State v. Dearing

• Decision Date: 13 December 1904
• Citation: 184 Mo. 647,84 S.W. 21
• Court: Missouri Supreme Court
• Parties: STATE ex rel. AMERICAN LEAD & BARYTA CO. et al. v. DEARING, Judge, et al.

84 S.W. 21

184 Mo. 647

STATE ex rel. AMERICAN LEAD & BARYTA CO. et al. v. DEARING, Judge, et al.

Supreme Court of Missouri.

December 13, 1904.

PROHIBITION — PRELIMINARY RULE — SUPREME COURT — POWER OF JUDGE — RECEIVER — APPOINTMENT IN VACATION — JURISDICTION.

1. Under the inherent powers of the Supreme Court, the direct provisions of Rev. St. 1899, c. 55, and Const. art. 6, § 3, providing that the Supreme Court shall have power to issue writs of habeas corpus, mandamus, quo warranto. certiorari, and other remedial writs, a judge of the Supreme Court has power during the vacation of the court to issue a preliminary rule in prohibition returnable to and triable by the court in term time.

2. An order of a circuit judge to show cause, in vacation, why the appointment of a receiver should not be made permanent, is in excess of his jurisdiction.

3. Where plaintiff seeks to have the property of a corporation, against which he has no claim, placed in the hands of a receiver pending an action to settle a difference between plaintiff and a third person, a contention that the case is one where, without even an allegation that the

corporation is insolvent, the appointment of a receiver should be made in vacation, and in the absence of notice to the defendants is untenable.

4. Where a judge in vacation appointed a receiver of a corporation without notice to the defendants, and in excess of his authority, an application to the judge to vacate the order is not essential to entitle the injured persons to a writ of prohibition to the judge to forbid him from further enforcing the order; the absence of jurisdiction being apparent on the face of the record.

In Banc. Original proceeding by the state, on the relation of the American Lead & Baryta Company and another, against Frank R. Dearing, Judge, and others, for a writ of prohibition. Preliminary rule made absolute.

Jas. P. Dawson and E. T. Eversole, for relators. H. J. Cantwell and Sam Byrns, for respondents.

MARSHALL, J.

This is an original proceeding in prohibition to prohibit the defendant judge from further enforcing or carrying into effect an order appointing the defendant Donnell as receiver for the relator company, the American Lead & Baryta Company, made in a suit heretofore instituted, and now pending in the circuit court of Washington county, wherein the defendant Wm. J. Elledge is the plaintiff and the American Lead & Baryta Company and others are the defendants. A preliminary rule in prohibition was heretofore issued in this case. The defendant Elledge filed a motion to quash the writ. The defendant Donnell filed a return showing compliance with the commands of the preliminary rule, and submitting himself to the further order of this court. Before the return day of the preliminary rule, the defendant Dearing, Judge, died, and his successor has been appointed and qualified, and he now adopts a return which had been prepared by his predecessor, and which had been filed by defendant Elledge as a part of his motion to quash. The matter has been fully argued by learned counsel, and submitted for decision.

The pleadings and exhibits filed in this case are quite too voluminous to be reproduced, or even fully abstracted, in an opinion. For the purposes of this case it is only necessary to state the ultimate facts shown, and they will be stated in substantially the chronological order of their occurrence. Some time prior to November 22, 1900, the defendant Elledge and one William Long had secured options to buy some 26,000 acres of land in Washington county, which were believed to contain rich ores, and especially baryta and other basic elements of paints. O. E. Robinson lived in Baltimore, Md., and was engaged in the business of manufacturing paints in that city. He was the president of the National Mining & Milling Company, which was located in Baltimore, and he or the company owned certain patents or processes and machinery for the manufacture of paints. About the 22d of November, 1900, Elledge, Long, Robinson, G. H. Ten Broek, John Morton, and Moses Greenwood, Jr., agreed to form and did form a corporation to be known as the American Lead & Baryta Company, with a capital stock of $10,000,000 and a bond issue of $1,250,000. Robinson was to put into the company the patents, processes, machinery, etc., of the National Milling Company, and to take therefor $2,000,000 of the capital stock and $100,000 of said bonds. Elledge and Long were to turn over to the company the options they held on the 26,000 acres of land aforesaid, which it is alleged were worth $1,000,000. Accordingly, the American Lead & Baryta Company was organized under the laws of Delaware, and obtained a license to do business in this state, and opened an office in the Wainwright Building, in St. Louis. Robinson was made president of the company. It was the original intention to sell enough stock and bonds to pay for the lands on which options were held as aforesaid, and to pay Robinson or the National Mining & Milling Company for the patents, machinery, etc., aforesaid, in stocks and bonds as aforesaid; and the profits of the venture, according to Elledge, to be divided one-fifth each to Greenwood, Ten Broek, Morton, and Robinson, and one-tenth each to Elledge and Long. It being the original intention that the stock should be sold so as to pay for the options aforesaid, and to secure working capital for the company, all of the stock except enough shares to make up a board of directors was issued in the name of the president, Robinson. It was agreed that Elledge, Greenwood, Ten Broek, and Long should make diligent efforts to sell the stock and bonds aforesaid. The value of the patents, machinery, etc., that Robinson or the National Mining & Milling Company were to put into the new company is nowhere stated, but the petition in the original case alleges that Robinson represented them to be of great value, and that the business of said National Company was being conducted at a profit of $60,000 a year; but that such patents, machinery, etc., were not turned over to the new company. On the contrary, it is charged that money borrowed by the new company was being diverted by Robinson to pay the debts of the National Company, and were applied to his own use. The attempt to sell the stock and bonds of the new company and thereby to raise money to pay for the lands in Washington county proved futile. The options were about to expire, and therefore an arrangement was made in 1901 with the Missouri Trust Company to advance the new company the sum of $500,000, with which to pay for the lands, and as security therefor the title to the land was to be conveyed direct to the trust company, to be held by it until the stock and bonds could be issued, when the trust company was to take $1,250,000 of bonds and the same amount of stock of the company. The trust company also required O. E. Robinson to execute to it his two notes — one for $400,000, indorsed by his brothers, J. K. Robinson and A. H. Robinson; and one for $100,000, indorsed by said Morton and Jacob Stocke. Accordingly, the trust company advanced the $500,000, and Elledge and Long transferred to it the options on the land held by them, out of which the trust company paid for the land and took the legal title in its own name, and Robinson executed the two notes aforesaid. The new company then began business by establishing four stores, buying some horses and mules, and proceeded with its mining and business operations. Elledge became general or district manager of the company, and continued to act as such until he instituted the original suit, and as such manager was paid something over $5,000 for his services. The business of the company was thus carried on for about two years, and the plaintiff and Greenwood and Ten Broek and Long were all the while unsuccessfully engaged in trying to negotiate the bonds and sell the stock. In the early part of the present year the trust company, never having received the stock and the bonds aforesaid, threatened to sell the land. In the meantime there had been suits going on about the title to certain of the lands. The baryta company had had to borrow about $30,000, and Robinson had indorsed the notes and pledged certain of the stock to secure the notes. Robinson had also advanced considerable money for the company, said by relator to have amounted to $35,000, and incurred about $8,000 liability for the company, and had never received a cent of the $25,000 a year that he was to receive as president of the company. In this plight the baryta company, through Robinson and Morton, made an arrangement with the trust company, whereby that company advanced about $135,000 more to clear up the title to the land, and it was agreed that time until June 1, 1904, should be given the baryta company to pay up what it owed the trust company, and that in the meantime Morton should devise some method of reorganizing and refinancing the baryta company. Morton devised a scheme whereby the old $10,000,000 stock issue and the old million and a quarter bond issue were to be canceled. He (Morton) was to turn over to the baryta company certain mining securities stated to be worth $400,000, upon which and upon all other property of the company the trust company was to have a first mortgage of $600,000 and a second mortgage for not exceeding $300,000 was to be put upon the same, with which to pay the other indebtedness of the company, aggregating $135,000, and also to pay Robinson what the company owed him for advances and salary; and $60,000 of the second mortgage bonds were to be turned over to Elledge, Greenwood, Ten Broek, and Morton in equal parts, Elledge, however, to share his part equally with Long and one McGregor.

The matter was in this shape on May 30, 1904, when Elledge filed a suit in the circuit court of Washington county against O. E. Robinson, John Morton, G. H. Ten Broek, Moses Greenwood, Jr., William Long, the Missouri...