State ex rel. McDowell v. Libby
| Decision Date | 08 November 1943 |
| Parties | State of Missouri, ex rel., R. Newton McDowell et al., Relators, v. Hon. Harry J. Libby, Judge, Respondent |
| Court | Kansas Court of Appeals |
Peremptory rule made permanant.
Blatchford Downing and Caldwell, Downing, Noble & Garrity for relator.
(1) The default judgments rendered against R. Newton McDowell, Inc. after its charter had been forfeited and without relators as statutory trustees having been substituted as parties defendant, are void; and cannot support executions and garnishment proceedings thereunder. James Bruun v. Katz Drug Co., 351 Mo. 731; Hecht Bros. Clothing Co. v Walker, 224 Mo.App. 1156, 35 S.W.2d 372; State ex rel. Darr v. A. B. Collins & Co., 34 F.Supp. 550; Macklind Inv. Co. v. Ferry, 341 Mo. 493, 108 S.W.2d 21; Cole v. Parker-Washington Co., 276 Mo. 220, 259, 207 S.W. 749; Estell v. Midgard Inv. Co., 46 S.W.2d 193; Nudelman v. Thimbles, Inc., 225 Mo.App. 553, 40 S.W.2d 475; Watkins v. Mayer, 103 S.W.2d 566. (2) All assets, if any, of the defunct corporation being vested by operation of law in the officers and directors as statutory trustees thereof, no execution under a judgment rendered against the corporation alone can be valid to reach such assets, if any there be, in the hands of the trustees, either by levy upon tangible property or by garnishment of creditors or choses in action. Sec. 5094, R. S. Mo. 1939; Meramec Park Co. v. Gibson, 268 Mo. 394; Jackson v. Rothschild, 99 S.W.2d 859; Cole v. Parker-Washington Co., 276 Mo. 250. (3) To permit executions to be enforced by garnishment or otherwise against the statutory trustees of an insolvent corporation would hamper and impede the trustees in the administration of their trust and tend to permit certain judgment creditors to obtain preferences contrary to the principles of equity. Sec. 5094, R. S. Mo. 1939; Foster v. Mullanphy Planing Mill Co., 92 Mo. 79, 90; Nudelman v. Thimbles, Inc., 225 Mo.App. 553, 40 S.W.2d 475. (4) Statutory trustees being accountable solely to a court of equity for the administration of their trust cannot be subjected to garnishment proceedings under execution which are strictly at law. Bank of Odessa v. Barnett, 98 Mo.App. 477; Wank v. Peet, 190 S.W. 88; Estell v. Midgard Investment Co., 46 S.W.2d 193; Sheedy v. Second National Bank, 62 Mo. 17; Lackland v. Garesche, 56 Mo. 267; State ex rel. McIndoe v. Blair, 238 Mo. 132, 152-4. (5) Plaintiffs were attempting to convert the garnishment proceedings, which are strictly at law, into an independent creditor's bill in equity. The court had no jurisdiction of a creditor's bill to reach assets in their hands, if any there had been. State ex rel. Auchincloss, etc., v. Harris, 159 S.W.2d 799; Sheedy v. Second Natl. Bank, 62 Mo. 17, 25; Dahlberg v. Fisse, 328 Mo. 213, 40 S.W.2d 606; State ex rel. McIndoe v. Blair, 238 Mo. 132, 152-4. (6) Plaintiffs' so-called denials of the garnishees' answers to the interrogatories were so deficient in stating facts sufficient to constitute a cause of action against the garnishees, that no jurisdiction existed to proceed further. Secs. 1578, 7982, R. S. Mo. 1939; South Central Co. v. Vernon, 227 Mo.App. 486, 494, 54 S.W.2d 416; Taylor v. Dollins, 205 Mo.App. 246; Federal Trucking Co. v. Mayer, 216 Mo.App. 443; May Department Stores v. Union Electric Co., 341 Mo. 299, 324-328, 107 S.W.2d 41. (7) The subpoenas duces tecum were invalid on their face in not specifying any particular books, records or documents to be produced. There was no showing of materiality to any issues, and their enforcement should be enjoined by prohibition. Hale v. Henkel, 201 U.S. 76, 77; State ex rel. A., T. & S. F. Ry. v. Trimble, 254 Mo. 542, 560; State ex rel. Ozark Cooperage & Lumber Co. v. Rudeman, 176 Mo.App. 540, 158 S.W. 436; Ex parte Brown, 72 Mo. 83. (8) Remedy by the appeals is inadequate; and immaterial in view of the issuance of the preliminary writ. State ex rel. Busby v. Cowan, 232 Mo.App. 391; State ex rel. v. Wurdeman, 232 S.W. 1002, 1004; State ex rel. v. Higbee, 43 S.W.2d 825.
B. R. Williams, Robert N. Jones, Alpha L. Burns, H. K. West, M. D. Campbell and Roach & Brenner for respondent.
(1) The circuit court had jurisdiction over the parties and subjectmatter. Estes v. Chemical Clay Co. (Mo. App.), 93 S.W.2d 295; Rice v. Griffith, 349 Mo. 373, 380, 161 S.W.2d 220; C., B. & Q. Ry. Co. v. Gildersleeve, 219 Mo. 170, 118 S.W. 86; State ex rel. v. Anderson (Mo. App.), 101 S.W.2d 520, 533; Sec. 2100, R. S. Mo. 1939; Art. VI, Sec. 22, Const. of Mo.; 9 Fletcher's Cyc., Corp., p. 298; Globe Democrat Publ. Co. v. St. Louis Oil Co. (Mo. App.), 75 S.W.2d 636; 1 Houts on Missouri Pleading and Practice, p. 57; 21 C. J. S., p. 143; Hidden v. Edwards, 313 Mo. 642, 285 S.W. 462. (2) The act of the Secretary of State cancelling the corporate certificate is a mere suspension, not a dissolution. R. S. Mo. 1939, secs. 5091 and 5093; Yerxa, Andrews & Thurston, Inc., v. Viviano (Mo.), 44 S.W.2d 98, 99, 100; Collier v. Am. Cafeteria Co., 215 Mo.App. 182, 186, 256 S.W. 118; Allen v. Surety L. Ins. Co., 230 Mo.App. 402, 407-09, 92 S.W.2d 956; In re Independent Ins. Co. (U.S.), 13 Fed. Cases, pp. 13, 16. (3) Upon forfeiture of charter of a corporation, the president and members of the last board of directors become trustees for all parties beneficially interested, and especially for creditors of the defaulting corporation. R. S. Mo. 1939, sec. 5036; Wank v. Pete, 190 S.W. 91; Nudelman v. Thimbles, Inc., 225 Mo.App. 553, 40 S.W.2d 475; Fed. Land Bank of St. Louis v. Bross (Mo. App.), 122 S.W.2d 35; Grafeman Dairy Co. v. Mo. Bank, 290 Mo. 311, 331, 235 S.W. 435, 441; Ford v. Ford Roofing Products Co., 285 S.W. 538; R. S. Mo. 1939, secs. 5036 and 5094; Diekroeger v. Jones (Mo. App.), 151 S.W.2d 691. (4) Plaintiffs' actions did not abate upon forfeiture of the charter of R. Newton McDowell, Inc. Furthermore, defendant, in failing to file a plea in abatement, is estopped to claim that its charter was forfeited and the judgments void. Evans v. Interstate Rapid Transit R. R. Co., 106 Mo. 594, 17 S.W. 489; Lindall v. Benton and Kennerly, 6 Mo. 361; 16 Fletcher's Cyc., Corp., p. 900, and Vol. 9, pp. 411 and 415; Wolcott Mfg. Co. v. Cady & Olmstead Jewelry Co., 72 S.W.2d 845; Nubelman v. Thimbles, Inc., supra; Kansas City Hotel Co. v. Sauer, 65 Mo. 279; Watkins v. Mayer et al., 103 S.W.2d 569; Sturges v. Vanderbilt, 73 N.Y. 384; James & Co. v. Ins. Co., 239 N.Y. 254, 146 N.E. 369, 37 A. L. R. 720; Pyro-Gravure Co. v. Staber, 30 Misc. 658, 64 N.Y.S. 520; State ex rel. Natl. Co. v. Superior Court, 180 Wash. 587, 41 P.2d 133; Barrett v. Stoddard Co., 152 S.W. 43, and 193 S.W. 644; Globe Co. v. St. Louis, etc., Co., supra; St. Louis, etc., Ry. Co. v. Holladay, 131 Mo. 440, 33 S.W. 51; High on Receivers, secs. 259 and 260; Bruun v. Katz Drug Co., 351 Mo. 731; Hammar v. Motor Carriage Co., 155 Mo.App. 444, 134 S.W. 601; Ford v. Kansas City, etc., Ry. Co., 52 Mo.App. 439; Seaton v. C., R. I. & P. Ry. Co., 55 Mo. 416; 97 A. L. R. 492. (5) Relators' application for prohibition must be denied because the sole question is one of jurisdiction, and in this case the trial court had jurisdiction. State ex rel. Tracy, 327 Mo. 109, 119, 140 S.W. 888; State ex rel. v. Hartman, 221 Mo.App. 215, 226; State ex rel. Fabrico v. Johnson, 293 Mo. 302, 239 S.W. 844; State ex rel. Clark v. Klene, 201 Mo.App. 408, 212 S.W. 55; State ex rel. Schleuter Mfg. Co. v. Beck, 337 Mo. 839, 85 S.W.2d 1026. (6) Since a similar petition for writ of prohibition filed in the Supreme Court has been decided adversely to relators, and since relators have taken appeals to this court from the judgments and orders of the Circuit Court of Macon County, Missouri, their application for writ of prohibition should be denied. K. C. v. Jones Co., 325 Mo. 226, 28 S.W.2d 1008, cert. den., 282 U.S. 873; State v. Sevier, 340 Mo. 645, 102 S.W.2d 882. (7) The property of R. Newton McDowell, Inc., in the hands of its trustees is subject to execution and garnishment. Mieyr v. Federal Surety Co. (Mont.), 34 P.2d 982; Clark v. Williard, 79 L.Ed. 363, 55 S.Ct. 356.
This is an original proceeding in prohibition wherein relators seek to prohibit the respondent, Judge of the Circuit Court of Macon County, from enforcing, by execution certain judgments claimed to be void.
The case has been submitted upon a motion for judgment upon the pleadings filed to respondent's amended return.
The facts show that on or about September 20, 1940, there was filed in the Circuit Court of Macon County, at La Plata, two cases entitled, respectively, U. F. Ketcham, v. R. Newton McDowell, Incorporated, No. 3811, and Kenneth Keithley, v. R. Newton McDowell, Incorporated, No. 3812, in which said named plaintiffs sued to recover from said defendant damages for personal injuries arising out of an automobile collision; plaintiff Ketcham claiming damages in the sum of $ 7500 and plaintiff Keithley in the sum of $ 1000. The allegatons of the petitions in said cases were identical, except as to the names of the plaintiffs and the amount of the damages prayed and plaintiff, Keithley, alleged that he was riding as a guest in the motor car being driven by plaintiff, Ketcham, at the time of the accident. Summonses in said cases were served upon defendant, amended petitions in said causes were filed and, on November 8, 1940, answers were filed on behalf of the defendant in each case by its attorney, consisting of a general denial in the Keithley case, and a general denial and plea of contributory negligence in the Ketcham case.
On or about April 17, 1941, said attorney withdrew as attorney for the defendant in each of said cases and mailed a notice of such withdrawal to the defendant...
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