Roseberry v. Scott

• Decision Date: 10 April 1926
• Docket Number: 26,287
• Citation: 244 P. 1063,120 Kan. 576
• Parties: LUCY DRESSEL ROSEBERRY, Appellee, v. SAMUEL W. SCOTT, Appellant
• Court: Kansas Supreme Court

244 P. 1063

120 Kan. 576

LUCY DRESSEL ROSEBERRY, Appellee, v. SAMUEL W. SCOTT, Appellant

No. 26,287

Supreme Court of Kansas

April 10, 1926

Decided January, 1926.

Appeal from Johnson district court; JABEZ O. RANKIN, judge.

Judgment affirmed.

SYLLABUS

SYLLABUS BY THE COURT.

1. FRAUD--Evidence--Sufficiency as Against Demurrer. After an examination of the evidence, it is held that the court was justified in overruling the demurrer thereto.

2. DAMAGES--Exemplary Damages--Cause Arising in Another State. Punitive damages may be recovered on a cause of action which arose in Missouri where such damages may be recovered on a similar cause of action arising in this state.

3. LIMITATION OF ACTIONS--Evasion of Process--Evidence. There was evidence sufficient to show that the defendant had so absconded from his place of residence, first in Missouri and then in Kansas, and so concealed himself as to prevent the statute of limitations running against the action commenced by the plaintiff.

4. CONTINUANCE--Illness of Parties--Duty as to Deposition. It was not error to refuse to grant a continuance which was asked on the ground that the defendant, a nonresident, was sick and unable to attend, where no effort was made by him to have his deposition taken and where he endeavored to prevent his deposition being taken by the other side.

J. W Parker, of Olathe, O. H. Dean, R. B. Thomson and Carl L. Crocker, all of Kansas City, Mo., for the appellant.

W. D. Morrison, of Olathe, C. W. Prince, E. A. Harris and James N. Berry, all of Kansas City, Mo., for the appellee.

OPINION

MARSHALL, J.:

The plaintiff sued for $ 500 actual and $ 3,000 punitive damages caused by the defendant's fraudulent sale to her of two shares of worthless stock in the Mexican Gulf Land and Development Company. Verdict and judgment were rendered in favor of the plaintiff for $ 1,000, and the defendant appeals.

1. At the close of the evidence for the plaintiff, the defendant demurred thereto. The demurrer was overruled. He urges that "the demurrer to the evidence should have been sustained," and says:

"By an examination of the petition it is manifest that all the allegations relied upon to establish fraud are:

"1. That Mexican Gulf Land and Development Company was organized in violation of law.

"2. That said company had no capital.

"3. That said company failed to qualify to do business in the state of Missouri.

"4. That it was represented to the plaintiff that the stock purchased by her was fully paid.

"5. That it was represented to plaintiff that said company owned 75,000 acres of valley land in Mexico and government concessions in connection therewith."

There was evidence which tended to show that the defendant with others, all residents of the state of Missouri, procured the incorporation of the Mexican Gulf Land and Development Company under the laws of Arizona, capitalized at one million dollars; that the company after its organization maintained an office in Kansas City, Mo., where its business was transacted; that some of the meetings of the corporation were held in Arizona; that the company never qualified to do business in the state of Missouri; that the statutes of Missouri provided that "the secretary of state should not issue a certificate in cases where residents of Missouri organize a corporation in a foreign state for the purpose of avoiding the laws of the state of Missouri," and "that the stocks or bonds of a corporation shall be issued only for money paid, labor done or money or property actually received, and that all fictitious issues shall be void"; that the plaintiff purchased the stock in Missouri; that when she purchased the stock it was represented to her that the stock purchased by her was fully paid; that that representation was not true; that it was represented to the plaintiff that the company owned 75,000 acres of valuable land in Mexico and government concessions in connection therewith; that the company did not own outright the 75,000 acres of land, but the ownership of the company was qualified by rights and liens in the land held by the defendant; and that the capital of the company consisted of whatever right it had in the 75,000 acres of land which, there was some evidence tending to show, was worth $ 3 an acre. There was other evidence which tended to show that sometime after the purchase of the stock, the plaintiff was induced by some representative of the company to surrender her stock for the purpose of procuring a deed to ten acres of land in Mexico, and that the defendant absconded and concealed himself for the purpose of avoiding service of process.

In Booth v. Scott, 276 Mo. 1, 205 S.W. 633, a case against this defendant arising in Missouri out of a sale of stock in the same Mexican Gulf Land and Development Company under circumstances similar to those in the present action, part of the syllabus reads:

"That an Arizona corporation formed by residents of this state was formed for the purpose of avoiding the laws of this state is shown by the fact that its articles of association contained provisions that its principal place of business outside of Arizona shall be Kansas City, Mo., at which place meetings of the board of directors shall be held and any and all business of the corporation transacted; that its capital stock is to be paid into its treasury at such times as its board of directors shall direct, either in cash or by the sale and transfer to it of real or personal property, or by services rendered; that the shares so issued shall be fully paid and nonassessable; that the amount of stock is to be one million dollars, of which one-fourth is to be preferred, bearing interest at the rate of seven per cent per annum, the par value being payable five years from date of issue and to constitute a lien on all the property of the corporation; and by the fact that the only purpose for which an office or agent was required in Arizona was to provide opportunity for service of process there; and by the further fact that the corporation was formed for the purchase of a tract of land in Mexico from one of its incorporators without the payment of any part of its capital stock, and that two-thirds of the common stock, or one-half the entire capitalization, was to be taken, without any payment whatever, by the incorporators, while the other third was to be given as a bonus to purchasers of preferred stock at par. The law presumes that one intends the necessary and obvious consequences of his acts.

"A foreign corporation formed by residents of this state for the purpose of avoiding the laws of this state is forbidden by statute to transact business in this state, and if it attempts to transact business in this state its incorporators become liable as partners for its debts."

The court was justified in overruling the demurrer to the evidence.

2. The defendant argues that it was error for the court to submit to the jury the question of punitive damages. The cause of action arose in Missouri. It is urged that under the laws of this state punitive damages will not be allowed on a cause of action which originated in Missouri. Punitive damages are allowed in Kansas on similar causes of action arising in this state. In Cady v. Case, 45 Kan. 733, 26 P. 448, this court declared that:

"The cases of Malone v. Murphy, 2 Kan. 250; Wiley v. Keokuk, 6 Id. 94, and other similar decisions in this court, holding that whenever the elements of fraud, malice, gross negligence, or oppression mingle in the controversy, the law allows the jury to give what is called exemplary or vindictive damages, followed." (Syl. See, also, Nevins v. Nevins, 68 Kan. 410, 416, 75 P. 492; Winkler v. Bank, 89 Kan. 279, 281, 131 P. 597; Stalker v. Drake, 91 Kan. 142, 136 P. 912; Cheesman v. Felt, 92 Kan. 688, 693, 142 P. 285.)

In Woolacott v. Case, 63 Kan. 35, 64 P. 965, the court said:

"The laws of a sister state, in the absence of...