St. Louis Carriage Mfg. Co. v. Hilbert

• Decision Date: 18 January 1887
• Parties: ST. LOUIS CARRIAGE MANUFACTURING COMPANY, Appellant, v. ROBERT HILBERT, Respondent.
• Court: Missouri Court of Appeals

24 Mo.App. 338

ST. LOUIS CARRIAGE MANUFACTURING COMPANY, Appellant,

v.ROBERT HILBERT, Respondent.

St. Louis Court of Appeals, Missouri.

Jan. 18, 1887.

APPEAL from the St. Louis Circuit Court, GEORGE W. LUBKE, Judge.

Reversed and remanded.W. B. THOMPSON, for the appellant: A servant or agent can not pay his debt with his master's or principal's property. Bertholf v. Quinlan, 68 Ill. 297; Story on Agency, sects. 413, 429, 430; Buckwalter v. Craig, 55 Mo. 71; Greenwood v. Burns, 50 Mo. 52; Wharton on Agents, 210; Flannigan v. Alexander, 50, 51; Wheeler & Wilson v. Givan, 65 Mo. 89. A corporation can not reduce its stock by exchanging for it its property. St. Louis Co. v. Robinson, 82 Mo. 18; Gill v. Balls, 72 Mo. --; Railroad v. Allerton, 18 Wall. 233; Corbin v. Greenlesse, 38 Ohio St. 275; Johnson v. Laflin, 6 C. L. J. 124.

B. SCHNURMACHER, for the respondent: In the absence of a statutory prohibition, the officers of a corporation may invest its funds in the purchase of its own stock; or may take the stock in payment of debts due it from a stockholder; or may take it in exchange for other property owned by the corporation. Such acts are not ultra vires. Taylor v. Exporting Co., 6 Ohio, 176; Bank v. Bruce, 17 N. Y. 507; Hartridge v. Rockwell, Charlton's Reports, 260; Exparte Holmes, 5 Cowan, 426. The surrey having been sold to the defendant by the superintendent of the plaintiff, for part stock and part money, with the tacit consent of the vice-president and the secretary, who were present at the time: even if the act of these officers was not binding on the corporation, because objected to by the president, the corporation could not repudiate their acts and re-take the surrey without first offering to return the defendant his stock and money. Schultz v. Christman, 6 Mo. App. 338; Cahn v. Reid, 18 Mo. App. 115.

ROMBAUER, J., delivered the opinion of the court.

The plaintiff is a manufacturing company, incorporated under the general laws of this state, with a capital stock of five thousand dollars, divided into fifty shares of one hundred dollars par value. March 21, 1885, it issued a certificate for two full paid shares, to one Henry Appel, its superintendent, who immediately thereafter indorsed the same in blank and delivered them to the defendant Hilbert, as security for a loan of two hundred dollars, then made by Appel of Hilbert.

Matters remained in this condition until the twenty-seventh day of July, 1885, except that Appel in the meantime had paid to the defendant some money on account of interest on the loan, placed by the testimony at between ten and twenty-five dollars.

July 27, 1885, the defendant, in pursuance of a previous arrangement with Appel, called at the plaintiff's storerooms, and bought from Appel, who purported to act for the plaintiff, a surrey carriage of the value of two hundred and twenty-five dollars, and paid for said surrey by turning over to Appel the two shares of stock held as security for Appel's debt, and twenty-five dollars in cash. Thereupon the defendant removed said surrey from the plaintiff's storerooms, and made immediate efforts to re-sell it, but had not done so prior to July 30, 1885, when the present action was instituted by the plaintiff corporation, to recover the surrey by replevin.

Appel, upon selling the surrey, caused the plaintiff's book-keeper to charge him with two hundred and twenty-five dollars, upon the plaintiff's books, and afterwards, and prior to the institution of the suit, he offered to turn over to the plaintiff's president the two shares of stock, but not the money, which, in the meanwhile, he had spent.

It was also in evidence that prior to the institution of the suit, the plaintiff's president demanded of Appel, and of the defendant, payment for this surrey in cash, and that the two shares of stock and the twenty-five dollars in cash never came into possession of the company, unless Appel's possession amounted to such possession.

This was substantially all the testimony. The jury found a verdict for the defendant, and the complaint of the appellant is, that the court gave erroneous instructions to the jury.

Two propositions of law are presented by these instructions: (1) Whether in order to avoid the sale, on the ground that it was made by the agent Appel to pay his private debt, it was incumbent upon the plaintiff to show that such debt was the sole consideration of the sale; and (2), assuming that the sale was made on behalf of the company, and valid in other respects, whether it became invalidated by the fact, that its consideration was stock of the corporation, which it received in exchange of its wares.

On the first proposition the plaintiff requested the court to charge the jury as follows:

“The court instructs the jury that if they find from the evidence that the defendant and Henry Appel, an employe of the plaintiff, took the surrey in controversy from the premises of the plaintiff for the purpose of paying the private debt of Appel to the defendant, and without the knowledge or consent of the plaintiff, then the jury will find for the plaintiff.”

“The jury is instructed that a corporation is bound by the acts of its agents duly authorized, and if the jury find from the evidence that the defendant knew that Henry Appel had no authority to sell or deliver the surrey in question, belonging to said corporation, for the payment of an indebtedness due and owing by said Appel to the defendant, then the jury will find for the plaintiff.”

The court refused to give these instructions, but gave them in a modified form by inserting in the first before the...