text:
    EDWARD J. SCOTT and JOHN R. SCOTT, Appellants, v. R. L. BARTON et al.
    Division Two,
    December 15, 1920.
    1. CORPORATION: Judgment: Nulla Bona Execution: Liability of Stockholders. A creditor who has obtained judgment against a corporation, may, upon the return of a nulla bona execution, proceed against the holders of unpaid stock to enforce payment of such judgment. And in such case, the judgment against the corporation is conclusive on such stockholders.
    2. -: Unpaid Stock: Estoppel: Creditors Knowledge. A creditor of a corporation who knew when he extended credit to it that its shares of stock had been issued to the subscribers, therefor without payment of money or money’s worth, cannot enforce his claim against the stockholders to the extent of the stock issued to them; therefore, the question of the creditor’s knowledge is a vital issue where he, after- a return of a nulla bona execution under a judgment against the corporation, seeks by separate suit against the holders of unpaid stock to enforce payment of his judgment.
    .3. EQUITY: Deference to Chancellor. An equity suit is tried ele novo in the appellate court, and while such court will defer to the finding of the trial chancellor on a question of fact and consider such findings as persuasive, it will not allow such finding to be binding', unless the minds of the appellate court run with the chancellor on the facts, or unless the facts are conflicting and close and a yielding to his judgment seems necessary because of his better position to judge of the credibility of the witnesses.
    4. CORPORATION: Unpaid Stock: Estoppel: Creditor’s Knowledge: Burden of Proof. The burden of proving ttíat the creditor of a corporation, in a suit against the holders of unpaid stock to enforce payment of his judgment against the company, knew, at the time he extended credit to it, that its shares of stock had been issued to the subscribers without payment of money or money’s worth, is on the stockholders; and in this case, it is hold, as it was on the former appeal, that the evidence does not establish such knowledge by the creditor, and the court refuses to accept the finding of the trial chancellor that it does.
    5. -: -: Suit Against Stockholders: Multiplicity of Suits: Contribution. In a suit against holders of unpaid stock to enforce payment of a judgment against the corporation, the creditor is not required to sue all such stockholders, and is not to be charged with splitting his cause of 'action, or with needlessly bringing a multiplicity of suits, if he brings different suits against different stockholders. But a defendant in any such suit, if he desires, can bring in all the interested parties, so that contribution may be adjudged among them; but the responsibility to pursue this course rests upon the interested stockholders when sued, and not upon the creditor of the corporation.
    6. FORMER ADJUDICATION: Retrial. A complete adjudication on former appeal that plaintiffs had not sold their interest in their judgment against a corporation, to enforce payment of which they bring the present suit against the holders of unpaid stock, precludes a further consideration of the question.
    7. CORPORATION: Stock Liability: Bonus Stock. The fact that subscribers received as a bonus three and. one-half shares of common stock for one share of the company’s second mortgage bonds establishes their stock liability, when sued as holders of unpaid stock by a creditor of the corporation to enforce payment of his judgment against it.
    8. -: -: Judgment. Plaintiffs as creditors had obtained judgment against a corporation for $117,303.35, and execution was issued and returned nulla bona. Alleging these facts, and that the company was insolvent, except for the amount due it from subscribers to its stock who had obtained it without paying therefor, plaintiffs brought this suit against the holders of unpaid stock to enforce payment of their judgment, naming such holders and the amount due to the corporation from each. The judgment of the trial court for defendants is reversed, and 'the cause remanded with directions that defendants be adjudged to account for the amounts due from them respectively on account of unpaid stock to said corporation, and to pay the judgment against the company, with interest and costs; and if any defendant is insolvent, that the other defendants be adjudged to make up such deficiency in proportion to their respective liabilities.
    Appeal from St. Louis City Circuit Court.—Hon. George H. Shields, Judge.
    Reversed and remanded (with directions).

      Kinealy & Kinealy for appellants.
    (1) A creditor who has obtained a judgment against a corporation and a return of execution nulla bona may then proceed against the holders of unpaid stock. 10 Cyc. 725 and 731, tit. Corporations; Shickle v. Watts, 94 Mo. 410; Meyer v. Min. & Mill. Co., 192 Mo. 162. (2) The judgment against the corporation is conclusive on the stockholder. Nichols v. Stevens, 123 Mo. 96; Johnson v. Stebbins-Thompson Ry. Co., 177 Mo. 581. (3) If the holder of the stock be an assignee thereof and took it with notice that it had been paid up in property, then he takes it subject to the right of a creditor to have the value of the property investigated, and if such value be not equal to the amount of the capital stock, then 'the holder of the stock is liable to the creditor. Meyer v. Min. & Mill. Co., 192 Mo. 162. (4) To defend, by way. of estoppel, against the claim of the creditor, it must be shown that he had actual knowledge that the stock was not fully paid. Rogers v. Stag Min. Co., 185 Mo. App. 659; Construction Co. v. Western, 153 Mo. App. 185. (5) The mere fact that the creditor may also be a stockholder does not prevent him from pursuing his remedy as a creditor. Schaefer v. Brewing Co., 4 Mo. App. 115; Guernsey v. Moore, 131 Mo. 650; Meyer v. Min. & Mill. Co., 192 Mo. 162. (6) Under our procedure the courts can only consider controversies as concrete cases made by' the pleadings. State ex rel. v. Muench, 217 Mo. 124; Moormeister v. Hannibal, 180 Mo. App. 717. (7) If the stockholder, when sued by a creditor, admits that he is such stockholder, he can file a cross-bill bringing in ah other stockholders for contribution. Hatch v. Dana, 101 U. S. 205; Young v. Farwell, 139 111. 326; Martin v. Land Co., 94 Va. 28; Brundage v. Monumental Co., 12 Ore. 322. (8) Defendants are bound by the allegations of their answer. Oglesby v. Railroad, 150 Mo. 137; Knopp v. Kelsey, 102 Mo. 291; Weil v. Posten, 77 Mo. 284; Bruce v. Sims, 34 Mo. 246. (9) An assignment of a judgment to one not a party thereto does not extinguish. the judgment. Not even where the assignee is a surety for the judgment debtor. 23 Cyc. 1475; Bardon v. Savage, 1 Mo. 560; Bradley v. Heffernan, 156 Mo. 653; Prather v. Hairgrove, 214 Mo. 142; Thompson v. Longan, 42 Mo. App. 146; Marshall v. Meyer, 96 Mo. App. 643; Vas IToose v. Machinery, 169 Mo. .App. 54. (10) The liability of stockholders to corporate creditors does not make the stockholders sureties for each other. Guernsey v. Moore, 131 Mo. 650. (11) The assignee of the subject-matter of a pending suit gets all the rights of his assignor. R. S. 1909, see. 1924; United Shoe Mach. Co. v. Ramlose, 210 Mo. 631; Hendricks v. Calla-way, 211 Mo. 536; Van Syckel v. Beam, 110 Mo. 589; Craig v. Zimmerman, 87 Mo. 475pLangford v. Varner, 65 Mo. App. 370; Bank v. Stanley, 46 Mo. App. 441; Craig’s Appeal, 92 Mo. 396. • (12) All the questions involved in this case having recently been under review of Court in Banc, are concluded here against respondents. Scott v. Luehrmann, 213 S. W. 855.

      Muench, Walther & Muench for respondents.
    (1) The question whether Scott & Sons were informed of the method by which the Parkview Company was promoted and financed was one of fact, and having been determined by the court, below, on ample evidence contained in the record, that finding should be deferred to in this court, in view of the superior opportunity of that court to observe the witnesses and adjudge the weight and credibility of their evidence. Yeager v. Yeager, 185 S. W. 744; Thurmond v. Thurmond, 186 S. W. 1; Clark v. Clark, 143 Mo. App. 350; Hull v. Hull, 168 Mo. App. 220.; . Thiesen v. Thiesen, 167 Mo. App. 264; Griesedieck v. Griesdieck, 56 M'o. App. 98; Schierstein v. Schierstein,- 68 Mo. App. 205; Wald v. Wald, 119 Mo. App. 347; Hunnell v. Zinn, 184 S. W. 1154 ; Creamer v. Bivert, 214 Mo. 479. (2) Where one deals with a corporation, knowing its stock to have been paid up in property of an unascertained value, and as “full paid,” he can no more assail the consideration upon which, such stoolc was issued than can the corporation itself; and especially is this true of one who was a party to the scheme by which stock was issued for an alleged inadequate consideration. Woolf oik v. January, 131 Mo. 637; Berry v. Rood, 168 Mo. 316; Shields v. Hobart, 172 Mo. 491; Trust Co. v. McMillan, 188 Mo. 567; Meyer v. Milling Co., 192 Mo. 162; Hanlon v. Trust Co., 251 Mo. 588; Biggs v. Western, 248 Mo. 344; Bank of Ft. Madison v. Alden, 139 U. S. 372; Cunningham v. Holley, Co., 121 Fed. 720; Continental, etc., Co. v.- Cook, 152 Fed. 652. (3) The Syndicate contract, expressly joined in by plaintiffs Scott, having provided, in so many words, that ‘' no member of the Syndicate shall be liable beyond the amount of his subscription,” plaintiffs are now estopped from gainsaying that covenant, and seeking to make their fellow members pay for three and one-half times that amount. Herman on Estoppel, sec. 575; Bigelow on Estoppel (6 Ed.)', p. 495. (4) The contention that the Scotts did not, at the time, know the'value of the real estate equities which were turned over to the Park-view Company, will not avail. Not only did they fully examine this property before they either undertook to do the grading thereof or joined the Syndicate, but they had the same sources of information as all others, and cannot plead deliberate ignorance. ‘ ‘ Knowledge is that which is, or may be, known.” Meier v. Blume, 80 Mo. 184; Wade on Notice, sec. 11. (5) The original plaintiffs in these cases having been paid the agreed amount upon their judgment by parties of at least equal (if not greater) liability with these defendants, the judgment became extinct, unless the purchasers have some superior equity which entitles them to continue its vitality. Franklin v. Menovm, 10 Mo. App. 574; Menown v. Crawford, Ibid. 575; Thayer v. Union Tool Co., 4 Gray (Mass.) 75; Hull v, Sherwood, 59 Mo. 172; McDaniel v. Lee, 37 Mo. 204; Johnson to Use, v. Greve, 60 Mo. App. 170. (6) There is not a word of evidence in the present case that, despite this payment to the Scotts by other syndicate members, this judgment should be kept alive. The only reference to the matter is found in the “Defense-Fund Agreement” of September 24, 1914, wherein, among themselves, the subscribers to the agreement reserve the light to seek contribution in equity against other subscribers to the syndicate—not to ^continue an action in the name of a creditor, praying for judgments more than $400,000 in excess of the price paid by them for the original Scott judgment. This signifies a radical difference between the cases at bar and the case of Scott v. Luehrmann, 213 S. W. 855. But even without such difference, the rule in this State has always been that the payment of judgment by persons of equal, or greater, responsibility with remaining judgment debtors cannot recover from ’the latter more than a just contribution. Campbell v. Pope, 96 Mo. 475; Milling Co. v. Sugg, 83 Mo. 476; eases last above. (7) This being an equitable proceeding, the original plaintiffs, and, a fortiori, their present substitutes, should do equity. It is not equitable to bring a large number of different suits against many defendants, in the same jurisdiction, upon the causes, if any, identical in all, thus multiplying cost and creating harassment; and in this very cause the corporations (the Trust Companies and the Parkview Company), should have been made parties in order to have their several liabilities determined. Deeming the majority opinion in the Luehrmann case at variance with the following authorities, we respectfully urge a re-examination, by this court, of the point involved. Lucke v. Treadway, 45 Mo. App. 515; Patterson v. Lynde, 112 111. 205; Swan Co. v. Frank, 148 U. S. 603; First Natl. Bank v. Smith, 6 Fed. 215; Elkhart v. Guar. Co., 87 Fed. 252; Witherbee v. Baker, 35 N. J. Eq. 507; Coleman v. White, 14, Wis. 700; Morawetz on Corp. sec. 625; 20 Ency PL & Pr. 724; Continental Adj. Co. v. Cook, 152 Fed. 652.
   MOZLEY, C.

There are two of these cases, Nos. 20157 and 20158, which have been consolidated by the parties, and only one, No. 20158, has been abstracted and briefed. What is said in this case applies also to the other.

The action is in equity and seeks to enforce the collection from' defendants of a judgment in favor of plaintiffs of $117,303.35. Plaintiff’s bill was dismissed by the court below “without prejudice” and plaintiffs duly appealed to this court.

The ease of Scott v. Luehrmann, 278 Mo. 638, decided by Court in Banc, adjudicates all of the points in issue here. That case was dismissed by the lower court, appealed here, and reversed and remanded to the lower court with directions to proceed in conformity with said opinion. Since the facts of that case and of the instant case are the same with the exception below noted, we deem them important to the present case and therefore, set them out, as follows:

“The consummation between the parties hereto was a judgment in favor of plaintiffs for $117,303.35 and against defendants. The petition avers that returns nulla Iona were made on two executions; that the corporate defendant (Parkview Realty & Improvement Co.) is wholly insolvent, except the amount due it from subscribers to its stock who have obtained same without paying therefor. The plan of the incorporation of the company is then set out, showing that it gave to each purchaser of its second mortgage bonds a certain proportion of common stock (3½ for 1). That its whole capitalization is based on taking over about 300 acres of real estate heavily encumbered, at. a fictitious value over and above what was paid for it by the purchasing agents; that this device of the corporation was carried out by the issuance of $5,500,000, par value, of shares paid for by real estate mortgage for $3,500,000, that said mortgage represented the funds in the acquisition of the lands and. the extinguishment of all prior incumbrances thereon.
“The defendants answered by a general denial, and that plaintiffs had knowledge of the method of capitalization and had themselves purchased some bonds of said corporation and knew its capital stock had not been paid for in money; that plaintiffs had brought six suits when one would have been sufficient had all necessary- parties been joined in the action. The reply was a general denial.”

Plaintiffs have pleaded in this case, in addition to what was pleaded in the other, the names and respective amounts due and unpaid to the corporation on stock purchased by its stockholders, viz: R. L. Barton, $17,500; H. C. Zelle, $87,500; C. B. Smith, $3,500; George F. Haid, $10,500; W. C. Waldeck, $17,500; Emanuel Waldeck, $3,500; C. G. Waldeck, $7,000; Ernest B. Filsinger, $3,500; A. A. B. Woerheide, $437,-500; Julius C. Garrell, $175,000; Charles Hamilton, $35,000; O. J. McCawley, $17,500; H. E. Sprague, $7,-000; Nannie B. Sherlock, $3,500; George P. Potee, $17,-500; E. H. Exrler, $87,500; A. L. Abbott, $3,500; Joseph M. Brown, $17,500; F. W. Wrieden, $17,500; G. M. Telle, $17,500; George A. Held, $35,000; G. F. A. Breuggemann, $7,000; Rebecca Harris, $10,500; William E. Hall, $35,000; Ben Altheimer, $87,500; Ada Blanch Blake, $8-7,500; O. E. Forster, $29,166; and H. 0. Stifel, $29,166. These constitute the defendants sued herein.

The facts will be further referred to when deemed necessary.

I. A creditor who has obtained judgment against a corporation, upon return of executions nulla bona, may proceed against the holders of unpaid stock to enforce the payment of such judgment. [14 C. J. p. 383, par. 505; 10 Cyc. 725-731; Meyer v. Min. & Mill. Co., 192 Mo. 162; County v. Allen, 103 U. S. 498; Richardson v. Green, 133 U. S. 30; Hatch v. Dana, 101 U. S. 205; Shickle v. Watts, 94 Mo. 410.]

And the judgment against the corporation is conclusive on the stockholders. [Nichols v. Stevens, 123 Mo. 96; Johnson v. Stebbins-Thompson Co., 177 Mo. 581; 5 R. C. L. p. 949, sec. 429; 24 Cyc. 765, sec. 5; Nave v. Adams, 107 Mo. 414.]

II. There is no doubt that the creditor of a corporation who knew when he became such that its shares of stock had been issued to the subscribers therefor without the payment of money or money’s worth, cannot enforce his claim against the shareholders to the extent of their indebtedness for the stock issued to them. The question of plaintiffs’ knowledge, therefore, becomes a vital one.

Referring again to the facts in the Scott v. Luehrmann case, supra, we find the question of plaintiff’s knowledge of the above facts at the time he became a creditor of the Parkview Realty & Improvement Co. was ruled adversely to respondents’ contention that appellants had such knowledge. Mr. Pitzman, chief engineer in charge of the work and who is alleged to have put plaintiffs in possession of the above facts, did not testify in the instant case, although he did testify in the Luehrmann case, and it was ruled therein that his testimony was insufficient for the purpose of’ establishing knowledge on the part of the appellants. Respondents offered two witnesses in the case in hand, Otto Schmitz and Edward J. Brose. Schmitz testified as follows:

“My occupation is that of civil engineer and surveyor. Have been connected with Pitzman Company of surveyors and engineers since its organization in 1893, and am its vice-president. I have known the Scotts for about fifteen years. I was familiar with the Park-view project and the grading contracts. My desk at the office was next to that of Mr. Pitzman, who was the chief engineer in charge of the work and who conferred with the several bidders on the same. I distinctly remember Mr. Edward Scott coming into the office before the grading contract was let, and having a conversation with Mr. Pitzman about the contract and the way in which the Parkview Company was organized. Mr. Pitzman had on his desk a pamphlet containing the printed syndicate agreement, and he used this in explaining to Mr. Scott the manner in which the company was financed, speaking of bonds and shares to be issued. While I cannot now give the words that were spoken, I know it was about underwriting bonds and stocks.”

Brose testified as follows:

“I was connected with the Pitzman Company as a surveyor since 1895. I knew both Edward and John Scott, and remembered that Edward Scott came to Mr. Pitzman’s office several times before the letting of the contract for grading the Parkview tract. I remember hearing Mr. Pitzman, on one occasion, before they had the contract, talk to Edward Scott about the organization of the Parkview Company, and the manner in which the bonds and shares were to be issued, but it is too long ago for me to give the exact conversation now.” •

John E. Scott, a member of the firm of Edward J. Scott & Sons, testified as follows:

“The first time the matter of the financial responsibility of the Parkview Company or the question of its bonds or stocks came up for discussion to my knowledge, was in January, 1904, when the question of making a settlement with the company was under consideration. At that time I and my attorney went to Mr. Eule, the secretary of the company, and told him he wanted to know about how the capital stock of the company had been paid up. Mr. Eule refused to give us any information about it or to discuss the matter.. I never saw this underwriting agreement which has been read in evidence before we brought this §uit against the stockholders of the Parkview Company.”

Edward J. Scott testified that “he was a member of said firm, and made the financial arrangements respecting the contract for said Parkview Company grading on February 12, 1902; that he had no knowledge as to the financial condition of the Parkview Company or the way it was organized; that he had never seen said underwriting agreement and did not see it until these stock suits were brought. Mr. Pitzman did not tell me anything about the organization of the Parkview Company or its stocks or bonds or financial condition prior to the signing of that contract. No such question ever came up until after the work was completed, nor did I have any idea of the value of the property out in that neighborhood.”

The foregoing presented a question of fact for the chancellor below to determine, and the burden of proving the affirmative of the proposition was on respondents who had pleaded it as a defense to the action.

We agree with respondents that this being an equity suit it is to be tried here de novo, as held in the case of Gibson v. Shull, 251 Mo. l. c. 485, but the question of how far we will defer to the finding of the chancellor below is quite another matter, as shown by the following on the same page: “In other words, whilst we look upon the finding in the lower court as persuasive, we do not allow it to be binding, unless our minds run with the chancellor below on the facts, or unless the facts are conflicting and close and we yield to his judgment because of his better position to judge of the credibility of the respective witnesses.”

We must, therefore, resort to the facts to ascertain whether or not appellants, at the time of making the contract to do the grading, had knowledge of how the Parkview Company was organized, its financial condition and how its capital stock had been paid up.

Keeping in view the fact that respondents carried the laboring oar in making this proof by a fair preponderance of all the evidence relating thereto, we think the testimony insufficient to accomplish that end. It was wholly lacking in definiteness and certainty as to any facts—it was the conclusion of the witnesses. Under the above authority it does not justify us in following the finding of the chancellor below, and we decline to do so.

III. As to respondents’ contention that appellants split their cause of action by bringing more than one suit in which, they say, all matters in dispute could have been adjusted and on account thereof it becomes impossible for the court to adjudge contributions among the interested parti era, we cannot agree. Appellants were not compelled to sue all of the interested parties; the obligation was not a joint one; no particular stockholder was liable for the payment of what another stockholder owed, hence appellants could sue such as they desired. Respondents could have, had they so desired, brought in as parties to the action all of the interested parties so that contribution could be adjudged among them, but we think the responsibility to pursue this course rested upon them. [Hatch v. Dana, 101 U. S. 205; Olgilvie v. Ins. Co., 22 Howard, (U. S.) 380; Terry v. Tubman, 92 U. S. 156; Sec. 3004, R. S. 1909; Steam Cutter Co. v. Scott, 157 Mo. 520, l. c. 525; Guerney v. Moore, 131 Mo. 650, l. c. 667; State Savings Assn. v. Kellogg, 63 Mo. 540; Perry v. Turner, 55 Mo. 418.

IV. The contention made by respondents that appellants had sold all their right, title and interest in said judgment prior to bringing the present action has been adjudicated adversely to said contention in the case of Scott v. Parkview Realty & Improvement Co., 255 Mo. 76. We hold that respondents are precluded from further raising that question.

So, also, respondents contention that appellants became a party to the syndicate agreement and thereafter were bound by its provisions because of the purchase by them of $5,000 worth of second mortgage bonds for which they were to receive $17,500 of face-value common stock of said Parkview Company, has been adjudicated adversely to respondents in said case of Scott v. Luehrmann, 278 Mo. 638. We rule the contention against respondents.

V. A stock liability upon the part of respondents is fairly established by the fact that they acquired $3,-500,000 of the common stock of the corporation for $1,-000,00 of second mortgage bonds; that is, three and one-half shares of common stock were given for one share of said mortgage bonds— clearly a bonus for which the corporation received nothing. This plan was to aid the sale of said second mortgage bonds [Scott v. Realty & Imp. Company, 255 Mo. l. c. 93-94.]

VI. The opinion in the Luehrmann case, supra, is alleged to be in conflict with a number of cases decided by this court and cited in respondent’s brief. If it is, which we do not decide, it is the latest expression of our Court in Banc upon the questions therein discussed and we think they were correctly decided.

VTI. We have given attention to other matters argued in the briefs filed, but we think what is herein said sufficiently covers the case.

We think the petition states a cause of action and that the testimony is ample to support a judgment and decree in favor of appellants.

It results, therefore, that the decree and judgment of the lower court will be reversed and remanded with directions that said respondents be adjudged to account for the amounts due bv them respectively on account of unpaid stock of said Parkview Realty & Improvement Company, and that they be adjudged, ordered and decreed to pay appellants said judgment, with interest and.costs; and if any defendant be insolvent or without sufficient property subject to execution out of which he ought to pay, that the other defendants be adjudged, ordered and decreed to make up such deficiency in accordance with their respective liabilities.

It is so ordered.

White, C., concurs; Railey, C., not sitting.

PER CURIAM:—The foregoing opinion of Mozley, C., is hereby adopted as the opinion of the court.

All of the judges concur.


source: Caselaw Access Project

author: RAILEY, C.

license: Public Domain

text:
    RALEIGH INVESTMENT COMPANY v. S. J. BUNKER, Appellant.
    Division Two,
    December 15, 1920.
    1. CORPORATION: Unpaid Stock: Suit Against Stockholders: Referee: Suit in Equity. A proceeding against stockholders, after return of a nulla dona execution issued under a judgment against the corporation, to enforce its payment, although one on execution under the statute to recover upon unpaid stock, will be dealt with by the appellate court upon equitable principles, and conclusions will be reached upon the evidence, .independently of the conclusions of the referee and trial court.
    2. -: Unpaid Judgment: Unpaid Stock: Proceeding Against Stockholders. In view of the constitutional and statutory provisions, that stock or bonds of a railroad corporation “shall be issued only for money paid, labor done, or money or property actually received,” the courts will determine, in a proceeding against stockholders to enforce payment, of a judgment against the company after the return of a nulla dona execution, what portion of the stock issued to a subscriber had been paid at the time of its delivery, where it recites that it was fully paid and non-assessable, notwithstanding the certificate of the Secretary of State issued to the railroad company.
    3. -: -: -: -: Purchaser from Subscriber: Knowledge. The purchaser of stock from a subscriber to whom it was issued, with knowledge that the stock had not been fully paid for either in money or money’s worth, and that not to exceed twenty per cent of its face value had been paid for either in money, property or services, may be compelled, by a proper proceeding upon execution, after a return of a nulla dona execution issued under a judgment against the company in favor of a creditor of said company, to pay to said creditor, in satisfaction of said judgment, the difference between the face value of the stock purchased by him and said twenty per cent; and the evidence in this case shows that the purchaser from the subscriber, at the time of his purchase and from the organization of the company, had both actual and constructive notice that not exceeding twenty per cent .of the face value of the stock had been paid and that the remaining eighty per cent was at no time paid.o
    4. -: Stock: Purchaser: Untransferred Upon Books: Equitable Owner. The purchaser of stock from the subscriber to whom issued, although it has not been transferred to him upon the corporation’s books, but entitled to be so transferred, is its equitable owner, and, in an equitable proceeding, may be compelled to pay the judgment of a creditor against the company, after nulla dona return of execution, to the extent that the unpaid portion of said stock, issued with knowledge on his part that it had not been paid for, bears to its face value.
    Appeal from St. Louis City Circuit Court.—Hon. Karl Kimmel, Judge.
    Affirmed.

      Jesse McDonald, George B. Webster and Arnold Just for appellant.
    (1) Appellant was a bona-fide purchaser of the stock without knowledge that it was partly unpaid, and he is not liable. Keystone Bridge Co. v. McCluney, 8 Mo. App. 496; Berry v. Rood, 168 Mo. 316; Cook on Corporations, sec. 257; Skrainka v. Allen, 76 Mo. 384; Erskine v. Loewenstein, 82 Mo. 301; Meyer v. Ruby Co., 192 Mo. 162; Bonet Const. Co. v. Central Am. Co., 153 Mo. App. 185. (2) The blocks of fourteen shares and eighty shares not being transferred on the corporate books from Evans to appellant, as required by the terms of the certificate, appellant is not the stockholder as to such shares and is not liable thereon. 14 Corpus Juris, 781; Cook on Corporations (7 Ed.), secs. 258, 260; People’s Bank v. Stadmuller, 150 Cal. 106; Marlborough Mfg. Co. v. Smith, 2 Conn. 579; Topeka Mfg. Co. v. Hale, 39 Kan. 23; Robinson v. Southern Bank, 180 H. S. 295; Wilson v. Ry. Co., 108 Mo. 588.

      Connett & Currie and John A. Gilliam for respondent.
    (1) Appellant is liable as purchaser of stock to the amount of $80 per share with interest at six per cent computed from date when be obtained the stock on at least 119 shares of stock bought by him from E. E. Evans, the promoter and president of the company. Enright v. Heckscher, 240 Fed. 863, 153 C. C. A. 549; Davis v. Scott, 195 S. W. (Ark.) 383; Luehrmann v. Title & Trust Co., 192 S.' W. 1026; Van Cleve v. Berkey, 143 Mo. 109; Rumsey Mfg. Co. v. Kaime, 173 Mo. 551; Berry v. Rood, 168 Mo. 316; Meyer v. Mining & Milling Co., 192 Mo. 162; Trust Co. v. McMillan, 188 Mo. 568; State ex inf. v. ITogan, 163 Mo. 43; Shickle v. Watts, 94 Mo. 414; Keystone Bridge Co. v. Barstow, 8 Mo. App. 494; Keystone Bridge Co. v. McCluney, 8 Mo. App. 496; Moores v. Citizens Nat. Bank, 111 U. S. 156; Rhoads v. Blatt, 84 Pa. St. 31; Shober v. Wheeler, 113 N. C. 370; Bay v. Cook, 31 111. 336; Scoggin v. Schloath, 15 Ore. 380; Shalv v. Ansoldi Co., 165 N. Y. S. 872; Stevens v. Episcopal Church History Co., 140 App. Div. (N. Y.) 570; Sand Co. v. Crematory Co., 205 HI. 42. (2) The transferee of stock, if taken with notice that the stock is unpaid, is liable for the amount unpaid. Cook on Corp. (7 Ed.) sec. 293, and cases cited in notes, and Secs. 373, 374, 375, 376, 377, 378, 379, 380, 381, 382, .383 and note 4 on Sec. 384 of Cook on Corp. (5 Ed.); Trust Co. v. McMillan, 188 Mo. 568; Shaw v. Spencer, 1.00 Mass. 302; Coleman v. Howe, 154 111. 472; Wilson v. Met. El. Ry. Co., 120 N. Y. 152; Rogers v. Stag Mining Co.,, 185 Mo. App. 675; Cypress Lumber Co. v. Shadel, 52 La. Ann. 2094; Howes v. Chaille, 129 Ind. 435; Jackson L, S. & R. Co. v. Davison, 65 Mich. 416; Sicker v. Rambousek, 193 Mo. 113; Stephenson v. Kilpatrick, 166 Mo. 262; Ins. Co. v. .Smith, 117 Mo. 261; Thompson on Liability of Stockholders, sec. 129. (3) The buying of stock from the president of a corporation which is standing in his own name, and which is sold for his own benefit, within a short time after the incorporation of the company, at about ten per cent of its par value, puts the purchaser upon inquiry* is a badge of fraud, and the purchaser is not a bonafide purchaser of the stock, but is liable for all that is unpaid on the stock. Cook on Corp. (7 Ed.) sec. 293 and note; Mores v. Citizens Natl. Bank, 111 U. S. 156; Van Cleve v. Berkey, 143 Mo. 109; State ex inf. v. Hogan, 163 Mo. 43; Davis v. Scott, 195 S. "W. (Ark.) 383; Allen v. Ligón, 175 Ky. 767; Robinson v. Robards, 15 Mo. 459; Fisher v. Shelver, 53 Wis, 498; Boyd v. Ellis, 11 Iowa, 97; Dodson v. Cooper, 50 Kan. 680; Kuykendall v. McDonald, 15 Mo. 416; Fisher v. Lewis, 69 Mo. 632; Lionberger v. Baker, 88 Mo.' 447; Hudgins v. Kemp, 61 IT. S. (20 How.) 45; Trust Co. v. McMillan, 188 Mo. 568; Farrington v. Railroad, 150 Mass. 406; Iloppin v. Doty, 25 Wis. 591; De Witt v. Perkins, 22 Wis. 473; Auction & Com. Co. v. Mason, 16 Mo. App. 473; Eck v. Hatcher, 58 Mo. 241; Webster v. Upton, 91 U. S. 65; Ins. Co. v. Sherwood, 72 Mo. 461. (4) The circumstances of this case show that Bunker got thirty-five shares direct from Evans at $10 per share, and 102 shares by contract for relieving him from a $450 note, and eighty shares by relieving him from an $800 note, that at the time of getting the last 102 shares Bunker was secretary of the company and shortly thereafter became its president and general manager, and he is bound by the transfer for the unpaid amount on the stock and is estopped to deny his ownership and liability. Trust Co. v. McMillan, 188 Mo. 568; State ex inf. v. Hogan, 163 Mo. 43; Gillett v. Chicago Title & Trust Co., 230 111. 373; Nelson v. Chicago Title & Trust Co., 230 HI. 440; Kemp v. Chicago Title & Trust Co., 230 111. 495; Meyer v. Mining & Milling Co., 192 Mo. 162; Erskine v. Lowenstein, 82 Mo. 301; Garrett v. Kansas City Coal Mining Co.. 113 Mo. 338; Schroeder v. Edwards, 267 Mo. 481; Clark & Marshall on Corp. see. 605, p. 1842; Sec. 4184, p. 7257, Fletcher’s Corporation Cyclopedia; Cutting v. Damarel, 88 N. Y. 410; Sayles v. Bates, 15 R. I. 342; Dain Mfg. Co. v. Seed Co., 95 Mo. App. 144; Wilson v. Railroad, 108 Mo. 609; Keystone Bridge Co. v. McCluney, 8 Mo. App. 496; Camden Land Co. v. Lewis, 101 Me. 78; Moore v. Barrel Co., 238 111. 544; Shaw v. Straight, 107 Minn. 152; Moore v. Township of Kenochee 75 Mich. 351; Jones v. Shafer Iron Co., 96 Mich. 98; Camden v. Stuart, 144 U. S. 104; Herbert v. Duryea, 164 N. Y. 596; Patterson v. Woolridge, 170 Ky. 748; Upton v. Tribilcock, 91 U. S. 47.
   RAILEY, C.

On June 15, 1915, plaintiff obtained a judgment in the Circuit Court of the City of St. Louis, Missouri, against the Bismarck, Bellevue & Western Railway Company, for $17,572.08, upon which judgment an execution and alias execution were issued, and returned nulla bona by the sheriff. On April 3, 1916, plaintiff filed, in the circuit court aforesaid, its notice to defendant, S. J. Bunker, informing him as to the rendition of said judgment and the return of nulla bona aforesaid; and likewise notifying him that on Monday, April 3, 1916, it would move said court for an order against said defendant for an execution against him as a stockholder of said railroad company for the amount of said judgment and costs, or for such portion thereof as this defendant was liable to pay. On April 3, 1916, respondent filed a motion in said court for execution as aforesaid,' and on April 12, 1916, filed an amended motion for execution against said Bunker as a stockholder in said railroad company and, after describing the judgment in favor of plaintiff as aforesaid, alleged that an execution had been issued on said judgment and a nulla bona return made thereon; that said Bunker was a stockholder in said company to the extent of 340 shares of the par value of $100 each; that one hundred per cent of the par value of 165 shares of said stock remains unpaid; that ninety per cent of the par value of 139 shares of said stock remains unpaid; that said S. J. Bunker purchased said stock with knowledge that nothing had been paid on said 165 shares of stock, and that only ten per cent of the par value of said 139 shares of stock had been paid. Respondent herein asked for an execution against said Bunker, as a stockholder aforesaid, to colle.ct $29, 010, or as much of said sum as may be necessary to satisfy the judgment aforesaid, being the sum remaining unpaid on the shares of stock held by defendant Bunker.

Appellant herein filed his return, and alleged therein that he is a stockholder of said railway company, but denies that he ever subscribed to the capital stock of same; denies that he was an incorporator thereof, or that he had any knowledge of its organization. He avers that on April 5, 1921, E. E. Evans was the owner of certain shares of the capital stock of said railway company, and that, on said date, he purchased from said Evans, for a valuable consideration then paid to to him, ten shares of the capital stock aforesaid; that he purchased the same in open market, upon the assurance and under the belief, that the same had been fully paid, and that said certificate, representing said ten shares, upon its face stated that they were paid in full and were non-assessable; that-he had no notice or knowledge to the contrary; that he then believed, and still believes, that said shares were fully paid, non-assessable, and that no liability attached to the holder thereof, and he so avers; that by reason of the premises, he is not liable for the payment of any portion of said ten shares of stock, etc.

On September 18, 1916, respondent herein filed a re-lily to the return of appellant aforesaid, and denied all the allegations of new matter contained therein. It is further alleged in said reply, that said railway company was incorporated under the laws of Missouri, with a capital stock of- 3,000 shares of the par value of $100 each, to build a railroad from Bismarck, Missouri, to Sunlight, in said State; that its first stockholders’ meeting was held on March 23, 1912, and the following per-' sons were its organizers, promoters, and constituted its first board of directors, namely, E. E. Evans, C. E. Hamilton, J. R. Roycroft, Edward T. Eversole, P. T. Ramsey, H. P. Hathaway, H. H. Albert, Walter C. Haeussler, E. E. Gimlin, Grant Wyatt and Louis Hudson; that at said meeting, E. E. Evans was elected president of said corporation, 0. E. Hamilton vice-president, and J. R. Roycroft secretary and treasurer. It is averred that said directors and Dr. John L. Eaton, and other persons unknown to respondent, were a syndicate, organized to promote said corporation; that each of said parties had put up before that date about $250 in the promotion of said corporation; that said E. E. Evans had put in means of his own to the extent of about $1750, in addition to the $250 aforesaid, and about $2500 of borrowed money; that all of said sums, amounting to about $7,000, had been used in making surveys, procuring charter, getting agreements for rights-of-way, and deeds for rights-of-way, for said railway company; that the total amount of all payments made by said syndicate, all voluntary contributions made, and services rendered to said railway company, did not exceed $8,000, up to and including the first day of April, 1912; that on March 23, 1912, said directors, including E. E. Evans, who was present, passed the following resolution, to-wit: “Mr. Wyatt moved that the company purchase the rights-of-way, contracts, field notes and all property pertaining to proposed road between Bismarck and Sunlight, from E. E. Evans, and pay said Evans for same,, including all moneys advanced for organization expenses, the sum of one hundred and two thousand dollars, said'property to he free and clear of debt, and that said consideration be paid, two thousand dollars in cash, and one hundred thousand dollars in common stock of the company, fully paid and non-assessable; seconded by Mr. Hathaway, and carried.”

It is further averred, that in pursuance of said resolution, which was entered on the proceedings and minutes of said board of directors, on April 1, 1912, a certificate of stock for 1,000 shares of common stock in said company, purporting to be of the par value of $100 per share, was written up and signed by said E. E. Evans as president, and said J. R. Roycroft as secretary, in the stock certificate book, and there remained until about July 12, 1913; that about 140 other certificates for stock, amounting to about 550 shares, were issued to divers persons, purporting to be transferees, from said E. E. Evans, before said certificate was formerly surrendered by said Evans, and other certificates for about 450 shares issued in its stead; that each and all of said directors were interested with said Evans in getting said resolution passed; that no money was paid to said Evans at that time, nor was any money paid into the corporation’s, treasury at that time for any of said stock. It is averred that the entire consideration for said 1,000 shares of stock, and said $2,000 so voted, paid in money and labor to said company, in services, contracts, for rights-of-way, property, surveys, charter and legal expenses, did not exceed in value $8,000; that said 1,000 shares taken by said Evans had not to.exceed $6,000 paid on them; that about $94 per share was unpaid thereon.

The reply contains other allegations, tending to show notice to appellant herein as to how the stock to Evans >had been issued, as well as in respect to other matters tending to show appellant bought with notice, that the capital stock 'which was delivered to him was not paid up in full, and had not been paid in excess of $20 per share.

It is further alleged that appellant purchased from said Evans, as a part of said $1,000 shares, on May 7, 1.912, 25 shares; on August 13, 1912, 10 shares; on July 19, 1913, 1 share; on November 12, 1913, 10 shares; on July 18, 1914, 200 shares; and on August 13, 1914, 94 shares of stock, making a total of 340 shares, of the par value of $1.00 per share; that said $1,000 shares were issued to said Evans, as aforesaid, within four days after said railway company was chartered. It is further charged that Bunker knew that said Evans was promoting said company for about 14 months before said stock was voted to him; that he was president of said company; that while promoting same, he was a clerk in the employment of the U. S. Government at a small salary; that he was a man of limited means, worth not exceeding $2,000, and with poor credit; that said Evans had not paid for said stock in money, labor, services, or pimperty, in excess of six dollars per share; that he was publicly offering it for sale, within a month after it was voted to him, at ten dollars per share; that-appellant knew all the facts aforesaid, or by the exercise of reasonable care, diligence, inquiry and investigation be would have known said facts; that defendant did not pay for said stock over $2,200, and owes, therefore, $29,010, etc.

On December 5, 1916, the court heard part of the evidence and ordered that the cause be referred to a referee. Mr. Frank A. Thompson was appointed referee, qualified as such, took the testimony, and made a report of his proceedings to the trial court on October 8, 1917. After carefully reading and considering all the facts as presented in the record before us, we are satisfied with the statement and finding of facts made by the said referee, and hereby adopt the same applicable to the case before us, as follows:

“Statement of the Case.
“This case was heard on the issues raised on eleven motions for execution against certain persons mentioned in the motions who had purchased stock from one E. E. Evans who was a promoter and large stockholder of the defendant railway company, the theory of the plaintiff in each motion being that the stock of E. E. Evans was unpaid and that each of the stockholders had purchased said stock from E. E. Evans under such conditions as to make them liable to plaintiff for the unpaid portion of said stock.
“Facts with Reference to the Organization of the Company and Issue of Stock to E. E. Evans.
“Mr. Evans is now about forty years of age. In January, 1911, he conceived the idea of building a railroad about eighteen miles in length, starting at Bismarck, Missouri, and running west to Sunlight, Missouri. He was at the time a reputable man in the Government employ at Saint Louis, Missouri, but of no particular means. He interested several gentlemen in Saint Louis in the matter and then went to Bismarck and Sunlight and interested several gentlemen in that locality and along thS proposed line. Between the time that Evans first conceived the idea of building this railroad in March, 1912, he spent seven or eight months in interesting people in the matter and procuring rights-of-way and bonuses and subscriptions for stock for the proposed railroad, and during all of that time he was occupying a Government position and drawing seventy-five dollars per month. After having interested a number of men as aforesaid in the matter, on or about March 19, 1912, he, together with the other men whom he had interested in the matter, filed articles of incorporation with the Secretary of State in accordance with Article II, Chapter 33, Revised Statutes 1909, by which it was provided that the name of the proposed corporation should be the Bismark-Bellevue Yalley & Western Railway Company; that it should continue for a period of fifty years; that its purpose was to build a railroad from Bismarck in St. Francois County to Sunlight in Washington County; that the capital was to be $300,000, divided into 3,000 shares of $100 each, and that the board of directors should be composed of eleven persons named therein, and that 300 shares were subscribed for. Thus the corporation was launched.
“On the 23d day of March, 1912, the directors of the Bismarck-Bellevue Yalley & Western Railway Company held their first meeting. These directors were associates of E. E. Evans, and upon a resolution prepared and presented the corporation purchased from E. E. Evans all of the rights-of-way, bonuses, subscriptions to stock, and services rendered by E. E. Evans in the promotion of said railway company and amounts expended and advanced by him in and about the promotion of said company, and allowed him for these items by way of payment two thousand dollars in cash and one thousand shares of the stock of the company of the par value of one hundred" dollars each, making altogether, a payment to Evans of one hundred and two thousand dollars for services, rights-of-way, bonuses and subscriptions, money advanced and money expended by E. E. Evans.
“It is the contention of the plaintiff in this case that instead of all this being worth one hundred and two thousand dollars, it was in reality worth not to exceed nine thousand dollars. A certificate for one thousand shares of the par value of one hundred dollars each' was immediately issued to E. E. Evans. Within a few weeks thereafter, E. E. Evans commenced selling this stock. His regular price seemed to' be ten dollars per share. He sold some, however, for less than this and in one or two instances for a little more. Each of the eleven individual defendants mentioned in this case against whom a motion for execution has been filed became a purchaser or holder of some part of this stock so acquired as aforesaid by E. E. Evans.
“On the 15th day of June, 1915, plaintiff in this case obtained judgment against the Bismarck-Bellevue Valley & "Western Railway Company in the Circuit Court of the City of St. Louis for $17,572.08, which judgment is recorded in Book 250, page 430. Execution was issued- and a nulla tona return was made by the Sheriff of the City of St. Louis, which is Execution No. 62 of the October Term, 1915. Upon the return of this execution unsatisfied, the plaintiff filed these eleven motions for execution against these individual defendants, which motions are in the nature and correspond to a bill in equity, their object being to compel the individual defendants to respond to the plaintiff for the unpaid portion of the stock which they hold so acquired from E. E. Evans, as aforesaid. These motions are all alike and all state that the individual défendants or stockholders purchased their stock from E. E. Evans with knowledge that the same was unpaid. To each of these motions the defendants filed a return, all similar, in which each of the defendants denies that he purchased the stock having any knowledge of the manner in which it was paid for, but that he purchased it in good faith upon the open market and upon representation that it was fully paid and not assessable stock and that he had no knowledge whatsoever to the contrary. To these returns the plaintiff filed a reply, in which it is alleged that the individual defendants purchased the stock with full knowledge of how it was paid for, knew the conditions under which it was issued and all the facts and circumstances surrounding the issuance of the stock, and had knowledge, or what amounted to knowledge, that the stock was not fully paid. It might be stated here that none of the defendants except P. T. Ramsey took part in the organization of this company as original stockholder or director, although defendants S. J. Bunker and P. H. Cureton became much interested in the company and helped materially to promote it very shortly after March 23, 1912.
“Findings.
“Your referee finds that the one thousand shares of stock issued to E. E. Evans, as aforesaid, was paid to the extent of not over twenty per cent. That eighty per cent, or eighty dollars on each share, is unpaid. Indeed, E. E. Evans himself admitted before the Public Service Commission that it was only twenty-five per cent paid. All of the certificates which all of these defendants received from Evans read that the stock was fully paid. ' Your referee finds that of the defendants, three are liable, to-wit, S. J. Bunker, P. IT. Cureton and P. T. Ramsey; that the remaining defendants are not liable. Your referee finds that the three defendants who are liable purchased their stock under the following conditions, to-wit:
“First, S. J. Bunker, an experienced - man, became interested in this railroad and had a conference with E. E. Evans in St. Louis in January or February, 1912. Shortly after the organization meeting of March 23, 1912, he prevailed upon E. E. Evans to divert the proposed road from Sunlight, Missouri, to Bunker, Missouri, and that in conversations and before he purchased any stock, E. E. Evans told him all about the organization of the company and told him the manner in which he had procured his stock, and shortly thereafter, on, to-wit, May 7, 1912, he purchased of Evans twenty-five shares and thereafter acquired fourteen shares for paying a part of a $450 note of Evans, and eighty additional shares for paying a note of Evans amounting to $800, so that your referee finds that S. J. Bunker acquired one hundred and nineteen shares of stock from E. E. Evans with actual knowledge of the manner in which E. E. Evans had acquired it, with actual knowledge of what Evans turned over to the company to pay for it, and your referee finds that, knowing this, he cannot believe that S. J. Bunker could really have come to the conclusion that the property put in for Evan’s stock was worth $102,000, whereas it was worth but a very small proportion of that amount. Plaintiff contends that S. J. Bunker is liable upon an additional 200 shares of stock which was to go to Bunker and become his property upn the completion of the railroad, but since the road was never completed, your referee finds, under the conditions of the agreement, S'. J. Bunker never became the owner of this stock and is not liable thereon,” 'etc.

The referee, in his conclusions of law, recommended that judgment be entered iii favor of plaintiff and against defendant Bunker for $9,520. Appellant filed exceptions to the report of the referee, which were overruled and, on December 2, 1918, the court confirmed said report, and entered its judgment in favor of plaintiff for $9,520, with interest from April 3, 1916, at six per cent per annum, amounting in the aggregate to $11,041.61

Defendant Bunker, in due time, filed his motion for a new trial, which was overruled and the cause duly appealed by him to this court.

I. It has long been recognized as the settled practice in this State, to deal with questions like those before us upon equitable principles, although this is a proceeding on execution under the statute to recover upon unpaid stock. [Erskine v. Lowenstein, 82 Mo. l. c. 305-6; Gilbert v. Gilbert, 33 Mo. App. l. c. 268.] In view of the foregoing, we have carefully read and considered the evidence in the case, in order to pass upon same, independently of any conclusions which may have been reached by the referee and trial court. Our views of the case are in accord with those of the referee in respect to the facts, and, hence, we have adopted that portion of the referee’s report heretofore set out, which we will supplement with a few additional observations, based upon the evidence and record before us.

II. Under proposition one of appellant’s “Points and Authorities,” it is said: “Appellant was a bonafide purchaser of the stock without knowiedge that it was partly unpaid, and lie is not liable.”

In considering this question, it is important to keep in mind certain provisions of our organic and statutory laws relating to the capital stock of railroad cor p orations.

Section 8 of Article XII of our Constitution provides that “no corporation shall issue stock or bonds, except for money paid, labor done or property actually received, and all fictitious increase of stock or indebtedness shall be void.”

Section 2981, Revised Statutes 1909, provides that: “the stock or bonds of a corporation shall be issued only for money paid, labor done or money or property actually received. . . . All fictitious issues or increase of stock or of bonds of any corporation shall be void.”

In view of the above provisions of our Constitution 'and Statute, notwithstanding the certificate of incorporation issued by the Secretary of State to said railroad company, we may determine in this proceeding what portion of the stock issued had been paid, when it was delivered to E. E. Evans, and by him thereafter sold to appellant. [Hess Warming & V. Co. v. Grain Elev. Co., 280 Mo. 163.]

It appears from the articles of association that E. E. Evans subscribed for 280 shares of the capital stock of said railroad company, in December, 1911, and that the ten directors heretofore named each subscribed for two shares of said stock, making the total amount of capital stock subscribed 300 shares of the par value of $100 each. At the organization meeting of the directors of said railroad company on March 23, 1912, the following occurred, as shown by the record of said company, to-wit:

“Mr. Wyatt moved that the company purchase the rights-of-way, contracts, field notes and all property pertaining to proposed road between Bismarck and Sunlight, from E. E. Evans, and pay said Evans for same, including all moneys advanced for organization expenses, the sum of one hundred and two thousand dollars, said property to be free and clear of debt, and that said consideration be paid two thousand dollars in cash and one hundred thousand dollars in common stock of the company, full paid and non-assessable; seconded by Mr. Hathaway, and carried.”

In passing, it is well to observe that the record shows E. E. Evans and the ten directors at said meeting were pretending to represent themselves, as well as the railroad company with which they were dealing.

As heretofore stated, we find from the evidence that the 1000 shares of stock issued to Evans was paid to the extent of not over twenty per cent. That eighty pier cent, or eighty dollars on each of said shares, is unpaid. In the light of foregoing, was appellant a bona-fide purchaser of that stock which he received from Evans, without notice that a large portion of same was unpaid when he bought it?

It. is fair to assume from the evidence that appellant is at least a man of average intelligence and business qualifications. He was engaged in manufacturing and selling lumber at Bunker, Missouri, in 1912. He was a stockholder and manager of the Hamilton-Ryan Construction Company, which did some of the grading on said road in the fall of 1912. He was also at one time a director in said railroad and, at another time, president of said railroad company.

Appellant became interested in having the road run to Bunker, and wrote to Evans at St. Louis in January, 1912, in regard to the matter. He testified that he met Evans in St. Louis, Missouri, in January or February, 1912. E. E. Evans testified, in regard to what occurred between himself and appellant, while the latter was in St. Louis, as follows:

“Q. Well, did you. tell him that you had received one thousand shares of stock for your services? A. Bunker was apprised of that fact at St, Louis, I think, about his first trip up here.
“Q. 'He had been apprised of that fact? A. Yes, sir.
“Q. And then he knew for this one hundred and two thousand dollars that had been voted to you you had received one thousand shares of this stock.? A. Yes, sir.
“Q. On his first visit up here in the spring of 1912? A. Yes, sir.”

E. E.’ Evans -further testified as follows:

“The organization was on the 23rd of March, 1912, and our first survey went out of Bunker along about the 25th or 26th of April, Bunker towards Sunlight. .
“Q. Before that, then, you had no conversation with Mr. Bunker about this railroad, had you? A. We had one letter, if I recall right, and he was in the city once.
“Q. And you had then talked with him about this railroad and about what you were doing? A. Why, most assuredly I talked to him about this railroad and what we were doing and going to try to do.
“Q. You told him the whole thing from beginning to end? A. Yes, sirree.”

Appellant testified that sometime during the spring or summer of 1912 he examined the records of the railroad company, and saw that part of it relating to the issuance of 1000 shares of stock to Evans. No grading had been done at that time. Appellant further testified:

“Q. Now, let me get that. You saw this record and you found that $100,000 in stock had been voted to Evans? A. Yes, sir.
“Q. And that $2,000 in cash had been voted to Evans? A. ,Yes, sir.
“Q. And you understood that those seven directors, taking two shares each, paid for their stock out of this $2,000? A. I understood that this money came from those directors. The record, I believe, showed— I think it was exactly $2,000.
“Q. - And all that had been voted to Evans for services? A. Por services in the connection with the survey, rights-of-way, and so on, from Bismarck to Sunlight. . . .
“Q. Well, that resolution provided for the payment to Evans? A. Yes, sir.
“Q. Then, that didn’t leave any money in the treasury? A. I think not.”

Without considering the evidence further, we are of the opinion, that appellant bought the stock in controversy, with both actual and constructive notice that not exceeding twenty per cent of same had been paid, and that the remaining eighty per cent had never been paid. Under the facts thus found, the judgment below was for the right party. [Shickle v. Watts, 94 Mo. 410; Van Cleve v. Berkey, 143 Mo. 109; Banking Co. v. Independence Mfg. Co., 168 Mo. l. c. 645-6; Berry v. Rood, 168 Mo. l. c. 332-3; Bank v. Rockefeller, 195 Mo. l. c. 54-5; Brewing Assn. v. Novelty Co., 120 Mo. App. 513; Leucke v. Tredway, 45 Mo. App. 507.] Numerous other authorities in this State, and elsewhere, are in accord with the principles of law announced in foregoing cases.

III. It is contended by appellant, that the blocks of fourteen shares and eighty shares are not transferred on the corporate books from Evans to appellant, and that he is not liable thereon. Appellant was undoubtedly the equitable owner, at least, and was entitled to have the stock transferred to himself on the books of the company. As we are dealing with this case upon equitable principles, we can conceive of no good reason for relieving him from, the unpaid portion of said stock. [Wilson v. Ry. Co., 108 Mo. l. c. 609; Moore v. Bank of Commerce, 52 Mo. l. c. 379; Boatmen’s Ins. & Tr. Co. v. Able, 48 Mo. l. c. 139-40; Chouteau Spring Co. v. Harris, 20 Mo. 382-3; Kretzer v. Cole Bros. Rod Co., 181 S. W. (Mo. App.) 1066-7-8; Dain Mfg. Co. v. Trumbull Seed Co., 95 Mo. App. l. c. 146-7.] The above contention is without merit and is overruled.

TV. We have carefully examined and fully considered the issues presented in this case. The judgment rendered in the court below meets with our approval, and is accordingly affirmed.

White, C., concurs; Mozley, C., not sitting.

PER CURIAM:—The foregoing opinion of Railey, C., is hereby adopted as the opinion of the court.

All of the judges concur.


author: WILLIAMSON, J.

text:
    CITY OF HARDIN v. JAMES W. CUNNINGHAM et al., Appellants.
    Division Two,
    December 15, 1920.
    1. TOWN COMMON: Dedication: Title. A town plat, executed by tbe owners and recorded in 1869, showing blocks and streets, and a strip marked with the name of the town, which was thereafter understood by the town to be a common and acted upon by all persons concerned as town property, is sufficient to show title in the town to such strip, although the plat is vague.

      2. TITLE OF CITY: Estoppel: Improvements hy Strangers. The city, claiming title to a common by dedication, is not estopped, as against a railroad which claims it by gift, by the fact that it stood by and permitted various strangers to the title to erect valuable improvements on the land. Estoppel is available only to him who has been misled to his hurt, and to those who are in privity with him. If that plea were available to intruders or trespassers on the land, the railroad cannot shelter itself behind it.
    3. -: Dedication: Language. Where the plat of the addition shows that the owners meant to dedicate a certain strip thereof to the town as a common or park, and the town so understood it and acted upon it, and the strip has for more than forty years been recognized by 'all parties as city property, the language of the dedication is not material.
    Appeal from Ray Circuit Court.-—Hon. Arch B. Davis, Judge.
    Affirmed.

      N. S. Brown, Lavelock & Kirkpatrick and S. J. and G. C. Jones for appellants.
    (1) The judgment of the trial court finding for plaintiff is erroneous in this, that the evidence fails to show that plaintiff had a legal title to the land in dispute. Without the legal title, plaintiff could not recover. Chaput v. Pickle, 250 Mo. 578; Adkins v. Adams, 256 Mo. 2; Carter v. Masey, 239 Mo. 518; St. Louis v. Blast Furnace Co., 235 Mo. 27; Nalle v. Thompson, 173 Mo. 614; Martin v. Kitchen, 195 Mo. 487. (2) The fact that the City of Hardin, its officers and representatives stood by and permitted the railroad company and its lessees to take possession of the land in controversy, erected valuable buildings and improvements thereon, at the expenditure of large sums of money, clearly worked an estoppel against it. Dunklin v, Chouteau, 120 Mo. 595; City of St. Joseph v. Railway Co., 268 Mo. 47; Town of ¡Montevallo v. School District, 268 Mo. 217; St. Louis v. Railroad, 248 Mo. 10; Simpson v. Stoddard County, 173 Mo. 421; Reuter v. Lawe, 34 L. E. A. 733; County of Boone v. Railroad, 139 U. S. 684, 35 L. Ed. 323; Peoria v. Central Natl. Bank, 224 111. 43, 12 L. R. A. (N. S.) 696. (3) The doctrine of equitable estoppel applies to municipal corporations the same as to individuals. Simpson v. Stoddard County, 173 Mo. 421; Dunklin County v. Chouteau, 120 Mo. 577; Town of Montevallo v. School District, 268 Mo. 217; County of Boone v. Railroad, 139 IT. S. 684, 31 L. Ed. 323. (4) It cannot be seriously insisted that the plat or dedication signed January 10, 1869; by Hughes, Shaw, Spurlock and McGinnis and acknowledged by them and recorded in the county plat-book is valid or that any legal rights were acquired thereunder. It was surely absurd and impossible in its description. The property intended to be located therein could not be ascertained. R. S. 1865, sec. 1, p. 40; State ex rel. Bras-well v. Tucker, 48 Mo. 531.

      M. M. Milligan and Garner, Clark, Milligan & Garner for respondent.
    (1) The plat, although it fails to definitely locate the land platted, is admissible in evidence, as color of title and as characterizing the nature of the city’s possession. Laddonia v. Day, 265 Mo. 396. (2) The arrangement of the lots facing on this strip, the north- and-south streets extending through it, coupled with the fact that the city has kept the strip open to the public and the dedicators have not attempted to take possession or convey the property since the filing of the plat, conclusively shows an intention on the part of the dedicator to include this strip in the plat, and on the part of the city to accept it for public use. City of Hardin v. Ferguson, 196 >S. W. 746; Buschmann v. St. Louis, 121 Mo. 535. (3) The plat of the original town, coupled with the acts of user, control and supervision on the part of the city, show an intention on the part of the owners to dedicate, and of the city to accept for public uses, the land in controversy. And this is so, although the plat may not be sufficient as a statutory dedication. City of Hardin v. Ferguson, 196 S. W. 746; City of California v. Howard, 78 Mo. 88; Buschmann v. St. Louis, 121 Mo. 523; Heitz v. St. Louis, 110 Mo. 618; McGrath v. Nevada, 188 Mo. 102; Naylor v. Harrison-ville, 207 IMo. 341; Rose v. St. Charles, 49 Mo. 508; Conner v. Nevada, 188 Mo. 148; Price v. Breckenridge, 92 Mo. 378; Curran v. St. Joseph, 264 Mo. 659; Benton v. St. Louis, 217 Mo. 705'; St. Louis Ry. v. Lindell Ry., 190 Mo. 246; Otterville v. Bente, 24Ó Mo. 291; Long-worth v. Sedevic, 165 Mo. 221; Tracy v. Battle, 213 Mo. 303. (4) The judgment in the former case is res adjudicaba as to Cunningham and Ferguson. Davidson v.'Ins. Co., 249 Mo. 474; Emmett v. Aldridge, 231 Mo. 124. (5) The railroad acquired no title by adverse possession: First, because evidence is not sufficient; Second, because under the statute then and now it could so acquire only such property as was necessary in the actual construction and operation of the railroad. Laws 1886, p. 332; Sec. 3049, R. S. 1909; Third, because it cannot so acquire property dedicated to public use.' City of St. Louis v. Mo. Pac. Ry., 114 Mo. 13. (6) The City of Hardin is not estopped to claim title to the land in controversy.
   WILLIAMSON, J.

The plaintiff, the City of Hardin, brought this suit against the defendant Cunningham, claiming, that it was entitled to the possession of a certain strip of land described as follows:

“ ... Lying between the right of way of the Wabash Railroad and Block Thirteen of the original town of said City of Hardin and more particularly described as follows: Beginning at the northeast corner of Lot Nine in Block One of Hughes’ Addittion to said City of Hardin, thence in a. northeasterly direction parallel with the no'rth line of a street called Main Street in said city to the west line of First Street in said city, thence south along the west line, of First Street to the north line of the Wabash Railroad, thence in a southwesterly direction along the north line of said right of way to the southeast corner of said Lot Nine, thence along the east line of said lot to the place of beginning, said strip of ground being, three hundred feet long, east and west, and ninety feet wide, north and south.”

Thereafter the Wabash Railway Company (hereinafter called the Wabash) was made a defendant, apparently because it claimed to be the owner of the lands in controversy and other lands similarly situated in Hardin, and filed an answer, as did the defendant Cunningham. Upon a hearing before the court, a jury having been waived, judgment was rendered in favor of the plaintiff and the Wabash has appealed. .

The petition merely asserts that the plaintiff is entitled to possession of the lands described, that defendant unlawfully ousted it, and claims damages and “other and proper relief.” The answer of Cunningham is a general denial. The answer of the Wabash is a general denial; a claim of title in itself; an assertion that plaintiff claims title under a dedication which is alleged to be void for indefiniteness; that the signers of the plat of the town of Hardin ‘ ‘offered” said lands to the North Missouri Railroad Company for a named consideration, namely, the construction of a railroad through said lands, which offer this defendant alleges “was accepted,” and the railroad was duly built; that the Wabash is the successor in title to the North Missouri Railroad Company; a plea of various Statutes of Limitations, and a plea of estoppel. A general denial was filed in reply.

The plaintiff had brought certain suits of a similar nature against various persons, and the Wabash had brought a suit to quiet title to all of the lands involved in all of these suits, asserting title in itself to all of the said lands, and, for convenience, this suit resolved itself into a sort of omnibus proceeding having for its object the settlement of the conflicting claims of the parties to a tract of land about ninety feet in width, lying immediately north of the north line of the Wabash right-of-way, extending entirely across'Blocks 8, 9, 10, 11, 12 and 33 of the original town-plat and bounded on the north by the south line of said blocks. Evidence was introduced touching any and all of the tract last above described.

James Happy, who was the owner on April 29, 1853, is admitted to be the common source of title. By mesne conveyances Happy’s title passed to Shaw, Spurlock, McGinniss, Hughes and Porter, who were the owners on January 2, 3868, when the lands in question and other lands were platted by them as a part of the town of Hardin. .

The north sixty feet of this strip above described has. been improved by respondent as a street and apparently is not in dispute. That much is apparently conceded to the plaintiff.

The evidence tended to show that for thirty years or more this strip of land had lain unenclosed and had been used as a town common; that the city had built a jail upon it, had authorized the erection of a band-' stand thereon; had laid tiling, planted trees, mowed weeds and otherwise exercised control, supervision and management over it. The general public had traveled freelv upon it, and upon all parts of it, and up until about 193.2 no controversy had arisen concerning the city’s right to possession of the entire tract.

Between the south margin of this tract and the rails of the Wabash main track was a strip of ground approximately fifty feet wide, which, by common consent, was regarded as the north half of the Wabash right-of-way. For a great many years various buildings, such as grain elevators, stock-pens and other structures, had been erected and maintained in close proximity to the railroad tracks under leases or permits issued by the Wabash, for which it charged a nominal rental, usually five dollars per annum. Appellant built and for many years maintained stock-pens which extended into the land in dispute, hut these pens were torn away several years ago. It is a mooted point whether these structures, or some of them, were wholly on the right of way, or partly upon it, and partly, or perhaps wholly, upon the land in litigation. It should further he noted that the Wabash constructed and maintained a switch track on the north side of its main line, which, in its course, gradually diverges from the main line, until, in places, it is obviously entirely off of the right of way. Controversy as to this portion of the disputed strip, however, is eliminated by an express avowal of counsel for the city that “the city concedes it [the-'Wabash] a 100-foot strip for its- main track and also that portion of land which it occupies from a side-track and for other legitimate railroad purposes.”

Thus, by process of elimination, this general controversy is narrowed down, for all practical purposes, to a question as to the title to .a strip of land about thirty feet wide, bounded on the south by the north line of the Wabash right-of-way, and upon the north by a line sixty feet south of the south line of Blocks 7 to 13 as shown upon the town-plat, from the west line of Block 7 to the west line of Block 13, except so much of this 30-foot strip as is occupied by the switch-track above mentioned. The land involved in this particular suit, however, is the small tract hereinbefore described.

I. Appellant complains that the City of Hardin failed to show title to the lands here in question, and that the judgment in favor of the city is therefore erroneous.

There is in evidence, as shown by the record before us, a plat of the town of Hardin, which is accepted by both sides as having been executed by the owners of the land in question on the 10th day of January, 1868. This plat was recorded on the 29th day of January, 1869. It purports to be a plat of the town of Hardin, and is so treated by the parties. It is attacked by appellant as so vague as to be void, it is true, but no one doubts, apparently, that by this plat the owners meant to plat some land as a part or all of the town of Hardin. This plat is labeled “Hardin.” More than sixteen blocks, appropriately numbered, and divided in numbered lots, are shown upon it. These blocks lie some upon the north and some upon the south side of a railroad, also shown thereon and designated as “West Branch of North Missouri R. R.,” which was appellant’s corporate predecessor in interest. A strip of ground not divided in blocks or lots, appears upon each side of the railroad so designated. The land here in dispute is obviously a part of the strip lying to the north of the railroad. Streets are shown at regular intervals upon this plat, and the streets running north and south upon the north side of the railroad correspond and would, if extended, unite with the streets running in the same direction, upon the south side of the railroad. All east-and west streets are parallel on both sides of the railroad. These streets are not marked ■ upon any part of the railroad, nor upon the strips of land bordering it. It seems obvious that by this plat the owners meant to lay out certain lands in town lots; to locate appropriate streets and alleys; to designate the location, or anticipated location, of a railroad; to provide for streets both north and south of the railroad and paralleling its right of way, and to dedicate all of such streets to the public use. Otherwise, the action of the owners is unintelligible. The town of Hardin so understood it and so acted upon it during the lifetime of the owners, and has continued to do so ever since. However imperfect this plat may have been as a dedication under the statutes, it, and that which has been done under it, were sufficient at common law to vest- title in the town of Hardin to the lands here in controversy, and which are embraced within the plat’ We so held in a recent case involving a portion of the same lands here in dispute when this same question was made between the City of Hardin and Mr. Cunningham, who was a party-defendant to this action. We see no reason to change that conclusion. [City of Hardin v. Ferguson, 271 Mo. 410, l. c. 414, 196 S. W. 746, and authorities there cited.] This point is ruled against the appellant.

II. Appellant claims that respondents is estopped to claim the land in dispute for the reason that it has stood by and permitted various individuals, other than appellant, to erect valuable improvements upon the lands in question. It should be borne in mind that the Wabash, alone, appears here as an appellant. It is not claimed that the Wabash is the owner of any of these improvements, except the sidetrack, which for the reasons stated, is not imperilled in this proceeding. We do not see by what authority the Wabash can here shelter itself behind a plea which might, indeed, under appropriate circumstances, be available to the owners of the buildings which have been built upon the lands in dispute, but which is a plea that the owners alone could set up. Estoppel is available only to him who has been misled to his hurt and to those who are in privity with him. No such privity exists here. [21 C. J. p. 1179.]

There is nothing in this record to show that the appellant has been misled to its hurt by any act of the respondent, and therefore the plea of estoppel avails appellant nothing. [Thompson v. Lindsay, 242 Mo. 53, l. c. 76; DeLashmutt v. Teetor, 261 Mo. 412, l. c. 439 and authorities there cited.]

III. Appellant, as its third and final assignment óf error, asserts that “the language of the dedication as made by Shaw and others^’ is void because the description is absurd and impossible.

This dedication, as to the language used, is set out in the brief for appellant and in appellant’s answer. We do not find that it was ever introduced in evidence. That fact, if it be a fact, however, is imma-j-e;i:aa^ for the reason that, irrespective of the language used, the plat, which is in evidence, is when-coupled with the facts set forth in paragraph one hereof, sufficient to constitute a common-law dedication under the doctrine of the Ferguson case, supra, and the authorities there cited.

It follows that the judgement below should be affirmed.

It is so ordered.

All concur.


text:
    CITY OF HARDIN v. LAFAYETTE FERGUSON, Appellant. CITY OF HARDIN v. WILLIAM NICHOLSON et al.; WABASH RAILWAY COMPANY, Appellant. WABASH RAILWAY COMPANY, Appellant, v. CITY OF HARDIN.
    Division Two,
    December 15, 1920.
   WILLIAMSON, J.

These three cases are companion cases to the case of City of Hardin v. Cunningham et al., this day decided, and involve the same questions which are there involved.

By a stipulation filed in this court in each of these three cases, it is agreed by the parties that “each and all of the above causes shall abide the decision of this court in the case of the City of Hardin, Respondent, v. James Cunningham et al., Appellants.”

In each of these four cases, the judgment below was in favor of the City of Hardin.

In our opinion in the last named case we affirmed the judgment of the trial court. For the reasons set forth in our opinion in that case and pursuant to the terms of stipulation above mentioned, the judgment in each of these three cases is also affirmed.