Quinn v. American Bankers' Assur. Co.

• Decision Date: 01 March 1914
• Citation: 165 S.W. 823,183 Mo. App. 8
• Parties: QUINN v. AMERICAN BANKERS' ASSUR. CO.
• Court: Missouri Court of Appeals

165 S.W. 823

183 Mo. A. 8

QUINN v. AMERICAN BANKERS' ASSUR. CO.

St. Louis Court of Appeals. Missouri.

March Term, 1914.

1. CORPORATIONS (§ 448)—LIABILITY ON CONTRACTS OF PROMOTERS.

Where one of the promoters of a corporation advanced money to a co-promoter, which was used by him in procuring the corporation's charter, the corporation, after its organization, could ratify the act of its promoter in procuring such advancement and using it for its benefit, thereby becoming liable to reimburse the promoter who advanced the money.

2. CORPORATIONS (§ 426)—LIABILITY ON CONTRACTS OF OFFICERS.

Where, though money advanced to the vice president and general counsel of a corporation for its benefit was credited by him in the books of another corporation, organized as a stock-selling agency of the first corporation, it was used for the benefit of the first corporation, it was liable to the person who advanced the money, especially where he was not a party to the method adopted by the vice president in crediting it in the books.

3. CORPORATIONS (§ 426)—LIABILITY ON CONTRACTS OF OFFICERS—RATIFICATION.

It was immaterial that money advanced by plaintiff to the vice president of a corporation for its benefit was credited by him in the books of another corporation, organized as a stock-selling agency of the first corporation, where the first corporation subsequently ratified and adopted the vice president's act in borrowing the money by voting to issue stock to plaintiff in repayment.

4. PLEADING (§ 36)—ADMISSIONS—EFFECT.

In an action against a corporation to recover money advanced by plaintiff to its vice president and general counsel, where the corporation pleaded as a defense that stock was issued to plaintiff in the name of the vice president on account of the indebtedness and its witnesses testified to the same effect, it was estopped to deny that the money was advanced to it.

5. TRIAL (§ 194) — INSTRUCTIONS—PROVINCE OF JURY.

In an action against a corporation to recover money advanced to one of its promoters, who became its vice president and general counsel, before and after its incorporation, where the evidence showed that the money was used in behalf of the corporation and that it ratified the act of its promoter and vice president and voted to issue stock in the name of the vice president in plaintiff's behalf to repay him, but there was evidence that the vice president was not authorized to receive stock in behalf of plaintiff, it was error to charge that if the money was advanced to the promoter and vice president to be used by him or to reimburse him for expenditures made in the organization of the corporation in his name, and if he received money or stock from the corporation as an equivalent therefor, to find for defendant, since it took from the jury the question whether the vice president was authorized to receive stock for plaintiff.

6. CORPORATIONS (§ 521)—ACTIONS—INSTRUCTIONS.

In an action to recover money advanced to a promoter and vice president of a corporation before and after its organization, where the evidence showed that it was used in its behalf and that his acts were ratified by the corporation, an instruction to find for defendant unless the money sued for was advanced to the corporation, and that payments or advances to the vice president, unless paid to the corporation with its knowledge or the knowledge of its officers that they were made by plaintiff and so accepted, did not constitute payments to the corporation, was erroneous.

7. CORPORATIONS (§ 579)—REORGANIZATION— LIABILITY FOR PREDECESSOR'S DEBTS.

Where the officers of a Missouri corporation formed a new corporation with the same name under the laws of Delaware and subscribed for its entire capital stock in trust for the stockholders of the Missouri corporation, and a large majority of the stockholders surrendered their stock in the Missouri corporation in exchange for stock in the Delaware corporation, which thereupon by mutual consent appropriated the assets of the Missouri corporation with the exception of a pro rata portion thereof which was distributed among a few stockholders declining to participate in the new corporation, and the officers in the Missouri corporation succeeded to the same offices in the Delaware corporation, which continued the business as if no change had occurred, it was liable for the debts of the Missouri corporation at law as well as in equity.

Appeal from St. Louis Circuit Court; Wm. B. Homer, Judge.

Action by Samuel Quinn against the American Bankers' Assurance Company. From a judgment for defendant, plaintiff appeals. Reversed and remanded.

Brownrigg & Mason, of St. Louis, for appellant. Arthur N. Sager, of St. Louis, for respondent.

NORTONI, J.

This is a suit for money advanced to the use and benefit of defendant's predecessor, the American Bankers' Assurance Company, incorporated under the laws of Missouri. The finding and judgment were for defendant, and plaintiff prosecutes the appeal.

Defendant American Bankers' Assurance Company is a corporation organized and existing under the laws of the state of Delaware and appears to be a mere continuation of the prior company by the same name which was organized under the laws of Missouri and to whose benefit plaintiff advanced the money here sued for. Plaintiff Samuel Quinn, together with John B. Christensen, H. A. Vrooman, and Ernest A. Peters, promoted and organized the American Bankers' Assurance Company, which was incorporated under the laws of Missouri on October 1, 1909. The object and purpose of the company was to insure depositors in banks against loss, and the home office was located in the city of St. Louis. By the charter of the company its capitalization was authorized at $1,000,000, to be divided in as many shares of stock of the par value of $2 per share; one-half of which amount to constitute a surplus fund. The evidence is conclusive, and, indeed, it seems to be conceded that the four persons named—that is, plaintiff Quinn, Christensen, Vrooman, and Peters— agreed among themselves to advance equal portions of such an amount of money as was necessary to organize and launch the company; the amounts so advanced by each to be repaid them by the company after it came into existence. At the time, plaintiff was engaged in Oklahoma in connection with the launching of an institution known as the Mid-Continent Life Insurance Company, and therefore, in a measure, he depended upon Christensen to represent him, when absent, in the matter of organizing the American Bankers' Assurance Company. When the parties were about ready to incorporate the American Bankers' Assurance Company, Christensen wrote plaintiff to send on his portion of the money to be used for that purpose; that is, $150. In response to this letter, plaintiff forwarded Christensen his check for $150 in the latter part of September, 1909, and Christensen employed the money realized thereon in incorporating the company on the first day of October thereafter as he did a like sum contributed by himself, Vrooman, and Peters. This one payment of $150 so made by plaintiff to be used for the purpose of incorporating the company was made prior to the incorporation, but subsequent payments were made thereafter. Upon the company being incorporated, Ernest A. Peters was elected president thereof by the first board of directors, and John B. Christensen vice president and also its general counsel. While all of these parties seem to have been active in the matter of organizing and launching the company, it appears that Christensen was the principal figure, or the more active one of the number, and this may be because he was the general counsel of the company and a lawyer, possessed of special knowledge with respect of such matters. Christensen and plaintiff Quinn were intimate friends, and it appears in the absence of plaintiff Christensen advanced some money for him toward the end desired.

Immediately after the incorporation and after Christensen's election as vice president and general counsel, he, with the knowledge and consent of all of his associates, expended several thousand dollars in advertising the company, getting out literature, providing offices, furniture, etc., and called upon his associates for their contributions under the original agreement. In response to this call, plaintiff sent Christensen $250 in December, 1909, that is, after the company was a going concern, and $600 more about the 1st of January, 1910. The entire payments so made by plaintiff amounted to $1,000, the first $150 of which was paid immediately before the incorporation of the company, but to be used in procuring its charter, and the remaining $850 after the company was organized and to Christensen, its vice president and general counsel, and all for the use and benefit of the company. It was agreed before any payments were made, and the understanding continued throughout, that each of the four original incorporators, including plaintiff, should be repaid by the company either in stock or cash as they should elect. Plaintiff's business in Oklahoma in connection with the Mid-Continent Insurance Company made such demands upon his time as to render it impossible for him to become actively identified with the American Bankers' Assurance Company, and because of this he elected to withdraw and take compensation in money rather than in stock for the amounts so advanced. To this end, he wrote Christensen a number of letters and also visited him and urged the payment of his claim in money. Christensen wrote plaintiff several letters putting him off from time to time, but all of which acknowledged his claim as a valid one, and in one letter Christensen suggested that he would take stock in the company on account of plaintiff's claim and pay plaintiff the money himself. Plaintiff answered this letter promptly, to the effect that he did not care who paid him the money, but he did not want stock in the...