The State Ex Inf. Walker v. Equitable Loan & Investment Association of Sedalia

• Decision Date: 19 January 1898
• Citation: 41 S.W. 916,142 Mo. 325
• Parties: The State ex inf. Walker, Attorney-General, v. Equitable Loan and Investment Association of Sedalia
• Court: Missouri Supreme Court

41 S.W. 916

142 Mo. 325

The State ex inf. Walker, Attorney-General, v. Equitable Loan and Investment Association of Sedalia

Supreme Court of Missouri

January 19, 1898 ^[*]

To the information filed in this cause a demurrer has been introduced which necessitates copying the information, which is as follows:

"Now comes R. F. Walker, for the State of Missouri, and states that the defendant was created and organized as a building and loan association on the nineteenth day of July, 1887 under and in accordance with an act of the General Assembly of the State of Missouri entitled "An act concerning mutual savings fund loan and building associations," approved March 31, 1887, and ever since and now is exercising the franchises, rights and privileges conferred by said act of the legislature of the State of Missouri, and other acts amendatory and supplemental thereto, and having its chief office and place of business in the city of Sedalia, in the county of Pettis, in said State. And this relator charges that ever since its organization it has continuously within this State, and at the county of Pettis, aforesaid, offended against the laws of this State and has grossly abused and misused its corporate authority, franchises and privileges and unlawfully assumed and usurped franchises and privileges not granted to it by the laws of the State of Missouri, and especially in the following particular, to wit:

"That the defendant association has issued what it terms 'full paid stock' in shares of the par value of two hundred dollars each, and by which the defendant association, in its certificates issued for said stock, certifies that , the party to whom said stock was issued, was entitled to one or more shares of the capital stock of defendant association upon which there has been paid in the full sum of two hundred dollars for each share, the said sum being the dues in full on said shares of stock at the rate of one dollar per month on each share for the full period of two hundred months from its date, and that the holder and owner of said shares of stock was entitled to the redemption thereof in the full sum of two hundred dollars on, and not before, the expiration of one hundred months from the date of its issue, and also to receive thereon as the share of the earnings and profits of the business of said association belonging to the said shares of stock so issued seven per cent interest per annum, payable in the sum of seven dollars each six months during the whole period of one hundred months, except that the last payment of interest is two thirds of said sum for four months, said interest being payable agreeably to and only on the presentation and delivery, at the place of payment indicated therein, of the coupons attached to said certificates of stock as they respectively matured, and the said association guaranteed to secure the redemption of said shares and the payment of the sum of two hundred dollars on each and all the said coupons attached thereto; that there was deposited with the trustees named in said certificates certain securities for the redemption thereof, as hereinafter set forth, and the said certificates further provided, that in consideration of the security thus given for the redemption for said stock the holder thereof released all right, interest and benefit of such share in and to the earnings and profits of said association over and above the seven per cent interest per annum, payable as therein provided, and in said certificates declaring that the same was not negotiable until the certificates indorsed on the back thereof had been duly signed by the said trustee, and upon the back of each of the said certificates of stock was the indorsement of the said trustee that each of said certificates was secured by the deposit of evidences of indebtedness, as stated in the face of said certificates of stock, which were held as security for the redemption of said shares. That each of said certificates of stock was issued as aforesaid by the defendant association, and it declared that to secure the redemption and payment thereof, and all the interest coupons attached thereto, as well as other shares of stock, and coupons of the same series, there was deposited with James C Thompson, as trustee, obligations for loans due said association, in an amount ten per cent more than the total par value of all of the shares in said series, and secured by pledges of the stock of said association with said loans, and also by deeds of trust on real estate, appraised at double the amount of said loans, and with approved titles, and which said deeds of trust and pledged stock were also deposited with the said trustee, and that the defendant association agreed and guaranteed that the securities deposited with said trustee should, during the whole of the said one hundred months, be maintained in the amount and character as aforesaid, to secure the redemption and payment of said shares of stock, and that the said trustee would hold the said obligations and securities aforesaid for the benefit of the lawful holder of said shares of said series, and that the said trustee was authorized to collect said obligations and indebtedness or to sell the same and to use the proceeds thereof to redeem said shares in case default should be made by the defendant association in the redemption and payment thereof or of the interest thereon.

"And this relator further states that the said defendant association has continuously since the time of its organization issued a large number of shares of its full paid stock, as aforesaid, said shares being negotiated and sold upon the faith of the securities deposited with the trustee as in the said certificates stated, and as shown by the indorsement of the said trustee placed thereon, and signed by him, and that the said defendant association withdrew and took out of its assets its bills receivable to an amount exceeding the amount of its said outstanding shares of stock at least ten per cent, and deposited the same with the said trustee as security for the payment of said shares of stock and for the payment of the interest thereon, and upon the faith of said certificates and of the deposit of security, as aforesaid, the defendant association has sold and has now outstanding of said shares of full paid stock one hundred and eighty-eight thousand dollars or more, together with the notes and obligations and assets of the defendant association as security therefor, as aforesaid.

"And this relator further states that there was organized under the laws of the State of Missouri a certain corporation known as The Pettis County Investment Company, having a capital stock of two thousand dollars and its chief place of business in the city of Sedalia aforesaid, and that by virtue of certain acts of the General Assembly of the State of Missouri it became and was necessary for the said Pettis County Investment Company to deposit with the State treasurer of the State of Missouri one hundred thousand dollars of good and available securities or cash, to be approved by said treasurer, for the protection of the investors in such bonds certificates or debentures as might or should be issued by the said Investment Company; and thereupon the defendant association, without consideration, issued and delivered to the said State treasurer ninety thousand dollars ($ 90,000) par value of its full paid shares of stock secured by a deposit of one hundred thousand dollars of its bills receivable and obligations secured by deeds of trust, as hereinbefore stated, with one Adam Ittel as the trustee, and the said Ittel signed the said indorsement on the back of each of said certificates representing the said shares of stock of the tenor and effect aforesaid, and the certificates for said shares of stock to the amount of said ninety thousand dollars bearing the indorsement of said trustee, was by the defendant association delivered and deposited to and with the said State Treasurer as security for whatever liability might be incurred by the said Pettis County Investment Company, as aforesaid, and that said State Treasurer now holds said ninety thousand dollars of said full paid stock and the said Adam Ittel now holds one hundred thousand dollars of the said obligations and notes payable to the defendant association as security for the payment of said stock, as aforesaid.

"And this relator further avers that the defendant association has continuously paid and is now paying the interest at the rate of seven per cent per annum upon all of the said outstanding full paid shares of stock issued by it as aforesaid, except that held by the said State treasurer, when it has not earned and is not now earning that amount of interest upon its stock, and that said interest is so paid upon the said full paid shares out of the capital of said association and out of the earnings belonging to the other classes of stockholders therein.

"That by reason of the facts aforesaid said defendant association has rendered itself incapable and unable to prosecute the business for which it was organized and for which it received its franchise from the State, and has become and is wholly insolvent, and a continuation and perpetuation of the unlawful means and acts aforesaid is of great harm and injury to the public and a great wrong is done to all those people dealing with said association by reason of the privileges and franchises granted to it by the State of Missouri. And your relator avers that the said action of the defendant association, as hereinbefore alleged, is a gross perversion of the franchises granted to it by the State of Missouri and an unsurpation of privileges not granted to it and of great injury to the public. Wherefore, the Attorney-General, who prosecutes...