Patrick v. Boonville Gas Light Co.

• Decision Date: 21 April 1885
• Citation: 17 Mo.App. 462
• Parties: W. K. PATRICK, Appellant, v. BOONVILLE GAS LIGHT COMPANY, Respondent.
• Court: Missouri Court of Appeals

17 Mo.App. 462

W. K. PATRICK, Appellant,

v.BOONVILLE GAS LIGHT COMPANY, Respondent.

St. Louis Court of Appeals, Missouri.

Apr. 21, 1885.

APPEAL from the St. Louis Circuit Court, ADAMS, J.

Affirmed.

JAMES P. DAWSON, for the appellant: A director in a corporation has a right to deal with such corporation in any way that a stranger may-- St. Louis v. Alexander, 23 Mo. 527; Kitchen v. R. R., 69 Mo. 243; Foster v. Mullanphy Planing Mill Co., 16 Mo. App. 150; Buell v. Buckingham, 16 Iowa 284; Burbank v. West Walker Ditch Co., 13 Nev. 431; Smith v. Skeary, 47 Conn. 54; Whitwell v. Wareer, 20 Vt. 444; Gordon v. Preston, 1 Watts 387; Twin Lick Oil Co. v. Marburg, 1 Otto 587. The president of such company has the right with his own funds to purchase notes and drafts of the company maturing, and when he does so, he succeeds to all the rights of the holders.-- Merrick v. Peru Coal Co., 61 Ill. 473; Same case, 4 American Corp. Cases, 364, 365; Harts v. Brown, 77 Ill. 226; Bank v. Wasson, 48 Iowa 336.

DRAFFEN & WILLIAMS, for the respondent: The president of a corporation holds such a fiduciary relation to it that he cannot speculate in its debts for his own benefit. When Heath paid the debts (if he ever did), and took them up, if they were valid obligations of the defendant, he held them as trustee for the corporation, of which he was president. Holding them in trust, he could not re-issue them to one with notice of the relation in which he held them.-- Lingle v. National Insurance Co., 45 Mo. 109; Hall v. Vorhis, 45 Mo. 555; Brewster v. Stratman, 4 Mo. App. Rep. 41; Choteau Insurance Co. v. Floyd, 74 Mo. 286-291; Choteau v. Allen, 70 Mo. 338. The plaintiff was not entitled to a new trial on the ground of “surprise.” “Surprise, in its legal acceptation, denotes an unforeseen disappointment in some reasonable expectation, against which ordinary prudence would not have afforded protection.” “If the surprise was owing to the least want of diligence the applicant will be without excuse, and his motion will be denied.”-- Fretwell v. Lafoon, 77 Mo. 26; Peers v. Davis, Adm'r, 29 Mo. 184; Richardson v. Farmer, 36 Mo. 35; Carter v. Prior, 8 App. Rep. 576.

ROMBAUER, J., delivered the opinion of the court.

Plaintiff claiming to be the assignee, by indorsement in the year 1883, of three promissory notes, alleged to be executed by the defendant corporation in the years 1873 and 1874, and all maturing before the expiration of the year 1875, instituted suit thereon in September, 1883, against the corporation.

Plaintiff in his petition claimed to have derived title to the notes through one Heath, and the answer, among other things, sets up in defence the fact that Heath was the president of the corporation and its chief managing officer when the notes came into his possession, and that when they came into his possession he held them as trustee for the corporation and had no power nor authority to re-issue them. The answer also in general terms pleaded non est factum, a denial of the assignment to plaintiff, want of consideration, and payment. The answer was not verified. Plaintiff's reply controverted the allegations of the answer in general terms.

Upon the trial of the cause by the court sitting as a jury there was a verdict and judgment for the defendant.

The errors complained of by plaintiff here, are, that the court refused at the trial, although requested so to do by plaintiff, to compel defendant to elect between its defences; that the court gave erroneous declarations of law asked by defendant; and that the plaintiff was surprised, and the court should have sustained his motion for new trial on the ground of surprise. We shall dispose of the first and third of these objections before considering the the second, which is the only one raising questions entitled to a serious and careful consideration.

The defences were not inconsistent. Defences are held to be inconsistent under our statute only when they are of such character that the proof of one necessarily disproves the other.-- Nelson v. Brodhack, 44 Mo. 599; Rhine v. Montgomery, 50 Mo. 566.

Nor is there any merit in plaintiff's claim of surprise. The alleged surprise consisted of the fact that plaintiff expected that defendant would put certain witnesses summoned by plaintiff on the witness stand, which defendant failed to do. The witnesses were present in court and could have been examined by plaintiff, if their testimony was material. Either their testimony was essential to establish plaintiff's claim or to rebut the case made by defendant, and if so they could have been examined by plaintiff. Or their testimony was not needed for either purpose, and then the failure to examine them was immaterial because the defence must fail on other grounds. “Surprise, in its legal acceptation, denotes an unforeseen disappointment against which ordinary prudence would not have afforded protection.”--Gra. & Wat. New Tr. 398; Peers v. Davis, 29 Mo. 184. No such surprise can be claimed here. Upon the trial of the cause the plaintiff gave in evidence the notes sued on without proving their execution (which were admitted against defendant's objections). Plaintiff also proved by Heath the signature of Heath and other endorsers upon the notes. On cross-examination Heath stated that at the time he acquired these notes he was president of the corporation and the owner of almost its entire stock, and that the payees of two of the notes were directors. Defendant claims that upon this showing it was entitled to a verdict, because the execution of the notes had not been proven. This claim upon that ground cannot be sustained as the unverified answer confessed the execution of the notes.--Rev. Stat, 1879, sect. 3653; Lafayette Bank v. Stoneware Co., 2 Mo. App. 301; same case, 4 Mo. App. 278. Defendant relies on the case of Carpenter v. Inhabitants of Lathrop (51 Mo. 498), where it is said arguendo, that the execution of bonds is not admitted, although not denied under oath, where they purport to have been signed by an agent. This is correct when applied to cases, as it was in that instance, where the power of the agent thus to bind his principal, depends on special facts limiting his agency. But the rule can have no application to cases where the agency is conclusively presumed by law. The notes mentioned in the second and third counts of plaintiff's petition purport to have been executed by the Boonville Gaslight Company, a manufacturing corporation, authorized as such to execute negotiable paper in this form, and if it claimed that the paper sued on was not its obligation, it should have denied its execution under oath.

This point made might have some force, when confined to the notes sued on in the first count. The body of that note does not mention the corporation, and the signature, Wm. Heath, Pres. Boonville Gas Co., is perhaps prima facie that of Heath and not of the corporation.-- Barker v. Ins. Co., 3 Wend. 94; Fitch v. Lawton, 6 How. (Miss.) 37. This, however, is immaterial, as the plaintiff in our opinion must fail on that count on more substantial grounds.

The first count distinctly states that the note sued on therein was paid by Heath. It is true it stated that Heath paid it out of his own funds upon presentation. His so doing may have given him a claim against the corporation for money paid to its use, but could not give continued vitality to the note.-- Greenabaum v. Elliot, 60 Mo. 29; Burr v. Smith, 21 Barb. 262.

We believe therefore that there could be no recovery by plaintiff on the first count under the allegations of his own petition, regardless of other considerations hereinafter stated.

The testimony above detailed being all the evidence offered on part of plaintiff, the defendant called C. F. Aehle, who testified that he was treasurerof the defendant company from 1874 to 1880, and a director of the company from 1876 to 1880; that he had general superintendence of the finances of the company; that he never heard of the notes mentioned in the second and third counts of plaintiff's petition until the institution of the suit; that he had no knowledge of any occasion for issuing them, or of any consideration that could have passed to the company for them. That a number of dividends had been declared and paid by the company since the date of the notes on the understanding that all the debts of the company were paid. That some of these dividends were paid to Heath, who never claimed that the company was indebted to him in any amount. That Heath parted with all his stock in 1876. Defendant also called one Sombart, who testified that...