Hill v. Atoka Coal & Mining Co.

Burgess, J.

(dissenting.)—This is a suit brought by plaintiff to recover a dividend of $30 per share upon one hundred shares of stock included in certificate number 14, issued to E. J. Crandall and by him assigned to plaintiff.

The petition is as follows: ‘‘Plaintiff states that defendant is a corporation organized under the laws of the state of Illinois having property in the state of Missouri, and an office in the city of St. Louis in said state for the transaction of its usual and customary business. Plaintiff further states that defendant is indebted to plaintiff in the sum of $3,000 for dividends which have accrued upon one hundred shares of the capital stock of defendant’s said corporation held and owned by plaintiff, being the one hundred shares described in stock certificate number 14 of said corporation originally issued and delivered to one E. J. Crandall and by him transferred for value to plaintiff. Plaintiff says that said dividends became due and payable in St. Louis, Missouri, on or about the tenth day of December, 1889, that although demanded, defendant refuses to pay the same, wherefore plaintiff prays judgment for said sum of $3,000, with interest from the tenth, day of December, 1889, and for his costs.”

The answer, in addition to the general issue, pleaded substantially in estoppel the facts which appeared from the testimony at the trial, and asked that the certificate of stock number 14 be surrendered by plaintiff and canceled.

In March, 1881, defendant was duly incorporated under the laws of the state of Illinois, with a capital stock of $500,000 which was divided into five thousand shares of $100 each. E. J. Crandall subscribed for four thousand, seven hundred and fifty shares, and the remaining two hundred and fifty shares were taken by *171plaintiff and various other parties, by virtue of an agreement previously made with them. At that time, plaintiff and E. J. Crandall were directors of the corporation. By May 15, 1882, all of the stock held by Crandall was disposed of by him in compliance with the requirement of the board of directors, except two hundred and fifty-eight shares. It became necessary for the defendant to raise funds and at a meeting of the board of directors held on the thirteenth day of May, 1882, an assessment of sixteen and two thirds per cent, was levied upon three thousand shares of the stock of the company by consent of the stockholders, except Crandall, which included the two hundred and fifty-eight shares held by him. An additional assessment of eight and one third per cent, was subsequently made on the same shares of stock in the same way. During this time plaintiff was president and-Crandall vice president of the company. They were both present when the first assessment was made, but Crandall did not vote on the proposition. Crandall was not present when the last assessment was made, but Hill was. Shortly after the assessment was made Crandall refused to pay the assessments against his stock, and wrote to the secretary of the company the following letter:

“Mines at Collinsville, 111.

“St. Louis, Mo., Dec. 6th, 1882.

“Chas. M. Hays, Esq., Secretary.

“Dear sir : I hand you herewith certificate of stock in Atoka Coal & Mining Co. number 15 for one hundred shares held by me, and certificate number 43, for fifty-eight shares held by W. R. Crandall, which I surrender to the company as requested by Capt. R. S. Hays. There is one certificate, number 13, for one hundred shares, still held by me, which I have hypothecated for a temporary loan, that I can not control just *172at present; but will have it in my possession within sixty days, and will then surrender it also.

“Yours truly,

“E. J. Crandall.”

It was some time before the one hundred shares were redeemed by Crandall, and he never surrendered the certificate, although repeatedly urged to do so • by plaintiff and other officers of the company. The matter remained in this condition until early in 1887, when another formal demand was made on Crandall by the secretary of the company for the surrender of the stock.

Plaintiff, with full knowledge of all the facts and circumstances, in December, 1888, purchased from Crandall said one hundred shares of stock for the sum of $750. In December, 1889, the company declared a dividend of $30 per share on all stock of record on its books, except the one hundred shares in question. There never was at any time a technical forfeiture of this stock. Before the dividend was declared, plaintiff presented the certificate of stock number 14, assigned to him by Crandall, to the company’s office, and requested a transfer to him on the books, which was refused.

At the annual meeting of the stockholders in 1888, the plaintiff, as proxy for Crandall, voted the one hundred shares of stock. A number of the other stockholders were not present at this meeting, and they also voted by proxy.

The cause was tried by the cou'rt without a jury, and no declarations of law were asked or given. A judgment was rendered requiring defendant to pay the amount of the dividend with interest thereon at six per cent, per annum from the time it was de-manded by plaintiff, upon condition that plaintiff within thirty days, pay to the defendant the sum of $2,500 with interest at the rate of six per cent, per *173annum from the fifteenth day of June, 1882, being the amount of the assessments and interest; the costs to be equally divided between the parties.

Defendant then filed the usual motions for new trial and in arrest of judgment, which being overruled, the cause is here by appeal.

1. It is urged with much confidence by appellants’ counsel that the court should have sustained the objection to the introduction of any testimony under the petition, because there was no averment therein, charging that a dividend has been declared by the board of directors of the defendant company, and until that is done, the relation of debtor and creditor does not subsist between the corporation and its stockholders.

This, as a proposition of law, is unquestionably correct. Cook on Stock and Stockholders, etc. [2 Ed.), sec. 544. And unless the petition in substance does allege that fact the objection should have been sustained. The allegation in the petition is that a dividend on the stock had accrued and that it became due and payable at St. Louis on the tenth day of December, 1889, and that it was demanded of the defendant corporation and wrongfully refused. Under the statutory rule for construing pleadings, which requires them to be “liberally construed, with a view to substantial justice between the parties,” (section 2074, Revised Statutes, 1889) the above allegation may well be construed to mean that a dividend had been declared, and this seems what was intended by the pleader, because he follows it up with the allegation “that said dividend became due and payable at St. Louis, Missouri, on or about the tenth day of December, 1889, and that although demanded, defendant refused to pay the same.” By section 2055, Revised Statutes, 1889, “only the substantive facts necessary to constitute the cause of action or defense shall be required to be stated.” We-think *174that the petition, construed by the rule herein invoked, is substantially good.

II. The next point of contention is that the plaintiff can not recover, because the resolution declaring the dividend, excepted from the benefits of such declaration, certificate number 14, for the one hundred shares of stock, upon which this suit is brought, and that in so far as this certificate is concerned, no dividend was ever declared on the stock, and that therefore his only remedy is by proceeding against the corporation for disregarding his rights.

This position, if the facts in the case justify it, seems to be sustained both by reason and authority. State v. Railroad, 6 Gill. 386; 1 Morawetz on Private Corporations [2 Ed.], secs. 450 and 451. But on the sixth day of December, 1889, defendant company by a resolution of its board did declare a dividend of $30 per share on all stock of record, saving and excepting the one hundred shares of stock in the name of E. J. Crandall, and plaintiff, as assignee of Crandall, is entitled to recover the dividend on his stock, unless the corporation had the power to discriminate against and preclude it from participation therein. The stockholders were all of the same class, and, when such is the case, the dividends must always be pro rata equal and without preference. Cook on Stock and Stockholders [2Ed.], sec. 542; Ryder v. Railroad Co., 13 Ill. 516; Alling v. Wenzell, 27 Ill. App. 511.

It would seem, under these authorities, that the resolution of the corporation, in so far as it discriminated against the one hundred shares of stock now held by plaintiff, is absolutely void and of no effect.

III. Plaintiff, being the owner of the stock when this suit was brought, had the right to sue for any dividend to which it was properly entitled to participate, to wit, $30 per share as declared by the resolution of *175the corporation passed on the sixth day of December, 1889, and that, too, without first compelling a transfer to him of the stock on the books by an equitable proceeding. Robinson v. Bank, 95 N. Y. 638; Merchant’s National Bank v. Richards, 6 Mo. App. 454, affirmed 74 Mo. 77.

IY. It is further claimed that plaintiff can not recover because he was, at the time he purchased the stock, as thoroughly familiar with its status as was Crandall himself, and that Crandall could not have recovered, because, by voting the assessment on his own stock and that of his associates, it was an admission on his part that the stock was not fully paid and was assessable; and that rather than pay these assessments he voluntarily surrendered his stock, which was accepted by his associates. This position does not seem to us to be borne out by the evidence. When Crandall surrendered the one hundred and fifty-eight shares of stock, as evidenced by certificates numbers 14 and 43, in his letter of date December 6, 1882, which accompanied them, he expressly stated that the stock in controversy was not at that time under his control; that it was hypothecated to secure a temporary loan, but that he would have it'in his possession within sixty days and would then surrender it.

The stock in controversy is paid up stock, and could not have been assessed by a majority vote of the stockholders, nor of the directors (Cook on Stock and Stockholders, etc. [2 Ed.], sec. 243) only by common consent. And while the evidence of Hill and Hays tends to show that the twenty-five per cent, assessment was made by agreement among the stockholders, it was simply voluntary, and does not show that Crandall ever at any time consented thereto. On the contrary, Crandall testifies that he was unable to pay the assess*176ment and thought that it was for the purpose of ‘'freezing him out.”

The stock was never at any time surrendered, nor were there any steps taken by the corporation to forfeit it for the nonpayment of the assessments claimed to have been made against it, nor to compel its surrender, although about nine years elapsed from the time that the assessments are alleged to have been made before this suit was instituted. If the theory of defendant is correct, it might have maintained an action against plaintiff and Crandall for specific performance of the contract with Crandall and compelled the surrender of the one hundred shares of stock in controversy; but, as shown by the evidence, Crandall did not consent to the assessment, and there was, therefore, no consideration for the promise made by him for the surrender, and the promise was nuclum pactum. And, for the same reason, the defense based on such a ground must fail. Even if the stock had been forfeited for nonpayment of calls regularly made, a court of equity will allow the owner to redeem the stock by the payment of the amount due with interést, if the stock has not been issued to another person. Walker v. Ogden, 1 Biss. 287. Such was the effect of the decree of the court in this case.

It is admitted that there was no technical forfeiture of the stock. And the facts as developed by the evidence are not sufficient to estop plaintiff as the assignee of Crandall from suing for and collecting the amount of the dividend declared by defendant corporation on the stock.

The certificate of stock is evidence of ownership, and passed the stock to the assignee by virtue of the assignment. Cook on Stock and Stockholders, etc. [2 Ed.], sec. 231; Chouteau Spring Co., v. Harris, 20 Mo. 383; Budd v. Street R’y Co., 12 Oregon, 273. The *177promise, then, to surrender it at some future time is governed by the same rules of law that control in regard to- contracts or promises for the delivery of other personal property or choses in possession or choses in action. The large number of authorities cited by counsel for appellant on this point are either cases of symbolical delivery in prcesenti, or for the delivery for a valuable consideration of something tangible in futuro.

That the stock was never surrendered by Crandall, and was never so understood to be by the defendant corporation, finds support in the fact that in December, 1889, the company declared a dividend of $30 per share on all stock of record on its books, except the one hundred shares now held by plaintiff. If it had been surrendered and accepted, as contended for by defendant, why was it kept on its books and excepted from the resolution declaring the dividends?

Y. The cause was tried as one in equity, and we are not prepared to say that the finding of the court was not authorized by the facts in proof, or that it is not just and equitable between the parties. The answer interposed an equitable defense, and the cause was properly tried by the court sitting as a chancellor. Durfee v. Moran, 57 Mo. 374.

Finding no error that will justify a reversal of the cause, the judgment should be affirmed.

Black, C. J., and Gantt, J., concur with me.