author: BOHLING, Commissioner.

text:
    Edna M. CUTHBERT, Executrix of the Estate of Mabel S. Adams, Deceased, Respondent, v. Arthur H. HEIDSIECK, Appellant.
    No. 49137.
    Supreme Court of Missouri, Division No. 2.
    Feb. 11, 1963.
    Edward J. Houlihan, St. Louis, for appellant.
    John B. Sharpe and Jesse E. Bishop, St. Louis, for respondent.
   BOHLING, Commissioner.

This is a suit to set aside a gift made December 16, 1959, by Mabel S. Adams to Arthur H. Heidsieck, Mrs. Adams’ attorney, of two hundred shares of United States Steel Corporation common stock on the ground of undue influence practiced by said attorney upon said client. We have appellate jurisdiction because of the amount in dispute. Mrs. Edna M. Cuthbert was appointed Guardian of the Estate of Mabel S. Adams, Incompetent, on September 26, 1960. She filed this suit January 25, 1961, as such guardian. A trial resulted in a decree and judgment for the plaintiff, the trial court retaining jurisdiction so far as necessary to effectuate said decree and judgment. Mrs. Adams died pending defendant’s appeal, and plaintiff, as Executrix of the Estate of Mabel S. Adams, Deceased, has been substituted as party respondent.

Under plaintiff’s petition and defendant’s answer the following facts stand admitted: Plaintiff’s capacity as guardian aforesaid. Mrs. Adams’ ownership on or about December 16, 1959, of the 200 shares of United States Steel Corporation stock. Defendant, for a long time prior to December 16, 1959, was the trusted lawyer, financial advisor and confidant of Mrs. Adams and a fiduciary and confidential relationship existed between them. Mrs. Adams on December 16, 1959, transferred said stock to defendant as a gift. These admissions were offered in evidence.

Defendant’s answer put in issue the other material allegations of plaintiff’s petition, i. e.: That Mrs. Adams on December 16, 1959, (1) “possessed failing eyesight”; (2) “was physically in failing and infirm health”; (3) “was in a state of declining mental vigor” and (4) “was easily persuaded by those trusted by her in the handling of her financial and personal affairs”; and that, in breach of the fiduciary and confidential relationship then existing between them, defendant exercised undue influence, coercion and • deception upon Mrs. Adams in procuring her gift of said stock to him without consideration.

Mrs. Mabel S. Adams, born January 2, 1880, was the wife of Lloyd L. Adams, a practicing lawyer of St. Louis city, who died in November, 1943. She continued to reside in St. Louis. She broke her hip January 31, 1960, was taken to a hospital, was there six weeks when she broke her other hip and fractured a wrist. She died January 23, 1962, without returning home. She was 80 years old January 2, 1960, a small, thin, active woman. Others of her age could not keep up with her. She had only four or five women friends. We briefly outline Mrs. Adams’ activity prior to the breaking of her hip: She had been working for about 10 years for Louis Brooks, a lawyer, as a receptionist, answering the telephone and making notes, after 12:30 p. m. on Mondays, Wednesdays and Fridays. She could not typewrite. She had her evening meals at Hulling’s Restaurant, 11th and Locust, four or five times a week, and she, Bernard J. Jostes, and defendant ate together quite frequently. After 1958 she went downtown practically every day, Tuesdays and Thursdays included, about 10:00 a. m. She roamed the streets and was in department stores until she went to work.

Arthur H. Heidsieck, defendant, a lawyer, was younger than Mr. Adams, and had assisted Mr. Adams in his practice.

Mrs. Adams executed a number of wills, which indicated that her relatives were Mrs. Edna Cuthbert, of Clayton, Missouri, and Mrs. Elinor Page, of Blanchester, Ohio, nieces, and Robert Miller, of Los An-geles, California, and Clark Butler, of Richmond Heights, Missouri, nephews. In her wills of April 8, 1955, and October 15, 1956, she named Arthur H. Heidsieck as executor. In her wills of September 13, 1958, October 10, 1958, and December 3, 1958, she made specific bequests of $15,000 to Arthur H. Heidsieck and appointed him executor of her estate. In her will of December 16, 1959 (the date of the transfer here involved), she made specific monetary bequests totaling $4,000 to her niece Mrs. Page and her two nephews, and named her niece Mrs. Cuthbert residuary beneficiary and executrix of her estate. The real parties in interest here are Mrs. Cuthbert, as residuary beneficiary, and defendant.

Mrs. Cuthbert was the only witness for plaintiff. She, as did some of defendant’s witnesses, gave testimony on Mrs. Adams working for Mr. Brooks, eating at Hulling’s Restaurant, and Mrs. Adams’ physical condition. She testified to the following effect : After Mr. Adams’ death she was very close to Mrs.. Adams. Mrs. Adams started talking about defendant right after Mr. Adams’ death. Defendant, as time passed, played an ever more important role in Mrs. Adams’ life. “The most important friend in her life was Mr. Heidsieck.” Mrs. Adams told witness many times she sought defendant’s advice on legal matters, her wills, and financial matters relating to her stocks. Mrs. Adams never did have any business ability. She told witness defendant visited in her apartment and helped her, for instance, sewed buttons on her clothes. Witness thought she had heard Mr. Adams left an estate of $22,000. After her husband’s death Mrs. Adams worked in the linen room of a hospital and witness knew defendant advised Mrs. Adams she could not live on the interest of $22,000 and should invest her money. Witness and her husband “put Mrs. Adams and Mr. Heid-sieck on the train for California in 1955.” She thought Mrs. Adams was away about a month, but didn’t know. Mrs. Adams lived in a small apartment, about 5700 west. She was quiet and despondent the last two or three years.

September 24, 1958, Mrs. Adams had plaintiff accompany her to the Mercantile Trust Company to see what stocks she had in her lockbox and their value. Mrs. Adams had certificates for 415 shares of General Motors, 200 shares of United States Steel, 113 shares of Sun Oil, 100 shares of Bond Stores, 50 shares of Laclede Gas, 100 shares of Greyhound Bus, and 150 shares of Portland General Electric. Witness testified said stocks then had a market value of $51,438. At that time Mrs. Adams placed her box in the joint names of herself and witness. In November, 1959, Mrs. Adams had the Laclede Gas and Sun Oil stock issued in the joint names of herself and witness with the right of survivorship. Mrs. Adams’ guardianship estate inventoried (November, 1960) $32,655.81, exclusive of the United States Steel stock. She informed Mrs. Cuthbert defendant had told her she was worth $62,000 in December, 1959.

From 1958 on Mrs. Adams made complaint about her eyesight, telling plaintiff she could not see. Plaintiff testified Mrs. Adams could not tell the difference between a $1 and a $5 bill, or a quarter and a nickel, and that witness read to Mrs. Adams letters received from a sister. Mrs. Adams could see well enough to be out on the streets.

Mrs. Cuthbert, following Mrs. Adams’ injury and hopsitalization, had occasion to enter her lockbox and discovered that the United States Steel stock was missing. She reported this to Mrs. Adams and, after talking with her, consulted Mr. John Sharpe, a lawyer. On March 17, 1960, Mrs. Adams signed the following letter addressed to Mr. Sharpe:

“This is your authority to act as my attorney on my behalf, to recover from Mr. Arthur Heidsieck, two hundred (200) shares of stock in United States Steel Corporation, which were registered in my name in December of 1959 and which I feel were transferred to Mr. Heidsieck without sufficient consideration.”

The evidence on behalf of defendant follows.

Ernst C. Stifel was a “customer’s man” for the A. G. Edwards brokerage firm of St. Louis. He knew Mrs. Adams, who had purchased stock through him on several occasions during the last ten or eleven years, and also knew Mr. Heidsieck. Mrs. Adams and defendant came to his desk December 16, 1959. Mrs. Adams said she wanted to transfer 200 shares of United States Steel stock to defendant. Mrs. Adams had the stock. (She had received the current dividend.) He informed them transfers were made at the cashier’s cage and took them there. There is some confusion in this witness’s testimony. Plaintiff stresses the following answer to whether Mrs. Adams or defendant gave the directions as to how the new certificates were to be made out: “A As to who the new certificates were to be made out, I just don’t remember whether Mr. Heidsieck or Mrs. Adams, but the point was — A receipt was made for the two certificates of 100 shares each and issued by the brokerage firm to “Mabel S. Adams” for said stock to be transferred as per instructions. A girl was in charge of the cashier’s cage. Asked: “Now, who gave [the girl] the instructions to transfer as per instructions?” the witness answered: “Mrs. Adams gave them to me and I gave them to the girl in the cage to transfer.” The girl asked Mrs. Adams to endorse the certificates, which Mrs. Adams did, and to wait for her receipt. Other testimony by this witness was to the effect Mrs. Adams directed the transfer of this stock to Mr. Heidsieck. Mrs. Adams’ signatures endorsing the certificates to defendant were guaranteed by the A. G. Edwards brokerage firm. Mrs. Adams also executed and delivered the following statement, defendant’s Exhibit A, dated at St. Louis, Mo., December 16, 1959:

“TO WHOM IT MAY CONCERN: This is to show that the Two Hundred (200) Shares of Common Stock of U. S. Steel was transferred to Arthur H. Heid-sieck as a gift.”

Witness Stifel testified in chief Mrs. Adams executed defendant’s Exhibit A while at the broker’s office December 16th; that it was her signature but he was not certain he saw her sign it, and she after-wards explained why she was making this gift. On cross-examination he testified the first time he had seen “this particular piece of paper,” referring to the exhibit shown to him, was the day of the trial; that if it came from his brokerage office they had a copy of it. The brokerage firm billed Mrs. Adams for the transfer charges ($10.42), which defendant paid, and the broker delivered the new certificates to him.

Witness Stifel testified that following the transaction he had a conversation with Mrs. Adams in which “[s]he said she was making a gift of the two hundred shares of United States Steel to Mr. Heidsieck for all the things he had done for her over the seventeen years — for about the last fifteen or seventeen years, and he had done a lot of work for her”; that he had done work for her since her husband died in 1943 and “that she hadn’t paid him for anything over the years and for that reason she was giving him the two hundred shares of United States Steel stock, that’s the way I got it.”

In a Federal gift tax return of January 7, 1960, Mrs. Adams declared under the penalties of perjury that she had examined said return which, to the best of her knowledge and belief, was a true and complete return; that she transferred 200 shares of common stock of United States Steel Corporation to Arthur H. Heidsieck, having a value of $19,975 as of the date of transfer; and that said transfer was “without an adequate and full consideration in money or money’s worth.”

Louis A. Brooks, the lawyer for whom Mrs. Adams worked, testified he was surprised when informed of her age; she mentioned having trouble with her glasses; she kept a record of his office calls; her handwriting was fairly legible the last two or three months, and that she performed her work properly and gave no evidence of mental suffering.

Mrs. Goldie Zimmerman, a supervisor at Hulling’s Restaurant, testified that she knew Mrs. Adams for four years; that she and Mr. Jostes witnessed Mrs. Adams’ will of September 13, 1958; that she observed nothing eccentric about Mrs. Adams’ conduct; that Mrs. Adams dressed modestly and in proper style, and was of sound mind.

Bernard J. Jostes knew Mr. Heidsieck for six to ten years and Mrs. Adams for six to eight years. He testified he might see Mrs. Adams at the restaurant 15 or 20 times a month; that Mrs. Adams, defendant and witness sat at the same table quite frequently, but not at any regular times. Mrs. Adams had other friends she ate with. Occasionally, not too frequently, Mrs. Adams would ask defendant’s advice and witness would leave the table. When he witnessed Mrs. Adams’ will of September 13, 1958, he banteringly asked if she had mentioned him in her will and she pointed to Mr. Heidsieck and said “to him I did.” He also met Mrs. Adams at parties and sometimes took her to parties. He stated she had a mind of her own, did not appear to be physically failing or in infirm health, or give any indication of declining mental vigor.

Mrs. Zimmerman testified she never noticed Mrs. Adams having trouble seeing during the last year she ate at the restaurant. Mr. Jostes testified there was nothing wrong with Mrs. Adams’ eyesight; she gave no indication it was bad; she would pay her bill at the restaurant and had no difficulty distinguishing the value of paper money; she held her will up like she was reading it on the occasion he signed it as a witness.

We have said that a gift or a transfer of assets to one in a fiduciary relationship with the donor or grantor, such as in this case, is presumed to be by reason of undue influence exercised upon the donor or grantor in those instances where the evidence permits of the inference that the beneficiary of said gift or transfer was active in causing or assisting in causing the execution thereof. (Loehr v. Starke, 332 Mo. 131, 144, 56 S.W.2d 772, 777; Pulitzer v. Chapman, 337 Mo. 298, 85 S.W.2d 400, 409 [3], 410) ; that when supported by probative evidence said presumption makes a prima facie case which does not disappear upon the introduction of rebutting testimony (Loehr, supra, 56 S.W.2d 1. c. 776 [3]; Nelson v. Hammett, Mo., 189 S.W.2d 238, 243[9]) and that such proof casts the burden of going forward with the evidence on the donee or grantee to show that the gift was fair and equitable (Nelson, supra [7, 8] ; Been v. Jolly, Mo., 247 S.W.2d 840, 854[4-6, 8]; Sebree v. Rosen, Mo., 349 S.W.2d 865, 882[20]). “ ‘This presumption rests upon three facts for its formation: First, the fiduciary relation; second, the gift or devise to, or in the interest of the guardian; third, an opportunity for an exercise of undue influence.’ ” Loehr, supra, 56 S.W.2d 1. c. 777, quoting Bridwell v. Swank, 84 Mo. 455, 467.

Laspy v. Anderson, Mo., 361 S.W.2d 680, 682 [2], citing authority, states: “The law is well established in this state and elsewhere that public policy dictates the necessity to protect the confidential and fiduciary attorney-client relationship. Consequently, when a conveyance from a client to an attorney is attacked it is considered presumptively fraudulent and the burden is on the attorney to prove by convincing evidence that the transaction evidenced by the conveyance, as well as the conveyance itself, was fair and equitable in every respect.” See also Thompson v. Stearns, 197 Mo.App. 344, 356, 195 S.W. 43, 46. The law with respect to gifts is to like effect. 7 C.J.S. Attorney and Client, § 129, p. 971; 5 Am.Jur. 290, § 51. Consult Annotations, 24 A.L.R.2d 1288; 70 A.L.R.2d 591.

Should a grantor convey his property to his attorney and the attorney actively participate in the transfer, or in making a contract with his client, such facts if admitted or shown “would not necessarily compel a finding for plaintiff on the issue of undue influence, but would present an issue of fact.” Nelson v. Hammett, supra [9]; Been v. Jolly, supra [4-8].

With defendant admitting the fiduciary relationship and the performance of legal and financial services for his client over the years, his implication that plaintiff’s case based on undue influence rests in suspicion and conjecture is without substance.

We find allegations in defendant’s pleadings to the effect that for seventeen years and without compensation he performed legal and financial services for Mrs. Adams; that the main services involved the drafting of seven wills; the making of yearly income tax returns, personal property tax returns, and a gift tax return; the collection of $22,000 life insurance (no contest is indicated) ; the payment of $42 per month Social Security after she had been twice refused; and that through his efforts and advice her assets increased from $22,000 to about $62,000, and her annual income rose from about $600 to $2,245. A1-. leging she consulted him on an average of two hours a week, he estimated his services, $15 an hour for 1,768 hours, worth $26,520.

Witness Stifel testified Mrs. Adams stated she had never paid defendant anything and she was making a gift of the United States Steel stock to defendant for all the things he had done for her over the years since her husband’s death. Her signed statement “To Whom It May Concern” was that she had transferred the stock “as a gift” to defendant, and her Federal gift tax return of January 7, 1960, was to like effect. These instruments and the several wills in which Mrs. Adams bequeathed $15,000 to defendant were executed during the client-attorney relationship and are subject to the inference they were executed as a result of undue influence exercised by defendant. The trier of the facts could find that her statement “To Whom It May Concern” and her Federal gift tax return were aids planned by defendant to secure said stock from his client without his payment of taxes on income earned. Her letter to her attorney, Mr. Sharpe, sought the recovery of the stock on the ground it had been transferred to defendant “without sufficient consideration.” We think it plain enough that Mrs. Adams considered the transfer discharged her obligations to defendant and defendant must have so understood. Without this background defendant has little standing on the theory of a gift.

Mrs. Adams, active for her age, was not incompetent; but she did not possess the mental alertness and vigor of defendant and she relied upon him and was subject to his influence. This necessitated frankness and fair dealing with her oñ his part. He accompanied her whenever she had occasion to go to the brokers and brought her there on the day of the transfer; told her where, if he did not instruct her, to endorse the stock certificates; paid the charges for the transfer of the stock although these were billed to Mrs. Adams, and picked up the new certificates at the broker’s. This record does not establish that Mrs. Adams had independent and disinterested advice regarding her transfer of the stock and her reasonable obligations to defendant (Been v. Jolly, Mo., 247 S.W.2d 840, 846) or that she discussed her intentions before or after said transfer with third parties (except broker Stifel at the time of the transaction) and made known in unmistakable language her feelings and reasons for making said transfer (Hamilton v. Steininger, 350 Mo. 698, 168 S.W.2d 59, 64 et seq.). Defendant’s position would be much improved had Mrs. Adams secured and acted upon the advice of some competent disinterested person who was cognizant of all the circumstances connected with the transaction.

Mrs. Adams was about 64 years of age when her husband died and 80 when she transferred the stock to defendant. This stock then had a market value of $19,975. Her employment consisted of working in the linen room of a hospital and, later, three afternoons a week as a receptionist for an attorney. The record discloses the performance by defendant for Mrs. Adams of no legal work of any extraordinary nature or monetary value and only a few, say approximately 10, financial transactions, none of which were shown to involve any considerable sum. There was no attempt by defendant to show that his services to Mrs. Adams had a value approximating $19,975. There is nothing of record to show that any transaction prior to her transfer of the stock to defendant involved any considerable sum of money; and no showing whatever that Mrs. Adams received legal and financial services from defendant averaging in value $100 and more monthly over the sixteen-year period. The chancellor was not required to believe defendant’s witnesses. Mueller v. Mueller, Mo., 318 S.W.2d 365, 369[4, 5]. Under the authorities defendant has not met the burden of going forward with the evidence. See Laspy v. Anderson and other cases cited supra.

The decree and judgment appealed from should be and is affirmed, and the cause is remanded for further proceedings to effectuate said judgment.

BARRETT and STOCKARD, CC., concur.

PER CURIAM.

The foregoing opinion by BOHLING, C., is adopted as the opinion of the court.

All of the Judges concur.


source: Caselaw Access Project

author: STOCKARD, Commissioner.

license: Public Domain

text:
    Thorton REYBURN, Respondent, v. John Thornton SPIRES, Executor of the Estate of Virginia Jane Sharp, Deceased; Beulah Sharp Law and Lester Law, her husband, Appellants.
    No. 49284.
    Supreme Court of Missouri, Division No. 2.
    Jan. 14, 1963.
    Motion for Rehearing or to Transfer to Court En Banc Denied Feb. 11, 1963.
    Max Oliver, Montgomery City, Latney Barnes, Barnes & Barnes, Mexico, for appellants Laws.
    N. Murry Edwards, St. Louis, Ninian M. Edwards, Clayton, for plaintiff-respondent.
   STOCKARD, Commissioner.

Defendants have appealed from a judgment setting aside a deed to certain real estate on the basis that it was in fraud of plaintiff as a creditor.

Miss Virginia Sharp and her niece, Beulah Sharp Law, each was the owner, the title having been acquired by inheritance, of an undivided one-half interest in 121.5 acres of land in Montgomery County. Mrs. Law was a resident of Virginia and. had never been in possession of the land. Miss Sharp, who had never married and was 89 years of age on March 20, 1957, lived on the land in a log cabin. What income she received from the land she retained and did not share it with Mrs. Law, but there is no indication that Mrs. Law asked for or expected to receive any part of it. Pursuant to a letter received from Thornton Reyburn, respondent herein and a second cousin of Miss Sharp who lived in St. Louis, Mrs. Law and her husband came to Missouri in February 1957 and arranged for Miss Sharp to be placed in the Spires Nursing Home at Bellflower, Missouri. At that time Miss Sharp was in a “weak condition and needed care.” Mr. Law paid the charges for her care and maintenance at the nursing home to the end of March 1957, and in the presence of Thornton Reyburn agreed to be responsible for and guaranteed all subsequent expenses. Apparently such money that Miss Sharp had was to be used first for her care and maintenance, and Mr. and Mrs. Law agreed to pay all additional amounts needed. After these arrangements were completed Mr. and Mrs. Law returned to Virginia.

While she was in Missouri Mrs. Law apparently suggested to Miss Sharp that she should apply for old age assistance. At that time a person otherwise eligible for aid “could own up to $5,000 in property” but no more than $500 of that amount could be in cash and securities. Ruth Franey, the Montgomery County Director of the Division of Welfare, talked to Miss Sharp at the nursing home and determined that she was ineligible for assistance because Miss Sharp told her that in addition to her interest in the land she had $300 in a bank at Jonesburg, $500 in another bank or in a savings and loan association in St. Louis, and $367.69 “from her wheat crop * * * [which] was put in another bank [the name of which she could not remember] in St. Louis by her cousin, Thornton Rey-burn.” Miss Sharp stated that “when she used it [the money] down under $500 she would re-apply.” Miss Franey testified that during the conversation Miss Sharp mentioned that “at one time she thought of transfering part of it [the land] to Thornton Reyburn,” and that she went with Reyburn to Montgomery City to talk to a lawyer, whose name she could not remember, but “she didn’t like the way it was planned so she would not sign it.” The reason why she had given consideration to transferring part of the land to Reyburn is not revealed.

On March 26, 1957 Miss Sharp asked Mr. Spires to take her to an attorney in Montgomery City where at her request a deed was prepared and executed by her conveying her interest in the 121.5 acres, of land to Mrs. Law with a reservation in the grantor of a life estate. Both Mr. and' Mrs. Spires stated that Miss Sharp had previously talked to them and said that she “wanted to transfer the land to her niece and that Reyburn had been taken care of otherwise.” While at the attorney’s office Miss Sharp also executed a will leaving all her property to Mrs. Law.

Sometime after Mr. and Mrs. Law returned to Virginia and before April 13, 1957, Reyburn went to the Spires Nursing Home and told Miss Sharp that he was going to take her away. This caused her to be “low spirited,” and she told the Spires that she wished she could stay, but that “she had to do what he said” or he "mistreated her.” While there is an indication that this visit by Reyburn was “two. or three days” before April 13, Mrs. Spires testified that Miss Sharp “made the deed [to Mrs. Law] after she knew- she would have to leave because she said if she ever got with him [Reyburn] she couldn’t make it [the deed] like she wanted' it.” On April 13, without the knowledge or consent of Mrs. Law, Reyburn returned to-the nursing home, paid the balance then-due for the maintenance and care of Miss. Sharp, but whether from his personal money- or that -of Miss Sharp is not shown, and took her away from the nursing home. The reason for this action by Reyburn is.. not. disclosed. He had participated in the arrangements in placing Miss Sharp in the home, Miss Sharp had money to pay for her care and maintenance for a substantial period of time, and Mr. Law had guaranteed all additional money needed. There is not the slightest indication that Reyburn was ■dissatisfied with the services of the Spires Nursing Home or that he justifiably could have been. Mr. Spires was under the impression that Miss Sharp was returning to her home on the farm, but apparently she was taken by Reyburn to St. Louis. The record does not disclose when Mrs. Law learned that Miss Sharp had been taken away from the nursing home, or what protest if any was made by her. She returned to Missouri to be with her aunt on "her 90th birthday on March 20, 1958, and she would have learned of the change at that time if not earlier.

On May 7, 1958, while Miss Sharp was in Reyburn’s home in St. Louis, or at least at the time that Reyburn alleged that his home was her residence, and when she was “ninety years of age and [was] and [had] 'been for several years feeble,” Reyburn filed suit against her in the Circuit Court ■of the City of St. Louis. He alleged that he had “taken care” of Miss Sharp from February 10, 1941 to the “present time” by furnishing her at her request with “food, board, meals, nursing care, and the •essentials of life running errands for her from time to time, and furnishing her with •transportation from time to time with the •use of his automobile in conveying her to ■places where she wished to go; that two--thirds of the time he furnished the defendant with board, room and meals at his home, during the winter months, * * * and about one-third of the time he lived with •the defendant during the summer months, on her farm,” except when she was in ’“an old folks home” between February 27 .and April 13, 1957. He then alleged that the reasonable value of the above services was $360 per year for a period of 17 years, or a total of $6,120. He also sought 'by his petition to recover $1,727.96 for work, labor, and materials supplied by him on the 121.5-acre farm of Miss Sharp from 1941 to the “present time” which consisted, he alleged, of putting a new roof on the house, $170'; paying for sawing lumber, $234.08; furnishing labor and materials to install electricity in the house, $120; purchasing a refrigerator, $200; building a garage, $375; purchasing and installing a pump, $10; paying taxes two years, $81.98 for each year; putting a new roof on the smokehouse, $100; grading and graveling a road, $260; purchase of stove wood, $60; and building and installing an outside toilet, $35. Miss Sharp was personally served with summons on May 8, 1959 by the sheriff of the City of St. Louis, apparently while she was in Reyburn’s home. On June 11, 1958, the court entered an interlocutory judgment of default, and on June 26, 1958, a final default judgment was taken against Miss Sharp in the amount of $7,-847.96, the full amount prayed for in the petition. Reyburn caused execution to issue to the Sheriff of Montgomery County, and publication of a notice of a sheriff’s sale had been commenced when Miss Sharp died on August 28, 1958. The record contains a copy of a demand against her estate by the Lincoln County Memorial Hospital at Troy, Missouri in the amount of $346.95 for services rendered from August 23, to August 28, 1958. Lincoln County adjoins Montgomery County, but there are two counties lying between Lincoln County and St. Louis City. Why Miss Sharp was taken to the Lincoln County hospital in preference to some other hospital, particularly if she was in St. Louis, is not shown.

After the death of Miss Sharp, Reyburn had the judgment, which he had obtained by default, revived and continued as a lien against her real estate, and also had his claim represented by the default judgment allowed as a demand against her estate. The inventory lists as assets in her estate a deposit in the Jonesburg State Bank in the amount of $312.12, which included accumulated interest. No other bank or savings and loan deposits are listed and there is no explanation in the record of what may have happened to the other two deposits. The only other asset listed in the inventory is “household and kitchen furniture” with a total value of $25.00, including two stoves, a sewing machine, clock, loom and spinning wheel among other items. No refrigerator is listed although Reyburn alleged in his suit against Miss Sharp that he had bought one for her.

On July 20, 1960, Reyburn filed this suit in the Circuit Court of Montgomery County to set aside the deed from Miss Sharp to Mrs. Law executed on March 26, 1957, when she was in the Spires Nursing Home, and alleged as a basis therefor that the deed “was signed and placed of record for the sole purpose of cheating and defrauding plaintiff, who was at-, the time of the signing of said deed a creditor of Virginia Jane Sharp and had been continuously for eighteen years.” The trial court found that Reyburn was a “judgment creditor of the deceased” in the amount of $7,847.-96, which with interest to the date of the decree amounted to $9,358.39; that Miss Sharp executed the deed on March 26, 1957, “with the intent to hinder, delay and defraud her creditor, Thornton Reyburn, * * from collecting his lawful debt and demand against her, and further * * * that said transfer by deed * * * did include so much of the said Virginia Jane Sharp’s property, that it left her without the means to pay her debt to * * * Thornton Reyburn, and was therefore a voluntary conveyance, and * * * that said conveyance is null and void as to the plaintiff, Thornton Reyburn, and as to the amount due the plaintiff, Thornton Reyburn, from the said Virginia Jane Sharp.”

We shall first review this case on . the theory that, the default judgment obtained by Reyburn against Miss Sharp was valid. There is no substantial evidence that at the time of the conveyance of the property either Miss Sharp or Mrs. Law had any actual intent to defraud creditors, including Thornton Reyburn. Within a few days before Miss Sharp executed the deed, acting against her own interest insofar as her application for old age assistance was concerned, she told Miss Franey that she had $1,167.69 in cash, but she said nothing about owing any debts to anyone. It is our definite impression from a reading of the record, albeit this is based somewhat on speculation, that Miss Sharp would have been surprised if then told that Reyburn considered himself to be her creditor. In this circumstance, with Reyburn being a judgment creditor but having obtained that judgment fifteen months after the conveyance which he now attacks, what was he required to prove in this suit in order to entitle him to have the deed set aside ? The answer is in Chrisman v. Zeysing, Mo., 209 S.W.2d 144, where it is said: “First, that the conveyance was made for an inadequate consideration; second, that the conveyance rendered the grantor insolvent; third, that plaintiff at the time of the conveyance was a creditor of the grantor.”

There admittedly was no consideration in the form of money moving from the grantee to the grantor. Appellants contend that other consideration existed on the basis that Mrs. Law was a creditor of Miss Sharp because she was the owner of an undivided one-half interest in the land and had never received any of the rents and profits therefrom. However, there is no evidence that the rents and profits exceeded the expenses, and we cannot assume that they did. Also, there is no evidence from which it may be inferred that the conveyance to Mrs. Law was intended by either party to be in settlement of a claim by Mrs. Law for her share of the rents and profits. When Miss Sharp entered the nursing home Mr. Law paid a little more than $65 for her care and guaranteed the payment of all money needed in the future. Assuming that this payment and the guarantee established a debt owed by Miss Sharp to Mrs. Law, the amount paid the nursing home would be totally inadequate as consideration to prevent the transfer from being in fraud of other creditors, and when Miss Sharp made the conveyance she knew she was leaving the nursing home and that there would be no need for the guarantee. We can only conclude from the limited evidence before us that the conveyance to Mrs. Law was without consideration or was with inadequate consideration.

The second and third elements of the essential proof on the part of Reyburn, that the conveyance rendered Miss Sharp insolvent and that he was a creditor at the time of the conveyance, may be considered together. A few days before the conveyance Miss Sharp had a total of $1,167.69, in cash, or at least she said she did and there is no evidence to the contrary. Whether or not the conveyance rendered her insolvent depends upon whether at that time she was indebted to Reyburn for more than that amount. In the presentation of his case Reyburn took the position that the default judgment was final and conclusive proof of the indebtedness on the part of Miss Sharp to him, not only at the time the judgment was entered but prior thereto. In this respect he was in error. Ordinarily a judgment constitutes proof of a debt only from the time of its rendition. In this case the introduction into evidence by Reyburn of the default judgment constituted proof only that Miss Sharp was indebted to him “at the date when the judgment was rendered” which was fifteen months after the execution of the deed. 37 C.J.S. Fraudulent Conveyances §§ 407 and 417; Jamison v. Bagot, 106 Mo. 240, 16 S.W. 697; Wolcott v. Titus, 238 Ala. 342, 191 So. 383; Bump’s Fraudulent Conveyances (4th ed.) § 507. See also Chrisman v. Zeysing, supra, 209 S.W.2d at p. 146, where it was held in a suit to set aside a deed on the ground that it was in fraud of creditors, that a valid judgment obtained against the grant- or’s estate was conclusive of the existence of a debt owed to plaintiff by the estate, but that “a court of equity was authorized to determine whether, at the time the conveyance was made, the grantor in the deed was indebted to plaintiff and whether the conveyance rendered the grantor insolvent.”

Reyburn offered no evidence of the transaction on which the default judgment was based to show that the debt antedated the allegedly fraudulent conveyance, see 37 C.J.S. Fraudulent Conveyances § 407, unless it can be said that the introduction in evidence of the petition filed by Rey-burn in the circuit court constituted proof of the facts therein alleged. The petition constituted a part of the entire file of that case which was offered in evidence by Rey-burn with no explanation of the purpose, and which was admitted by the court over several objections of the defendants, none of which was specifically directed to this question, but at least one of which bordered on the issue. Upon proper and adequate objection the petition was not admissible in this proceeding to prove the facts therein alleged, Jamison v. Bagot, supra, and in this equity case where we determine the cause de novo, weigh the competent evidence introduced on the factual issues, and reach our own conclusions based on that evidence, Jackson v. Tibbling, Mo., 310 S.W.2d 909, 914, we decline to accept the allegations of the petition as constituting any proof whatever that the debt antedated the default judgment. We conclude that as the record now stands Reyburn failed to prove, and there is no competent evidence from which it can be inferred, that at the time of the execution of the challenged deed Reyburn was a creditor of Miss Sharp. For that reason there is no competent evidence that the execution of the challenged deed rendered her insolvent.

Ordinarily this case would be remanded to afford Reyburn the opportunity to present proof of what he would contend was the obvious basis for the default judgment. However, to do so without further comment would result in at least tacit approval of the validity of the default judgment and of its use in this case; an approval we expressly decline to give either directly or by inference.

Reyburn took the position in the present suit that the default judgment was not subject to attack by Mrs. Law for any reason, and that was the effect of the ruling of the trial court. Although in the trial appellants questioned the propriety of the default judgment, for some unexplained reason they have not adequately preserved for appellate review any specific challenge to that judgment. Because of what we consider to be a situation involving the integrity of the courts and the judicial process, for the purpose of our subsequent comments concerning the default judgment we invoke to such extent as is necessary the application of Civil Rule 79.04, V.A.M.R., which permits this court in its discretion to consider plain errors affecting substantial rights when it deems that manifest injustice or miscarriage of justice has resulted. “The general rule is that when for any reason the judgment against the grantor is invalid the grantee may show its invalidity in a proceeding to set aside the conveyance as fraudulent,” and the grantee may show that the judgment “was obtained by fraud or collusion, and that there was no debt or legal obligation or any real cause of action to support the judgment, or that the cause of action accrued under such circumstances that the creditor has no right to impeach the conveyance.” 37 C.JT.S. Fraudulent Conveyances § 349b. See also 37 C.J.S. Fraudulent Conveyances § 417 concerning the conclusive effect of the judgment in a suit by the judgment creditor against the grantee. It is thus obvious that Mrs. Law was entitled to challenge the default judgment on the basis that it was fraudulently obtained, and for the reasons we now set forth we think the record before us establishes a presumption of fraud.

Miss Sharp was born and had lived all her life, except when with Reyburn, on her farm in Montgomery County. In her latter years she apparently was not able to care for herself adequately and her circumstances apparently caused concern among her neighbors and friends. Evidence was offered (but rejected by the trial court upon the objection of Reyburn that it constituted a collateral attack on the default judgment) to the effect that neighbors called the sheriff concerning her circumstances, and at one time a neighbor who had been taking care of Miss Sharp had contacted Miss Franey, the county welfare agent. When Reyburn brought suit against her she was ninety years of age, and in his petition Reyburn alleged that she was and had been feeble for several years. Against her wishes she had been removed from a nursing home by Reyburn and taken to a large city where she had no nearby relative, other than Rey-burn, or any friends as far as is shown by the record. It is a reasonable conclusion that if Miss Sharp had desired legal assistance pertaining to the suit filed against her by Reyburn she would not have been able, on her own initiative, to go to a lawyer, relative or friend for advice, but would have had to rely solely on Reyburn. In other words, regardless of her mental condition and her ability to comprehend what was being done, as to which the record is silent, she was physically under the complete and absolute control of her adversary in the lawsuit. It was under these circumstances, insofar as is shown by the record, that Reyburn brought suit against her, had her served with process while she was in his home, and then obtained a default judgment against her based on a claim covering a previous period of seventeen years. We consider that the circumstances establish, as a matter of law, a relationship between Miss Sharp and Reyburn so kindred to confidential or fiduciary that regardless of what it may be termed, it speaks of fraud in the procurement of the default judgment. Not only was Mrs. Law entitled to challenge the default judgment on that ground, when Reyburn comes into a court of equity and relies on that judgment the burden is on him to establish by clear, cogent and convincing evidence that the circumstances under which that judgment was obtained were far different from those now indicated by the record, and that they were such to overcome the presently existing presumption of fraud.

The judgment is reversed and the cause remanded for further proceedings in accord with the views here expressed.

BOHLING, C., concurs.

BARRETT, C., concurs in the result.

PER CURIAM.

The foregoing opinion by STOCKARD, C., is adopted as the opinion of the Court.

All of the Judges concur.


author: HOLLINGSWORTH, Judge.

text:
    HOUSEHOLD FINANCE CORPORATION, a Corporation, Respondent, v. James M. ROBERTSON, J. Ralph Hutchison, and John A. Williams, as Members of the State Tax Commission of the State of Missouri; M. E. Morris, Director of Revenue, State of Missouri; and Milton Carpenter, as Treasurer of State of Missouri, Appellants.
    No. 49227.
    Supreme Court of Missouri, En Banc.
    Jan. 14, 1963.
    Rehearing Denied Feb. 11, 1963.

      Thomas F. Eagleton, Atty. Gen., Joseph Nessenfeld, Asst. Atty. Gen., Jefferson City, for defendants-appellants.
    Floyd E. Britton, Hubachek & Kelly, Chicago, Ill., E. R. Morrison, John A. Morrison, John R. Gibson, Morrison, Hecker, Cozad & Morrison, Kansas City, for respondent.
   HOLLINGSWORTH, Judge.

Defendants, respectively, the three members of the State Tax Commission, the Director of Revenue and the Treasurer of the State of Missouri, have appealed from a summary judgment of the Circuit Court of Cole County declaring void certain assessments for Missouri corporation franchise taxes against plaintiff, granting an injunction against enforcement of the collection of said portion of the taxes based upon said assessments and an injunction against any future assessment of such taxes against plaintiff by use of the same method.

Plaintiff’s petition alleged and the trial court, among other findings adverse to defendants, held that the uniform method of assessment of such franchise taxes adopted by the Missouri State Tax Commission deprived plaintiff of its property without due process of law in violation of the Fourteenth Amendment to the Constitution of the United States and Article I, Section 10, of the Constitution of Missouri, V.A.M.S. Consequently, this court has exclusive jurisdiction of the appeal because construction of certain of the revenue laws of the State is involved, state officers as such are ■parties, and the case involves construction of the Constitutions of the United States and of this State. Article V, § 3, Constitution of Missouri, V.A.M.S.

The specific questions for determination rest primarily upon the purview and meaning of that portion of § 147.010 RSMo 1959, V.A.M.S., relating to the franchise tax imposed upon foreign corporations doing business in this state, as supplemented by § 147.-030. That portion of § 147.010 in material substance reads:

“Every foreign corporation engaged in business in this state * * * shall pay an annual franchise tax to the state of Missouri equal to one-twentieth of one per cent of the par value of its outstanding shares and surplus employed in business in this state, * * * and for the purposes in this chapter such ■corporation shall be deemed to have employed in this state that portion of its entire outstanding shares and surplus that its property and assets in this state bear to all its property and assets wherever located.”

It should also be borne in mind that the first portion of § 147.010 makes identical provisions for payment of franchise taxes by domestic corporations; and that § 147.030 in material substance reads:

“1. The state tax commission shall, on or before the first day of November in each year, determine from the facts reported, and from any facts within or coming to its knowledge the proportion of the outstanding shares and surplus of each corporation employed in business in this state and the amount of tax each corporation is liable to pay *

Defendants’ basic contention is that implicit in the second clause of the above quoted portion of § 147.010 is the meaning: “ * * * and for the purposes in this chapter such corporation shall be deemed to have employed in this state that portion of its entire outstanding shares and surplus that its property and assets [employed] in this state bear to all its property and assets wherever located.” Plaintiff insists that the fact that the Legislature did not include the above bracketed word “employed” in the second clause of Par. 2 of § 147.010 shows that had the Legislature intended the phrase “property and assets in this state” to mean “property and assets employed in this state”, it had but so to say; and that, therefore, the omission indicates a conscious intention on the part of the Legislature that the word “employed” should be omitted.

The trial court, on motion of plaintiff, rendered summary judgment under S. Ct. Rule 74.04, V.A.M.R., on the theory there was no genuine issue as to any material fact. The facts, therefore, are the allegations of the petition as admitted by and pleaded in the answer and in an affidavit and supplemental affidavit filed on behalf of plaintiff.

Plaintiff is a Delaware corporation with its principal place of business and administrative office in Chicago. It is engaged in the business of loaning money. It is authorized to do business in Missouri and, pursuant to such authorization, owns and operates 17 local branch loan offices in Missouri. It also owns all of the capital stock of numerous subsidiary corporations, seven of which are authorized to do business in Missouri, each of which is organized under the laws of Delaware, has its principal office in Chicago and operates a separate loan office in this state.

In February, 1959, plaintiff filed its corporation franchise tax report, which showed, as of December 31, 1958, property and assets in the State of Missouri of the value of $12,444,391.98. According to the report, these assets consisted of cash in the amount of $111,017.16, loans receivable in the amount of $12,231,403.87, office furniture and fixtures in the amount of $75,167.27, and deferred charges in the amount of $26,803.-08. Attached to the report was the general balance sheet of plaintiff corporation, showing its total assets, wherever situated, in the aggregate amount of $579,899,711.46, as of December 31, 1958. Among other items, the balance sheet showed cash in the amount of $26,601,884.74. It also showed plaintiff’s investment in subsidiaries (including the seven operating in Missouri) in the total sum of $261,333,611.36, consisting of advances and capital stock. Also, as shown by the pleadings, the total amount of interest-bearing advances (loans) made by plaintiff to the seven subsidiary corporations operating in Missouri, as of December 31, 1958, was $4,563,132.00 and plaintiff’s investment in the capital stock of said seven subsidiary corporations was $560,000.00.

After the report was filed, the Commission calculated the total value of the property and assets of plaintiff employed in business in this state and necessarily to be included in fixing the franchise tax owed by plaintiff for the year of 1959, so that the total Missouri assets upon which the franchise tax was to be computed were increased from the reported figure of $12,444,391.98 to $18,595,385.00. As a result of that action, plaintiff’s franchise tax for the year 1959 was increased by the Commission from $6,-222.19 to $9,297.69. This increase was predicated upon computations made by the Commission with respect to three items:

(1) The item of cash employed in Missouri, which was shown on the report as $111,017.16, was increased to $1,138,879.00 by the use of the following formula: The Commission first found the percentage of loans receivable and tangible assets reported by plaintiff as part of its Missouri assets' as compared to like items in plaintiff’s total balance sheet. This percentage, .042812, was applied to the entire amount of plaintiff’s cash, wherever physically located, shown in plaintiff’s total balance sheet; and the amount of cash thus computed was substituted for the amount of cash in Missouri reported by plaintiff in its 1959 franchise tax report.

(2) The sum of $560,000.00, comprising plaintiff’s investment in the capital stock of its seven wholly owned corporate subsidiaries operating in Missouri, was by the Commission added to the amount shown in plaintiff’s return for the reason that all of said capital stock of said seven subsidiaries was acquired by plaintiff at the time of the organization of these corporations. In this connection, it was admitted and agreed that all of the transactions incident to the creation of these corporations took place entirely within the State of Illinois; that the stock in each instance was subscribed for at the time of the organization of these corporations pursuant to an agreement made in Illinois and payment for and delivery of the stock certificates to plaintiff were made in that state; that the money paid as the purchase price of said shares of stock, which was used in Missouri, was taken to this state by the subsidiaries and constituted capital employed by said subsidiaries in Missouri; and that the stock certificates have remained in the possession of plaintiff in Chicago ever since their receipt.

(3) The sum of $4,563,132.00 which constituted the advances made by plaintiff to its seven subsidiaries, organized under the laws of Delaware and operating in Missouri, was by the Commission added to plaintiff’s return for the reason that plaintiff admitted that these “advances” constituted interest-bearing loans which the subsidiaries became obligated to pay to plaintiff on demand and on which they do pay interest. In this connection, it was also admitted and agreed that all transactions relating thereto were negotiated, agreed to and performed by the officers and agents of plaintiff and the respective subsidiaries in Chicago; that the money represented by these transactions was paid to said subsidiaries in Chicago; that the funds so borrowed, upon being transferred to Missouri by the subsidiaries, was employed by them, respectively, in their business in Missouri; that all payments of interest and principal made to plaintiff upon such advances were made to plaintiff in Chicago; that each of the seven subsidiary corporations filed its own franchise reports in Missouri for the years 1959 and 1960, in which it reported the market value of its property and assets in Missouri without deduction of the amount owed to plaintiff; and that all meetings of the stockholders of such subsidiaries since their organization have been held outside of the State of Missouri.

In December, 1959, plaintiff paid the final assessment of its franchise tax in the amount of $9,297.69 to the Director of Revenue, under protest as to the sum of $3,-075.50, which resulted from the increased valuation. Thereafter, in February, I960, plaintiff filed its corporation franchise tax report for the year 1960, which did not include as part of its Missouri assets as of December 31,1959, (1) any cash except such as was physically located in Missouri as of December 31, 1959, (2) its investment in the shares of stock in its subsidiaries operating in Missouri, (3) the amount of advances made by plaintiff to such subsidiaries. In June, 1960, plaintiff instituted this action for a declaratory judgment.

During the pendency of the' suit, the Commission increased the total amount of plaintiff’s property and assets located in Missouri, which plaintiff had listed in its 1960 report at $13,333,306.19, (1) by increasing the cash employed in Missouri, as allocated by the Commission by the same method used for the year 1959, from $127,-641.93 to $848,160.68, (2) by adding thereto plaintiff’s investments of $560,000.00 in the capital stock of its wholly owned subsidiaries operating in Missouri, and (3) by including the advances made by plaintiff to its said subsidiaries operating in Missouri in the sum of $4,864,858.69. As the result of this increase, the amount of franchise tax due from plaintiff, as determined by the Commission for the year of 1960, was increased from $6,666.65 to $9,739.34. Plaintiff thereupon obtained a temporary injunction to restrain the collection of the sum of $3,072.69, the amount in dispute for the 1960 tax. The injunction required plaintiff to pay into court the sum of $6,666.65, to be delivered to the Director of Revenue and credited to plaintiff’s account for 1960 franchise taxes without prejudice to the contentions of defendants as to validity of the remainder of the tax and to pay the further sum of $3,072.69 to the Clerk of the Circuit Court of Cole County to be disbursed upon order of the court following final determination of the cause.

On final hearing of plaintiff’s motion for summary judgment, the trial court entered its final decree sustaining plaintiff’s motion for summary judgment and granting plaintiff a declaratory judgment declaring that the assessments for Missouri corporation franchise taxes, to the extent increased by the Commission, were invalid, making permanent the temporary injunction theretofore granted and ordering the sum deposited with the circuit clerk returned to plaintiff, enjoining the State Tax Commission from making any further assessments of franchise taxes against plaintiff upon same or similar grounds to those upon which the assessments for 1959 and 1960 were made, and enjoining the Director of Revenue from attempting to collect franchise taxes theretofore assessed in the manner held invalid by the decree.

The court also specifically found and declared that the method used by the Commission in allocating the cash of plaintiff in determining the value of plaintiff’s property and assets employed in Missouri was not authorized by § 147.010; and that (1) the additional cash allocated to Missouri by said method, to wit: $1,027,862.00, had no taxable situs in Missouri and was not capital employed in Missouri; (2) that the shares of capital stock of the seven subsidiary corporations in which plaintiff invested $560,-000.00 had no taxable situs in Missouri and that Missouri had no power to impose any tax measured by the value of such shares as capital employed by plaintiff in Missouri; (3) that the advances made by plaintiff in the sum of $4,563,132.00 to its subsidiary corporations doing business in Missouri had no taxable situs in Missouri and were not employed in this state within the meaning of § 147.010, that Missouri had no power to measure the tax by such advances and that the franchise tax, to the extent measured by the amount of said advances, was not authorized by § 147.010; and (4) that said three increases resulted in an unlawful exaction of franchise taxes to the extent thus assessed against plaintiff and deprived plaintiff of its property without due process of law, in violation of the 14th Amendment to the Constitution of the United States and Article I, § 10, of the Missouri Constitution.

On this appeal, defendants seek reversal of each of the above four enumerated findings and declarations of the trial court.

The franchise tax provided for in these sections is not a property tax. Rather is it an excise on the right to do business in this state. Union Electric Co. v. Morris, 359 Mo. 564, 222 S.W.2d 767, 769 [1]; State ex rel. Marquette Hotel Inv. Co. v. State Tax Commission, 282 Mo. 213, 221 S.W. 721; National Leather Company v. Commonwealth of Massachusetts, 277 U.S. 413, 48 S.Ct. 534, 72 L.Ed. 935; Kansas City Southern Ry. Co. v. Reily, 242 La. 235, 135 So.2d 915, 918; Household Finance Corp. v. Director of Division of Taxation, 36 N.J. 353, 177 A.2d 738; Household Finance Corp. v. State Tax Commission, 212 Md. 80, 128 A.2d 640; Household Finance Corp. v. State Tax Commission, 217 Md. 327, 142 A.2d 807.

Section 147.010 expressly declares that each corporation, domestic and foreign, doing business in this state shall pay such a tax upon the basis of its capital stock and surplus employed in business in this state. Section 147.030 declares without qualification that the Tax Commission shall determine the amount of that tax from any facts at hand upon the basis of the proportion of its outstanding shares and surplus employed in business in this state. Obviously, the Commission did not levy any tax upon any asset of plaintiff without this state; it merely computed the franchise tax imposed under § 147.010 on the basis of one-twentieth of one percent of the par value of plaintiff’s outstanding shares and gross assets by it employed in business in this state. But plaintiff insists that the phrase “outstanding shares and surplus employed in business in this state”, as used not only-in § 147.010 but also in § 147.030, supra, does not mean precisely what it says because of the “formula” set forth in § 147.010. Its-argument in that respect runs thus: (1) The subj ect of taxation must be clearly authorized, the plain language of a taxing statute must be applied and the statute strictly construed against the taxing authority; (2) the language of § 147.010 establishes a mandatory formula for computing the franchise tax; and (3) the Commission had no authority to adopt a formula contrary to that set forth in § 147.010;.and,, therefore, the adoption of a contrary formula is a nullity. If we accepted the accuracy of the premise upon which plaintiff bases its contention that the “formula” adopted by the Commission is not within the meaning of the wording of the provisions of' § 147.010 (augmented by § 147.030), when read in their entirety and in the light of their specifically declared purpose, then plaintiff’s position would be sound. As will hereinafter appear, however, we have concluded that the judgment and decree of the trial court was erroneous in disallowing the increase made by the Commission in the item of cash reported by plaintiff as employed by it in this state and in enjoining the Commission henceforth from computing the amount of the corporation franchise tax owed by plaintiff to the State of Missouri for years subsequent to those “here directly involved, as required by § 147.030.

The word “surplus”, as used in the phrase “outstanding shares and surplus” in § 147.010, means the excess of gross assets over the par value of its outstanding shares without deduction of debts -or liabilities. State ex rel. Marquette Hotel Investment Co. v. State Tax Commission, 282 Mo. 213, 221 S.W. 721, 722. That case, long followed as the established law of this state, 221 S.W. loc. cit. 724, states: “It certainly is not beyond the power of the Legislature to take the extent of the use of a franchise as a basis for the computation of the franchise tax. That, we think, is the standard adopted by the Legislature in this instance. * * * It is upon the franchise, we reiterate, that the statute here in question levies a tax. The extent of the use of the franchise is the basis for the computation of the tax.” (Emphasis supplied.) That case dealt with the corporation franchise tax act of 1917, Laws 1917, p. 237, § 1, which to the extent here material was substantially identical with the present language of § 147.010. It, however, involved the franchise tax owed by a domestic corporation which did not employ any part of its outstanding shares and surplus in a foreign state and it did not, therefore, reach the precise question here presented. But it definitely determines that language identical with that set forth in § 147.010 was intended to and did undertake to measure the Missouri franchise tax provided for domestic corporations upon the basis of the amount of the shares of stock and surplus used in its business in Missouri; and its holding, therefore, obviously is applicable to the question here involved.

Both parties refer us to the case of Union Electric Co. v. Morris et al., 359 Mo. 564, 222 S.W.2d 767. The facts in that case, as in the instant case, were not in dispute. Union Electric, a domestic corporation, owned the shares of stock of two Illinois corporations which were not engaged in business in the state of Missouri and none of the property or assets of either of said corporations was located or employed in the state of Missouri. In computing the Missouri corporation franchise tax due from Union Electric, the Missouri Tax Commission considered the market value of such stocks as a part of the franchise tax base for the purpose of determining the amount of tax due from respondent. The Circuit Court of Cole County enjoined collection of the tax and the defendants, members of the Tax Commission, appealed. This court, after quoting with approval from the reasoning set forth in the Marquette Hotel case, supra, stated, 222 S.W.2d 767, 769: “The two foreign corporations issuing the stock have legal title to the property and assets in the foreign state, and such foreign corporations, not [Union Electric], are engaged in business in such foreign state. On the other hand, it is admitted that the two Illinois corporations are wholly-owned subsidiary corporations of the respondent. Of course there can be no doubt that corporate shares of stock issued by a foreign corporation and owned and held by a domestic corporation in his state are ‘property and assets’ of such domestic corporation, but the question here is as to the location and employment of such property and assets within the meaning of Sec. 135, supra. [§ 147.010 RSMo 1959]” It also further stated, loe. cit. 770: “There is no suggestion that the shares of stock in question were used in [Union Electric’s] business, or that it was in the business of buying and selling stocks. On the other hand, it is admitted that [Union Electric] is ‘engaged as a public utility corporation in the business of generating, transmitting, distributing and selling electric energy and Steam in the state of Missouri,’ and that [it] owns the shares of stock of the two Illinois corporations.” The court further noted, loc. cit. 768, that the Commission construed the statute to mean that “all of [Union Electric's] property and assets in the state are deemed to be employed here.” But that contention was not sound because, said the court, loc. cit. 772: “Reading and considering the statute as a whole and giving effect to its several provisions, we must hold that [Union Electric] does in fact employ a part of its outstanding shares in business in another state; that the amount evidenced by the market value of the shares of stock held in the two Illinois corporations is not ‘property and assets in this state,’ nor are such shares of stock ‘property and assets in this state’ within the meaning of those words as used in the statute; that such property and assets were not ‘employed in this state’; and that the market value of such shares of stock should not have been included in the tax base for computing the amount of [Union Electric’s] corporation franchise tax for said years.” (Emphasis supplied.)

Considering the Union Electric opinion in its entirety, we understand it to declare that the physical property of the Illinois corporations was not located in this state and neither was it employed by Union Electric in its business; and neither was it property and assets of Union Electric in this state for the purpose contemplated in § 147.010. We also further understand the opinion to hold that in order to be included in computation of the Missouri franchise tax the property must have been employed in Union Electric’s business in Missouri; we do not understand it to hold, as plaintiff contends, that if the physical property were in fact employed in Union Electric’s business in Missouri, it nevertheless should not be included in computing Union Electric’s franchise tax on grounds that the situs of the physical assets represented by the shares of stock was not also in Missouri. Rather do we understand the opinion to hold that the franchise tax imposed under § 147.010 is to be measured by and computed upon the value of its property and assets employed in business in this state.

As declared in the Marquette Hotel case, supra, 221 S.W. 721, 722, the cardinal rule of statutory construction is to ascertain the intention of the law-making body and as far as possible to give effect to the intention expressed; and in Union Electric Co. v. Morris, supra, 222 S.W.2d 767, 770, this court said of the statute here under consideration: “In this case the meaning of the questioned words cannot be determined independent of the particular’ context in which they are used and the subject matter under discussion. The statute must be construed with reference to the particular facts in the case and every word, phrase and sentence must be given some meaning if that can be done.” And in 82 C.J.S. Statutes § 323, p. 607, the general rule is thus stated: “If a statute is susceptible of more than one construction, it must be given that which will best effect its purpose rather than one which would defeat it,, even though such construction is not within the strict literal interpretation of the statute, * *

Viewing § 147.010 in the light of the Marquette Hotel and Union Electric cases, supra, and seeking the actual meaning of the phrase in question in the context in which it is used and the purpose it seeks to serve,we have concluded it means that “such cor- ■ poration shall be deemed to have employed in this state that portion of its entire outstanding shares and surplus that its property and assets [employed] in this state bear to all its property and assets wherever located.” So construed, the statute, read in its entirety, is free of ambiguity and accomplishes the intent and purpose of the act as declared in the Marquette Hotel case and quoted with approval in the Union Electric case. To hold otherwise would enable all corporations, domestic and foreign, to employ in this state their cash on hand and used in their cmthorised business in this state without paying the corporation franchise tax as required by § 147.010 by the simple expedient of keeping such cash in another state and drawing thereon as their needs required. For example, can the statute mean that either a domestic or foreign corporation engaged in the business of making loans in St. Louis, Missouri, may avoid payment of a portion of the franchise tax imposed under § 147.010 merely by keeping the cash thus employed by it in East St. Louis, Illinois, and drawing thereon as its Missouri commitments required? We think it can not. We hold that the corporation franchise tax imposed under § 147.-010 requires that the cash employed by plaintiff in business in this state, irrespective of its location, shall be included in computing the amount of the tax annually accruing under § 147.010.

In compliance with the duties required of it under § 147.030, supra, the Commission undertook to determine from the facts shown in plaintiff’s general balance sheet the amount of cash employed by it in Missouri, irrespective of the state in which the cash was kept. Plaintiff makes no showing that the method by which the Commission made that determination was inherently arbitrary or unreasonable; nor does plaintiff undertake to show or contend that the amount of cash as thus determined by the Commission was in excess of the amount of cash actually employed by plaintiff in Missouri. To the contrary, plaintiff’s petition, after correctly alleging the method by which the Commission determined the cash allocable to Missouri in computing the tax due for the years of 1959 and 1960, challenged the legality of that method only on the ground that § 147.010 did not authorize the inclusion of any of plaintiff’s assets located outside Missouri (and on the ground that the inclusion of assets outside Missouri in computing plaintiff’s franchise tax deprived plaintiff of its property without due process of law). Defendants’ answer likewise alleged the method used by it in determining the cash so employed by plaintiff in Missouri and averred its intention thereafter to so determine the cash employed by plaintiff in Missouri for the purpose of computing the amount of the franchise tax owed by it. In that state of the record, plaintiff moved for summary judgment upon grounds that no material fact issue existed. Consequently, the amount of cash thus determined to be actually employed by plaintiff in Missouri during the years in question, for the purpose of this case, stands admitted. It necessarily follows that the trial court erred in excluding the cash added by the Commission to the tax reports of plaintiff for the years of 1959 and 1960, unless, of course, as plaintiff contends, it was thereby deprived of its property without due process of law. In support of the latter contention plaintiff has cited: Connecticut General Life Insurance Co. v. Johnson, 303 U.S. 77, 58 S.Ct. 436, 82 L.Ed. 673; Hans Rees’ Sons v. State of North Carolina ex rel. Maxwell, 283 U.S. 123, 51 S.Ct. 385, 75 L.Ed. 879; Alpha Portland Cement Co. v. Commonwealth of Massachusetts, 268 U.S. 203, 45 S.Ct. 477, 69 L.Ed. 916; Kennecott Copper Corp. v. State Tax Commission, 5 Utah 2d 306, 301 P.2d 562; State v. Travelers Ins. Co., 256 Ala. 61, 53 So.2d 745; Wallace v. Hines, 253 U.S. 66, 40 S.Ct. 435, 64 L.Ed. 782. It would unduly lengthen this opinion to undertake to discuss the differing facts and statutes considered in those cases. Careful study of them has convinced us that none of them is decisive of the question here presented.

Defendants cite and rely upon, among others, not only the decisions of this state in the Marquette Hotel and Union Electric cases, supra, but also the following cases from other states as reflecting the constitutionality of § 147.010 under the due process clauses of the Constitutions of both the United States and the State of Missouri: Kansas City Southern Railway Co. v. Reily, 242 La. 235, 135 So.2d 915, 918; Household Finance Corp. v. State Tax Commission, 212 Md. 80, 128 A.2d 640; Household Finance Corp. v. State Tax Commission, 217 Md. 327, 142 A.2d 807; Household Finance Corp. v. Director of Division of Taxation, 36 N.J. 353, 177 A.2d 738; National Leather Co. v. Commonwealth of Massachusetts, 277 U.S. 413, 48 S.Ct. 534, 72 L.Ed. 935; Butler Bros v. McColgan, 315 U.S. 501, 62 S.Ct. 701, 86 L.Ed. 991; International Harvester Co. v. Evatt, 329 U.S. 416, 67 S.Ct. 444, 91 L.Ed. 390; Ford Motor Co. v. Beauchamp, 308 U.S. 331, 60 S.Ct. 273, 84 L.Ed. 304; Great Atlantic & Pacific Tea Co. v. Grosjean, 301 U.S. 412, 57 S.Ct. 772, 81 L.Ed. 1193; Flint v. Stone Tracy Co., 220 U.S. 107, 165, 31 S.Ct. 342, 55 L.Ed. 389; Kansas City, Fort Scott & Memphis Railway Co. v. Batkin, 240 U.S. 227, 232, 36 S.Ct. 261, 60 L.Ed. 617; Greiner v. Lewellyn, 258 U.S. 384, 387, 42 S.Ct. 324, 66 L.Ed. 676.

We do not understand plaintiff seriously to question defendants’ contention that these cases establish both the state and federal constitutionality of § 147.010 if that section means, as we have determined it does, that plaintiff’s franchise tax liability is to be determined upon the basis that the portion of its property and assets employed in this state bears to its property and assets wherever located. Note that plaintiff’s brief significantly says of one of the federal cases cited by defendants: “In National Leather Company v. Commonwealth of Massachusetts, 277 U.S. 413 [48 S.Ct. 534], 72 L.Ed. 935 (1928), the franchise tax was based on the proportion of the ‘value of the assets, both real and personal, employed in any business within the Commonwealth’ to the value of the total assets of the corporation. This case thus actually contains the words which defendants wish to add to the clear statutory formula in the Missouri statuteand, after discussion of some of the other cases cited by defendants, plaintiff’s brief says that in none of them “was there a departure from the statutory formula similar to that attempted by the defendants here.” (Emphasis supplied.)

The National Leather Co. case, cited supra by defendants, deals with a fact situation and statute admittedly fairly analogous to the facts and statute (as we have interpreted it) with which we here are dealing. In that case, 277 U.S. 413, 423, 48 S.Ct. 534, 536, the court said:

“It is settled law that a State may lawfully impose upon a foreign corporation a tax for the privilege of doing business within its borders which, is measured by the proportionate part of its total gross receipts that are received within the State, [State of] Maine v. Grand Trunk Ry. Co., 142 U.S. 217, 228, 12 S.Ct. 121, 163 (35 L.Ed. 994); or by the proportionate-part of its total capital stock which is-represented by the property located and. business transacted within the State, Hump Hairpin Co. v. Emmerson, 258 U.S. 290, 293, 42 S.Ct. 305 (66 L.Ed. 622); American Mfg. Co. v. [City of]. St. Louis (C.C.A. [8]), 8 F.2d 447, 450; * * *.” And further, 277 U.S. loc. cit. 423, 48 S.Ct. loc. cit. 536: “Here both the commissioner, the administrative officer charged with the enforcement of the statute, and the Massachusetts court, have found that the capital stocks of the two subsidiary companies were employed by the petitioner in carrying on its business within Massachusetts. We find no adequate reason for disturbing this conclusion. On the contrary, looking to the substance of the transactions and not merely to form, we think that the petitioner, through its ownership of the capital stock of the two subsidiary corporations and the control which it thereby exercised over them, did, in a very real and practical sense, employ these stocks as an instrumentality in carrying on its business within Massachusetts — to the extent, at least, that the controlled activities and property of the subsidiary corporations were within the State.”

When the decisions cited by defendants are considered in the light of the true meaning and intent of § 147.010, as we have hereinabove determined its true meaning and intent, we are constrained further to hold that the action of the Commission in increasing the item of cash as determined by the Commission did not deprive plaintiff of its property without due process of law within the meaning of either the Constitution of the United States or of the State of Missouri.

This brings us to the more serious question of whether § 147.010 reasonably may be construed to authorize the Commission to include (1) the item of $560,000.00, comprising plaintiff’s investment in the capital stock of its seven wholly owned subsidiary corporations, or (2) the item of $4,563,-132.00, constituting moneys advanced by plaintiff to said subsidiaries, for which plaintiff received and held said subsidiaries’ interest-bearing obligations to repay on demand.

The argument made by defendants that the $560,000.00 comprising plaintiff’s capital stock investment in its wholly owned seven subsidiaries should be included in computing plaintiff’s franchise tax liability runs thus: that capital invested by plaintiff in the shares of stock, evidenced by the stock certificates in the subsidiaries, is not employed where the certificates are held (in Chicago) but is employed in Missouri, where the tangible property, assets and business of the subsidiaries are located; that plaintiff employs in its loan business in Missouri that portion of its outstanding shares and surplus consisting of the property and assets of its Missouri subsidiaries constituting plaintiff’s capital invested therein and evidenced by the shares of stock; and that looking to the substance of the transactions, this investment is part of plaintiff’s assets employed in carrying on its business in Missouri, and therefore was properly taken into account in determining the value of its outstanding shares and surplus employed by plaintiff in Missouri. Their argument that the $4,563,132.00 advanced by plaintiff to its seven subsidiaries should also be included is this: that said advances constitute property employed in Missouri within the meaning of the statute; that they were made for the purpose of being employed in the loan business in Missouri; that plaintiff conducts its loan business in this state partly through its own branch offices and partly through its subsidiaries; that the money represented by these advances was employed by plaintiff’s Missouri subsidiaries in conducting their loan business in Missouri; and that therefore all of such capital of plaintiff is, in any realistic view of the case, employed in the business of Household in Missouri and constitutes a part of plaintiff’s outstanding shares and surplus employed in business in this state.

Illustrative of defendants’ contentions as above summarized is the case of National Leather Co. v. Commonwealth of Massachusetts, 277 U.S. 413, 48 S.Ct. 534, 72 L. Ed. 935, portions of which are hereinabove quoted. Also cited in that behalf by defendants are the following cases: Union Electric Co. v. Morris, 359 Mo. 564, 222 S.W.2d 767; State ex rel. Marquette Hotel Inv. Co. v. State Tax Commission, 282 Mo. 213, 221 S.W. 721; Kansas City Southern Railway Co. v. Reily, 242 La. 235, 135 So.2d 915, 918; Household Finance Corp. v. Director of Division of Taxation, 36 N.J. 353, 177 A.2d 738; Household Finance Corp. v. State Tax Commission, 212 Md. 80, 128 A.2d 640; and Household Finance Corp. v. State Tax Commission, 217 Md. 327, 142 A.2d 807.

On the other hand, plaintiff contends that the trial court did not err in either of the respects contended by defendants. As to the $560,000.00 of capital stock of the seven subsidiary corporations operating in Missouri, plaintiff points out that it was admitted that this $560,000.00 of capital stock was acquired by plaintiff in transactions that took place entirely within the State of Illinois; that any portion of the subscription price used in Missouri was taken to the state by the subsidiaries and constituted capital employed by said subsidiaries in Missouri; that the stock certificates have remained in the possession of plaintiff in Chicago, lili-nois; that each of the subsidiary corporations doing business in Missouri filed franchise tax reports of the market value of their property and assets in the State of Missouri without deduction of the amount owed to plaintiff; and, plaintiff contends, therefore, that the trial court properly held that the stock of those subsidiaries was not subject to the franchise tax. As to the advances made by plaintiff to the aforesaid seven subsidiaries, plaintiff points out that these loans were contracted and made in Chicago, Illinois; that the moneys thus acquired by the said subsidiaries became assets of said subsidiaries, were employed by them in Missouri; that said subsidiaries also pay a franchise tax in this state based on the market value of their property and assets in Missouri without deduction of the amount owed to plaintiff; that the advances (loans) are employed by the subsidiaries in Missouri, are included in determining the franchise taxes assessed by Missouri against each of the seven subsidiaries, as is admitted by defendants.

Cited in support of the contentions thus made by plaintiff, among other cases, are: State v. Shell Pipe Line Corp., 345 Mo. 1222, 1243, 139 S.W.2d 510, 522; Comstock v. Group of Institutional Investors, 335 U.S. 211, 229, 68 S.Ct. 1454, 92 L.Ed. 1911, 1923; State v. National Cash Credit Association, 224 Ala. 629, 141 So. 541; State ex rel. City of St. Louis v. Public Service Commission, 331 Mo. 1098, 56 S.W.2d 398.

Illustrative of the contention made by plaintiff is the case of State v. National Cash Credit Association, 224 Ala. 629, 141 So. 541, 544-545:

“There is no question that bills receivable, given by borrowers from a foreign corporation conducting a loan business in Alabama, constitute capital employed in business in this state within our franchise tax laws.
“But such is not the case before us. An Alabama corporation duly authorized to maintain an office and conduct this branch of its business wholly in another state and with a foreign corporation there doing such business is not doing business in Alabama by such foreign corporation.
* * * * * *
“ * * * The foreign corporation is not exercising its franchise here, but a local legal entity recognized by law is acting under its franchise, and paying the one franchise tax due for such business.”

Each of these cases was decided upon consideration of the true meaning and intent of the particular statute under consideration. They are helpful, but ultimately the questions with which this court is confronted must be decided upon our own determination of the true intent and purpose of § 147.010 (as supplemented by § 147.030) considered in its entirety. We, therefore, turn directly to that section for ascertainment of its purpose and, if we may do so, construe it to the end that such purpose may be effectuated.

At the outset, it should be noted that no contention is made that the separate corporate existence of either of the seven subsidiaries is other than a lawfully created corporation for the purpose of lawfully advancing the financial interests of the owner of its capital stock, plaintiff herein. As hereinabove stated, the language of § 147.-010, which was enacted in 1943, is substantially identical in the respects here involved with the wording of a prior corporation franchise tax statute enacted in 1917, Laws 1917, p. 237. Neither the earlier act nor § 147.010 contains any wording whatever whereby it fairly may be said that the Legislature intended that either the cash paid by plaintiff to its subsidiaries operating in Missouri in return for the stock delivered to plaintiff at the time of their incorporation, or the money advanced them by plaintiff, as shown by the admitted facts, should be included in the computation of the amount of franchise taxes owed by plaintiff to the State of Missouri.

The language used in the statute, as we have interpreted it, imposes a corporation franchise tax therein exacted of every corporation, domestic and foreign, engaged in business in this state solely upon that portion of its property and assets [employed] in this state bears to all its property and assets wherever located. When plaintiff paid its seven subsidiaries the $560,000.00 for their capital stock and thereafter advanced them money, the purchase price of the capital stock and the money became assets of the subsidiaries and these identical assets were thereafter employed by the subsidiaries in Missouri, not by plaintiff; and by virtue of the specific provisions of the statute the subsidiaries, not plaintiff, reported and paid the portion of the franchise tax computed and based thereon. (We do not here undertake to decide whether the Legislature could or could not by statute expressly so declaring constitutionally exact of plaintiff a franchise tax computed upon, among other assets, any assets paid in exchange for stock of its wholly or majority owned corporate subsidiaries or moneys advanced to them for use in loaning money. Neither do we undertake to decide whether, upon sustainable finding of facts by the Commission of any unconscionable scheme or plan of any corporation to evade its true liability under § 147.010, through manipulation of its assets employed in this state by means of capital stock ownership in other corporations or otherwise, the Commission could or could not include such assets in computing the tax due from such corporation. See Kansas City Southern Ry. Co. v. Reily, 242 La. 235, 135 So.2d 915; National Leather Co. v. Commonwealth of Massachusetts, 277 U.S. 413, 48 S.Ct. 534, 72 L.Ed. 935.) We simply say that the statute does not warrant this court, in construing its clearly stated language, to declare its purpose to include the imposition of a corporation franchise tax upon plaintiff, computed on assets now owned and employed in Missouri by plaintiff’s seven subsidiaries and upon which said subsidiaries pay a corporation franchise tax to this state.

Finally, as to that portion of the decree enjoining the Commission from the free exercise of the duties placed upon it under § 147.030, we do not fail to note the comprehensive provisions of S.Ct. Rule 87 relating to declaratory judgments. Should the facts of any case warrant a finding that any state administrative agency was threatening in the future to act in violation of a final judgment of any court of competent jurisdiction, we would not hesitate to affirm injunctive relief properly decreed under the facts. But this case was tried upon an agreed statement of facts. We cannot know what the facts in another case may show. “In taxation matters it has been observed that the doctrine of res judi-cata is of but limited application, inasmuch as the assessment for each year is an independent determination for that year. Each year’s tax is a separate transaction and each action relating to each year’s tax is a new cause of action. In re Breuer’s Income Tax, 354 Mo. 578, 190 S.W.2d 248; Young Men’s Christian Ass’n of St. Louis and St. Louis County v. Sestric, 362 Mo. 551, 242 S.W.2d 497.” Cupples-Hesse Corporation v. Bannister, Mo., 322 S.W.2d 817, 823. We think the judgment rendered upon the agreed facts in this case should not serve to tie the hands of the Commission in the attempted performance of its duties under facts that may not be precisely as those herein agreed.

The judgment and decree of the trial court is reversed and remanded for modification to the extent in this opinion stated.

All concur.