Sherman v. Shaughnessy

• Decision Date: 31 May 1910
• Citation: 129 S.W. 245,148 Mo.App. 679
• Parties: MARGARET R. SHERMAN, Assignee of SIMPSON CATERING COMPANY, Appellant, v. MARTIN SHAUGHNESSY, Respondent
• Court: Missouri Court of Appeals

129 S.W. 245

148 Mo.App. 679

MARGARET R. SHERMAN, Assignee of SIMPSON CATERING COMPANY, Appellant, v. MARTIN SHAUGHNESSY, Respondent

Court of Appeals of Missouri, St. Louis

May 31, 1910

Appeal from St. Louis City Circuit Court.--Hon. J. Hugo Grimm Judge.

Judgment affirmed.

Roland M. Homer for appellant.

(1) The subscription contract entered into between the various subscribers was a valid contract. It was not unilateral. The promises of each subscriber to the other were sufficient consideration. These promises were made to each other for the benefit of the corporation. Railroad v. Crow, 137 Mo.App. 461; Business Men's Association v Williams, 137 Mo.App. 575; Hill v. Mining Co., 124 Mo. 166; Glover v. Henderson, 120 Mo. 367; Lewis v. Ins. Company, 61 Mo. 538; Hotel Co. v Smith, 13 Mo.App. 7; Haskell v. Sells, 14 Mo.App. 91; Haskell v. Worthington, 94 Mo. 560; Hotel Co. v. Wright, 73 Mo.App. 240. (2) It was not necessary to allege or prove a tender of the stock or demand for the money. Champion v. Rischert, 74 Mo.App. 542; Haskell v. Sells, 14 Mo.App. 91; Williams v. Taylor, 120 N.Y. 244; Harwood v. Diener, 41 Mo.App. 51; McManus v. Gregory, 16 Mo.App. 375; Soap Wks. v. Sayers, 55 Mo.App. 15; Railroad v. Crow, 137 Mo.App. 461; Business Men's Association v. Williams, 137 Mo.App. 575; Coppage v. Gregg, 127 Ind. 363; Bank v. Benoist, 10 Mo. 525. (3) The trial court erred in permitting the introduction of the conversation between the defendant and the president of the catering company for the purpose of varying the terms of the contract sued upon, and further erred in holding that the result of such conversation was a release of defendant's liability. Ins. Company v. Wolfson, 124 Mo.App. 291; Koons v. Car Co., 203 Mo. 255; Ollesheiner v. Mfg. Co., 44 Mo.App. 172; Haskell v. Sells, 14 Mo.App. 101; Schaeffer v. Insurance Co., 46 Mo. 248; Hotel Co. v. Wright, 73 Mo.App. 240; Haskell v. Worthington, 94 Mo. 560; La Grange v. Mays, 29 Mo. 64; Pickering v. Templeton, 2 Mo.App. 424; Railroad v. Crow, 137 Mo.App. 468.

R. M. Nichols for respondent.

(1) This is an action at law, tried before the court, without instructions, and without raising any question of law during the progress of the trial, and is not reviewable by this court. Altum v. Arnold, 27 Mo. 264; Easley v. Elliott, 43 Mo. 289; Wilson v. Railroad, 46 Mo. 36; Weilandy v. Lemuel, 47 Mo. 322; Jordan v. Davis, 172 Mo. 608; Bozarth v. Legion of Honor, 93 Mo.App. 564. (2) Under the allegations of the petition and the proof the suit is on a contract of sale of stock of a corporation already organized, as distinguished from a contract of formative subscription to the capital stock of the corporation to be organized. Morawetz on Corps. (2 Ed.), secs. 46, 61; Clark v. Imp. Co., 57 Ind. 138; Weiss v. Iron Co., 58 Pa. St. 295; Thrasher v. Railroad, 25 Ill. 393; St. Paul, etc., v. Robbins, 23 Minn. 44; Railroad v. Curtis, 80 N.Y. 219; Railroad v. Little, 14 Bush. 429; Railroad v. Hambleton, 77 Md. 341; Wood v. Jefferson, 57 Minn. 458. (3) Being a contract of sale no title passed to Mr. Shaughnessy and he did not become a stockholder until the stock was actually issued and transferred, or delivered or tendered to him. Delivery of the certificates and payment of the amount were intended to be concurrent acts, and upon failure to carry out the contract by delivery by plaintiff's assignor, plaintiff cannot recover the purchase price. The petition in this view of the case does not state a cause of action, because it does not aver a transfer of the stock, nor a delivery or attempt to deliver the stock to the defendant. The testimony conclusively shows that no issue of stock, delivery or attempt to deliver or tender of the same to the defendant was ever made. See authorities under point 2, and in addition. White v. Salisbury, 33 Mo. 150; Fine v. Hornsby, 2 Mo.App. 61; Stockwell v. Merc. Co., 9 Mo.App. 133; Boatmen's Inst. & T. Co. v. Abel, 48 Mo. 136; Greene v. Iron Co., 88 F. 203. (4) The contract, not being a subscription to capital stock of a corporation to be organized, but being a contract for the purchase of capital stock in a corporation already organized, the defense of fraud or rescission is as applicable as in any other ordinary contract. Wells v. Jones, 41 Mo.App. 1; Haskell v. Worthington, 94 Mo. 560; Ramsey v. Mfg. Co., 116 Mo. 313; Hess v. Draffen, 90 Mo.App. 580; Tinker v. Kier, 195 Mo. 183. (5) It was a fraud upon Mr. Shaughnessy for the president of the corporation to lead him into the belief that the corporation would do the thing specified in the proposed contract in order to get his signature to the contract for the sale of the stock, and after she had got the same, refuse to enter into the written contract. The evidence of fraud was admissible and did not contradict or vary the written contract. Wells v. Jones, 41 Mo.App. 1; Haskell v. Worthington, 49 Mo. 560.

OPINION

GOODE, J.

The Simpson Catering Company was a Missouri corporation, incorporated February 19, 1904. The original subscribers for the capital stock of $ 50,000 were Corinne Simpson, William C. Morgan and S. J. Hoge, the first of whom subscribed for 498 shares and the other two for one share each. Mrs. Simpson had obtained a concession from the Louisiana Purchase Exposition Company and this concession was transferred by her to the incorporated company as full payment of its capital stock. She was named as president of the company, William C. Morgan as vice-president and S. J. Hoge, secretary, and those three persons were named as the first board of directors. At a meeting of the company held February 20, 1904, the stockholders voted to increase the board of directors to five, and Jean P. Baerveldt was elected director, but who the fifth was is not shown. After the election of Baerveldt, Morgan resigned as vice-president and Baerveldt was chosen to fill that office. March 24th a motion was adopted, reciting the previous resolution by which the directors were increased from three to five, and at the same time Hoge resigned as director. This left as officers Corinne Simpson, president, Jean T. Baerveldt, vice-president, Wm. C. Morgan as secretary, and S. J. Hoge as treasurer, with Mrs. Simpson, Baerveldt and Morgan as directors. At the meeting February 20th, when the stockholders were the persons stated, it was voted the capital stock of the company should be paid in full by the transfer of all rights of Mrs. Simpson, and that she should transfer $ 25,000 of the stock subscribed by her to the treasury of the company, to "be set aside as treasury stock to be sold for the purpose of raising funds to build a restaurant and equipping the same, said stock to be sold at par." Later Mrs. Simpson solicited persons to subscribe for or purchase shares of the treasury stock and among others, solicited defendant. The persons solicited were asked to sign the following paper, and the names of those who signed were shown at the foot of it.

"St. Louis, Mo., Feb. 18, 1904.

"We the undersigned, subscribe and agree to pay for in cash, for the number of shares of the capital stock of the Simpson Catering Company, of St. Louis, Missouri, set opposite our names. Money to be deposited with the Commonwealth Trust Company, of St. Louis, Missouri, as bankers to the credit of the Simpson Catering Company, upon the condition that all the received money is to be used for the general running expenses and the building of buildings, improvements and equipment, according to the plans and specifications and drawings made by the architect, and that upon delivery of the check or cash to the company or the trust company, a certificate of stock to the amount is to be delivered to the purchaser of the stock, of the par value $ 100 each, paid for at par.

"The concession is granted and is assigned to the Catering Company by Mrs. Corinne Simpson, and the bond and all stipulations have been complied with to the Fair Company.

"The building shall have a seating capacity of 1,000 persons, and shall be conducted as an eating house, restaurant, buffet and general refreshment place, during the term of the St. Louis World's Fair Exposition is in progress.

"The capital stock of the company is fifty thousand dollars, par value, one hundred dollars each, and fifteen thousand dollars of this stock is to be sold at par, and ten thousand dollars will be left in the treasury for raising further funds if necessary.

"It is agreed by the board of directors that the subscriber of this fifteen thousand dollars will be paid his money back first before any dividends are paid on the promoter's stock, and that there is a sinking fund set aside for the actual daily rental expenses of the cost of the building to not be used for any other purposes until the fifteen thousand is paid back to the holders of the stock, who advanced the money and then the profits derived from the earnings shall be paid in weekly dividends for the whole stock.

"The board of directors shall meet once a week and declare such dividends as may be necessary from the profits derived.

"Name.

Residence.

Shares

"M. Shaughnessy & Co.

10 shares

The Simpson Catering Company fell into insolvency and August 6 1904, Corinne Simpson, the president, by authority of the board of directors, executed a deed of assignment to plaintiff Mary B. Sherman, conveying to her all the assets for the benefit of creditors of the company. Plaintiff instituted this action as assignee, to recover from defendant, Martin Shaughnessy, $ 1000, alleged to be owed by him for ten shares of stock subscribed for or agreed by him to be purchased, under the name of M. Shaughnessy & Co., the style under which he did business. It is important to state the dates when the so-called subscription paper was signed. The first two...