State ex rel. Duggan v. Kirkwood

• Citation: 208 S.W.2d 257,357 Mo. 325
• Decision Date: 12 January 1948
• Docket Number: 40260
• Parties: State of Missouri, ex rel. Jerome F. Duggan, Trustee in Reorganization of the Christopher Engineering Company, a Corporation, in a Proceeding for Corporate Reorganization in the United States District Court for the Eastern District of Missouri, Relator, v. Robert J. Kirkwood, Judge of the Circuit Court for the City of St. Louis
• Court: United States State Supreme Court of Missouri

208 S.W.2d 257

357 Mo. 325

State of Missouri, ex rel. Jerome F. Duggan, Trustee in Reorganization of the Christopher Engineering Company, a Corporation, in a Proceeding for Corporate Reorganization in the United States District Court for the Eastern District of Missouri, Relator, v. Robert J. Kirkwood, Judge of the Circuit Court for the City of St. Louis

No. 40260

Supreme Court of Missouri

January 12, 1948

Rehearing Denied February 9, 1948.

Original Proceeding in Mandamus.

PEREMPTORY WRIT ISSUED.

James T. Blair, Jr., Geo. O. Durham and B. Sherman Landau for relator.

(1) Jurisdiction of this court. Const. Art. V, Secs. 3, 4. (2) Mandamus is a proper remedy. State ex rel. Bank of Nashua v. Holt, 156 S.W.2d 708, 348 Mo. 982; Perkins v Burks, 78 S.W.2d 845, 336 Mo. 248; State ex rel General Motors Acceptance Corp. v. Brown, 48 S.W.2d 857 330 Mo. 220; State ex rel. Fielder v. Kirkwood, 138 S.W.2d 1009, 345 Mo. 1089; State ex rel. Lefholz v. McCracken, 231 Mo.App. 870, 95 S.W.2d 1239, 231 Mo.App. 870. (3) Intervention generally. The intervention was of right. Code of Civ. Proc., Sec. 21 (a) (3). (4) The fund being in custodia legis could be claimed only by application to the court having its custody. In re Franz Est, 145 S.W.2d 400, 346 Mo. 1149. (5) Being unable to resort to any other court for the relief sought, the respondent, by denying relator admission to the pending action, denied him access to the courts and denied him certain remedy for the injury which he sought to assert, contrary to the guaranties of the Constitution. Mo. Const. Art. I, Sec. 14. (6) And denied him due process of law and equal protection of the law contrary to the Constitutions, State and Federal. Mo. Const. Art. I, Sec. 10; U.S. Const. Amend. 14, Sec. 1. (7) Respondent erred in undertaking to determine matters of substance in limine. 21 C.J., sec. 344, p. 344, sec. 347, p. 346; Douglass v. Blake, 189 Ala. 24, 66 So. 617; Miller v. Clark, 301 Ill. 273, 133 N.E. 685; 30 C.J.S., sec. 162, p. 606. (8) A court may not even where intervention is discretionary judge the substance of an intervenor's demand in limine, but should admit the intervention in order that the intervenor might by appeal review the action of the lower court. Toller v. E.T.V. & G. Railway Co., 67 F. 168; Brinckerhoff v. Holland Trust Co., 146 F. 203; Leary v. United States, 224 U.S. 567, 56 L.Ed. 889. By analogy: Perkins v. Burks, 78 S.W.2d 845, 336 Mo. 248; State ex rel. Bank of Nashua v. Holt, 348 Mo. 982, 156 S.W.2d 708. (9) The relator as reorganization trustee for Christopher was vested with title to the claim asserted. Chandler Act Sec. 111, 11 U.S.C.A. 511; Chandler Act, Sec. 70a (5), 11 U.S.C.A. 110 (5); Duggan, Trustee Christopher Engineering Co. and Natl. Aircraft Co. v. Sansberry, 327 U.S. 499, 90 L.Ed. 622. (10) Under the admitted facts the relator had an option to claim the profits and with respect to the profits Magidson stood in the position of a trustee ex maleficio. Equity will find a way to strip a wrongdoer of the profits of his wrong. Williams v. McKinley, 65 F. 4. (11) The obligation of Magidson has its foundation not in the actual commission of fraud, but in the orison "lead us not into temptation." Wormley v. Wormley, 8 Wheat. 421, 5 L.Ed. 651. (12) Magidson's covenant was valid even for the period of two years subsequent to the term of the contract. 43 C.J.S., sec. 84, p. 571; Athletic Tea Co. v. Cole, 16 S.W.2d 735. (13) He was also disabled, at least during the term, from competing as an equitable incident of his employment and regardless of his covenant. 3 C.J.S., p. 19, Verbo Agency. (14) The same rule of loyalty applies as between an employer and employee that applied to the relation of principal and agent, trustee and cestui que trust and client and attorney. Morgan v. Aldrich, 91 S.W. 1024, 114 Mo.App. 700; Jewell Realty Co. v. Dierks, 18 S.W.2d 1043, 322 Mo. 1064. (15) The principal is subrogated to the fruits of the agent's disloyalty. Exeter v. Sawyer, 146 Mo. 302, 47 S.W. 951; Murdock v. Milner, 84 Mo. 96; Arpe v. Brown, 51 S.W.2d 225, 227 Mo.App. 60; Garner v. Woods, 24 S.W.2d 708; Holt v. Dieckmann R.E. Co., 140 S.W.2d 59; In re Luther, 63 F.Supp. 83; Mountain Grove Creamery Co., etc., v. Willow Springs Creamery Co., 202 S.W. 1054. (16) An agent will not be allowed to retain profits incidentally obtained by him in the execution of his duty (not authorized by the principal), any usage to the contrary notwithstanding, and all profits over and above the agent's ordinary compensation belong to the principal. Jacques v. Egdell, 40 Mo. 76. (17) If an agent, employee or other fiduciary violates his obligation of loyalty and profit, or property, results to him therefrom, the same is charged with a trust for the benefit of the other party at the option of the latter in accordance with sagacious public policy, which for the purpose of removing all temptation removes all possibility that a fiduciary may derive profit from the subject matter of the trust, so that one whose confidence has been betrayed may enforce the trust which arises under this rule of law, although he has sustained no damage and although the confidential relation has terminated before the trust was betrayed. The relation of trustee and cestui que trust, principal and agent, client and attorney, employer and employee, are within the prohibition of this rule of law. Trice v. Comstock, 121 F. 620; Morgan v. Aldrich, 91 S.W. 1024, 114 Mo.App. 700; Harrison v. Craven, 87 S.W. 962, 188 Mo. 590; Witte v. Storm, 139 S.W. 384, 236 Mo. 47. (18) The rule springs from the duty of the employee to protect the interests of his correlate and not to permit his personal interest to conflict with his duty in that respect and thereby provide against possible selfish interest exercising an influence which can interfere with the faithful discharge of the duty owing. Michoud v. Girod, 11 L.Ed. 1076; Magruder v. Drury, 235 U.S. 106, 59 L.Ed. 151. (19) A trustee is held to something stricter than the morals of the market place. Not honesty alone, but the punctillio of an honor the most sensitive, is then the standard of behavior. Uncompromising rigidity has been the attitude of courts of equity when petitioned to undermine the rule of undivided loyalty by the disintegrating erosion of particular exceptions. Meinhard v. Salmon, 164 N.E. 345. (20) The court erred in concluding that the relator had a complete and adequate remedy at law. The relator had alternate remedies. He could sue Magidson at law for his actual damages or at his option claim the proceeds of Magidson's wrong by the equitable title vested in him by the rules of equity. His right to intervene and claim the fund in subrogation of Magidson was not destroyed by the fact that he had an election of remedies between recovery of damages for the misconduct and the recovery of the fund. Trust Co. v. Chicago T.T.R. Co., 188 F. 292. (21) The court erred in concluding that Magidson was illegally deprived of a jury trial because an equitable proceeding was brought against him. The constitutional guarantee of trial by jury protects that right only insofar as it existed at common law. At common law the parties to an equitable action had no right to a jury trial. Spitcaufsky v. Hatten, 182 S.W.2d 86, 353 Mo. 94.

Walter N. Davis, Max Sigoloff and Myron L. Silver for respondent.

(1) The amount involved in the relator's petition to intervene was not, independent of all contingencies, in excess of $ 7,500, and therefore relator does not have the right to invoke the jurisdiction of this court for a writ of mandamus directed to respondent. Art. V, Sec. 3, Mo. Constitution 1945; Warmack v. Crawford, 192 S.W.2d 407; Higgins v. Smith, 351 Mo. 609, 144 S.W.2d 149. (2) Respondent's finding that relator was not entitled to intervene cannot be reviewed by mandamus. Mandamus is never granted unless it can be specifically shown that there is no other legal remedy, and the relator has failed to meet this test. Perkins v. Burks, 336 Mo. 248, 78 S.W.2d 845; State v. Pythian Sisters, 227 Mo.App. 557, 54 S.W.2d 468; State ex rel. v. Thompson, 330 Mo. 1146, 52 S.W.2d 472; State ex rel. v. Hughes, 123 S.W.2d 105; State ex rel. v. Sevier, 334 Mo. 771, 68 S.W.2d 50; State v. Governor, 39 Mo. 388. (3) Mandamus is never granted when a party can be redressed by appeal. State v Thurman, 232 Mo. 130, 132 S.W. 1157; State ex rel. v. Hughes, 123 S.W.2d 105; State v. Judge, 1 Mo.App. 543. (4) Even if relator has no other remedy at all, respondent's determination that relator could not intervene was a judicial determination which, whether right or wrong, cannot be reviewed by mandamus. State v. Dickey, 280 Mo. 536, 219 S.W. 363; State ex rel. v. Sevier, 334 Mo. 771, 68 S.W.2d 50; State v. Thurman, 132 S.W. 1157; State ex rel. v. Hughes, 123 S.W.2d 105; State ex rel. v. Nortoni, 269 Mo. 563, 191 S.W. 429; State v. Mosman, 112 Mo.App. 540, 87 S.W. 75; State v. Robinson, 257 Mo. 584, 165 S.W. 997. (5) Respondent denies that he failed to exercise jurisdiction of relator's petition. The petition of relator was filed and placed on the court's docket. It was argued before respondent and counsel stipulated in open court that said application should be taken as submitted upon briefs to be filed by counsel. Thereafter briefs of counsel were furnished respondent, and thereafter after due consideration of the law and being fully advised in the premises, respondent decided that relator was not entitled to intervene and accordingly entered a written finding and decision. There was never any contention that respondent failed to exercise jurisdiction of relator's petition. State v. Mosman, 112 Mo.App. 510, 87 S.W. 75; State ex rel. v. Sevier, 334 Mo. 771, 68 S.W.2d 50; State ex rel. v. Hughes, 123 S.W.2d 105. (6) If relator had...