Strong v. Crancer
| Decision Date | 16 November 1934 |
| Docket Number | No. 32800.,32800. |
| Citation | 76 S.W.2d 383 |
| Parties | STRONG v. CRANCER et al. |
| Court | Missouri Supreme Court |
Appeal from Circuit Court, St. Louis County; Julius R. Nolte, Judge.
Action in equity by Jules Q. Strong, as trustee in bankruptcy of the estate of the Allegheny Tube & Steel Company, against Ralph Crancer and others, wherein defendants filed demurrers. From a judgment sustaining all demurrers, plaintiff appeals.
Affirmed.
Lee W. Grant and Barton N. Grant, both of St. Louis, for appellant.
Oliver J. Miller and Lashly, Lashly & Miller, all of St. Louis, for respondents Joseph and Lyman J. Kaiser, John Frerichs, Willard S. Tisdel, E. H. Thurston, Archibald E. Debow, and Howard E. Rusk.
Keil & Keil and Frank Coffman, all of St. Louis, for respondent Emil Sieloff.
Irl B. Rosenblum, of St. Louis, for respondents Mamie Baggerman, Joseph Cantoni, Mrs. A. H., Lester A., and Ralph Crancer, Charles A. Enders, George B. Fleischman, Mrs. Isabella Plough, Mike Reichert, Harry Schopfer, Nick Zahner, Albert H. Hitchings, Marcel J. Immer, Leigh C. Turner, and Wilbur J. Carmichael.
George Eigel, of St. Louis, for respondent Rudolf Schlatter.
HYDE, Commissioner.
This is an action in equity by a trustee in bankruptcy to collect from defendants, stockholders of the Allegheny Tube & Steel Company, a bankrupt corporation, amounts alleged to be due and unpaid for shares of capital stock. Defendants' demurrers presented the grounds that the petition does not state a cause of action; that there is a misjoinder of parties defendant; that there is a misjoinder of causes of action; that plaintiff is not entitled to equitable relief; and that plaintiff has an adequate remedy at law. The first ground really includes the last two grounds for the purposes of this case. The court sustained all demurrers; plaintiff refused to plead further; and judgment was entered for defendants, from which plaintiff appealed.
Plaintiff's petition alleged that the bankrupt was incorporated under the laws of this state January 29, 1929, with $160,000 capital, which consisted of 600 shares of preferred stock of $100 par value and 20,000 shares of common stock of $5 par value; that 15,311 shares of common stock were issued as fully paid and nonassessable, as follows: Lester A. Crancer, 11,310; Ralph Crancer, 4,000; George B. Fleischman, 1; that the consideration therefor was the assets of a partnership of these defendants; and that, because the assets of the partnership were overvalued and the liabilities thereof were understated, the net worth of the same lacked at least $6,000 of paying into the corporation the par value of this common stock issued to them. Plaintiff's petition further alleged that in March, 1929, the bankrupt issued to Ralph Crancer, without any consideration, 90 shares of common stock as fully paid and nonassessable, and also issued to him 98 shares of preferred stock, for which he paid only $4,080, leaving a balance due of $5,720 therefor; and that, in August, 1929, it issued to George B. Fleischman, without any consideration, 800 shares of common stock, for which there was due $4,000.
Plaintiff's petition further alleged that the capital of the bankrupt was increased by authorizing 1,400 more shares of preferred stock and 10,000 more shares of common stock; and that certain shares of each were issued to defendants, other than the three original incorporators, for which they had not fully paid and for which they were still liable to pay, as follows:
Shares Not Amt
Name Fully Paid For Due
Mrs. Mamie Baggerman 16 sh. common $ 80.00
F. W. Bailey 20 sh. common 100.00
Joseph Cantoni 6 sh. common 30.00
Joseph Cantoni 6 sh. preferred 80.00
Wilbur J. Carmichael 10 sh. common 50.00
Mrs. A. A. Crancer 1 sh. common 5.00
Archbald E. DeBow 10 sh. common 50.00
Chas. A. Enders 85 sh. common 425.00
Chas. A. Enders 60 sh. preferred 820.00
John Frerichs 10 sh. common 50.00
Fred J. Heimer 15 sh. common 75.00
Albert H. Hitchings 40 sh. common 200.00
Marcel J. Immer 10 sh. common 50.00
Joseph Kaiser 48 sh. common 240.00
Lyman J. Kaiser 2 sh. common 10.00
Kohler & Co. (Edwin Kohler) 2 sh. common 10.00
Thomas Moffat 40 sh. common 200.00
Mrs. Grace Nestor 10 sh. common 50.00
Isabella H. Plough 1 sh. common 5.00
Isabella H. Plough 1 sh. preferred 10.00
Mike Reichert 2 sh. common 10.00
Mike Reichert 2 sh. preferred 40.00
Dr. Howard A. Rusk 5 sh. common 25.00
Rudolf Schlatter 20 sh. common 100.00
Harry Schopfer 10 sh. common 50.00
Mrs. Louise Siegwart 10 sh. common 50.00
Emil Sieloff 5 sh. common 25.00
E. H. Thurston 20 sh. common 100.00
Willard S. Tisdel 10 sh. common 50.00
Leigh C. Turner 5 sh. common 25.00
Nick Zahner 2 sh. common 10.00
Concerning these transactions, plaintiff's petition alleged: "That the bankrupt issued to all of the defendants herein from time to time shares of its stock, which said shares of stock were issued to defendants, respectively, as fully paid and nonassessable, and were received by defendants, respectively, but that nevertheless said defendants did not pay the par value of all the stock received by them; that all the defendants, in acquiring shares of stock of the bankrupt without paying the full par value thereof, committed a legal fraud against creditors and thereby became obligated to repay to this plaintiff for the benefit of creditors the difference between the par value of the stock acquired by them, respectively, and the amounts actually paid by them therefor."
In addition to the above matters, the petition alleged that the corporation was adjudicated a bankrupt; that plaintiff was the duly appointed trustee; that claims had been allowed against it in bankruptcy in the sum of $124,903.58; that the assets of the bankrupt, exclusive of the liability of defendants for capital stock sued for, did not exceed $50,000; that all costs of administration would have to be paid out of these assets; and that the referee had made a finding that at least $76,361.19 more than the value of the assets in plaintiff's hands would be required to settle all claims and costs, but that there was unpaid and still due upon the capital stock at least $34,563.71, which he authorized plaintiff to collect by proper proceedings at law or in equity. The prayer of plaintiff's petition was: "That in order that a multiplicity of suits be avoided that an account be taken of the amount due the creditors of said bankrupt, of all costs and expenses, including reasonable counsel fees for bringing and prosecuting this suit, and of the amounts severally due from the defendants herein, and of the amounts paid by each on account of stock issued to them, respectively, and that judgment may be entered against each of the defendants herein for so much as may be found due, respectively, from defendants, and for such other and further relief as may seem to the Court meet and proper."
Plaintiff at the outset misconceives the nature of the suit, saying in his brief that this is an action "to recover assets fraudulently transferred by the bankrupt to the defendants respectively, said assets consisting of capital stock of the bankrupt, issued and delivered to the defendants respectively, as full paid and nonassessable, when in fact it was not full paid." So far as the corporation issuing stock is concerned, the shares of capital stock which it issues are its liabilities and not its assets. Stock certificates with a stated par value, although not a direct indebtedness of the corporation, evidence the fact that the holder has paid a certain amount to the corporation which it is liable to pay back to him, proportionately with other shareholders upon dissolution, out of its assets remaining after other creditors have been paid. Of course it also determines his share of earnings. 14 C. J. 383, § 503; 7 R. C. L. §§ 166, 171, and 280. The shares are assets of the stockholders to whom they are issued, and their liability to pay the par value thereof are assets of the corporation. Therefore a suit to collect this unpaid obligation of stockholders to the corporation is not a suit to set aside a fraudulent transfer and recover assets transferred, but it is a suit to collect a debt; namely, the amount the shareholder ought to have paid before the corporation issued the shares to him and thus assumed liability to him as a shareholder for the par value of the stock issued.
It is a fundamental principle of equity jurisdiction that, when a plaintiff has a full, complete, and adequate remedy at law, he cannot invoke the jurisdiction of a court of equity to obtain the same relief he could get at law. Williams v. Walker, 333 Mo. 322, 62 S.W.(2d) 840. Plaintiff, here, desires to collect certain definite amounts from defendants. Why can he not collect these amounts by a suit at law? Plaintiff's petition shows that it will require $76,361.19 to pay the debts of the bankrupt and costs of the bankruptcy, after the referee made the most liberal possible estimate of the amount that could be realized from its assets. It also shows that the total claimed to be due from all stockholders, upon their liability to pay the full par value of their stock, is considerably...
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