St. Louis, K. & S. R. Co. v. Wear

CourtUnited States State Supreme Court of Missouri
Citation36 S.W. 357,135 Mo. 230
Decision Date15 June 1896
PartiesST. LOUIS, K. & S. R. CO. et al. v. WEAR, Judge.<SMALL><SUP>1</SUP></SMALL>

4. On an ex parte application, without notice, an order was granted in vacation appointing a receiver for a going corporation, and providing that the corporation should appear at the next term of court, three months distant, and show cause why the receivership should not be continued. Held, that the order was in excess of the limitation of the power of appointment without notice, the final hearing not having been fixed within a reasonable time.

5. The proceedings being ex parte, the fact that no objection was made to the jurisdiction at the time the order was granted is not a bar to an application for a writ of prohibition.

6. A petition for the appointment of a receiver for a corporation showed that the corporate property had been transferred to an alleged new company, but such new company was not made a party to the petition. A receiver having been appointed, the officers having control of the property refused to surrender it, whereupon the court granted a writ directing the sheriff to place the receiver in possession, and to arrest for contempt the persons refusing to surrender possession. Held that, the new corporation and its officers not being parties to the proceedings, the court was without jurisdiction to grant the writ.

7. A refusal to obey an order of court granted without jurisdiction does not render the person so refusing liable for contempt.

8. Under Const. 1875, art. 12, § 17, providing that the manager of a railroad corporation shall not in any way control, or act as officer of, another railroad corporation operating a parallel or competing line, the president of a railroad company cannot act as receiver for a company operating a parallel or competing line. Sherwood, J., dissenting.

In banc. Application by the St. Louis, Kennett & Southern Railway Company and others for a writ of prohibition against Judge Wear, judge of the circuit court. Writ granted.

The proceeding before Judge Wear was upon a petition in which Mr. Kerfoot was named as plaintiff, and the "St. Louis, Kennett & Southern Railroad Company, a corporation, and Louis Houck, E. F. Blomeyer, L. B. Houck, Theophilus Besel, and E. S. McCarty, as directors in said railroad company, and the Pemiscot Railroad Company, a corporation, and Robert G. Ranney, Leo Doyle Robert T. Giboney, and John R. Jeannin, directors in said railroad company, and Louis Houck," defendants. The substance of that petition (according to the statement of the counsel for defendants in the supreme court, which statement is regarded as sufficiently full for the purposes of the prohibition case) is as follows:

"On the 17th of March, 1890, there was organized under the laws of this state the St. Louis, Kennett & Southern Railroad Company, with a capital of $180,000, divided into 1,800 shares of the par value of $100 each, designed to be constructed and operated from Campbell to Kennett, Dunklin county, Missouri, — a distance of 19 miles. Of this stock, A. J. Kerfoot held, and still holds, 108 shares, and E. S. McCarty, Harry H. Ferguson, Melvin L. Gray, and George Denison, respectively, held 108 shares. Prior to the ____ day of July, 1891, all the shares of the other stockholders in said company were purchased by said A. J. Kerfoot and E. S. McCarty. On July 8, 1891, said Kerfoot and McCarty entered into a contract with relator Louis Houck, by the terms of which said Houck agreed to transfer to said Kerfoot and McCarty ten interest-bearing extension bonds of the Cape Girardeau Southwestern Railway Company, each for $1,000, which were represented to be worth 81/100 of their face value, and also to organize a construction company for the purpose of making a connection between the said railroads at the town of Campbell, said connection being of the approximated length of 30 miles. Of the stock of said construction company, said Kerfoot and McCarty were to receive 49 per cent., and on the construction of said connection, said Kerfoot and McCarty were to be superintendent and general manager, respectively, at salaries of not less than $175 per month. By the terms of this contract, one-half of the real estate belonging to said St. Louis, Kennett & Southern Railway Company at Kennett was to be transferred to said Kerfoot and McCarty. In consideration of the foregoing, said Kerfoot and McCarty were to transfer to said Houck 300 shares of their stock in said railroad company, on the completion of the contract aforesaid. After the above terms of said contract had been agreed on and set forth therein, additional stipulations were inserted by said Houck in said contract, without the knowledge and consent of said Kerfoot and McCarty, to the effect that in no event was said Houck to be personally responsible for the fulfillment of said contract, and that, if said contract should not be kept on his part, such failure should not affect in any wise the said contract, and that 1,360 additional full-paid shares of stock in said company should be issued to said Houck, and that the 240 shares of said Kerfoot and McCarty should be considered full paid. While the bonds above referred to were by said Houck transferred to said Kerfoot and McCarty, not only were they not of the value represented by said Houck, but of no value whatsoever; and while said construction company was organized, and certain certificates of its stock transferred to said Kerfoot and McCarty, the purpose of its organization — the construction of a connection between the aforesaid railroads — was not only never accomplished, but never attempted to be carried out, and said certificates are consequently of absolutely no value. Shortly after the transfer of the 300 shares of the stock of the St. Louis, Kennett & Southern Railroad Company by said Kerfoot and McCarty to said Houck on the faith of the performance of the terms of said contract by said Houck, said Houck held a meeting of the pretended shareholders holding shares in excess of those held by said Kerfoot and McCarty, — to whom no notice of said pretended meeting was ever given, or attempted to be given, and of which they had no knowledge or information, — whereat said pretended shareholders did attempt and pretend to issue to said Houck 1,360 additional shares of stock of said railroad company. This action of said pretended shareholders, respondent, Kerfoot, claims to be fraudulent, illegal, and void, against which he has protested, and now protests, and in affirmance of which he has done and will do nothing. By reason of the aforesaid facts, it is claimed that the consideration for the transfer of said stock to Houck has failed, and was only brought about by the false and fraudulent representations of said Houck, with the intent to cheat and defraud said Kerfoot and McCarty.

"It is also charged in said petition: That, having thus fraudulently obtained control of said railroad, said Houck and the other relators have mismanaged, and been guilty of gross negligence and misconduct in their trust capacity as directors, officers, etc., and fraudulently combined to cheat and defraud respondent, Kerfoot, and to render his shares of stock valueless, etc., together with those of other of the stockholders. That the other relators, as directors of said company, are under the influence and control of said relator Houck, and conform their actions to accomplish his fraudulent and illegal purposes, and to carry out his unlawful designs. That said Louis Houck is the principal shareholder in a company organized to construct a railroad through the counties of St. Genevieve and Perry, in the state of Missouri, which said road is located many miles from the St. Louis, Kennett & Southern, and that, being entirely without credit, said Houck has used in the construction of said road divers funds belonging to said St. Louis, Kennett & Southern Railroad Company, without any authority so to do from the stockholders and directors of said company, although with the pretended authority of said board of directors. That said Houck is also the principal stockholder in a certain railroad in process of construction through Scott county, Missouri, and in the construction of this road said Houck has illegally and fraudulently, in like manner and to like ends, appropriated the funds of said St. Louis, Kennett & Southern Railroad Company. That on or about February 15, 1892, the Pemiscot Railroad Company was organized, — and constructed during the year 1894, — of which said Houck was the real and substantial owner. That in the construction of this road said Houck wrongfully and...

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