Woolfolk v. January
| Decision Date | 17 December 1895 |
| Citation | 33 S.W. 432,131 Mo. 620 |
| Parties | Woolfolk, Plaintiff in Error, v. January |
| Court | Missouri Supreme Court |
Error to Vernon Circuit Court. -- Hon. D. P. Stratton, Judge.
Affirmed.
T. K Skinker for plaintiff in error.
(1) Unless the plant received by the company under the arrangement of December 12 was fairly worth $ 80,000, the stock is not full paid and the stockholders are liable to creditors for the difference. Constitution of Missouri, art 12, sec. 8; Garrett v. Coal Co., 113 Mo. 337; Liebke v. Knapp, 79 Mo. 24; Kehlor v Lademann, 11 Mo.App. 550; Chouteau v. Dean, 7 Mo.App. 210; Shickle v. Watts, 94 Mo. 410; Bank v. Gallaher, 43 Mo.App. 482. The burden of proof as to value was on defendant. Camden v. Stuart, 144 U.S. 104; State v. Wood, 13 Mo.App. 143; Crandall v. Lincoln, 52 Conn. 73; Clapp v. Peterson, 104 Ill. 26. (2) The transfer of the plant pursuant to the arrangement of December 12 did not operate as payment of Roberts' and Irland's liability on the five hundred and ninety shares subscribed by them. Schaeffer v. Ins. Co., 46 Mo. 248; Thompson on Stockholders, secs. 11, 106, 107; Beach on Receivers, sec. 513. (3) The rights and privileges conferred by ordinance number 37 should not be considered in determining the question to what extent, if at all, the stock was paid up. Camden v. Stuart, 144 U.S. 104; Chisholm v. Forney, 65 Iowa 333; Tasker v. Wallace, 6 Daly, 364. (4) The words "full paid and nonassessable" in the stock certificates are no protection to the defendant. Erskine v. Loewenstein, 82 Mo. 301; Burkinshaw v. Nichols, L. R., 3 App. 1004; Boulton Carbon Co. v. Mills, 78 Iowa 460; Ins. Co. v. Floyd, 74 Mo. 291; Thompson on Stockholders, sec. 135; 2 Thompson on Corporations, sec. 1680; Henkle v. Mfg. Co., 39 Ohio St. 547; Keystone Bridge Co. v. McCluney, 8 Mo.App. 496; Foreman v. Bigelow, 7 Cent. L. J. 430; Steacy v. Railroad, 5 Dillon, 348. (5) He used no diligence to ascertain the truth, as was his duty. Upton v. Tribilcock, 91 U.S. 45; Kitchen v. Railroad, 69 Mo. 265; Stephenson v. Smith, 7 Mo. 617; Roan v. Winn, 93 Mo. 511; Leavitt v. Laforce, 71 Mo. 356; McDaniel v. Harvey, 51 Mo.App. 199; Howe v. Agricultural Works, 46 Ill.App. 85; LeWarne v. Meyer, 38 F. 191. (6) The price paid is a telltale. Curd v. Lackland, 49 Mo. 451; Ames v. Gilmore, 59 Mo. 549; Morgan v. Wood, 38 Mo.App. 260; Douglass v. Ireland, 73 N.Y. 100. (7) Defendant's failure to support his plea of belief with his own oath is fatal to his claim of innocence. Hedrick v. Beeler, 110 Mo. 91; Baldwin v. Whitcomb, 71 Mo. 651; Cass County v. Green, 66 Mo. 498; Henderson v. Henderson, 55 Mo. 559; Goldsby v. Johnson, 82 Mo. 605; Leeper v. Bates, 85 Mo. 228. (8) The alleged verbal transfer of the works to the directors on the twelfth of October, gave them no title nor even possession. Black's Law Dict., "Livery of Seizin;" 2 Black. Com., side p. 315; Rannells v. Rannells, 52 Mo. 108; Hughes v. Israel, 73 Mo. 538. (9) Plaintiff's judgment against the company is conclusive on defendant. Nichols v. Stevens, 27 S.W. 613; Glenn v. Williams, 60 Md. 119; Hawkins v. Glenn, 131 U.S. 319; Lewis v. Glenn, 84 Va. 947; Thayer v. Lithographic Co., 108 Mass. 523; Came v. Brigham, 39 Me. 35; Milliken v. Whitehouse, 49 Me. 527; Wilson v. Stockholders, 43 Pa. St. 424. (10) The statute of limitations (R. S. sec. 2782) is no defense to this action. Hauser v. Thompson, 56 Mo.App. 85; R. S. 1879, sec. 940; Gen. Stat. 1865, sec. 13, p. 370; R. S. 1855, sec. 22, p. 390; Thomp. on Stock., sec. 210; Chouteau Spring Co. v. Harris, 20 Mo. 382; Miller v. Ins. Co., 50 Mo. 55; Schricker v. Ridings, 65 Mo. 214; Cable v. McCune, 26 Mo. 571; Ochiltree v. Contracting Co., 54 Mo. 117.
Burton & Wight and M. T. January for defendant in error.
(1) Roberts and Irland sold the gas works to the corporation in payment of their subscription to the capital stock. They fixed the price. If there was an overvaluation they are responsible for it. They were estopped to assert the stock was not full paid. Lloyd v. Preston, 146 U.S. 630; Cook on Stock and Stockholders, sec. 39, page 35, and note. (2) Plaintiff in error purchased the bonds with full knowledge of the transaction between Roberts and Irland and the corporation. First. The recital in the bonds suggested an inquiry, which, if followed up, would have disclosed the fact of the estoppel against Roberts and Irland. Second. Plaintiff in error does not claim as an innocent purchaser of the bonds. "Under the circumstances of this case, if Mr. Woolfolk was ignorant his ignorance may well be imputed to him as knowledge." (3) Plaintiff in error then stands in the shoes of Roberts and Irland and he is likewise estopped to assert the stock is not full paid. (4) Notwithstanding there may have been error in the trial, the judgment is for the right party, on the question of estoppel and should be affirmed.
In this action plaintiff in error sought to charge the defendant as a stockholder of certain shares in the Nevada Gas and Coal Company, to satisfy a judgment obtained by plaintiff against said company. The proceeding is by motion for an execution against the defendant as holder of one hundred and one shares of the capital stock of said company. Plaintiff obtained judgment for $ 7,266.96 against the company. Execution issued and was returned nulla bona. Plaintiff averred that defendant's stock was wholly unpaid. Defendant denied that he owed any sum whatever on the stock.
For a second defense, the answer avers that plaintiff's judgment is founded on eighteen certain bonds of $ 1,000 each, made by the company and delivered to P. Roberts, D. H. Irland, and J. H. Andrews, in part payment of the purchase price of certain gas works and the properties and franchises thereto belonging, sold by said Roberts, Irland, and Andrews to said company; that the balance of the purchase price was five hundred and ninety paid-up shares in the capital stock of said company, which shares were issued and delivered to said Roberts, Irland, and Andrews, as fully paid and nonassessable and were so received by them, and it was understood and agreed by and between said company and said Roberts, Irland, and Andrews, that said bonds were to be a charge upon the property of the company only and not upon any of the shares of the capital stock; that afterward Roberts sold defendant the one hundred and one shares sued on, being part of said five hundred and ninety shares, and at the time of the sale represented to defendant that said shares were fully paid and nonassessable, and the same so appears upon the certificates thereof, and defendant, so believing, purchased the same in good faith and for value; that plaintiff purchased the said eighteen bonds with full notice of the said alleged facts and is thereby estopped from maintaining this motion. For a third defense the answer avers that defendant purchased his shares for value and in good faith, believing that they were paid-up and nonassessable. For a fourth defense the answer avers that the debt upon which plaintiff recovered his judgment was not to be paid within one year from the time it was contracted. For a fifth defense the answer avers that said debt became due and payable on the first day of January, 1885, and suit thereon was not brought against the company until January 2, 1889.
The reply admits that the judgment was founded on the eighteen bonds as alleged, but denies that the five hundred and ninety shares were paid-up stock or were issued or delivered to said Roberts, Irland, and Andrews as fully paid and nonassessable or were so received by them, or that it was understood and agreed between them and the company that the bonds were to be a charge upon the property of the company only and not upon the stock, or that Roberts and Irland represented to defendant that the one hundred and one shares sold to him by them were fully paid and nonassessable, or that defendant purchased the stock in good faith believing the same to be full paid and nonassessable, or that plaintiff purchased the bonds with notice of the alleged facts pleaded in the second defense. The reply further denies generally the third, fourth, and fifth defenses.
Besides this action against January there were pending at the same time and in the same court actions of the same kind by the same plaintiff against Joseph E. Harding, John A. Tyler, Michael Jordan, Thomas E. Stokes and Ed. J. Dickinson. By agreement of counsel for all the parties the cases, except that against Stokes, were all tried together, the evidence was taken in all together, they were submitted together, and the same bill of exceptions applies to all. The cause was heard by the circuit court and a finding and judgment for the defendants, and plaintiff sued out his writ of error.
From the record we gather that in 1882 D. H. Irland, of St. Louis, Preston Roberts, of Independence, and J. H. Andrews obtained from the mayor and city council of Nevada a franchise to construct gas works in said city and the exclusive privilege of laying the mains in the streets and alleys of said city for a period of twenty-one years. The ordinance limited the charge for gas for five years to $ 3.50 per thousand feet and after five years to $ 3 per thousand feet. The city was bound to use twenty-five lamps for five years at $ 30 per year per lamp, and each extension of three hundred and eighty feet bound the city to use an extra lamp at $ 25 per year.
Irland and Roberts paid Andrews for the franchise thus obtained between $ 1,200 and $ 2,000. Irland and Roberts then proceeded to, and did, erect the works and laid the mains in the streets. Irland and Roberts then became the promoters of a corporation to...
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