Scott v. Luehrmann
| Decision Date | 14 June 1919 |
| Parties | EDWARD J. SCOTT and JOHN R. SCOTT, Appellants, v. GEORGE E. W. LUEHRMANN and EDWARD H. LUEHRMANN |
| Court | Missouri Supreme Court |
Appeal from St. Louis City Circuit Court. -- Hon. J. Hugo Grimm Judge.
Reversed and remanded.
Kinealy & Kinealy for appellants.
(1) A creditor who has obtained a judgment against a corporation and a return of execution nulla bona may then proceed against the holders of unpaid stock. 10 Cyc. 725, 731; Shickle v Watts, 94 Mo. 410; Meyer v. Min. & Mill. Co., 192 Mo. 162. (2) The judgment against the corporation is conclusive on the stockholder. Nichols v. Stevens, 123 Mo. 96; Johnson v. Stebbins-Thompson Realty Co., 177 Mo. 581. (3) If the holder of the stock be an assignee thereof and took it with notice that it had been paid up in property, then he takes it subject to the right of a creditor to have the value of the property investigated, and if such value be not equal to the amount of the capital stock, then the holder of the stock is liable to the creditor. Meyer v. Min. & Mill. Co., 192 Mo. 162. (4) To defend, by way of estoppel, against the claim of the creditor, it must be shown that he had actual knowledge that the stock was not fully paid. Rogers v. Stag Min. Co., 185 Mo.App 659; Construction Co. v. Western, 153 Mo.App. 185. (5) The mere fact that the creditor may also be a stockholder does not prevent him from pursuing his remedy as a creditor. Schaefer v. Brewing Co., 4 Mo.App. 115; Guerney v. Moore, 131 Mo. 650; Meyer v. Min. & Mill. Co., 192 Mo. 162. (6) Under our procedure the courts can only consider controversies as concrete cases made by the pleadings. State ex rel. v. Muench, 217 Mo. 124; Moormeister v. Hannibal, 180 Mo.App. 717. (7) If the stockholder, when sued by a creditor, admits that he is such stockholder, he can file a cross-bill bringing in all other stockholders for contribution. Hatch v. Dana, 101 U.S. 205; Young v. Farwell, 139 Ill. 326; Martin v. Southern Salena Land Co., 94 Va. 28; Brundage v. Monumental Co., 12 Ore. 322. (8) A defendant's defenses and positions in a case must be consistent. Dickey v. Porter, 203 Mo. 1; Bell v. Campbell, 123 Mo. 2; Brown v. Emmerson, 155 Mo.App. 459; Shelby v. Sheppard, 145 Mo.App. 470. (9) It was defendants' duty in their answer to set forth their contention as to the construction or legal effect of Underwriting Agreement, which they did. Reilly v. Cullen, 159 Mo. 322; Anderson v. Gaines, 156 Mo. 664; Estes v. Shoe Co., 155 Mo. 577. (10) Defendants are bound by the allegations of their answer. Oglesby v. Mo. Pac. Ry. Co., 150 Mo. 137; Knoop v. Kelsey, 102 Mo. 291; Weil v. Posten, 77 Mo. 284; Bruce v. Sims, 34 Mo. 246. (11) An assignment of a judgment to one not a party thereto does not extinguish the judgment. Not even where the assignee is a surety for the judgment debtor. 23 Cyc. 1475; Bardon v. Savage, 1 Mo. 560; Bradley v. Heffernan, 156 Mo. 653; Prather v. Hairgrove, 214 Mo. 142; Thompson v. Longan, 42 Mo.App. 146; Marshall v. Meyer, 96 Mo.App. 643; Van Hoose v. Machinery, 169 Mo.App. 54. (12) The liability of stockholders to corporate creditors does not make the stockholders sureties for each other. Guerney v. Moore, 131 Mo. 650. (13) The assignee of the subject-matter of a pending suit gets all the rights of his assignor. R. S. 1909, sec. 1924; United Shoe Mach. Co. v. Ramlose, 210 Mo. 631; Hendricks v. Callaway, 211 Mo. 536; Van Syckel v. Beam, 110 Mo. 589; Craig v. Zimmerman, 87 Mo. 475; Langford v. Varner, 65 Mo.App. 370; Bank v. Stanley, 46 Mo.App. 441; Craig's Appeal, 92 Mo. 396. (14) The judgment against the delinquent stockholder should be for the amount due on his stock with interest from institution of suit. Millisack v. Moore, 76 Mo.App. 528.
Henry Kortjohn, Jr. for respondents.
(1) Stockholders who have knowledge and participate in the issuance of stock upon payment of less than its par value cannot afterwards complain of the transaction either in their own behalf as stockholders or creditors. Richard Halon Millinery Co. v. Miss. Valley Trust Co., 251 Mo. 587; Meyer v. Mining & Milling Co., 192 Mo. 162, 191; Woolfolk v. January, 131 Mo. 620; Berry v. Rood, 168 Mo. 333; Coleman v. Hagey, 252 Mo. 146; Biggs v. Westen, 248 Mo. 345. (2) A creditor of a corporation, who becomes such with knowledge that its stock was neither paid nor to be paid, but was issued merely as a bonus for the subscription and payment of other stock, cannot enforce his claim against the corporation by compelling its shareholders to pay to the corporation, its trustee or other representative, any portion of the stock so donated. Meyer v. Mining & Milling Co., 192 Mo. 162; Trust Company v. McMillan, 188 Mo. 567; Shields v. Hobart, 172 Mo. 491; Berry v. Rood, 168 Mo. 316; Woolfolk v. January, 131 Mo. 637; Bonet Construction Co. v. Central Amusement Co., 153 Mo.App. 195. (3) The defendants in their answer set forth all of the facts and their belief that under the facts they were not stockholders, and, further, by way of cross-bill, that if the court found them to be stockholders it issue summons for the other stockholders who were not before the court, and the defendants prayed the court that all in the same status be forced to contribution. There was no special demurrer or motion of any sort filed against this pleading before the trial. Any inconsistency in the pleading, if there be such, is therefore waived. Hendricks v. Galloway, 211 Mo. 536; State ex rel. Bristol v. Walbridge, 69 Mo. 657. (4) This is an equity proceeding, and if under the law contribution ought to be had among the stockholders a court of equity will not relax its grasp upon the res until it shall have avoided a multiplicity of suits by doing full, adequate and complete justice between the parties. Real Estate Savings Institution v. Collonius, 63 Mo. 295. (5) All of the persons who subscribed for second mortgage bonds and received bonus stock, the way the present plaintiffs and the defendants did, are in the same status. As to these persons the judgment of the original plaintiffs is satisfied, although never satisfied of record. If there be no claim on account of the purchase of the judgment, it is only through the doctrine of contribution, which doctrine is the result of general equity, based on the ground of equality of burden and benefit. Van Petton v. Richardson, 68 Mo. 379. (6) The defendant's amended answer pleads equitable set off, and asks for recoupment against the assignees of the judgment, who are now the real parties plaintiff, represented by the nominal plaintiffs. This is a proper counterclaim in equity. Grand Lodge of Masons v. Knox, 20 Mo. 435, 436; Trust and Banking Co. v. Dierks Lumber Co., 133 Mo.App. 39. (7) After the assignment of the judgment by plaintiffs and the payment to them of $ 77,761.36 by the fellows stockholders of these defendants, the judgment creditor was satisfied, and as to him the judgment was paid. If the defendants, fellow stockholders as assignees, had any legal right thereafter to continue the cause of action, it was only for contribution against these defendants. This, even if they chose to continue it in the original plaintiff's name. Trust & Banking Co. v. Dierks Lumber Co., 133 Mo.App. 39. (8) Under our statute, it is the assignee who may have his name substituted as plaintiff. The original plaintiff has no further interest in the suit. The assignee is the plaintiff after assignment, whether he has his name substituted or not and any equity against him may be set up. R. S. 1909, sec. 1924; R. S. 1899, sec. 764.
OPINION
In Banc
The petition alleges that plaintiffs recovered judgment against the Parkview Realty & Improvement Company on July 8, 1912, for $ 117,303.35. This judgment was the consummation of litigation between said parties, heard twice on appeal in this court (241 Mo. 112; 255 Mo. 76).
The petition further states that returns nulla bona were made on two executions under said judgment; that the corporate defendant in said judgment is wholly insolvent, except the amount due to it from subscribers to its stock who have obtained the same without payment therefor The plan of the incorporation of the company is then set out, showing that it gave to each purchaser of its bonds a certain proportion of common stock as a bonus; that its whole capitalization was based upon the taking over of said real estate, heavily incumbered, at a fictitious valuation over and above what was paid for it by the purchasing agents; that this device of the corporation was carried out by the issuance of $ 5,500,000, par value, of shares paid for by real estate mortgaged for $ 3,500,000; that said mortgage represented the funds used in the acquisition of the land and the extinguishment of all prior incumbrances thereon.
The petition further alleges that the defendants in this case were allotted shares of stock for which they owed the corporation, in the aggregate, $ 52,500, and for which they paid nothing. Plaintiffs prayed for an accounting by defendants and the application of this amount to the payment of their judgment and costs.
Defendants answered by a general denial and that plaintiffs had knowledge of the method of capitalization of the corporation that plaintiffs themselves had purchased a bond of said corporation and knew its capital stock had not been paid in money; that plaintiffs had brought six suits to enforce their judgment, when one would have been sufficient, and had not made necessary parties to the present action; that if defendants are held liable by the court, then others similarly situated are liable and should be made parties; that plaintiffs have no longer any personal interest in said suit, but are representing a...
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