Schneider v. Johnson

• Decision Date: 06 May 1912
• Parties: JOSEPH SCHNEIDER, Respondent, v. CHARLES T. JOHNSON, Appellant
• Court: Missouri Court of Appeals

147 S.W. 538

164 Mo.App. 639

JOSEPH SCHNEIDER, Respondent, v. CHARLES T. JOHNSON, Appellant

Court of Appeals of Missouri, Springfield

May 6, 1912

Motion for Rehearing Denied June 3, 1912.

Appeal from Jasper Circuit Court.--Hon. Joseph D. Perkins, Judge.

AFFIRMED.

Judgment affirmed.

McIndoe & Thurman for appellant.

(1) All of the counts fail to state a cause of action upon an account of an indebtedness. This question was raised by timely objections to the introduction of evidence and also on motion in arrest of judgment. Such objection under section 1804, Revised Statutes 1909, is never waived. Paddock v Soure, 102 Mo. 226; Hobber v. Coburn, 193 Mo 547; Hubbert v. Slavens, 218 Mo. 598; Slavens v Transit Co., 102 Mo.App. 644; Jackson v. Mfg. Co., 106 Mo.App. 441; Ball v. Neosho, 109 Mo. 683. (2) Section 3006, when it refers to the dissolution of a corporation refers to the statutory dissolution and provides for an action against a stockholder at the time of such dissolution. As long as a corporation has officers and directors within the period of its charter, it is not dissolved, even though insolvent; nor will a failure to elect directors or officers or to do business bring about such dissolution. Youree v. Ins. Co., 180 Mo. 165; Bank v. Roubidoux, 57 Mo. 451; Hotel Co. v. Sauer, 65 Mo. 279; Richards v. Mfg. Co., 221 Mo. 149; Bank v. Rockefeller, 195 Mo. 42; Kayser v. Freeman, 16 Mo. 88; Hayner v. Motor Co., 135 S.W. (Mo. App.) 1060; Banking Co. v. Daymon, 195 Mo. 266; McKee v. Rudd, 222 Mo. 344; Bank v. Allen, 195 Mo. 262. (3) The court erred in refusing to strike out the testimony of these witnesses, because the accounts were not filed and the defendant was not bound by such testimony. R. S. 1909, sec. 1832. (4) There is not a particle of testimony in the record to show the value of the leases. The proper rule is stated in Van Cleave v. Berkeley, 143 Mo. 136. There is no evidence whatever and the court did not take the value into consideration and the judgment of the court was based upon the wrong theory. R. S. 1909, sec. 2981.

Merritt & Spiva for respondent.

(1) It is not necessary to allege that a judgment had been taken against the corporation. Section 3006, Revised Statutes 1909, does not require judgment to be first taken against a corporation, but provides that if "any company formed under this chapter dissolve leaving debts unpaid, suits may be brought against any person or persons who were stockholders, etc." (2) Appellant in his brief asserts that the dissolution referred to in section 3006 means a statutory dissolution, but the courts in construing this statute disagree with appellant and hold that the dissolution of a corporation will be presumed in favor of creditors when it is shown that it has practically surrendered its corporate rights, has ceased to do business and has transferred all its assets. Bank v. Gallaher, 43 Mo.App. 483; Bank v. Bank, 107 Mo. 133; Bank v. Kellogg, 52 Mo. 583; Moore v. Whitcomb, 48 Mo. 543; State ex rel. v. Societe, 9 Mo.App. 114; Elliott v. Sullivan, 156 Mo.App. 509.

OPINION

GRAY, J.

In 1909 The Wautauga Mining Company and The Red Fox Mining Company were organized under the laws of this state relating to business corporations. The Wautauga Company had a capital stock of $ 80,000, divided into 800 shares, and the Red Fox $ 50,000, divided into 500 shares. The articles of association of each company recited that the stock was paid in full. The appellant subscribed for one share of the Wautauga stock, and paid for same. He subscribed for 200 shares of the Red Fox stock, and paid thereon $ 3000. Both companies maintained offices in Joplin, and engaged in mining in Jasper county, but proved to be financial failures, and ceased to transact business about a year before this suit was commenced. Their properties were covered by mortgages, and according to the testimony, they had no intention to, and were absolutely unable, to resume business.

The Wautauga Company at the time it ceased business, owed debts to numerous creditors of whom it had purchased supplies and machinery to enable it to carry on its mining operations, and this plaintiff was one of such creditors, and the accounts of fifteen other creditors were assigned to him for collection, and this suit was instituted on these accounts and against the defendant for his unpaid subscription to the capital stock.

The Red Fox Company at the time it ceased to do business, was indebted to the plaintiff for machinery and supplies furnished, and was also indebted to eleven other creditors, who assigned their accounts to plaintiff, and a suit was instituted by plaintiff against the appellant on all of said demands, and seeking to recover on the theory that appellant had not paid for his stock and was indebted to the company therefor at the time it ceased to do business, and at the time the suit was instituted. The two suits were consolidated by agreement, and tried as one, and the plaintiff recovered a judgment on each count of the two petitions, and defendant appealed to this court.

It is claimed the petition fails to state a cause of action. As each count is practically the same, it will only be necessary to consider one.

The second count charges: "That the Wautauga Mining Company was a corporation doing business in Joplin, Missouri, in 1909, but on or about the first day of March, 1910, said corporation was dissolved by abandonment of its business and property, all its property being consumed by liens and mortgages, and it has now no assets or property, and the said corporation left among other debts unpaid an indebtedness due to the Home Powder Company, a corporation, in the sum of twenty-seven dollars for powder and blasting material, and the same remains due and unpaid. The said Home Powder Company has this day assigned its said account to this plaintiff for the purpose of collection, and the same is herewith filed marked 'Exhibit B.' Plaintiff states that the defendant was the owner and holder of the stock of the said Wautauga Mining Company, of the par value of $ 11,100 and took said stock knowing the same had not been paid up, and there is now due and unpaid on the said stock so held by the defendant the sum of $ 6,500. Wherefore, plaintiff sues the said defendant as a former stockholder in said Wautauga Mining Company for the sum of twenty-seven dollars and for costs of suit."

The counts in the Red Fox transaction were practically the same, except they alleged that the appellant was one of the original subscribers to the capital stock of the company, and had not paid therefor. No demurrer was filed to the petition and appellant answered, and not until trial was commenced, and then only by oral objection to the introduction of testimony, was any complaint leveled against the petition.

While the defendant has the right to object to the introduction of testimony on the ground that the petition does not state facts sufficient to constitute a cause of action, this practice is one which is to be discouraged, and if the petition is sufficient to sustain a judgment, the objection should be overruled. [Mfg. Co. v. Montgomery, 144 Mo.App. 494, 129 S.W. 460; Johnson & Co. v. Ice & Refrigerating Co., 143 Mo.App. 441, 127 S.W. 692.] Of course if the petition is fatally defective, then the objection may be made for the first time after judgment, or even in the appellate court. [Simpson v. Witte Iron Works Co., 144 S.W. 895.]

It is first claimed that the petitions are fatally defective because they do not allege that any judgment had been rendered against the corporation. It is not necessary that the creditor should be a judgment creditor. [State Savings Assn. v. Kellogg, 63 Mo. 540; Bittner v. Lee, 25 Mo.App. 559.]

The next objection is that the accounts sued on were not filed. Exhibits are not a part of the petition, and cannot be considered in passing on the sufficiency of the petition. [Paper Co. v. Publishing Co., 156 Mo.App. 187, 136 S.W. 736; Merrill v. Central Trust Co., 46 Mo.App. 236; Lime & Cement Co. v. Wind, 86 Mo.App. 163.]

The petitions are further objected to on the ground that they do not show that the corporations were dissolved in the manner provided by section 3006, Revised Statutes 1909. Under the settled law of this state, the creditor of an insolvent corporation does not have to wait until the corporation's charter has expired, or until the corporation has been judicially dissolved, but as to him the corporation will be deemed dissolved when it has ceased to be a going concern, and has disposed of its tangible assets and there is no probability of its again attempting to carry on the business for which it was organized. [Farmers Bank v. Gallaher, 43 Mo.App. 482; Bank v. Kellogg, 52 Mo. 583; Moore v. Whitcomb, 48 Mo. 543; Elliott v. Sullivan, 156 Mo.App. 496, 137 S.W. 287; Brookline Canning & Packing Co. v. Evans, 163 Mo.App. 564, 146 S.W. 828, decided by this court April 1, 1912.]

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