South Missouri Pine Lumber Co. v. Crommer

• Decision Date: 28 March 1907
• Citation: 101 S.W. 22,202 Mo. 504
• Parties: SOUTH MISSOURI PINE LUMBER CO. v. CROMMER et al.
• Court: Missouri Supreme Court

101 S.W. 22

202 Mo. 504

SOUTH MISSOURI PINE LUMBER CO. v. CROMMER et al.

Supreme Court of Missouri, Division No. 1.

March 28, 1907.

1. CORPORATIONS — PROMOTERS — SUFFICIENCY OF EVIDENCE.

Evidence in an action to cancel notes given for land sold to a corporation, and for the difference between the value of the property contracted for and of that actually received, examined, and held insufficient to prove that the vendor and the agent negotiating the sale were promoters of the corporation.

2. SAME — CONSPIRACY TO DEFRAUD CORPORATION — SUFFICIENCY OF EVIDENCE.

Evidence examined, and held insufficient to prove that the vendor and the agent negotiating the sale were parties to a conspiracy to defraud the corporation by selling the land to it at a price in excess of that at which it was purchased.

Appeal from St. Louis Circuit Court; Jas. R. Kinealy, Judge.

Action by the South Missouri Pine Lumber Company against William Crommer and others. From a judgment for defendants, plaintiff appeals. Affirmed.

Plaintiff, the South Missouri Pine Lumber Company, is a Missouri corporation, organized on March 24, 1900, whose certificate of organization was issued by the Secretary of State March 26, 1900. Plaintiff was organized with a capital stock of $50,000, divided into 500 shares of $100 each. Of these shares A. J. Haus subscribed 169, E. P. Ewart 141, W. F. Maxwell 95, and E. C. Hartwig 95. Ewart, who is defendant herein, was an experienced lumberman, formerly of Topeka, Kan., and later of St. Joseph, Mo. A. J. Haus, who is no party to the action, was an experienced lumberman of St. Joseph, Mo. Maxwell and Hartwig, stockholders in the company with Ewart and Haus, were bankers, without experience in or knowledge of the lumber business. The defendants in this case are E. P. Ewart, an original stockholder in plaintiff company, but not such at time of suit, S. E. Newhouse, William Crommer, William F. Crommer, and S. J. Malugen. From the petition and from the evidence it appears: That the two Crommers owned a large tract of land in south Missouri upon which there was saw timber of different kinds and character. They likewise owned sawmill plants situated upon portions of their property. The Crommers were and had been in hard straits financially. At one time, prior to the transactions involved in this case, they had, through the instrumentality of S. E. Newhouse, of St. Louis, procured a loan of $3,000 upon this property, from the Wesleyan College, of Warrenton, Mo. That, still being in hard straits financially, they placed their property upon the market with defendant S. E. Newhouse, authorizing said Newhouse to sell said property for $21,000, and agreeing to pay him, out of the $21,000, the sum of $500, and further agreeing with him that whatever he got over and above $21,000 he should receive as his commission, in addition to the $500 hereinabove mentioned. It seems that, with this proposition upon his hands, Newhouse, through one Martin of Topeka, Kan., and Brewster of St. Joseph, Mo., interested Haus and Ewart of St. Joseph, and they in turn interested Maxwell and Hartwig.

From the start it appears that Maxwell and Hartwig were in favor of organizing a corporation to take care of the Crommer property, or whatever property might be bought. Maxwell would not go in unless they incorporated. So far as the evidence shows, neither Newhouse nor the Crommers knew anything about these first discussions of organizing and incorporating the plaintiff company. Prior to the organization of the company it was agreed between Haus, Ewart, Maxwell, and Hartwig, the prospective incorporators, that Haus and Ewart should proceed to south Missouri, and examine the Crommer plant and lands, and negotiate for the purchase of same. Accordingly they left St. Joseph for that purpose, with the knowledge of Maxwell and Hartwig. But before leaving they had an understanding with Maxwell and Hartwig that they and each of them had real estate which they would like to trade in on the deal in lieu of a cash contribution for their stock in said proposed company. Haus and Ewart went to Elsinore, where the Crommer lumber plant was situated, and were there met by defendant Newhouse, the agent of the Crommers, as well as by the Crommers themselves, together with one Kirkland, who was the timberman for the Crommers. Under the guidance of Kirkland, Haus and Ewart inspected a portion of the timber lands then offered for sale by the Crommers, and were asked, especially by young Crommer, to inspect it all. After this inspection, and on March 15, 1900, the parties entered into the following contract:

"Elsinore, Mo., March 15, 1900.

"It is agreed this day, by and between Wm. and W. F. Crommer, of Elsinore, Mo., parties of the first part, and A. J. Haus, E. P. Ewart, W. F. Maxwell, and C. E. Hartwig, of St. Joseph, Mo., parties of the second part: That the parties of the first part, for and in consideration of fifty ($50.00) dollars in hand paid, and a further consideration of four hundred and fifty ($450.00) dollars to be paid March 19, 1900, and four thousand five hundred ($4,500.00) dollars to be paid on the delivery of the deeds to said property hereafter described by parties of the first part to said parties of the second part, and sixteen thousand two hundred and fifty ($16,250.00) dollars in real estate, located in St. Joseph, Mo., and Topeka, Kan., and accepted by S. E. Newhouse, of St. Louis, Mo., agent for the parties of the first part, and by assuming a certain deed of trust for three thousand ($3,000.00) dollars, now on said lands, and property deeded by said parties of first part and due in three years from January, 1900, and payable to the Wesleyan College of Warrenton, Missouri, bearing interest at the rate of 7 per cent., payable annually, and by a deed of trust of thirteen thousand ($13,000.00) dollars secured on the property deeded by the parties of the first part and payable in thirteen (13) each one thousand ($1,000.00) dollar notes, and due in one (1), two (2), four (4), five (5), six (6), seven (7), eight (8), nine (9), ten (10), eleven (11), twelve (12), thirteen (13), and fourteen (14) months, respectively, with interest at 6 per cent. from date thereof until paid, agree to deed by special warranty deed to parties of the second part seven thousand five hundred (7,500) acres of land located in Butler, Carter, and Wayne counties, Missouri, to wit: Five thousand acres of virgin timber land located as follows: [Description omitted.] All in township 26, range 4 E., Butler county, Missouri, free and clear of any and all debt, except a certain deed of trust for three thousand ($3,000.00) dollars, above described, and which parties of the second part assume and agree to pay, and the taxes for 1900. Also twenty-two acres of land located in the town of Elsinore, Mo., together with all improvements thereon, and all of the town lots owned by parties of the first part in the town of Elsinore, Mo., excepting lots Nos. 1, 2, 3, 4, 5, 6, 7, 8, and the lot upon which Horren store building stands, together with all improvements thereon. The above twenty-two acres including the store building, warehouses, houses of all kinds, and sawmill and planing mill and all barns, in fact, all improvements thereon, including the machinery in the mills, office fixtures — and furnish bill of sale to stock of goods now in said store building and warehouses, and teams consisting of seventeen mules, one horse and two horses, together with all harness, wagons, log chains, cant hooks, skidding tongs, in fact all tools, etc., owned by said parties of the first part at Elsinore, Mo. Also a sawmill and planer located near Orchard Switch, and owned by the said parties of the first part and located in section 24, township 27, range 3 E., in Wayne county, Mo., all property to be free and clear from debt, excepting the three thousand ($3,000.00) dollar deed of trust as above mentioned, and all taxes for the year 1900 and thereafter, which parties of the second part assume and agree to pay. It is further agreed between said parties that this sale be consummated on or before April 2, 1900, by the said parties of the second part paying over said $4,500.00 and executing their certain deed of trust as set out above, and executing their certain deeds to real estate as per agreement above, and said parties of the first part delivering their deed to the 7,500 acres and other property above set out at the office of the parties of the first part at Elsinore, Mo.; and it is further agreed that parties of the first part will stop cutting timber on the said lands herein mentioned on the payment of four hundred and fifty ($450.00) dollars next Monday, March 19, 1900, and to turn all mills and other property over to said parties of the second part April 2, 1900, excepting the planing mill, which parties of the first part reserve the right to use free of cost, if needed by them, for fifteen days, or until April 15, 1900. It is understood that the timber cut and now in the yard is not sold under this agreement, and parties of the first part have the right to remove same, but not obstruct parties of the second part.

                  "[Signed]        W. F. Maxwell
                                  "E. C. Hartwig
                                         "By E. P. Ewart
                                  "Wm. Crommer
                                  "W. F. Crommer, Jr
                                  "A. J. Haus.
                                  "E. P. Ewart."
                

About the time the contract above quoted was signed, Haus and Ewart wrote and telegraphed Maxwell to come down and inspect the property. Maxwell was there on March 19th, saw what purported to be a portion of the property, accepted the contract, and paid the $450 mentioned in the contract. He then returned to St. Joseph, where later, on the dates hereinabove mentioned, plaintiff corporation was organized and chartered. Maxwell and Hartwig each put in $5,000 in cash. On April 2, 1900, deed was made by the Crommers to the corporation, at which...