Ratermann Bldg. & Contracting Co. v. Missouri Portland Cement Co.

• Decision Date: 11 December 1940
• Docket Number: 36287
• Citation: 145 S.W.2d 422,347 Mo. 12
• Parties: Ratermann Building & Contracting Company, a Corporation, Appellant, v. Missouri Portland Cement Company, a Corporation; Mississippi River Sand & Material Company, a Corporation; and Theodore Rassieur
• Court: Missouri Supreme Court

145 S.W.2d 422

347 Mo. 12

Ratermann Building & Contracting Company, a Corporation, Appellant, v. Missouri Portland Cement Company, a Corporation; Mississippi River Sand & Material Company, a Corporation; and Theodore Rassieur

No. 36287

Supreme Court of Missouri

December 11, 1940

Appeal from Circuit Court of City of St. Louis; Hon. Eugene J Sartorius, Judge.

Affirmed.

John L. Gilmore for appellant.

(1) The cause of action is vested in appellant and not in Central Building Materials Company. Central Republic Bank & Trust Co v. Caldwell, 58 F.2d 721; Industrial Research Corp v. General Motors Corp., 29 F.2d 623; State ex rel Shull v. Liberty Natl. Bank, 331 Mo. 386, 53 S.W.2d 902; 14 C. J., sec. 1445-b, p. 929; Adams v. Clark, 239 N.Y. 403, 146 N.E. 643; Meyerson v. Franklin Knitting Mills, 185 A.D. 458, 172 N.Y.S. 773; Stinnett v. Paramount-Famous Lasky Corp., 37 S.W.2d 150; Vierling v. Baxter, 293 Pa. 52, 141 A. 728; General Rubber Co. v. Benedict, 215 N.Y. 18, 109 N.E. 96; Ritchie v. McMullen, 79 F. 522. (2) The damages resulting from the fraud were suffered by appellant and not by Central Building Materials Company. Horne v. Hertel Co., 184 Mo.App. 725, 171 S.W. 598; 2 Pomeroy, Eq. Jur., sec. 898, p. 1865; Spreckels v. Gorrill, 152 Cal. 383, 92 P. 1014; Bissell v. Taylor, 41 Mich. 702, 3 N.W. 194; Stewart v. Lester, 49 Hun, 58, 17 N.Y. 248, 1 N.Y.S. 699; Sonnesyn v. Akin, 14 N.D. 248, 104 N.W. 1026; Cleavenger v. Sturm, 59 W.Va. 658, 53 S.E. 593; Cable v. Bowlus, 21 Ohio Cir. Ct. 53, 11 Ohio Cir. Dec. 526; 26 C. J., sec. 79 (2) 1171.

Rassieur & Rassieur for Missouri Portland Cement Company and Theodore Rassieur; John J. Phelan for Mississippi River Sand & Material Company.

(1) In an action for fraud the petition must show that the plaintiff in consequence of the fraud suffered such damages as plaintiff may recover in its own right; otherwise the petition is demurrable. 12 R. C. L., p. 239; 27 C. J., p. 37, sec. 157; 26 C. J., pp. 1167, 1171; Bell v. Butte Inv. Co., 250 S.W. 384; Vlates v. Catsigianis, 202 S.W. 441; Stacey v. Robinson, 184 Mo.App. 54, 168 S.W. 261; Abbott v. Miller, 226 Mo.App. 277, 41 S.W.2d 900; Thompson v. Newell, 118 Mo.App. 416, 94 S.W. 557. (2) The facts alleged in the petition show no damage sustained by plaintiff resulting from alleged misrepresentations. The facts alleged show damage suffered by Central Building Materials Company for which that company alone may sue, but not its individual stockholders suing in their own behalf. Loomis v. Railroad, 165 Mo. 469, 65 S.W. 962; Dorrah v. Pemiscot County Bank, 213 Mo.App. 541, 256 S.W. 560; In re Condemnation of Land for Spring Valley Park, 57 S.W.2d 752.

Bradley, C. Hyde and Dalton, CC., concur.

OPINION

BRADLEY

This is an action to recover $ 500,000 actual, and $ 100,000 punitive damages for alleged fraud and deceit. Separate demurrers to the second amended petition were sustained and plaintiff appealed. The petition covers thirty-four pages, but assuming the allegations to be true, the salient facts may be stated as follows: For many years prior to the latter part of 1928, plaintiff was profitably engaged in the building and contracting business in St. Louis and vicinity, and was a creditor, for a large sum, of the Meramec Portland Cement & Material Company, and owned three valuable pieces of real estate in St. Louis and in St. Louis county, which properties had the necessary equipment to carry on the sand and gravel, and the building materials and supplies business. In the latter part of 1928, there were many companies, in St. Louis and vicinity, engaged in the same or similar business, and plaintiff believed that conditions in this industry were in great confusion, and that the industry, as a whole, suffered great waste and loss because of duplication of effort, equipment, etc. Plaintiff, being aware of these conditions, "conceived the idea of arranging for" conferences with other local companies in the industry, "believing that something could be done to eliminate" waste, duplication, etc. Conferences were held at which "plaintiff presented its conception of the situation" to the corporate defendants and to several other companies, and all agreed that something should be done "to remedy the situation," and that the most practical thing to do "would be to consolidate all of the companies into one company."

Defendant, Rassieur, was, at the time and for many years prior, attorney for defendant, Missouri Portland Cement Company, and this company suggested that Rassieur be attorney for all concerned, instead of each company depending upon the advice of its own attorney. Defendant, Missouri Portland Cement Company, represented that Rassieur was possessed of superior knowledge and information respecting "a matter of this character," and plaintiff relied upon this representation, and Rassieur was retained as counsel for all concerned. The real purpose of defendant, Missouri Portland Cement Company, in urging the retaining of Rassieur was, as alleged, to secure counsel favorable to it, and who would assist in carrying out a plan to cheat and defraud plaintiff and others.

In February, 1929, George Ratermann, an officer of plaintiff, and Mr. Besch and Mr. Norcross, officers of the defendant, Missouri Portland Cement Company, called at Rassieur's office and presented and explained to him the agreed upon consolidation plan and asked for his advice. Rassieur told them that he would go into the matter "and would let them have his definite advice as soon as possible." The corporate defendants "seized upon the situation as an opportunity for their own enrichment and for damage to plaintiff and wilfully, maliciously, wrongfully, and unlawfully conspired, confederated and combined with each other and with the defendant, Rassieur, to create a situation which they could turn and mold to their own advantage and to the damage and detriment of plaintiff." Thereafter, Rassieur informed plaintiff that the consolidation plan was desirable, but that in his experience in the handling of such matters, the consolidation should not be at once consummated for the reason that the customers of the respective companies might believe that such consolidation was to increase prices, and that, in order to avoid such, it would be the wisest policy to form two corporations and to merge them in about six months, and that he had worked out the following plan:

Form two corporations, one the Standard Building Materials Company to consist of the corporate defendants, and the St. Charles Sand and Material Company, and the other, the Central Building Materials Company, to consist of plaintiff and eight other named companies. Rassieur said, according to the petition, that both new companies would have the same amount of cash and working capital, but the Central company would be caused to fail, and the Standard would be aided by all the others to prosper, and that after about six months, the Standard and Central would consolidate. The Standard and the Central were formed and the old companies going to make up the Standard conveyed their respective properties to it, and each, in turn, received stock in the Standard in proportion to the value of the property conveyed, and those companies going to make up the Central conveyed their respective properties to it, and each, in turn, received stock in the Central, in proportion to the value of the property conveyed.

The Standard and Central commenced business, but the plan to prosper the Standard and to destroy the Central was carried out. Rassieur, for various pretended reasons, as alleged, postponed the consolidation of the Standard and Central, and finally announced that the consolidation was illegal and could not and would not be carried out. The Standard was thereupon dissolved, and the defendants fraudulently converted its money and properties to their own use, which money and properties, in part, belonged to plaintiff. Upon learning of the proposed dissolution of the Standard, plaintiff demanded damages and an accounting of the Standard and the defendants. The defendants agreed among themselves that if liability was established against them, or either of them, or against the Standard or any of its assets, they would share such liability in proportion to the amount of their holdings in the Standard.

The source and cause of plaintiff's alleged damages, according to the petition, are: (1) Conveyance of its properties to the Central; (2) expenditures for appraisal of its properties in order to determine the amount of stock it would receive in Central upon the conveyance of its properties to that company; (3) loss sustained by plaintiff by performing its agreement with Central to stay out of the sand, gravel, and building and materials business; (4) loss sustained by plaintiff in the depreciation resulting to its machinery on account of idleness and nonuser; (5) loss of income from its properties; (6) loss due to disbanding its organization; and (7) loss of income from the Meramec Portland Cement & Material Company, its debtor.

The separate demurrers alleged that the petition stated no cause of action in plaintiff; that several alleged causes of action were improperly united in the petition; and that "the cause of action sued is barred by the five-year Statute of Limitations. The trial court did not specify the ground upon which the demurrers were sustained, but plaintiff states in its brief that "the sole argument advanced by respondents (defendants) in the lower court in support of their demurrers was the alleged insufficiency of the allegations in the petition to state a cause of action," and it is on that ground that defendants here rely.

We can more clearly, we think, rule the questions involved by specifically...