Ward v. National Ice Cream Co.

• Decision Date: 20 December 1922
• Docket Number: No. 23956.,23956.
• Citation: 246 S.W. 554
• Parties: WARD v. NATIONAL ICE CREAM CO. et al.
• Court: Missouri Supreme Court

246 S.W. 554

WARD v. NATIONAL ICE CREAM CO. et al.

No. 23956.

Supreme Court of Missouri, in Banc.

December 20, 1922.

Motion for Rehearing Overruled December 30, 1922.

Appeal from St. Louis Circuit Court; Robert W. Hall, Judge.

Action by William J. Ward against National Ice Cream Company and others. From an order refusing to revoke an interlocutory order appointing a receiver, defendants appeal. Reversed and remanded with directions.

Chester H. Krum, Philip Pollack, and Taylor R. Young, all of St. Louis, for appellants.

JAMES T. BLAIR, J.

This is an appeal from an order of the St. Louis circuit court "refusing to revoke * * * an interlocutory order appointing a receiver." In his petition respondent states that he is and was a stockholder in the National Ice Cream Company, a corporation of this state; that on and prior to May 24, 1921, he and Herman Horowitz and appellants Bechtold and Kraemer owned all the stock of the corporation; that the capital stock was $10,000, divided into 1,000 shares, of par value of $10 each, which for some time Prior to May 24, 1921, was shown by the company's books to be owned as follows: Kraemer, 50 shares: Bechtold, 375 shares; Horowitz, 405 shares; Ward (respondent), 170 shares. That Horowitz for some time had been and on May 24, 1921, was, president of the corporation, Bechtold was vice president, and Kraemer was secretary and treasurer; that on May 24, 1921, Horowitz resigned as president and transferred his stock, as follows: To Adolph E. Moll, 305 shares, and to Alice Moll, 100 shares. That thereafter, "without the formality" of an election, Adolph E. Moll unlawfully assumed the office of president of the corporation and has since acted and drawn salary as such. The petition continues as follows:

"That the consideration paid to the said Herman Horowitz for his stock by the said Adolph E. Moll and Alice Moll was $12,000, of which $750 was in the form of a debt which the said Herman Horowitz owed the defendant corporation, and which the said defendants Adolph E. Moll and Alice Moll assumed, $500 was unlawfully paid from the treasury of the defendant corporation to said Herman Horowitz and $3,000 was unlawfully secured and paid to said Herman Horowitz by placing a deed of trust for $3,000 upon the real estate owned by the defendant corporation, so that the said defendants, Adolph E. Moll and Alice Moll, are now indebted to the said defendant corporation in a sum in excess of $4,000. Plaintiff further states that the said Edward Bechtold is indebted to the defendant corporation in the sum of approximately $700, and the said Arthur Kraemer in the sum of approximately $150. That despite the above indebtedness of the said defendants to the defendant corporation, and despite the fact that the said corporation has lost money since the said Adolph E. Moll has unlawfully assumed its presidency and that it has been necessary to borrow money to continue to operate its business, the said defendants have failed to pay their obligations to the defendant corporation, but have proceeded to borrow large sums of money to operate the said business, giving therefor notes of the corporation, signed by A. B. Moll, president, so that the defendant corporation is now indebted to the Easton-Taylor Trust Company to an amount in excess of $10,000, and in addition thereto has other liabilities of no small amount.

"Plaintiff further states that the said defendants, Adolph E. Moll, Arthur Kraemer, and Edward Bechtold, have, for a long time past, been taking to their homes, supplies, materials,, and food products, the property of said defendant corporation, and have failed to compensate the said corporation for the goods so taken.

"Plaintiff further states that by reason of such illegitimate use of the said defendant corporation by the other defendants herein, the said defendant corporation has become and is greatly embarrassed in its financial condition, and that a continuance of said unlawful practices will bring about the insolvency and bankruptcy of said corporation defendant, if it has not already done so, and destroy the value of plaintiff's stock in said corporation.

"Wherefore, plaintiff prays that a receiver or receivers be appointed by this court to take charge of the business, property, and effects of said corporation, and to manage its affairs under the order of this court, and that the court make such other and further orders touching the premises as it may deem meet and proper."

Appellants filed a joint return in which they admitted the truth of the allegations concerning incorporation, amount of capital stock, the number and ownership of the shares, the officers of the company prior to May 24, 1921, the resignation of Horowitz, and the transfer of his stock to the Molls; deny that Moll unlawfully assumed the office of president, and aver that he was unanimously elected to that position by the board of directors; admit that the consideration paid Horowitz for his stock was $12,000, and that $750 of this was covered by Moll assuming a debt, in that sum, which Horowitz had previously incurred to the corporation; deny that $500 of the corporation's money was unlawfully paid to Horowitz, and deny that $3,000 was unlawfully secured by placing a deed of trust upon the company's property, and aver that the deed of trust was given by the corporation by consent of all its stockholders, and was done at the especial instance and request of respondent, who, it is averred, was anxious to have Moll come in and succeed Horowitz as chief managing officer of the company; "and that Adolph E. Moll, at the instance and request of plaintiff, quit a position which was paying him $5,000 per year to accept the position of president of the defendant corporation at a salary of $50 per week, upon the express condition and understanding in writing, signed by the plaintiff, that said deed of trust be placed upon the property of the defendant corporation, in order to enable the defendant Adolph E. Moll to raise sufficient funds with which to pay the said consideration to the said Herman Horowitz in order that a transfer and sale of all the stock of the said Herman Horowitz in defendant corporation be made to the defendant Adolph E. Moll, by reason of all of which defendants say that plaintiff is estopped now to make such claim, inasmuch as the enforcement thereof would work a fraud upon the defendant and each of them."

It is then admitted that Adolph E. and Alice Moll are indebted to the company in the sum of $4,254,13; Bechtold, in the sum of $638.21; and Kraemer, in the sum of $148. It is averred that the indebtedness of the Molls was incurred with the consent of respondent, and that the Molls have paid interest on it and reduced it since it was incurred, and in addition have advanced the company $1,075; that the indebtedness of Bechtold was incurred, $300 March 11, 1919. $50 August 6, 1919, and $375 February 19, 1921, which has been reduced to the sum already stated; that Kraemer's indebtedness was incurred, $98 in February, 1921, and $30 in March, 1921; that respondent has frequently received statements of the financial condition of the company which showed the obligations mentioned and has never objected thereto and "has never made any complaint to the board of directors or officers of the corporation in regard thereto, and that said indebtedness is worth the face value thereof, none of the defendants being insolvent." It is then denied that the company has lost money since Moll became its president, and averred that the only losses are those due to improper, payments of rebates by Horowitz while he was president, without any responsibility of defendants therefor, and that suit to recover those losses is pending. It is admitted the company is liable to a trust company for $10,500, and averred that $3,000 of this is the sum borrowed on the credit of the company, secured by trust deed, for the benefit of Moll with the express consent of respondent. It is admitted that the individual appellants have taken small quantities of food...