Raleigh Inv. Co. v. Cureton

• Decision Date: 07 June 1921
• Docket Number: No. 16554.,16554.
• Citation: 232 S.W. 766
• Parties: RALEIGH INV. CO. v. CURETON
• Court: Missouri Court of Appeals

232 S.W. 766

RALEIGH INV. CO. v. CURETON

No. 16554.

St. Louis Court of Appeals. Missouri.

June 7, 1921.

Rehearing Denied June 24, 1921.

Appeal from St. Louis Circuit Court; Karl Kimmel, Judge.

"Not to be officially published."

Action by the Raleigh Investment Company, a corporation, against P. H. Cureton. A judgment for plaintiff on return nulla bona to execution against a corporation of which defendant was stockholder, and defendant appeals. Reversed and remanded, with directions to enter judgment for defendant.

Jesse McDonald, George B. Webster, and Arnold Just, all of St. Louis, for appellant. John A. Gilliam, of St. Louis, for respondent.

BRUERE, C.

This suit is brought under section 9764, Revised Statutes of Missouri 1919. Plaintiff is a judgment creditor of the Bismarck-Bellevue Valley & Western Railway Company, a corporation, to the extent of $17,572.08. After a nulla bona return was made on an execution issued under said judgment, plaintiff, after due notice given, filed its motion, as provided for in said section.

Said motion is in the usual form, and alleges that the defendant is the owner of 40 shares of stock of said corporation, of the par value of $100 each, and that 90 per cent. of the par value of said stock remains unpaid; that said defendant purchased said shares with knowledge that only 10 per cent. of the par value thereof had been paid, and prays the court to order an execution to issue against the defendant to collect the sum of $4,140, the alleged balance due on said stock owned by him.

Defendant in his answer admitted that he was a stockholder of said Bismarck-Bellevue Valley & Western Railway Company, and averred that, on the 5th day of April, 1912, one E. E. Evans was the owner of certain shares of the capital stock of said company, and that on said day he purchased from said Evans 15 shares of said capital stock; that he purchased the same under the belief that the same were full-paid, and that the said certificate representing the said 15 shares upon its face stated that the same were full-paid and nonassessable, and that the defend"" ant had no knowledge or notice of anything to the contrary; that he then believed and still believes that the said shares were fully paid and nonassessable, wherefore he was not liable.

The reply denied the allegation of the new matter made in the return, and for further reply averred that the Bismarck-Bellevue Valley & Western Railway Company was incorporated with a capital stock of 3,000 shares, of the par value of $100 each, to build a proposed railroad from Bismarck, Mo., to Sunlight, Mo.; that, on the 23d day of March, 1912, a board of directors met and elected one E. E. Evans president of said corporation; that said E. B. Evans, together with the directors of said company, prior to the 23d day of March, 1912, had formed a syndicate to promote said corporation, and each of said directors had put up from time to time about $250 in the promotion of said corporation; that said E. E. Evans had further put in means of his own amounting to about $1,750, in addition to the $250 aforesaid, and money borrowed by him amounting to about $2,500; which sums, amounting in all to about $7,000, had been used in making surveys, procuring charter, and getting agreements for right of way and deeds for rights of way for said Bismarck-Bellevue Valley & Western Railway Company; and that the total amount of all payments made by said syndicate and all voluntary contributions made and services rendered to said railway company did not exceed $8,000 up to and including April 1, 1912.

The reply further averred that on March 23, 1912, under an order made by the board of directors of said corporation, of which E. E. Evans was president, the said corporation purchased the right of way, contracts, field notes, and all property pertaining to the proposed road between Bismarck and Sunlight from E. E. Evans, and agreed to pay said Evans for same, and in satisfaction of moneys advanced by him for organization expenses, the sum of $102,000, to be paid $2,000 cash and $100,000 in common stock of the company; that in pursuance of said agreement said corporation, on said day, issued to E. E. Evans a certificate of stock for 1,000 shares of common stock in said corporation, purporting to be of the value of $100 per share; that said Evans' subscription, theretofore made, of 280 shares of stock in said corporation, was credited as paid by said 1,000 shares, and each subscription for two shares, which had been made by each of said directors, was offset against the $2,000 cash voted to said Evans; that no money was paid to Evans at the time, and that no money was paid into the treasury of the corporation for any of said stock; that the entire consideration for said 1,000 shares of stock and said $2,000 so voted, paid in money and labor to said company, in services, contracts for right of way, property, surveys, charter and legal expenses, did not exceed in value the sum of $8,000; that there was paid on the 1,000 shares taken by said Evans a sum not to exceed $6,000, and that about $94 per share was unpaid thereon.

The reply further alleged that the defendant, on April 27, 1912, received from E. E. Evans 46 shares of stock, which was part of 1,000 shares of stock issued to E. E. Evans as aforesaid; that defendant knew the facts in regard to the issue of said stock to E. E. Evans, or by the exercise of reasonable care, diligence, inquiry, and investigation would have known said facts;. that defendant did not pay over $10 per share for said stock, and that he owed $4,140 on said stock, for which amount he was liable to plaintiff.

The court ordered that the entire cause be referred to Frank A. Thompson, to try all the issues and to report all findings and proceedings to the court. A trial was had before said Frank A. Thompson, referee, who filed his report, recommending therein that plaintiff's said motion be sustained, and that execution be issued against the defendant to collect the sum of $3,680, said sum being the amount remaining unpaid on 46 shares of stock owned by defendant.

Exceptions were filed to said report, which were overruled, the referee's report was confirmed, plaintiff's motion was sustained, and judgment was entered against defendant for $3,680, with interest, the total judgment amounting to $4,268.18. From this judgment defendant appealed.

The evidence showed that at the time plaintiff's motion was filed the defendant owned 46 shares of stock of the Bismarck-Bellevue Valley & Western Railway Company; E. E. Evans was the original holder of these shares, and sold them to the defendant for $10 a share.

The facts with reference to the issue of said stock to E. E. Evans are as follows: The Bismarck-Bellevue Valley & Western Railway Company was incorporated March 19, 1912. In January, 1911, Mr. Evans, who was a government clerk located at St. Louis, Mo., and as such was earning a salary of $900 a year, began the promotion of a railroad commencing at Bismarck, Mo., and running west across the southern part of Washington county. From the 26th day of January, 1911, until the 19th day of March, 1912, he spent the major portion of his time in said promotion, but...