State v. Ellison

• Decision Date: 02 February 1918
• Docket Number: No. 20354.,20354.
• Citation: 200 S.W. 1042,273 Mo. 218
• Parties: STATE ex rel. SHAWHAN v. ELLISON et al.
• Court: Missouri Supreme Court

200 S.W. 1042

273 Mo. 218

STATE ex rel. SHAWHAN v. ELLISON et al.

No. 20354.

Supreme Court of Missouri. In Banc.

February 2, 1918.

Certiorari by the State, on the relation of Mary F. Shawhan, executrix of George H. Shawhan, deceased, against James Ellison and others, Judges of the Kansas City Court of Appeals, and another to review a judgment (195 Mo. App. 445, 197 S. W. 369), reversing a judgment for plaintiff in an action by Mary F. Shawhan, executrix of George H. Shawhan, deceased, against the Shawhan Distillery Company. Writ quashed.

By this, an original proceeding in certiorari, relatrix on the ground that it conflicts with our last previous ruling on the subject, seeks to quash an opinion delivered by the Kansas City Court of Appeals in the case of Mary F. Shawhan, executrix, etc., v. Shawhan Distillery Co., 195 Mo. App. 445, 197 S. W. 369. Facts, here material, and stated in the opinion of the Kansas City Court of Appeals, may be summarized as follows:

Mary F. Shawhan, executrix of the will of her deceased husband, George W. Shawhan, brought suit against the Shawhan Distillery Company, a Missouri corporation, upon a promissory note in the sum of $5,000, dated January 31, 1912, due two years after date and payable to the order of said Geo. H. Shawhan. The note contained a collateral agreement pledging 50 shares of the capital stock of said corporation as security. The answer pleads no consideration, and, further, that the only consideration for the note was the sale by Shawhan to the defendant corporation of the 50 shares of stock which were pledged as collateral security with the note. The answer was not verified. The reply was a general denial.

Evidence was introduced from which it might be inferred that the note in question was given by the corporation to Shawhan in the purchase by said corporation of a portion of its capital stock from said Shawhan. There was also evidence from which it might be inferred that the note in question was executed by the corporation to pay an obligation which one Garcelon had made with said Shawhan whereby said Garcelon became obligated to purchase from said Shawhan said stock. On the day before the note was executed said Shawhan indorsed on the written obligation of said Garcelon, whereby Garcelon was obligated to purchase such stock, the following indorsement:

"I hereby acknowledge full settlement and satisfaction of the above contract."

The secretary of the defendant corporation testified that all of the corporation's "journals and ledgers" had, while this suit was pending below, been sold by defendant to a junk dealer, and it further appeared that the pages in the "bills payable" book or "tickler" of the defendant, which contained entries relating to four or five notes given by defendant to Shawhan on January 31, 1912, had been cut out and destroyed. The Court of Appeals in effect held that on account of the spoliation by defendant of record evidence in its possession which would have shown the true character of the transaction, the remaining evidence was such that different inferences might arise therefrom, and that therefore the evidence produced presented issues of fact for the jury's determination; that the trial court, for that reason, did not err in refusing to direct a verdict for defendant.

The court in substance instructed the jury that "if the note was given by the defendant corporation, in purchase of its own stock from Geo. H. Shawhan," that they should find issues for the defendant.

Instruction No. 5, given at the request of plaintiff, is as follows:

"If you shall find and believe from the evidence that at any time prior to the 30th day of January, 1912, George H. Shawhan and F. B. Garcelon, on their own behalf, and in good faith entered into a written contract by the terms of which said Garcelon agreed to purchase for himself from said Shawhan 100 shares of the capital stock of the defendant corporation amounting to the par value of $10,000, and that said Garcelon had agreed to pay therefor the sum of $10,000 on or before the 30th day of January, 1912, that on said 30th day of January, 1912, the said George H. Shawhan accepted the note in question in part or in full satisfaction of the agreement so entered into between said Shawhan and said Garcelon, and that in consideration thereof said contract was in fact canceled and satisfied, then your verdict should be for plaintiff."

The jury found the issues for the plaintiff, and judgment was entered by the trial court upon that verdict. Thereupon defendant duly appealed to the Kansas City Court of Appeals, which court reversed the judgment and remanded the cause on the ground that instruction No. 5 was erroneous.

In discussing instruction No. 5 the opinion states:

"This was erroneous and highly prejudicial. We need not pause to consider whether the defense of ultra vires attempted to be pleaded in the answer is well pleaded in law, the answer not being under oath; the defense of no consideration was well pleaded and the facts hypostatized in the instruction bore directly on that issue. On the premise that defendant gave and Shawhan accepted the note in suit in satisfaction of Garcelon's obligation to buy shares of defendant's capital stock, the conclusion must necessarily follow that defendant received no valid consideration for the note, and was entitled to a verdict under the plea of no consideration, since a transaction of that character could amount to nothing less than an attempted purchase by defendant of its own stock. For this error the judgment is reversed, and the cause remanded."

George W. Day, of Kansas City, and Ulysses S. Weary, of Junction City, Kan., for relatrix. Warner, Dean, McLeod & Langworthy, of Kansas City, for respondent Shawhan Distillery Co.

WILLIAMS, J. (after stating the facts as above).

Relatrix contends that the opinion of the Court of Appeals should be quashed because the above-quoted portion conflicts with the following previous rulings of this court, to wit:

(a) Green v. Higham, 161 Mo. 333, loc. cit. 337, 61 S. W. 798; Strode v. St. Louis Transit Co., 197 Mo. 616, loc. cit. 623, 95 S. W. 851; City of St. Louis v. St. Louis Gas Co., 70 Mo. 69, loc. cit. 116; Carr v. Card, 34 Mo. 513, loc. cit. 517; Marks v. Bank of Missouri, 8 Mo. 316, loc. cit. 319—which cases, in effect, hold that "an inconvenience, loss or injury, or the risk of it to the party promised," is a sufficient consideration for a contract.

(b) McDearmott v. Sedgwick, 140 Mo. 172, loc. cit. 183, 39 S. W. 776; Kelerher v. Henderson, 203 Mo. 498, loc. cit. 511, 101 S. W. 1083; Bell v. Warehouse Co., 205 Mo. 475, loc. cit. 492, 103 S. W. 1014; St. Louis Agricultural & Mech. Ass'n v. Delano, 108 Mo. 217, loc. cit. 220, 18 S. W. 1101; German Savings Institution v. Jacoby, 97 Mo. 617, loc. cit. 627, 11 S. W. 256; Musser v. Adler, 86 Mo. 446, loc. cit. 449; Moore v. Ringo, 82 Mo. 468, loc. cit. 473; Sybert v. Jones, 19 Mo. 86, loc. cit. 88 — which, in effect, hold that "when the illegality does not appear from the contract itself, or from the evidence necessary to prove it, but depends upon extraneous facts, the defense is new matter, and must be pleaded in order to be available."

(c) First National Bank v. Guardian Trust Co., 187 Mo. 494, loc. cit. 526, 86 S. W. 109, 70 L. R. A. 79; Cass County v. Mercantile Town Mutual Ins. Co., 188 Mo. 1, loc. cit. 16, 86 S. W. 237; City of St. Louis v. Railway Co., 248 Mo. 10, loc. cit. 27, 154 S. W. 55 — which, in effect, hold that "a corporation cannot avail itself of the defense of ultra vires when the contract in question has been in good faith fully performed by the other party, and * * * when it will not advance justice, but, on the contrary, will accomplish a legal wrong."

These points will be discussed in their order.

Point (a). In the case at bar plaintiff's instruction 5 permits a recovery if the jury finds that the corporation executed the note in suit upon the consideration that Shawhan release Garcelon from his written obligation to purchase and pay for this stock. In other words, this instruction told the jury in effect that if it found the corporation gave its note in payment of or the release of the debt of another (an act clearly ultra vires the corporation, Hunter v. Garanflo, 246 Mo. 131, loc. cit. 134, 135, 151 S. W. 741), it should find for plaintiff. Relatrix's position is that since Shawhan in...