State v. Reynolds

• Decision Date: 28 June 1918
• Docket Number: No. 20948.,20948.
• Parties: STATE ex rel. WURDEMAN, Circuit Judge, et al. v. REYNOLDS et al.
• Court: Missouri Supreme Court

204 S.W. 1093

275 Mo. 113

STATE ex rel. WURDEMAN, Circuit Judge, et al. v. REYNOLDS et al.

No. 20948.

Supreme Court of Missouri. In Banc.

June 28, 1918.

Proceeding by the State, on relation of G. A. Wurdeman, Judge of the Circuit Court for St. Louis County, and others against George D. Reynolds and others, as Judges of the St. Louis Court of Appeals, and others. Preliminary rule made absolute.

Albert D. Norton, of St. Louis, and A. E. L. Gardner, of Clayton, for relators. Morton Jourdan, George C. Mackay and W. G. Carpenter, all of St. Louis, for respondents.

WALKER, J.

This is a proceeding in prohibition against the judges of the St. Louis Court of Appeals, the Sterns Tire & Tube Company, William L. Burgess, Otto L. Menzing, Adam M. Joerder, and Arthur R. Koerner.

A bill in equity had been filed in the circuit court of St. Louis county by Sherman E. Smalley and Ephrim S. Garrett, relators herein, against the corporation and the individuals who are respondents here. These respondents sued out a writ of prohibition in the St. Louis Court of Appeals to prevent the hearing and determination of the said bill in equity. After the issuance of the preliminary writ of prohibition by the Court of Appeals, the action at bar was instituted to prevent further interference by the Court of Appeals with the suit in equity, on the ground of a lack of jurisdiction. The respondents' answer was in the nature of a demurrer. Upon these pleadings, after argument, the case was submitted. The bill in equity is set out at length in the petition for prohibition filed herein. The material allegations of same, having been admitted by respondents' demurrer, constitute to the facts for the determination of relators' right to a permanent writ. Such allegations, therefore, as are necessary to an understanding of the case, and are determinative of the Court of Appeals' jurisdiction, will be embodied in the statement of facts.

Hon. Gustavus A. Wurdeman is one of the judges of the circuit court of St. Louis county. The bill in equity was filed in his division of that court. When the writ of prohibition was sued out in the Court of Appeals, he was named therein as one of the respondents. Hence his appearance as one of the relators in the case at bar. The relators, other than Judge Wurdeman, are Sherman E. Smalley and Ephrim S. Garret. Their interest in the proceeding is as stockholders in the Sterns Tire & Tube Company, the corporation respondent. Smalley owns 28 shares of the capital stock of same, and Garrett 55 shares. Each of these shales has a par value of $100, or a total value of $8,300. It was to protect their respective interests as stockholders of said corporator that the suit in equity was instituted. Of the respondents, Burgess is the president of the said corporation; Menzing is its vice president and sales manager; and these two, with Joerder and Koerner, are the sole directors.

The corporation was organized in the state of Delaware, with a capital stock of $1,000,000, divided into 10,000 shares of the par value of $100 each. Soon after its organization, it was authorized to do business in Missouri. It maintains its chief office or place of business in St. Louis county, where it owns and occupies in the transaction of its business about 4½ acres of land, with buildings thereon, and machinery, goods, wares, merchandise, books, and papers, of the value of $25,000.

The petition or bill in equity charges, at length and with much particularity, that Burgess, the president, who is paid as such, a salary of $10,000 per year, directs and dominates the other directors, and thereby has the complete control of the business and affairs of the corporation; that the management of the same by said Burgess and the other directors is characterized by deceit, fraud, and waste, in disregard of the best interests of the corporation, and to the damage and irreparable loss of all its stockholders, except its directors; that for a number of years the statements made by these directors of the business affairs of the corporation show that it is being conducted at a great loss during each month and year covered by the term specified, up to the date of the filing of said bill, and that it has no income except that arising from the sale of its stock. This is followed by the usual formal allegations of a lack of other adequate remedy, the necessity for the protection of all of the stockholders, of the appointment of a receiver, an accounting, and for such other and further orders, etc., as may be necessary within the authority of the court.

As is evident from the character of the pleading of respondents, the issuance of the writ herein, except incidentally, is not questioned on account of the technical insufficiency of the petition or bill. It is contended, in effect, that what it does show, rather than what it does% not, constitutes grounds ample for the refusal of the writ.

The returns of the respective respondents, stated briefly according to their tenor, will most aptly illustrate their attitude. The judges of the St. Louis Court of Appeals raise a question of law solely in that they insist that said court is rightfully possessed of jurisdiction to issue its writ against the circuit court of St. Louis county, and that the presiding judge of the Court of Appeals was acting within the jurisdiction of said court when he issued the preliminary writ of prohibition, and that such court has full and complete authority to hear and determine the same. The other respondents, Sterns Tire & Tube company, William L. Burgess, its president, Otto L. Menzing, Adam M. Joerder, and Arthur E. Koerner, all of whom are directors thereof, for their return, demur to the petition and writ of relators, in that they say: First. That the matters and things therein stated are not sufficient in law or equity to entitle relators to the relief asked for in said petition, or to authorize the issuance of the writ of prohibition by the Supreme Court Second. That the" record in the prohibition proceeding in the St. Louis Court of Appeals, which relators here assail, does not disclose such facts as to bring the said proceeding within the jurisdiction of the Supreme Court, but that such record on its face discloses that said cause is within the jurisdiction of the St. Louis Court of Appeals. Third. That there is nothing before this court from or by which it is made to appear that the money value or "the amount in dispute" exceeds the statutory jurisdiction of the Court of Appeals. Fourth. That, in the petition or bill in equity, filed in the circuit court of St. Louis county, which is the basis of this action, the plaintiffs therein pray that the said court require (1) defendants Burgess, Menzing, Joerder, and Koerner to account to the defendant corporation for all moneys made by means of secret profits, as therein mentioned, for the benefit of the corporation and all of its stockholders; (2) that said Burgess, Menzing, Joerder, and Koerner be removed as officers and as directors of the corporation, and restrained from further conducting or interfering with its affairs; and (3) that a receiver be appointed for such corporation. That said petition, or bill, presents no data for estimating the amount which might be derived, if any, if it were adjudged that an accounting on the part of the defendant directors be had, and there is no legal basis for estimating the value of any of the relief sought by plaintiffs in their petition. Respondents, therefore, pray the preliminary writ of prohibition be discharged.

I. As to jurisdiction. The object here is not to obtain a money judgment. If so, the question as to the court entitled to cognizance in the determination of this case would he of easy solution, the terms of the Constitution being so plain and pertinent relative thereto that the employment of other words in defining its meaning would be rendered unnecessary. While the Constitution confers power upon the Courts of Appeals as well as the Supreme Court (sections 3, 12, art. 6), to issue and determine original remedial writs, the line of demarcation between the jurisdictions of these respective courts in this regard is not defined. The general language employed in the Constitution has therefore rendered judicial interpretation necessary that the cognizance of these tribunals in cases of the character here under review may be rendered as nearly in harmony with the court's appellate jurisdiction as the difference in the cases may admit. The result of this interpretation, as attested by numerous cases, is that where relief is sought other than in the recovery of a money judgment, the value of the right necessarily involved, estimated in money, will constitute the measure of jurisdiction. Bates v. Werries, 196 S. W. loc. cit. 1126; Bowles v. Troll, 262 Mo. loc. cit. 382, 171 S. W. 326; State ex rel. E. L. & P. Co. v. Reynolds, 256 Mo. loc. cit. 718, 165 S. W. 801.

Ruled otherwise, we would have presented the incongruous spectacle of the Courts of Appeals' appellate jurisdiction being limited to $7,500, and having no limit in applications for original writs. This was not intended by the framers of the Constitution; but that these tribunals in the exercise of their respective jurisdictions should be governed by the same standard in one class of cases as in others.

Here the value of the right of relators, necessarily involved, is that of $8,300. The actual value of the tangible property, real and personal, of the corporation, admitted by respondents (State ex rel. v. Reynolds, supra) is $25,000. Leaving out of consideration the value of the capital stock other than that belonging to the relators, the definitely stated value of the right involved is far in excess of the jurisdiction of the Court of Appeals. The conclusion is therefore authorized, in harmony with the reasoning in the cases cited, and as definitively declared in State ex rel. Sale v. Nortoni et al., 201 Mo. 1, 99 S. W....