State ex rel. Fenn v. McQuillin

• Decision Date: 02 April 1914
• Citation: 165 S.W. 713,256 Mo. 693
• Parties: THE STATE ex rel. BERT F. FENN et al. v. EUGENE McQUILLIN, Judge of Circuit Court, et al
• Court: Missouri Supreme Court

165 S.W. 713

256 Mo. 693

THE STATE ex rel. BERT F. FENN et al. v. EUGENE McQUILLIN, Judge of Circuit Court, et al

Supreme Court of Missouri

April 2, 1914

Writ denied.

Bert F Fenn and James T. Roberts for relators.

(1) "Where the act complained of affects the complainant solely in his capacity as a member of the corporation whether as stockholder, director, president or other officer it is the act of the corporation. Whether acting in stockholders' meetings or through its agents, the board of directors, then such action is the management of the internal affairs of a corporation." "A court of equity, in a jurisdiction where a foreign corporation has its situs for the transaction of business, and where its property is situated, is without jurisdiction, in the absence of a statute, to appoint a receiver for a foreign corporation at the suit of a resident stockholder who complains alone of the internal management of its affairs. Sidway v. Land Co., 101 F. 481; 19 Cyc. 1236; 13 Am. & Eng. Ency. Law 849; Wilkins v. Thorne, 60 Md. 236; Importing Co. v. Locke, 50 Ala. 332; Dodge v. Mfg. Co., 69 Ga. 665; Andrews v. Moon, 162 Mass. 294; Day v. Car Springs Co., 2 Duer. 608; Leary v. Columbia River Co., 82 F. 775; Mining Co. v. Brown, 58 F. 644; Hutchinson v. Car Co., 104 F. 182; North State Co. v. Field, 64 Md. 154; Dreyfus v. Seal, 37 A.D. 351; State ex rel. v. Denton, 229 Mo. 187; Madden v. Electric Co., 181 Pa. St. 617, 38 L. R. A. 638. (2) Where the object of the action is to prevent or redress a wrong to the corporation, the corporation itself is an indispensable party either as plaintiff or defendant. 10 Cyc. 995.

George C. Mackay and W. G. Carpenter for respondents.

(1) Prohibition will not lie if the petition states sufficient facts to justify any equitable relief, though different from that asked in the prayer for relief. A court's jurisdiction is not determined by the prayer for relief. State ex rel. v. Dearing, 180 Mo. 63; Pattison, Mo. Code Pleading (2 Ed.), sec. 333; 31 Cyc. 110. (2) Prohibition should not deprive the court of its wellknown equitable jurisdiction to compel directors unfaithful to their trust to account for corporate assets taken by them from a foreign corporation. Such an action does not regulate the "internal affairs" of the foreign corporation. Sloan v. Clarkson, 105 Md. 171; Wineburgh v. U.S. Co., 173 Mass. 60; Richardson v. Clinton Co., 181 Mass. 580; Babcock v. Farwell, 245 Ill. 14; Edwards v. Schillinger, 245 Ill. 23; Voorhees v. Mason, 245 Ill. 256; Harding v. Glucose Co., 182 Ill. 551; Dunbar v. Telephone Co., 224 Ill. 9; Watkins v. Company, 107 La. 107; Guilford v. Company, 59 Minn. 52; Miller v. Quinsey, 179 N.Y. 294; Grant v. Cobre Co., 193 N.Y. 306; Wilson v. Car Co., 64 N.J.Eq. 534; (3) Such right in favor of a foreign corporation may be established by minority stockholders as plaintiffs when the directors controlling the corporation are themselves the wrong-doers complained of. Hingston v. Montgomery, 121 Mo.App. 451; Slattery v. Trans. Co., 91 Mo. 217; Hannerty v. Theater Co., 109 Mo. 297; Hawes v. Oakland, 104 U.S. 450; 10 Cyc. 965; Vogeler v. Punch, 205 Mo. 576. (4) Jurisdiction once acquired will be retained to give complete relief. The action, being one in personam, must be brought where defendant directors reside; and they may be compelled to deed back foreign real estate misappropriated by them. Courts of equity have the right to operate on persons within their jurisdiction, even though the acts involved relate to lands outside of their jurisdiction. State ex rel. v. Muench, 225 Mo. 210; State ex rel. v. Dearing, 180 Mo. 53; State ex rel. v. Zachritz, 166 Mo. 309, 313; Olney v. Eaton, 66 Mo. 563; Castleman v. Castleman, 184 Mo. 438; McCune v. Goodwillie, 204 Mo. 336; Hewitt v. Price, 204 Mo. 31; State ex rel. v. Grimm, 243 Mo. 676; State ex rel. v. Homer, 164 Mo.App. 334. (5) In stockholders' suits to establish a right of the corporation against directors for fraud, equity has power to appoint a local receiver of property of a foreign corporation within the State; this power is incidental to the particular litigation and is exercised to preserve assets belonging to the corporation within the forum from unlawful disposition or injury pending suit. 34 Cyc. 99; 19 Cyc. 1239, note 69.

OPINION

In Banc

Prohibition.

FARIS J.

-- This is an original proceeding in prohibition, which was filed here on the 19th day of August, 1913, and our preliminary rule to show cause issued on that day. Relators are six out of sixteen defendants, in a certain alleged action in equity for an accounting, for the appointing of a receiver for such of said defendants as are corporations, and for other purposes and uses hereinafter more specifically set out. This action in equity is now pending in the circuit court of the city of St. Louis, in Division 6 thereof, which division is presided over by respondent, Judge Eugene McQuillin. Definitely as to when this equity suit was filed, does not appear, except by inference that it was on, or subsequent to, August 5, 1913, and prior to August 12, 1913. It does appear that it was made returnable to the October term, 1913, of said court. Relators in their petition filed here for their writ, set out their own descriptions and their several relations to this action and to the said equity suit, thus:

"Come the relators herein, Bert F. Fenn, the Continental Commercial Company, a corporation organized under the laws of the State of Maine; August J. Waldschmidt, Adolph P. Erker, The American-Mexican Sugar Company and Walter C. Guels, and give the court to understand and be informed that Eugene McQuillin is one of the judges of the circuit court of the city of St. Louis, Missouri, duly elected, qualified and acting, and presiding in Division No. 6 of said court; that J. Hugo Grimm is one of the judges of the circuit court of the city of St. Louis, Missouri, duly elected, qualified and acting and presiding in Division No. 1 of said court, but sitting in Division No. 6 of said court during the absence of Eugene McQuillin; that said Eugene McQuillin and J. Hugo Grimm, sitting in said Division No. 6 of said circuit court of the city of St. Louis, Missouri, have taken cognizance of and entertain jurisdiction of a certain cause wherein Henry W. Meyer, Alexander H. Schott, Charles Bilhartz, E. H. Keisker, Jr., D. F. Dirkes, Joseph Lintzenick, B. A. Oehler, J. H. August Meyer, A. H. Heitkamp, P. C. Compton, H. L. Mintague and Charles Happel are plaintiffs and the relators herein, the Continental Commercial Company, A. J. Waldschmidt, Adolph P. Erker, Charles H. McKee, Bert F. Fenn, Charles F. Haanel, William A. Brandenburger, Walter C. Guels, J. E. Carnahan, Louis Essig, John Doe, trustee, American-Mexican Sugar Company, a corporation; the Jumiapa Plantation Company, a corporation; Continental Sugar Refining Company, a corporation; Oaxaca Coffee Culture Company, a corporation, and the Monte Rosa Company, a corporation, are defendants, said cause being Serial No. 496, October Term, 1913.

"That said plaintiffs in said last-named cause in the circuit court of the city of St. Louis, Missouri, filed their petition in said cause, setting forth that they are stockholders of the Continental Commercial Company, of the defendants named therein, and that relators herein, Waldschmidt, Erker, McKee, Fenn, Haanel, Brandenburger, Guels and Carnahan, are officers of said Continental Commercial Company and have controlled the affairs of said Continental Commercial Company."

Since we have set out in the subjoined opinion, the whole of the remainder of relators' petition, either in the exact words thereof, or in its substance and legal effect, and since all of the facts are to be found in our views as written in the subjoined opinion, we deem it unnecessary to duplicate these facts here.

I. The case has been argued and submitted and is now up for judgment upon two pleadings only. We are compelled to consider first the nature of these pleadings and the issues presented by them, before we reach the question of what the law is upon the case thus made. The only pleading of whatever sort filed by relators is the petition lodged here upon which we issued our preliminary rule on respondents to show cause why the peremptory writ of prohibition should not be awarded herein. The respondents upon the return day filed on their part a single pleading only, which first demurred to the whole petition, then denied the whole petition, and then answered the whole petition, by revamping and reiterating (as we note by comparison), the charges contained in the petition filed in the court nisi, action upon which latter by the lower court is here sought to be restrained.

While such practice is not to be commended, when we have regard to the several ways of getting at issue upon the law in this sort of case, there is yet authority for holding that we may, ex gratia, seek out any issues made and proceed to determine them upon legal rules and along legal lines. [State ex rel. Connors v. Shelton, 238 Mo. 281.] But the legal rules admonish us that since both a demurrer and an answer, each to the whole of a petition, will not lie at one and the same time, a fortiori, they will not both lie when contained in the same paper and each directed toward the whole of the same petition. [State ex rel. v Bright, 224 Mo. 514.] In the above case on a very similar point it was said:

"A return is in the nature of an answer and a demurrer and answer can't both stand at the same time, where they both cover the entire case. The rule is well stated in 6 Ency. Pl. & Prac., p. 382, thus: 'A party may demur to one part of a declaration, petition, or complaint, and plead or answer to another, but he cannot demur and plead or answer at...