State ex rel. Harwood v. Sartorius
| Decision Date | 16 December 1946 |
| Docket Number | 39973 |
| Citation | 198 S.W.2d 690,355 Mo. 837 |
| Parties | State ex rel. Ollie Harwood et al., Relators, v. Eugene J. Sartorius, Judge |
| Court | Missouri Supreme Court |
Rehearing Denied January 13, 1947.
PROVISIONAL RULE MADE ABSOLUTE.
Provisional rule made absolute.
Fordyce White, Mayne, Williams & Hartman, Vincent M. Flynn, and Joseph Renard for relators.
(1) The corporation not being a party to the action, the respondent was without jurisdiction to order the cancellation of any of the outstanding stock and the issuance of the treasury stock of the corporation, or direct the disbursement of the corporation's funds by the individual parties to the action. Such judicial orders could operate, if at all, upon the corporation alone. St. Louis-S.F. Ry. Co. v Wilson, 114 U.S. 60, 29 L.Ed. 66; Muellhaupt v. Joseph A. Strawbridge Est. Co., 298 P. 189; Crump v. Thurber, 115 U.S. 56, 29 L.Ed. 328; Bivens v. Hull, 145 P. 694; H.M. Rowe Co. v. Rowe, 141 A. 334; 18 C.J.S. 708, sec. 252. (2) Respondent's injunction contained in the decree, attempting to restrain these relators from acting as stockholders in the event they failed to comply with the provisions of the decree within fifteen days of its entry, is grossly in excess of respondent's jurisdiction and is an abuse and usurpation of judicial power. State ex rel. Mills v. Calhoun, 234 S.W. 855; State ex rel. Castlet v. Mulloy, 331 Mo. 776; State ex rel. K.C. Exchange Co. v. Harris, 81 S.W.2d 632; State ex rel. Lane v. Montgomery, 221 Mo.App. 1043; St. Louis, Kennett & Southern R. Co. v. Wear, 135 Mo. 230; State ex rel. Judah v. Fort, 210 Mo. 512; State ex rel. v. Burney, 193 Mo.App. 326. (3) Respondent's injunction and restraining order cannot be stayed by appeal and supersedeas, hence relator's only adequate remedy is prohibition. State ex rel. v. Denton, 229 Mo. 187; State ex rel. Sanitary Street Flushing Machine Co. v. Garesche, 210 S.W. 900; C.H. Albers Comm. Co. v. Spencer, 236 Mo. 608; Willow Springs Creamery Co. v. Mountain Grove Creamery, 197 S.W. 916; State ex rel. Gray v. Hennings, 194 Mo.App. 545; 93 A.L.R. 710 et seq.; See also authorities cited under Point (2). (4) The Supreme Court in the exercise of its plenary power may dispose of the entire case upon its merits. State ex rel. v. Bird, 110 S.W.2d 386; State ex rel. McCaffery v. Aloe, 152 Mo. 466; State ex rel. Nickerson v. Rose, 351 Mo. 1198; State ex rel. Busby v. Cowan, 107 S.W.2d 805; State ex rel. McElvain v. Riley, 276 S.W. 881; State ex rel. Mueller v. Wurdeman, 232 S.W. 1002; State ex rel. Dunlap v. Higbee, 328 Mo. 1066. (5) If plaintiff's testimony in 1942 is untrue, plaintiff is not in court with "clean hands" and is entitled to no relief. Abernathy v. Hempe, 53 S.W.2d 1090; Keener v. Williams, 307 Mo. 682; Snitzer v. Pokres, 324 Mo. 386; Stillwell v. Bell, 154 S.W. 85, 248 Mo. 61; Colquitt v. Lowe, 184 S.W.2d 420; Smith v. Holdoway Const. Co., 344 Mo. 862; Ogden v. Auer, 184 S.W. 72; Baltimore American Ins. Co. of N.Y. v. Ulman, 170 A. 202, 165 Md. 630; Waller v. Eanes' Administrator, 157 S.E. 721, 156 Va. 389; Reck v. Reck, 46 N.E.2d 429; 30 C.J.S., p. 475 et seq. (6) If the testimony of Henriette de Bernard in 1942 is true or has any probative value, the decree was contrary to all the evidence and should have been for the defendant (these relators).
Edward K. Schwartz for respondent.
(1) The rights of the corporation were not involved nor affected by the cancellation of the stock certificates provided for in the decree; and, moreover, all the benficial owners of the outstanding capital stock were before the court as parties, and hence the corporation was not a necessary or indispensable party. 18 C.J.S., p. 1220, sec. 535; 14 C.J. 85, sec. 1349; Behlow v. Fischer, 36 P. 509, 102 Cal. 208; Doremus v. Natl. Cotton Imp. Co., 39 App. D.C. 295; King v. Barnes, 16 N.E. 332, 109 N.Y. 267; Perkins v. Banguet Cons. Mining Co., 132 P.2d 70. (2) The only portion of the injunctive provisions in the decree which would not be stayed by giving an appeal bond pending an appeal, is that which enjoined relators from interfering with plaintiff's activities in the corporation and this affords no reason for the extraordinary remedy of prohibition. (3) The respondent had jurisdiction to restrain relators from acting as stockholders in the event they failed to comply with certain provisions of the decree within fifteen days. Pickel v. Pickel, 158 S.W. 8. (4) The "unclean hands" doctrine has no application to the case at bar. Stegmann v. Weeke, 279 Mo. 131, 214 S.W. 134; McClure v. Wilson, 185 S.W.2d 878; King v. Bremer, 316 Mo. 891, 292 S.W. 702; Galbreath v. Devlin, 85 Wash. 482, 148 P. 589; American Assoc. v. Ennis, 195 Ky. 595; Butte Investment Co. v. Bell, 201 S.W. 880; Bante v. Bante Development Co., 27 S.W.2d 481; Smith v. Holdoway Const. Co., 334 Mo. 862; Snitzer v. Pokres, 324 Mo. 386. (5) Where the testimony was conflicting, the decided weight thereof was in plaintiff's favor; and, moreover, under the well established principle, and the express provisions of the new Civil Code, this court will, though not bound by the Chancellor's findings, defer to such findings, because of the opportunity of the trial court to judge of the credibility of the witnesses. Subsec. (d), Sec. 114, p. 388, Laws 1943; Klebba v. Otto, 187 S.W.2d 499; Deitz v. Deitz, 172 S.W.2d 866, 351 Mo. 306; Hamilton v. Steinlinger, 168 S.W.2d 14, 348 Mo. 770. (6) The decree of the court was entirely proper, and the relief granted was in conformity with the rule that equity, once it assumes jurisdiction, will afford complete relief. Lustenberger v. Hutchinson, 119 S.W.2d 921, 343 Mo. 51; Morris v. Hanssen, 78 S.W.2d 87, 336 Mo. 169; Jones v. McGonigle, 327 Mo. 457; Jones v. Jones, 325 Mo. 1037, 30 S.W.2d l.c. 55.
This is a proceeding in prohibition instituted in this court by the relatrices, Misses Ollie Harwood and Vivian Patterson, against the respondent, Hon. Eugene J. Sartorious, Judge of the circuit court of the City of St. Louis. The cause is at issue on relatrices' petition for our writ, respondent's return and a transcript of the evidence in the underlying litigation, which has been brought up by agreement.
Relatrices seek to prohibit the enforcement against them of certain preventive and mandatory injunctive orders decreed by respondent allegedly in excess of his jurisdiction as chancellor, in an equity suit brought against the relatrices by one Madame Henrietta de Bernard (hereinafter called Madame Bernard). The petition in the equity suit prayed: cancellation of two stock certificates for 100 shares each of the capital stock of a Missouri corporation styled Maison de Bernard, Inc., severally issued some five years earlier to the relatrices, respectively; that relatrices be divested of any right, title or interest in said shares of stock and any others of the corporation; that they be enjoined from interfering with Madame Bernard's management and control of the corporation; and for general relief. The corporation was not joined as a party defendant in the equity suit. Before stating the nature of the decretal orders made by respondent and assailed by relatrices, we must outline the facts.
The undisputed evidence adduced in the equity suit was as follows. The corporation was chartered by Madame Bernard in 1927 to take over a business she had earlier founded in St. Louis dealing in women's tailored and ready-to-wear apparel. It had 500 shares of capital stock of the par value of $ 100 per share. In the beginning she owned all of it. But in 1932 at the suggestion of her bankers she transferred 155 shares to the corporation's treasury to eliminate an item of good will appraised at $ 15,500 in the original schedule of capital assets. This left her with 345 shares of which 341 stood in her name, the other four being held by two employees as qualifying shares since the statutes required a manufacturing or business corporation to have at least three shareholders and directors. Sec's 4555 (7) and 4933, R.S. 1929. Relatrix Harwood was one of these two employees, holding two qualifying shares. She had entered the service of the corporation as bookkeeper that year -- 1932. But she lays no claim to those two shares and they may be treated as actually belonging to Madame Bernard. The other two qualifying shares were issued to a former employee named Flora Witbeck, who receipted for them on the stock book. Her stock certificate is not accounted for on the corporate records, but there was testimony in the equity suit that Madame Bernard had possession of it, and since the relatrices do not claim the two shares, we think it may be conceded for the purposes of the case that Madame Bernard owned them also, giving her the entire 345 shares outside of the 155 shares of treasury stock.
Madame Bernard's version of the disputed facts was that seven or eight years later, in the summer of 1940, the relatrices requested her to sell each of them 100 shares of her stock in the corporation for $ 500, or $ 1,000 for the two. She was dubious because it would leave her only 145 shares. Thereupon the relatrix Harwood [acting also for relatrix Patterson] proposed that the 155 shares of treasury stock and 45 shares of Madame Bernard's own stock be sold to them, making their 200 shares, and leaving her with 300 shares and stock control. She consented to that. But since relatrix Harwood felt she needed advice as to the proper manner of transferring the treasury stock, certificates for the two blocks of 100 shares were temporarily issued to the relatrices, respectively, on September 1, 1940, out of Madame Bernard's 345 shares, and a new certificate was issued to her for 143 shares, which together with the two qualifying shares in...
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