Redmond v. Republic Steel Corp. of N. J.
| Decision Date | 06 March 1945 |
| Parties | S. D. Redmond, Appellant, v. The Republic Steel Corporation of New Jersey, a Corporation, Respondent |
| Court | Missouri Court of Appeals |
Appeal from the Circuit Court of the City of St. Louis; Hon. William H. Killoren, Judge.
Affirmed.
Henry D. Espy for appellant.
(1) The court erred in sustaining the plea to the jurisdiction. Byrd-Frost, Inc., v. Elder, 93 F.2d 30, 115 A. L. R 342; Guardian Trust Co. v. K. C. So. Ry. Co., 171 F 43, 28 L. R. A. (N. S.) 620; U. S. F. & G. Co. v Lawson, 15 F.Supp. 116; Cottingham v. Hall, 55 F.2d 664; Brown v. Duffin, 13 F.2d 708; Kline v. Burke Const. Co., 260 U.S. 226, 67 L.Ed. 226, 24 A. L. R. 1077; Purcell v. Summers, 126 F.2d 390; Boynton v. Moffat Tunnel Dist., 57 F.2d 772; Newberry v. Davison Chemical Co., 65 F.2d 728; Watson v. Jones, 13 Wall. 679, 20 L.Ed. 671 and 15 C. J. 1165, sec. 638. (2) The court erred in ruling that the instant case is a proceeding in rem. (Cases, supra.) (3) The court erred in failing to consider and give consideration to the fact that appellant was never notified nor given an opportunity to exchange his Newton Steel Company stock.
Fordyce, White, Mayne, Williams & Hartman for respondent.
(1) The judgment in Division No. 2 of the circuit court, sustaining defendant's plea to the jurisdiction and dismissing plaintiff's petition therein, is res adjudicata for the reason that the petition in this case is substantially identical to the one in the prior suit and is the statement of the same cause of action and the trial court in the present case was correct in holding the present action barred. North St. Louis Gymnastic Society v. Hagerman, 232 Mo. 693, 135 S.W. 42; Hall v. Wilder, 316 Mo. 812, 293 S.W. 760; Bushman v. Barlow, 321 Mo. 1052, 15 S.W.2d 329; Ellis v. Starr Piano Co., 226 Mo.App. 1209, 49 S.W.2d 1078; Healy v. Moore, 100 S.W.2d 601. (2) The cause of action alleged in the petition here is the same cause of action alleged in the petition in the prior Ohio Federal suit, both are in rem actions and both deal with the same res, hence the federal court has exclusive jurisdiction and the circuit court in this suit is without jurisdiction. Princess Lida v. Thompson, 305 U.S. 456, 83 L.Ed. 285; United States v. Bank of New York & Trust Co., 296 U.S. 463, 80 L.Ed. 331; Ackerman v. Tobin, 22 F.2d 541; Hutchins v. Pacific Mutual Life Ins. Co., 97 F.2d 58; In re Franz Estate, 346 Mo. 1149, 145 S.W.2d 400; State ex rel. Kern v. Stone, 269 Mo. 335, 345; Palmer v. Texas, 212 U.S. 118, 53 L.Ed. 435; Farmers Loan & Trust Co. v. Ry. Co., 177 U.S. 51, 44 L.Ed. 667; Cohn v. Dowling, 123 F.2d 408; International Co. v. Occidental Life Ins. Co., 98 F.2d 138; Long v. Choctaw, Okla., & G. R. Co., 160 F. 355; Merritt v. American Steel Barge Co., 79 F. 228; Wabash Railway Co. v. Adelbert, 208 U.S. 37, 52 L.Ed. 379; State ex rel. Kirk v. Stone, 269 Mo. 334. (3) The stating part of a bill in equity chiefly determines its character; the stating parts of the three bills in issue here are substantially identical and hence the bills state the same cause of action and give rise to the same relief. 30 C. J. S. (Equity), No. 210; 19 Am. Jur. (Equity), No. 226.
This is a suit in equity in the Circuit Court of the City of St. Louis by which the plaintiff seeks a decree of court compelling the defendant corporation to deliver to him certain bonds and shares of its own stock, with earned interest and dividends thereon, in lieu of stock he had owned in a corporation absorbed by defendant corporation, or, in the alternative, awarding him the sum of $ 3000 as damages for the alleged unlawful and wrongful conversion and appropriation of his property without due compensation.
The plaintiff is one S.D. Redmond, while the defendant is The Republic Steel Corporation of New Jersey, a corporation organized and existing under and by virtue of the laws of New Jersey.
The facts of the case, as charged in the petition, show that plaintiff, at the inception of this controversy, was the owner of 100 shares of the common stock of The Newton Steel Company, an Ohio corporation engaged in the manufacture and sale of steel and steel products in the State of Ohio and elsewhere.
On June 30, 1932, without plaintiff's knowledge, and without notice being given him, and with the alleged intent of concealing the transaction from him, The Newton Steel Company, through its officers and directors and the holders of more than 67% of its stock, conceived a plan and entered into an agreement to merge and consolidate said corporation with, and transfer all of its assets to, The Corrigan, McKinney Steel Company, likewise an Ohio corporation, and likewise engaged in the manufacture and sale of steel and steel products in the same immediate territory as that which was served by The Newton Steel Company.
By the agreement in question, or plan of affiliation as it was called, The Corrigan, McKinney Steel Company purported to offer to such of the stockholders of The Newton Steel Company as might desire to accept its offer, certain shares or proportionate shares of its own stock in exchange for the shares of stock of The Newton Steel Company. However, such purported offer was not conveyed to plaintiff, nor did he know anything of it until 1942. It was provided by the agreement or plan that the stock certificates of those stockholders desiring to accept the offer should be deposited with a designated bank in Cleveland, Ohio, by a fixed date in 1932, and that the plan should not become operative unless certificates in the amount of at least 67% of the outstanding stock of The Newton Steel Company should be so deposited. By the date fixed in the agreement the requisite number of shares had been deposited, whereupon The Corrigan, McKinney Steel Company became the owner of the same, and proceeded to exchange its own shares of stock therefor, though at a rate of exchange which plaintiff claims was unfair to the stockholders of The Newton Steel Company, inasmuch as the stock of the latter company was allegedly equal in value to that of The Corrigan, McKinney Steel Company, so that the exchange should have been made on an equal basis of share and share alike.
Prior to the effective date of the affiliation agreement, and in furtherance of the alleged conspiracy to consummate a pretended sale and liquidation of the assets of The Newton Steel Company, the directors of such company adopted a resolution attempting to authorize the pledging of its bonds with The Corrigan, McKinney Steel Company as security for the existing indebtedness of the former to the latter in twice the amount of the existing indebtedness, and subsequently entered into a finance agreement that the company's future indebtedness should likewise be secured by such pledged bonds. A majority of the board of directors of The Newton Steel Company resigned, and persons who were directors of The Corrigan, McKinney Steel Company were elected in their stead, thus effectually surrendering the control of the assets, business, and property of The Newton Steel Company to The Corrigan, McKinney Steel Company.
All such facts were fraudulently concealed from plaintiff; and in further pursuance of the conspiracy, The Corrigan, McKinney Steel Company, and the directors, officers, and assenting stockholders of The Newton Steel Company, conspired to cause pretended loans and credits to be extended to the latter so as to make it appear that financial assistance was being given to maintain The Newton Steel Company, when in truth and in fact the purpose was to create a form of mortgage secured bonds under which a form of foreclosure could be instituted, the result of which would tend to indicate that the assets then apparently belonging to The Newton Steel Company were lawfully disposed of upon its failure to discharge its obligations apparently existing, although all money and property belonging to The Newton Steel Company was actually in the hands of The Corrigan, McKinney Steel Company.
Beyond the above, The Newton Steel Company was loaded with excessive charges for materials furnished by The Corrigan, McKinney Steel Company; false loans were granted at excessive rates of interest; excessive provisions were made for depreciation; new equipment was charged as expense to The Newton Steel Company, although such company had in fact become a part of The Corrigan, McKinney Steel Company -- all with the intent that The Newton Steel Company should finally become and appear insolvent upon the assumption that it was an independent, existing corporation, so that it would be futile for plaintiff or other similarly situated stockholders to resort to the courts for relief upon discovery that there had been such a pretended sale, merger, and consolidation.
On August 27, 1934, The Corrigan, McKinney Steel Company, after it had acquired all of the assets of The Newton Steel Company by virtue of what amounted to the merger and consolidation above described, entered into a similar agreement of merger and consolidation with defendant, The Republic Steel Corporation of New Jersey, which also was engaged in the manufacture and sale of steel and steel products in the state of Ohio and elsewhere. Provision was made in such agreement for the exchange of certain of defendant's bonds and shares of stock for the shares of stock of The Corrigan, McKinney Steel Company, with the further provision that the bonds thus exchanged, aggregating some $ 15,000,000, should constitute a first lien upon the plants and other properties taken over from the latter company. Plaintiff, however, received no part of said securities, nor any other compensation, for his shares of stock in The Newton Steel Company.
Subsequent to the...
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