Walsh v. Salsh

• Decision Date: 02 December 1920
• Docket Number: No. 20811.,20811.
• Parties: WALSH et al. v. WALSH et al.
• Court: Missouri Supreme Court

226 S.W. 236

285 Mo. 181

WALSH et al. v. WALSH et al.

No. 20811.

Supreme Court of Missouri, Division. No.

December 2, 1920.

Appeal from St. Louis Circuit Court; Vital stands in trust for said Julius S. Walsh and W. Garesche, Judge.

Suit by Julia M. Walsh and another against Julius S. Walsh and others. Decree for defendants, and the plaintiffs appeal. Affirmed.

Lehmann & Lehmann and Frank Y. Gladney, all of St. Louis, for appellants.

Boyle & Priest and Jourdan, Rassieur & Pierce, all of St. Louis, for respondents.

SMALL, C.

I. This is a suit in equity, filed February 7, 1917, by Julia M. Walsh, widow, and Edward J. Walsh, son, of Edward Walsh, Jr., and his sole heirs, against above defendants, to recover a certain fund as upon an accounting from Julius S. Walsh, the Mississippi Valley Trust Company and Edward W. Humphreys, arising from the exchange by said Julius S. Walsh of 113 shares of the capital stock of the Mississippi Glass Company, a corporation of Missouri, having a capital stock of $100,000, divided into 1,000 `shares of the par value of $100 each for 2,833 1/3 shares of the par value of $100 each in a New York company of the same name, having a capital of $3,000,000.

The charge in the petition is that of this capital stock Edward Walsh, Jr., at the time of his death, owned 446 shares and E. W. Humphreys 554 shares, including their share of 54 shares, which stood in the name of other parties, and which plaintiffs call treasury stock; that said 113 shares of stock belonged to Edward Walsh, Jr., at the time of his death, which occurred the 30th day of June, 1901; that by fraud and conspiracy between defendants the Mississippi Valley Trust Company, which was the administrator of the estate of said Edward Walsh, Jr., Julius S. Walsh, who was president of said trust company, and defendant Edward W. Humphreys, said 113 shares of stock were never inventoried nor accounted for by said trust company as such administrator, but were wrongfully converted to the use of said Julius S. Walsh on or about the 8th day of February, 1902, and were in the year 1904 transferred to said New York company by said Julius S. Walsh in exchange for said 2,833 1/3 shares of the capital stock in said New York company, who since then has received dividends on said New York stock amounting to $183,438; that all such stock in said New York company and dividends so received belong of right to the plaintiffs, but said Julius S. Walsh refuses to account for or pay same to the plaintiffs, but fraudulently persists in converting the same to his own use.

The prayer of the petition is that the defendants Julius S. Walsh and Edward W. Humphreys and the Mississippi Valley Trust Company be required to make full restitution, and said Vierling, in whose name said stock the New York company, be directed to transfer said 2,833 1/3 shares to plaintiffs, and, if this cannot be done, that plaintiffs have judgment against said Julius S. Walsh, Edward W. Humphreys, and the Mississippi Valley Trust Company for the value of the shares of the New York company, which is not less than par, and for all dividends received by said defendants, or either of them, together with interest and costs, and for general relief.

The separate answers of defendants Julius S. Walsh, Edward W. Humphreys, and said trust company denied the allegations of conversion, fraud, and conspiracy, and set up that "defendant Julius S. Walsh acquired said stock by virtue of an oral agreement made between said Edward Walsh, Jr., Edward W. Humphreys, and Julius S. Walsh in 1898, by which each of them became the owner of 333 1/3 shares, or one-third of the capital stock of the Missouri company, which was all the shares owned by said Edward Walsh, Jr., at the time of his death, and which were duly inventoried and accounted for by defendant trust company as administrator; also, in effect, set up the substantive facts shown in evidence by defendants and pleaded, that plaintiffs were estopped by their laches and lapse of time and defendant administrator's final settlement, as well as barred by the 5 and 10 year statutes of limitations.

The reply denied the new matter of the answers.

The other defendants filed a general denial. The trial was commenced May, 28, 1917, during the April term of said court, before Hon. Vital W. Garesche, judge, and occupied more than two weeks of the time of the court.

The testimony is very voluminous. It would be wholly impossible to do more than set out a bare outline of its controlling features. The evidence shows: That Julius S. Walsh and the deceased, Edward Walsh, Jr., were brothers, born and raised in St. Louis. Defendant Humphreys was their nephew, also born in St. Louis, but removed with his parents, when quite young, to New Jersey, but he and Edward Walsh, Jr., spent a large part of their school days together in the east. That the Mississippi Glass Company of Missouri was originally founded by George D. Humphreys, the brother of Solon Humphreys, who was the father of defendant Edward W. Humphreys. In 1876 said Solon Humphreys and John A. Walsh, a brother of Julius and Edward Walsh, Jr., became the owners of said company, each owning one half of the stock thereof. That John A. Walsh died about 1882, and under an order of the probate court of the city of St. Louis made in his estate, of which Julius S. Walsh was the administrator, and by agreement with Solon Humphreys, Edward Walsh, Jr., and Edward W. Humphreys, in April, 1883, acquire all of the stock in the company in consideration of their paying all of the debts of the company, for all of which, John A. Walsh and said Solon Humphreys were liable as indorsers.

It was understood from the beginning, so defendant Edward W. Humphreys testified, that one half of the capital stock belonged to Edward Walsh, jr., and the other half to Edward W. Humphreys, although 523 shares stood in the name of Edward W. Humphreys on the certificate book of the company, and only 423 shares in the name of Edward Walsh, Jr., up to the time of his death; the remaining shares standing in the names of third parties as collateral security or to qualify them as directors. The undisputed evidence also shows the loaning of money every few months, from 1891 to 1897, by Julius S. Walsh, to Edward Walsh, Jr., and Edward W. Humphreys for the company, and the taking of their notes therefor for $31,126.50, dated January 1, 1897, and $16,020, dated April 1, 1897, respectively, with an agreement attached to the larger note, stating that it was secured by 300 shares of the capital stock of said company valued at $35,000, and which agreement also gave the said Julius S. Walsh an option to purchase said 300 shares of stock for the amount of said note and accrued interest "at any time during the continuance of this loan and 30 days after its payment, for the face value of this note and accrued interest. The said option to be exercised in written notification." The $16,020 note was for money which Julius S. Walsh borrowed from the defendant trust company to loan to his brother and Humphreys, and was secured by collateral which. Mrs. Humphreys, the mother of Edward W. Humphreys, loaned to them for the purpose. These notes were payable 2 years after date. The defendant Edward W. Humphreys further testified: that in the fall of 1898 Julius S. Walsh called the attention of both Edward Walsh, Jr., and said Humphreys to the fact that he had been informed by the bookkeeper, Edwards, that certain large sums, amounting to approximately $200,000, had some years before been placed to the credit of said Edward Walsh, Jr., and E. W. Humphreys, each, on the books of the company, which credits were not justified by the business and profits of the company, although no formal dividends had ever been declared by the company. That up to that time, said Humphreys had drawn cash from the company amounting to about $122,000, leaving him a credit of about $78,000, and said Edward Walsh, Jr., had drawn out about $57,000, leaving to his credit and owing him by the company, according to the books, the sum of $143,000. That Julius S. Walsh complained that such credits impaired the value of the 300 shares of stock, which he had the option to purchase. That both. Humphreys and Edward Walsh, Jr., admitted the justice of the complaint made by Julius S. Walsh. That for several years before this note was made, Humphreys and Edward Walsh, Jr., considered the advisability of taking in the said Julius S. Walsh as a onethird owner of the business, and had had prepared by Lodwick a written agreement, which was signed by Humphreys, and which they intended to present and have Julius S. Walsh execute, dividing the stock of the company into three equal parts, of which said Julius S. Walsh was to take one, but the precise terms of which he could not recall. But the matter was neglected, and this written agreement was never presented to Julius S. Walsh. In 1897 Edward Walsh, Jr., made a trip to Europe to investigate the manner of manufacturing wire glass in Germany, and to provide against the contingency of his death during the trip, he himself, suggested the securing of his brother's debt, for which he had no note or written obligation of any kind up to that time, by the making of said note for $31,126.50, to which said option was attached. After he returned, and in the fall of 1898, when Julius S. Walsh made the complaint, as to the credits on the books of the company in favor of said Humphreys and Edward Walsh, Jr., an oral agreement to give him one-third of the stock, if he would release them from their personal obligation to him and hold his debts against the company only, was entered into between said Edward Walsh, Jr., said Humphreys, and said Julius S. Walsh, and that from that time forward the stock in the company should be equally owned by the three of them, each of them owning 333143 shares, and Julius S. Walsh should look to the company only for his debts. But...