Shawhan v. Shawhan Distillery Company
| Decision Date | 29 December 1916 |
| Citation | 197 S.W. 369,195 Mo.App. 445 |
| Parties | MARY F. SHAWHAN, Executrix of the Last Will and Testament of GEORGE H. SHAWHAN, Deceased, Respondent, v. SHAWHAN DISTILLERY COMPANY, a Corporation, Appellant |
| Court | Kansas Court of Appeals |
Rehearing Denied 195 Mo.App. 445 at 451.
Appeal from Jackson Circuit Court.--Hon. Thos. J. Seehorn, Judge.
REVERSED AND REMANDED.
Judgment reversed and cause remanded.
Warner Dean, McLeod & Langworthy for appellant.
George W. Day and U. S. Weary for respondent.
Plaintiff, as executrix of the last will and testament of her husband, George H. Shawhan, deceased, began this suit February 16, 1914, against defendant, the Shawhan Distillery Company, a Missouri corporation, upon a promissory note dated January 31, 1912, due two years after date for $ 5000, with interest from date and payable to the order of the said Shawhan. The note contains a collateral agreement which recites the pledge of "fifty shares of Shawhan stock" (meaning defendant's capital stock) as collateral security, without stating the numbers of the certificates or other means of precise identification. The answer is not verified and, therefore, the execution of the note is not in issue. The principal defense is no consideration and defendant alleges that the only consideration was the sale by Shawhan to defendant of the fifty shares of stock which the note recites were pledged as collateral. These shares were of the par value of $ 100 each and were evidenced, it is alleged, by five certificates numbered 126 to 130 inclusive, for twenty shares each which were issued to Shawhan by defendant January 25, 1906. The reply is a general denial. At the close of the evidence, the court submitted to the jury the issue of whether or not the note was given by defendant "in purchase of its own stock from George H. Shawhan" and directed a verdict for defendant if the jury found that such purchase was the consideration. The jury decided this issue for plaintiff, judgment was rendered on the verdict and defendant appealed.
The position of counsel for defendant is that the evidence shows indisputably that the note was given either in purchase of fifty shares of defendant's capital stock or in discharge and satisfaction of a personal obligation of one Garcelon to purchase such stock and, therefore, was without any valid consideration and its execution was ultra vires. Counsel for plaintiff argue that under the pleadings (the answer not being under oath) the only defense properly raised was that of no consideration; that on such issue the introduction of the note in evidence made a prima-facie case; that the burden devolved on defendant to prove the want of a valid consideration, and that since the evidentiary defense rests in part upon the testimony of witnesses, the questions of their credibility and the weight to be accorded their testimony are issues properly referable to the jury, and the trial court was precluded from declaring the defense established in law.
The facts disclosed by the documentary evidence in the record are as follows: The Shawhan Distillery Company was incorporated in 1902, with a capital stock of $ 50,000 divided into 5000 shares of the par value of $ 10 each. Shawhan was an incorporator and holder of 500 shares of stock and a director and president of the corporation. In 1904, the capital stock was increased to $ 250,000 and the par value of shares raised to $ 100. Shawhan subscribed for $ 15,000 of the new stock surrendered his old certificates and received ten new certificates for twenty shares each numbered 126 to 135 inclusive. The minute book shows that he continued as president until January 10, 1911, but the inference is reasonable that he ceased to be the real executive head of the corporation on January 30, 1909, when he entered into a contract in writing with F. B. Garcelon, another stockholder, for the sale to Garcelon of all his holdings in the corporation. Under the terms of that contract Shawhan sold and indorsed certificates numbered 131 to 135 inclusive for $ 10,000 of stock and delivered them to defendant. They were then indorsed "void, transferred to F. B. Garcelon" and pasted to their stubs in defendant's stock book. As to the remainder of Shawhan's stock evidenced by certificates 126 to 130, the contract between him and Garcelon provided for the deposit of these certificates in escrow which the Commerce Trust Company of Kansas City, on the following terms: Within three years of the date of the contract Garcelon was to pay $ 10,000, with interest to Shawhan and receive the certificates in case certain stated laws against the liquor traffic in Missouri were not enacted. Further a contract provided that if the sale of all the stock was consummated, Shawhan would become bound not to engage in the business of distilling whiskey in Missouri within the next ten years, nor to manufacture or sell any whiskey known as Shawhan whiskey and would become bound to permit defendant to use his name in furtherance of its business interests. On the expiration of...
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