Union Nat. Bank v. State Nat. Bank

• Decision Date: 05 March 1900
• Citation: 55 S.W. 989,155 Mo. 95
• Parties: UNION NAT. BANK v. STATE NAT. BANK et al.
• Court: Missouri Supreme Court

55 S.W. 989

155 Mo. 95

UNION NAT. BANK v. STATE NAT. BANK et al.

Supreme Court of Missouri, Division No. 2.

March 5, 1900.

COURTS—FOREIGN ADJUDICATION — EFFECT ESTOPPEL—DIRECTORS' MEETINGS — VALIDITY —RATIFICATION—MORTGAGE ON CORPORATE PROPERTY.

1. Defendant held a mortgage on real property in Illinois, which was executed by John Moran and wife, and also a mortgage on real property in St. Joseph, Mo., executed by the John Moran Packing Company; and in a suit in the court of Illinois to foreclose the first-named mortgage John Moran and wife, the plaintiff in this suit, and others were parties defendant. The suit was defended by the Union National Bank, who was an attaching creditor, upon the ground that the mortgage was executed by John Moran for the purpose of defrauding his creditors; but the mortgage was held valid, and the equity of redemption foreclosed. Thereafter the Union National Bank brought suit by attachment in a circuit court in Missouri against the State National Bank, and attached all the property included in the mortgage from the John Moran Packing Company to the State National Bank. The attachment was sustained, and plaintiff then brought this suit to set aside the mortgage last named, upon the ground that it was void, and a cloud upon the title to the property. Held, that the judgment rendered in the Illinois court did not estop the defendant in this suit from asserting its rights under the mortgage from the John Moran Packing Company, since the title to the property in question was in no way involved in the Illinois suit.

2. A mortgage on corporate property, authorized at a meeting of the board of directors held beyond the limits of the state in which the company was organized, contrary to its charter, is void.

3. The execution of a mortgage, which was void because authorized at a meeting of the board of directors in a foreign state, contrary to the charter of the corporation, was ratified at a meeting held within the state, but subsequent to the attachment of the mortgage property. Held, that the ratification was too late to defeat the lien of the attachment.

4. Where a mortgage is void because authorized at a meeting of the board of directors of the corporation held beyond the limits of the state from which it derived its existence, in violation of its charter, the fact that the company was organized to do business in the state where the mortgaged property was situated, and that the mortgage was made to secure its only creditor in that state, and to procure means to continue its business, did not validate the mortgage.

5. Laws 1891, p. 75, providing that foreign corporations shall maintain an office in Missouri, where legal service may be had, and proper books kept, and shall not mortgage its property to the injury or exclusion of any one in the state, etc., did not validate a mortgage executed by a foreign corporation, which was void, because authorized at a meeting of its directors beyond the limits of the state under the laws of which it was organized, contrary to its charter.

6. A president and director of a corporation, though he owns all of the stock, has no right to execute a mortgage on the corporate property, without authority to do so from the board of directors, where there are four other directors who are nominal stock owners.

Appeal from circuit court, Buchanan county; H. M. Ramey, Judge.

Action by the Union National Bank against the State National Bank and others. From a judgment in favor of plaintiff, defendant bank appeals. Affirmed.

Vinton Pike and Brown & Dolman, for appellant. Stauber, Crandall & Strop, for respondent.

BURGESS, J.

This is an action by plaintiff, a national bank, doing business in the city of Chicago, Ill., against the defendant bank, doing business in the state of Missouri, and its co-defendants, to have adjudged a certain deed of trust given by the John Moran Packing Company, to the use of the defendant the State National Bank, fraudulent and void, and to set the same aside, and to release the property therein described, upon which plaintiff has a judgment lien, in order that plaintiff may sell said property free from the incumbrance of said deed of trust, and that it may bring its full value at such sale. The plaintiff, a creditor of the John Moran Packing Company, an Illinois corporation, doing business in this state, began suit by attachment against it in the circuit court of Buchanan county on the 22d day of February, 1895. Under the writ of attachment issued all of the property of the packing company, including that involved in this litigation, was levied upon. The attachment was sustained and judgment rendered in favor of plaintiff against said company for the sum of $27,034.91. This suit was then instituted by plaintiff against the defendants, to set aside a deed of trust executed on the same property by the John Moran Packing Company to the defendant Donovan on the 18th day of February, 1895, for the use of the defendant the State National Bank, to secure two notes for $25,000 each, executed by the packing company by its president, John Moran, to the State National Bank, on November 8, 1894, and due, respectively, in three and four months. This deed of trust was authorized at a meeting held in the city of St. Joseph, at which only three of the board of directors were present, while the board was composed of five directors. The petition alleges that said deed of trust was fraudulently procured; that the meeting of the directors was illegal and void; and the execution of the deed of trust to the use of the defendant bank, by which it destroyed the corporate existence of the John Moran Packing Company as an existing, going concern, was in violation of its charter, being the general law of the state of Illinois. The answer of the State National Bank admits the incorporation of the plaintiff and of the defendant State National Bank, as alleged in the petition, and denies all other allegations in the petition except as in the answer afterwards stated. It then alleges that on the 18th day of February, 1895, the John Moran Packing Company, a corporation, was justly indebted to the defendant bank in the sum of $50,000 for money borrowed, evidenced by two promissory notes for $25,000 each, and that on the day last named the John Moran Packing Company, by order of its board of directors, duly and lawfully made, and for the purpose of securing the payment of said notes, executed and delivered to defendant Donovan, as trustee, the deed of trust in question; that on the ____ day of February, 1895, the defendant Andriano, as acting trustee in said deed of trust, sold the real estate therein described, and the defendant bank became the purchaser thereof. The answer then alleges that the John Moran Packing Company was at all the times mentioned in the petition and the answer, and at the time of and long before the creation of the indebtedness mentioned in said pleading, a corporation created and existing under the laws of Illinois, and doing business in that state, and also carrying on a separate and independent business in the state of Missouri, and located at Buchanan county, in said state, but has never been a resident of this state; that the indebtedness aforesaid of said John Moran Packing Company to defendant bank was incurred and created in the state of Missouri, and was due and payable in said state to said bank, a citizen thereof. The answer then avers that any lien that plaintiff may have on said property was fraudulently procured by collusion with said John Moran and said packing company, and that there were no grounds of attachment against either of them at the time plaintiff sued out its writ. Plaintiff, in its reply to the answer of defendant bank, alleged that the defendant bank had filed a bill in the courts of the state of Illinois against the plaintiff and others to foreclose a mortgage on certain real estate lying in that state, which mortgage was authorized and given to secure the same debt described in plaintiff's petition in this case, and based on the same facts and involving the same question of the legality of the meeting held in St. Joseph, Mo., February, 1895, and alleging that the adjudication of these questions by said court was an estoppel as to all questions actually involved and passed on in that case between the parties thereto. The incorporation of the John Moran Packing Company was under the law of the state of Illinois, and the certificate of incorporation recited that the location of the principal office was at that time in the city of Chicago, in that state, although all the business—which was that of buying and selling, killing, and packing—was done at St. Joseph, Mo. John Moran owned all the stock, although some of it was in the name of others. Of the five directors, Moran, Fogarty, and Linaker lived in St. Joseph; Nash lived in Chicago. Moran was president and manager. On the 18th day of February, 1895, the John Moran Packing Company executed the conveyance which is here sought to be set...