State v. Shelton

• Decision Date: 16 December 1911
• Citation: 142 S.W. 417,238 Mo. 281
• Parties: STATE ex rel. CONNORS et al. v. SHELTON, Judge, et al.
• Court: Missouri Supreme Court

142 S.W. 417

238 Mo. 281

STATE ex rel. CONNORS et al. v. SHELTON, Judge, et al.

Supreme Court of Missouri.

December 16, 1911.

1. PROHIBITION (§ 26)—REPLY—TREATED AS DEMURRER ON MOTION FOR JUDGMENT.

Where, upon the coming in of a return to a petition for prohibition, relators filed a reply, and neither side asked for a commissioner to take proofs and report, and issues of fact were presented by the pleadings, the reply will be treated as a demurrer to the return, or as a motion for judgment on the pleadings; and all well-pleaded allegations of the return must be accepted as true, and the allegations of the petition specifically denied as false.

2. MECHANICS' LIENS (§ 157)—PLEADINGS TO PERFECT—FILING OF LIEN.

Under Rev. St. 1909, § 8251, requiring lien accounts filed with the circuit clerk within 90 days after the completion of the work, or after the materials were furnished, to be just and true, an unjust account, made so intentionally, will not support a mechanic's lien.

3. PROHIBITION (§ 3)—GROUNDS—EXISTENCE OF OTHER REMEDIES—INADEQUACY OF APPEAL.

Inadequacy of remedy by appeal because of delay will not warrant the issuance of a writ of prohibition, though Const. art. 2, § 10, provides that justice shall be administered without delay.

4. PROHIBITION (§ 1)—NATURE OF REMEDY.

Prohibition reaches the court itself, and compels it to desist from the exercise of unwarranted jurisdiction.

5. CORPORATIONS (§ 556) — RECEIVERSHIP — PARTIES.

In an action by the stockholders of a corporation for the appointment of a receiver, the creditors need not be made parties; for they have the right to intervene.

6. ESTOPPEL (§ 68)—EQUITABLE ESTOPPEL —CLAIM OR POSITION IN LEGAL PROCEEDINGS.

Where creditors, in proceedings to perfect a lien, sued both the debtor corporation and receivers which had been appointed to conserve its property, they cannot, in a subsequent proceeding, attack the validity of the receivership.

7. CORPORATIONS (§ 553) — RECEIVERSHIP — POWERS OF COURT OF EQUITY.

A court of equity has the power to appoint a receiver on petition of stockholders, where the corporation is insolvent, and the directors are misappropriating its funds.

8. RECEIVERS (§ 59) — APPOINTMENT—COLLATERAL ATTACK.

The appointment of a receiver cannot be collaterally attacked.

9. CORPORATIONS (§ 560) — RECEIVERSHIP — SALE OF PROPERTY.

A court of equity, having appointed a receiver to conserve the property of an insolvent corporation, may sell the property to prevent its deterioration and loss.

10. APPEARANCE (§ 20) — VOLUNTARY APPEARANCE—EFFECT.

A party's voluntary appearance is a waiver of notice, and he cannot object that notice was not given.

11. PROHIBITION (§ 3) — GROUNDS — EXISTENCE OF OTHER REMEDY—REMEDY BY MOTION.

Where an order decreeing the sale of the property of an insolvent corporation was made, over the objection of creditors, who had appeared and were participating in the action, those creditors could assail the order by motion, and having failed to use that remedy are not entitled to prohibition to restrain a sale.

12. PROHIBITION (§ 3) — OTHER REMEDY — RIGHT TO APPEAL.

In view of Rev. St. 1889, § 2246, giving every person aggrieved an appeal, Rev. St. 1909, § 2038, which amended that section, and which provides that any party to a suit aggrieved by a special order after final judgment may appeal, creditors who appeared and contested an order for the sale of the property of an insolvent corporation were entitled to appeal, where the order recited their appearance and objection; and hence, no appeal having been taken, the creditors were not entitled to prohibition.

Woodson, J., dissenting.

In Banc. Prohibition by the State, on the relation of M. C. Connors and William Nuttall, doing business as M. C. Connors & Co., against Nat M. Shelton, as Judge, and John C. Mills, as receiver. Preliminary rule quashed, and absolute writ denied.

Vroman, Munro & Vroman and John T. Barker, for relators. Humphrey & Gose and Higbee & Mills, for respondents.

LAMM, J.

Prohibition. Relators are M. C. Connors and William Nuttall, doing business in railroad contracting under the firm name and style of M. C. Connors & Co. Respondents are the Honorable Nat M. Shelton, judge of the Second judicial circuit of Missouri, and John C. Mills, receiver of the Hannibal & Northern Missouri Railroad Company, hereinafter called the company.

This cause is submitted on the bare pleadings. There is no evidence, no formal demurrer to the returns, and no motion for judgment. The situation is this: On the filing of the petition, we passed and had served a preliminary rule to show cause. Presently respondents made separate returns, admitting some, but denying specifically certain other, vital allegations of the petition. Further, these returns stated facts putting a case to us quite different from that stated in the petition. Thereupon relators filed a reply, to the effect that they were without information or knowledge on certain allegation of facts in the returns, but averring that "said matters are immaterial in this case." It then restates, in effect, some averments of the petition, and renews the prayer for an absolute writ of prohibition. Neither side asked for a commissioner to take proofs and report. Such situation springs a question of practice to be disposed of at the outset. We rule thereon as follows:

Present issues of fact, absent evidence upon which those issues can be determined, and present a reply of the kind indicated, followed by a submission of the case on the pleadings, we may, ex gratia, treat the reply as a demurrer to the returns. In that view of it, we must take all well-pleaded allegations of the returns (not impossible) as true, for the purposes of the case. State ex rel. v. Broaddus, 234 Mo., loc. cit. 332, 137 S. W. 271. Or, if by way of extreme grace, we take the reply at bottom and meaning as a motion for judgment on the pleadings, the same result would follow, to wit, the well-pleaded averments in the returns would be taken as true, and those averments of the petition specifically denied by the returns would be taken as false. State ex rel. v. Shields, 141 S. W. 585, just handed down in banc, and not yet officially reported. In no other way can the issues of fact raised by the pleadings be laid out of view, and vitality and sense be given to the submission.

We are to gather, then, the facts from the 40 printed pages of pleadings, excluding relators' petition, except in so far forth as the returns admit its allegations. So gleaning, the facts in small compass follow, viz.:

In 1909 the company was incorporated to build a railroad from Hannibal to Kirksville, passing through Marion, Shelby, Macon, and part of Adair counties. Its route lay through a region without railroad facilities, and the people of that region were anxious for a road. Its authorized capital was $2,000,000, divided into 20,000 shares of the face value of $100 each. In 1910 about nine miles of the proposed road were graded in Marion county, and four in Shelby, but in disconnected portions; some culverts and bridges were partly built on those grades; there were some cross-ties and grading machinery belonging to the company, and the right of way was nearly secured through Marion and Shelby. The people along the line had subscribed and paid various sums of money to aid the enterprise, and were expected to subscribe more. In December, 1910, the company quit being a going concern, laid off all work on the line, and work was never resumed. It was then found that large blocks of its capital stock were wrongfully issued and donated to its directors and officers; that its treasury was looted; that it had continuously violated the law in not keeping a general office for the transaction of its business within this state, as provided by section 3035, R. S. 1909; that it had wrongfully kept its office, books, etc., in Chicago, Ill. Other usurpations and fraudulent acts upon the part of its officers were found to exist, among them the wrongful dissipation of funds and wrongful appropriation of large sums by the company's president to his own use. In consequence of all these things, dissentions sprang up in the board of directors, and made out of question any co-operation and concert of action. So accentuated was this intestinal war that some of its officers denounced others of them by publications, precisely as in a former age a man "posted" his enemy. The confidence of the people on whom the company relied for subscriptions was lost, debts accrued, amounting to $37,000, with no means to pay. The company became insolvent. Suits were begun against it on overdue notes for $15,000. A lien had been filed by one Simmons (Note: relators' lien was not yet filed), and a suit was pending to enforce Simmons' lien. To add to the corporate chaos and distress, rights of way had been wrongfully taken in the name of some of the promoters, which they refused to transfer or put of record, and contracts for construction were let, without advertising for bids, for grossly excessive prices. In short, it was impossible for the company to go on with the construction of the road, and all the work already done faced waste, depreciation, and destruction. In that fix, on April 5, 1911, some of the bona fide resident stockholders brought suit against the company in the Shelby circuit court for a receiver, to conserve the property, pay debts, cancel the shares of stock wrongfully donated, wind up the company's affairs, etc. Summons issued and was served, an answer was filed, and on a certain day in April of that year that cause was tried. The chancellor found the issues for plaintiffs, and appointed respondent John C. Mills receiver, who gave bond, qualified, and took upon himself the burden of the receivership as the arm of the court. (Nota bene: There is no pretense that any motion was filed to revoke the order appointing him receiver, or that the judgment in that case does not...