Strong v. Turner
| Decision Date | 06 December 1938 |
| Docket Number | No. 24559.,24559. |
| Citation | 122 S.W.2d 71 |
| Parties | STRONG v. TURNER. |
| Court | Missouri Court of Appeals |
Appeal from Circuit Court, St. Louis County; Fred E. Mueller, Judge.
"Not to be published in State Reports".
Suit by Jules Q. Strong, as trustee in bankruptcy of the estate of the Allegheny Tube & Steel Company, against Leigh C. Turner to recover $25 for the benefit of creditors of the defunct corporation, growing out of defendant's purchase of stock from the corporation at $25 less than its par value. From a judgment for defendant, plaintiff appeals.
Judgment reversed and cause remanded, with directions.
Barton N. Grant, of St. Louis, for appellant.
Oliver J. Miller, Robert G. Maysack, and Lashly, Lashly & Miller, all of St. Louis, for respondent.
This is a suit brought by plaintiff as trustee in bankruptcy of the estate of Allegheny Tube & Steel Company against defendant Turner to recover $25 for the benefit of the creditors of the defunct corporation, growing out of his purchase of stock from the corporation at $25 less than its par value.
The suit was begun in a justice of the peace court in St. Louis County, Missouri, on the 30th day of March, 1935, by the filing of the following statement:
The answer filed by defendant contained, first, a general denial, and, an assertion that he owed nothing to the plaintiff on account of the matters set out in the statement, and, second, the following paragraph: "The defendant further stated that he paid the full and regular market value for the stock mentioned in plaintiff's petition; the defendant further states that he was informed by the officers, agent and representative of the plaintiff's company that the stock he secured was fully paid for and if such was not the fact, then this defendant alleges that its purchase was secured from him by false and fraudulent representations and therefore is null and void." (Italics ours.) and third, the plea of the five year bar of the statute of limitations as set out in Section 862, R. S.Mo.1929, Mo.St.Ann. § 862, p. 1143.
The justice found in favor of plaintiff, and, on being tried in the circuit court on appeal, the jury found in favor of the defendant, and plaintiff, after the overruling of his motion for a new trial, brings the cause to this court by appeal for review.
The controversy involves similar issues to those in the case of Strong v. Frerichs, 116 S.W.2d 533, handed down in this court on May 3, 1938.
Plaintiff offered and read in evidence without objection Exhibit "A", which was a certified copy of the Articles of Association and Charter of the Allegheny Tube & Steel Company, which showed that it was incorporated for $160,000 and that the capital stock was divided into 600 shares of preferred stock of the par value of $100 a share, and 20,000 shares of common stock of the par value of $5 each.
Plaintiff also offered and read in evidence Exhibit "B", which was an authenticated copy of the order of the Referee in Bankruptcy approving the bond of the Trustee in Bankruptcy of the Allegheny Tube & Steel Company.
Plaintiff also offered and read in evidence Exhibit "C", which was an authenticated copy of the order of the Referee in Bankruptcy instructing plaintiff to bring this suit, and which further recited that the aggregate of the duly proved and allowed claims in the bankruptcy proceeding was $124,903.58, and that there was in the hands of the trustee, with which to pay said claims, a sum which did not exceed $50,000.
Plaintiff also offered in evidence Exhibit "D", which was a certified copy of the list of the claims which had been allowed against the bankrupt estate, and totaled $124,903.58.
Carl Boge testified on the part of the plaintiff, on direct examination, as follows:
That he was employed by the Allegheny Tube & Steel Company as auditor and in such capacity all the books of account were under his control, including the original stock books. He identified the original stock certificate book of the Allegheny Tube & Steel Company covering the common stock and stated that on June 21, 1929, stock certificate No. 71, covering five shares of common stock had been made out to the defendant, the stub of said book reading as follows:
He also identified the stock certificate book of the Allegheny Tube & Steel Company, covering preferred stock and stated that on June 24, 1929, five shares of preferred stock were issued to defendant, the stub in said stock certificate book reading as follows:
"Preferred Stock Certificate No. 61.
"For 5 Shares Issued to
"Leigh C. Turner
"1601 Ry. Exch. Bldg.
"Dated ______ 6/24 ______ 19-9
"From Whom Transferred _______
"Dated ______ 19__
No. Original No. Original No. of Shares
Certificate Shares Transferred
Received Certificate No. ______
For ______ Shares
this _____ day of ______ 19__
"(Revenue Stamp)"
The witness then identified the stock ledger of the Allegheny Tube & Steel Company, which was a book of original entry, and showed the stock transactions. The witness then identified the account of defendant, Leigh C. Turner, therein, in which he was debited on June 24, 1929, with the purchase of five shares of preferred stock totaling $500, and five shares of common stock totaling $25, the total debits amounting to $525. He also read the credit entries therein contained showing that defendant had paid $500 cash on June 25, 1929, and that the balance, towit: $25 had been charged to "Organization Expense". He also testified that no money was ever paid in to the company for this $25 and that it was set up as "Good Will" or "Organization Expense" on the books of the company.
Mr. Boge also testified that the defendant had received three dividends on his preferred stock, as follows:
July 1, 1929...................... $3.75
Oct. 1, 1929...................... 3.75
Jan. 2, 1930...................... 3.75
On cross examination Mr. Boge testified that all the books were kept under his direction and control, although he did not make all the entries himself; that when a sale of stock was made that usually he would get a memorandum of it and then make the original entry on the stock certificate book; that he was not familiar with the actual transactions which took place between the stock salesmen or officers of the company, and the prospective stockholders; that from the stock certificate stubs he then transferred his entries to the stock ledger and that he was familiar with the fact that if a person purchased a share of stock in a corporation from some other individual, whether it was direct or through a brokerage house, that the original stock certificate would have to be returned to the company before a transfer of the stock so sold could be made on their books and a new certificate issued to the purchaser.
Leigh C. Turner, the defendant, testified as follows:
That he was the owner of five shares of common stock and five shares of preferred stock in the Allegheny Tube & Steel Company, and that he had acquired them in June, 1929, and that he had bought them through Arthur Hilmer and A. Kauffman, who were salesmen for Lorenzo E. Anderson & Company, stock and bond brokers in St. Louis, Missouri, and that he paid $500 and received five shares of preferred stock and five shares of common.
In regard to this transaction he testified: ...
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