State ex rel. Cantley v. Tailoring Co.

• Decision Date: 19 February 1930
• Docket Number: No. 27178.,27178.
• Citation: 25 S.W.2d 98
• Parties: THE STATE EX REL. S.L. CANTLEY, Commissioner of Finance, Appellant, v. MEYER TAILORING COMPANY ET AL.
• Court: Missouri Supreme Court

25 S.W.2d 98

THE STATE EX REL. S.L. CANTLEY, Commissioner of Finance, Appellant, v. MEYER TAILORING COMPANY ET AL.

No. 27178.

Supreme Court of Missouri, Division Two.

February 19, 1930.

Appeal from Circuit Court of City of St. Louis. — Hon. Franklin Miller, Judge.

REVERSED AND REMANDED.

Stratton Shartel, Attorney-General, for the appellant; F.E. Williams of counsel.

(1) The petition states facts sufficient to constitute a cause of action. It was carefully drawn and followed the language of the Act of 1903 regulating co-operative companies (now included in Art. X, Chap. 90, R.S. 1919) which was attacked soon after its passage, but upheld by this court en Banc. State ex rel. v. Mercantile Co., 184 Mo. 160. (2) The petition stated sufficient facts to entitle the relator to the relief prayed. It pleaded specifically that defendants had failed to comply with the provisions of Art. X, Chap. 90, that they were unable to continue in business to the benefit and profit of their creditors and contract-holders and had refused for long periods of time after demand to pay anything on withdrawals, any one of which was sufficient ground for the appointment of the relator as receiver under Section 10244. (3) The relator had authority to bring the suit and be appointed receiver. He had all the powers in this respect that were originally conferred on the Supervisor of Building and Loan Associations by the Co-operative Act of 1903. The Act of 1921 creating the Department of Finance conferred upon him these powers. Laws 1921, p. 393, title, and sec. 4. (4) The petition shows that a receivership was authorized. (a) The petition pleads facts in the language of the Co-operative Companies Act and follows the various elements and provisions set out in this act. Secs. 10237-10245, R.S. 1919. (b) The petition alleges that defendants engaged in the issue of more than 3,000 contracts providing for the fulfilling of contracts from the accumulation of funds, etc., the maturing of contracts in an arbitrarily determined manner and the consideration in personal property greater than the amount paid in, etc., and collected $10 or more on each contract, and that these acts constitute doing business within the meaning of the Co-operative Companies Act. Sec. 10237, R.S. 1919. (c) The alleged acts of the defendant in failing and refusing after demands made therefor for long periods of time, to return sums or parts thereof paid by the contract-holders (when the contract-holders failed to pay the full thirty payments on the price of a suit of clothes) were violations of this act. Secs. 10240, 10241, R.S. 1919. (d) The alleged acts of the defendants in issuing more than 3,000 contracts, payable in thirty installments of $1.50 each and discounting some of these contracts according to the weather reports or at the will of defendants themselves, contained the elements of consideration, prize and chance and constituted a lottery within the meaning of the law. State v. Emerson, 1 S.W. (2d) 109; Constitution, Art. 14, sec. 10; Sec. 3562, R.S. 1919; State v. Shorts, 32 N.J.L. 398. (e) The acts of the defendants in failing to make the required deposit with the State Treasurer and in failing to file the State Treasurer's certificate, certified copy of by-laws, statement of plans for doing business, and to procure a certificate to do business show that said defendants were not authorized to do business under the co-operative companies act. Secs. 10238, 10239, R.S. 1919. (f) The alleged acts of the defendants in being unable and unwilling to continue business for the benefit of creditors and contract holders and in refusing for long periods of time to repay anything on forfeited contracts and in failing to comply with the provisions of Art. X, Chap. 90, gave ample grounds for the appointment of relator as receiver. Sec. 10244, R.S. 1919. (g) The petition also alleges that the business was being conducted in an illegal and unauthorized manner, that unless relief was granted the creditors and contract holders would have their investments lost and dissipated and that the State of Missouri and relator had no adequate remedy at law. (5) The demurrer of defendants alleging that plaintiff's petition does not state facts sufficient to constitute a cause of action or to entitle plaintiff to the relief prayed, or to any relief, admits the facts pleaded in said petition. Brewing Co. v. St. Louis, 187 Mo. 367; Birdsong v. Jones, 8 S.W. (2d) 98. (6) A demurrer on the ground that the petition does not state facts sufficient to constitute a cause of action is confined to that objection, and does not reach any defect, imperfection or uncertainty in the pleadings if a cause of action is stated. Eads v. Gains, 58 Mo. App. 586; Taylor v. Penquite, 35 Mo. App. 389; Cockerill v. Stafford, 102 Mo. 57; McAdam v. Scudder, 127 Mo. 345; Brewing Co. v. St. Louis, 187 Mo. 367.

Earl M. Pirkey for respondents.

(1) Article X of Chapter 90 is not intended to apply to ordinary mercantile business companies. (2) A demurrer does not admit conclusions of law nor the conclusions of the pleader. It admits only facts well pleaded. Harrison v. Tyler, 281 Mo. 395; State ex rel. Guaranty Co. v. Harty, 276 Mo. 593; Stephens v. Liverymen & Undertakers' Assn., 295 Mo. 604; State ex rel. Rabiste v. Southern, 300 Mo. 417.

WALKER, J.

The relator brought this action in the Circuit Court of City of St. Louis to enjoin the Meyer Tailoring Company from transacting in said city the business of issuing and selling contracts by which it obligated itself under the conditions set forth in the statement of facts, to give each holder of one of said contracts a suit of clothes. Certain individuals are joined in the petition as parties respondent who are not necessary to the determination of this action and hence are omitted.

The court, upon the filing of this petition, entered a temporary order enjoining the corporation from continuing to issue said certificates and appointed the relator as Commissioner of Finance of the State of Missouri to recover pendente lite the business assets and property of said respondent. The respondent thereupon filed a demurrer to the relator's petition alleging that the same did not state a cause of action. The demurrer was by the court sustained and from the judgment rendered thereon the relator has appealed.

The sufficiency of the petition is the determinative question in this case. It is alleged therein that the respondent is engaged in issuing contracts in the nature of certificates which provide for (1) the fulfilling of the contracts therein set forth, from the accumulation of funds arising from the contributions made by the holders of such contracts; (2) the maturing of such contracts in an arbitrarily determined order or manner; (3) and a consideration in personal property greater in value than the amount of such contracts together with the net earnings accrued and accumulated thereon.

That said corporation is transacting the business of issuing and selling said certificates or contracts payable in thirty weeks at the rate of $1.50 each week and is obligating itself at the expiration of said time to give each contract-holder a suit of clothes; but that under said contracts the holders thereof have no rights in the event of their failure to pay the full number of their installments to the return to them or any part thereof of the amounts thus paid and deposited with the corporation by them, contrary to the provisions of Sections 10240 and 10241, Revised Statutes 1919.

That said corporation in issuing to each contract-holder a contract or certificate whereby some of such holders may become entitled to have their contracts fully paid up at a time prior to the payment of the required thirty weekly installments; that at the time of making said contracts none of the parties know what contract holders will become entitled to have his or their contracts fully paid up; that the contract-holders during the lives of their contracts and prior to the selection or allocation of such fully paid contracts, have no knowledge relating to the selection or allotment of such fully paid contracts; that the determination of what contracts shall be declared fully paid is determined by chance, luck, caprice, and fortune; that these selections are sometimes determined by numbers corresponding to numbers occurring in the published weather reports, and at other times by selections made by the officers of said corporation; and that said corporation is thereby maintaining a lottery in violation of the laws of Missouri.

That...