author: WALKER, C. J.

text:
    MARY ALICE REGAN et al., Appellants, v. WILLIAM ENSLEY.
    Division Two,
    June 25, 1920.
    1. HOMESTEAD: Favorite of Courts. The salutary intent of homestead laws should not incline courts to extend them beyond the plain purpose of their enactment.
    2. <-: Estates. The widow has a conditional life estate in her husband’s homestead, and his minor children an estate for years terminable as they respectively reach legal majority.
    3. -: Devise By Husband. The words of the homestead statutes do not prevent the householder from devising the homestead to his widow for life with remainder to certain pf his adult children to the exclusion of others.

      4. -: — : Conveyance: Vesting of Title in Heirs. The plain purpose of the words of the statutes that “the husband shall be debarred from and incapable of selling, mortgaging" or alienating the homestead in any manner whatever” and that upon the death or remarriage* of the widow it “shall pass to the heirs of the husband” was to preserve a home for the householder’s widow during her widowhood and for his children during their minority, and they were not meant to be words controlling devolution of estates. They do not mean that, there being no minor children, the husband cannot b'y will devise the homestead to his wife for life and the remainder to certain preferred adult children, to the exclusion of ’ others.
    5. —1-: -: Without Wife Joining: Acquiescence. The proviso to the statute (Sec. 5435, R. S. 1909) that “nothing herein contained shall be so construed as to prevent the husband and wife jointly conveying, mortgaging, alienating or in any other manner •disposing of such homestead or any part thereof” refers by strict construction to the preceding words “conveying and mortgaging,” and not to the husband’s power of alienation by devise; and "besides, the acceptance by the widow of a devise of the homestead to her for life is a joining in the will as far as she is capable of doing so.
    Appeal, from Montgomery Circuit Court. — Eon. E. 8. Gantt, Judge.
    Affirmed.

      Claude B. Ball for appellants.
    (1) The evidence shows clearly that the property in suit, was the homestead of Solomon Ensley and his wife, Rebecca Ensley. He died April 30, 1896. The Homestead Law of 1895, page 185 was in force at the time of his death, and is the same as Secs. 3613, 3620, R. S. 1899. (2) The only question for decision is, could Solomon Ensley lawfully convey in fee simple his homestead to his wife for life and at her death to his son, William Ensley, there being no minor children? We insist that under Secs. 3616, 3620, R. S. 1899, he could not do so, and that such will in so far as it attempts to convey or devise the homestead to his wife for life and to his son in fee, is null and void. (3) Rebecca Ensley, the widow (who died March. 4, 1917) was not required to renounce the will, or file her election. The homestead was of less value than $1,500. The homestead law makes no rule or provisions requiring election or repudiation. Steepler v. Silberberg, 220 Mo. 270; • Bogart v. Bogart, 138 Mo. 427. The -rights of Solomon and of the widow were fixed and accrued under the Homestead Law of 1895, which expressly provides to whom the homestead shall pass on the death of the householder; in this case, to the widow, and upon her death, to the heirs of the husband. (4) The husband cannot dispose of his homestead by will, because the homestead law governs its disposition and not his will. Where such housekeeper dies leaving a widow the homestead “is as much exempt from the operation of the will of the deceased head of the family, as it is from sale for the payment of his debts; it is out of his power by will to deprive the widow and children of it; for the law makes -its own disposition of' such estate.” Rockhey y. Rockhey, 97 Mo. 79; Kaes v. Gross, 92 Mo. 659; Kleimann v. Gieselmann, 114 Mo. 444; Schorr v. Etling, 124 Mo. 42; Ball v. Ball, 165 Mo. 312; Armor v. Lewis, 252 Mo. 578. (5) The moment that the Act of 1895 went into effect, Solomon Ensley was bound by it, and was debarred from and incapable of disposing of his homestead either by deed or will, unless his wife Rebecca joined therein. “Under the Act of 1895 a husband cannot convey his homestead unless his wife joins in the conveyance.” Bushnell v. Loomis, 234 Mo. 371. (6) Sec. 3616, R. S. 1899, clearly states that any conveyance of the homestead-by the husband alone is null and void. Had Solomon deeded the homestead to his wife Rebecca for life, and at her death to pass in fee simple to his son, William, such a deed under this section would be null and void. It stands to reason that if he could not deed his homestead without his wife joining in the deed, he could not pass it to his son by will. Growney v. O’Donnell, 272 Mo. 167. And had Solomon deeded the homestead as suggested, and he had outlived his wife, the deed would be void as to him, and would not pass any title. Martin v. Herrington, 73 Vt. 193; White v. Spencer, 217 Mo. 252.

      W. G. Hughes for respondents.
    (1) That the husband, without the joinder of his wife, cannot alienate the homestead or impose a burden on its enjoyment, is too clear for comment; hut that he may sell the land subject to all homestead rights of a non-joining wife is uncontrovertible in reason and under a correct construction of our statutes. Fields v. Jacobi, 181 S. W. 68; Stephens v. Stephens, 183 S. W. 574. (2) Prior to the Act of 1895, it is beyond dispute that the husband could sell or incumber the homestead, subject to the wife’s inchoate right of dower, without the wife joining with him, except where the wife had filed her claim as provided by Sec. 5435, R. S. 1889. Greer v. Major, 114 Mo. 145; Rucker v. Wells, 111 Mo. 399; Kopp v. Blessing, 121 Mo. 391; Markwell v. Markwell, 157 Mo. 326; Gladney v. Sydnor, 172 Mo. 318. (3) The homestead law is not for the benefit of adult children; it is for the benefit of the wife and minor children. In this case there were no minor children. At the date of the death of Solomon Ensley, no one was interested in the homestead except his wife. Solomon did not take from her, or attempt to take from her; the homestead right; instead of alienating it, he enlarged it to a life estate. (4) In the case of Armor v. Lewis, relied upon by appellants, as in fact all cases of like holding, the question involved was the forced alienation of the homestead. This court has never held that a will or deed of the owner, enlarging the homestead right in the wife to a life estate, and devising or conveying the fee to an adult child,'is an alienation within the meaning of the homestead law.
   WALKER, C. J.

This is a suit to partition certain town lots in New Florence, Montgomery County. Mary Alice Regan and Sarah Anderson, appellants, and William Ensley, respondent, are the children of Solomon and Rebecca Ensley, through whom appellants claim title by descent as tenants in common to the lots in question. A trial in the circuit court resulted in a finding that appellants had no title to the property and that the fee in same was in the respondent. Prom the judgment rendered thereon appellants have prosecuted this appeal.

Solomon Ensley died testate in April, 1896, seized in fee of the lots, which at the time he occupied with his wife as a homestead. The pertinent portions of his will are as follows:

1st. I give and bequeath to my beloved wife, Rebecca Ensley,. all the real estate and personal property I may have or own at the time of my death to have and to hold and use during her lifetime and at her death all of such real estate to descend to my son, William Ensley, to have and to be held and owned by him in fee simple to use and dispose of as he may see proper.

“2nd. I give and bequeath to my two daughters, Sarah Anderson, the wife of Thomas Anderson, and Alice Regan, the wife of Jeff Regan, each the sum of ten dollars to be paid to them out of my personal estate or by my son, William Ensley, and in the event my son, William Ensley, pays to my two said daughters the said sums of ten dollars then and in that event it is my will and desire that my son, William Ensley, shall fall heir to any and own all of my personal estate which may remain in existence at the time of the death of my said beloved wife which has not been disposed fif by her for use and support.”

Rebecca, relict of Solomon, continued after his death to occupy the premises not only during her widowhood, but after her marriage to one Austin and until her death in March, 1917.

The authority of the testator to devise the lots which constituted his homestead is the matter at issue. The applicable statute is the amendatory act of the homestead laws (Laws 1895, p. 185) in force at the time of the testator’s death. [Balance v. Gordon, 247 Mo. l. c. 131.] Sections 6704 and 6708, Revised Statutes 1909, are in no material features different from the relevant portions of the Act of 1895, which in the first section prescribes the limitations upon the right of the disposal of a homestead as follows:

“Sec. 5435. The homestead of every housekeeper or head of a family, consisting of a .dwelling-house and appurtenances, and the land used in connection therewith, not exceeding the amount and value herein limited, which is or shall be used by such housekeeper or head of a family as such homestead,'shall, together with the rents, issues and products thereof, be exempt from attachment and execution, except as herein provided; such homestead in the country shall not include more than one hundred and sixty acres of land, or exceed the total value of fifteen hundred dollars; and in cities having a population of forty thousand or more, such homestead shall not include more than eighteen square rods of ground, or exceed the total value of three thousand dollars; and in cities having a population of ten thous- and and less than forty thousand, such homestead shall not include more than thirty square rods of ground, or exceed the total value of fifteen hundred dollars; and in cities and incorporated towns and villages having a population less than ten thousand, such homestead shall not include more than five acres of ground,, or exceed the total value of fifteen hundred dollars. The husband shall be debarred from and incapable of selling, mortgaging or alienating the homestead in any manner whatever, and every such sale, mortgage or alienation is hereby declared null and void: Provided, however, that nothing herein contained shall be so construed as to prevent the husband and wife from jointly conveying, mortgaging, alienating or in any other manner disposing of such homestead, or any part thereof.”

And in the second defines the manner in which such homestead shall pass and vest, as follows:

“Sec. 5439. If any such housekeeper or head of a family shall die, leaving a widow or any minor children, his homestead to the value aforesaid shall pass to and vest in such widow or children, or if there be both, to such widow aud children, and shall continue for their benefit without being subject to the payment of the debt of the deceased, unless legally charged thereon in his lifetime, until the youngest child shall attain its legal majority, and until the death of such widow; that is to say, the children shall have the joint right of occupation with the widow until they shall arrive respectively at their majority, and the widow shall have the right to occupy such homestead during her life or widowhood, and upon her death or remarriage it shall pass to the heirs of the husband;. and the probate court having jurisdiction of the estate of the deceased housekeeper, or head of a family, shall, when necessary, appoint three commissioners to set out such homestead to the person or persons entitled thereto.”

Under these statutes appellants contend that the inhibition therein upon the alienation of a homestead, whether by devise or otherwise, is absolute; and upon the death of the testator a life estate in the property vested in his widow with. a vested remainder in the parties hereto, appellants and respondent, which ripened into a fee upon the death of the widow.

While homestead laws are purely statutory in their origin, their salutary intent is such as to incline the courts to uniformly construe them with great liberality. Such construction, however, should not extend beyond the plain purpose of their enactment as evidenced by the usual and obvious meaning of the words employed or dispense with the necessity of parties bring themselves within the spirit and purpose of the laws unaided by judicial construction. [Dalton v. Simpson, 270 Mo. l. c. 300; Keeline v. Sealy, 257 Mo. 498; Sperry v. Cook, 247 Mo. 132; Hines v. Duncan, 79 Ala. 112, 58 Am. Rep. 580; Fred v. Bramen, 97 Minn. 484, 114 Am. St. 740; Charless v. Lamberson, 1 Iowa, 435, 63 Am. Dec. 457.]

Mindful of, these rules, the meaning of the statute as applied to the facts at bar should not be difficult of determination. That the homestead-. interest. upon the death of the husband vests as .a. conditional life estate in the widow we have repeatedly held. [Bushnell v. Loomis, 234 Mo. 371; Snodgrass v. Copple, 203 Mo. 480; Hufschmidt v. Gross, 112 Mo. 649; West v. McMullen, 112 Mo. 405; Rhorer v. Brockhage, 86 Mo. 544.] In this far, therefore, no question can arise as to the correctness of appellants’ contention. That one of the conditions under the statute on which the widow’s estate was terminable, viz., her marriage, need not concern us, as it did not the parties hereto. She continued in the possession and occupancy of the premises thereafter until her death, and if any conclusion is to be drawn as to the character of her tenure after her marriage it is that thenceforth she was holding under the will and not under the statute. In any view of this phase of the facts it canno't affect appellants ’ title.

A further provision of the statute is that the children of a householder or head of a family shall upon his death use and' occupy the homestead jointly with his widow during her tenure and thereafter until each of such children reaches its legal majority. The effect of this statute is to create in said children an estate for years terminable upon each reaching full age as stated. This provision has no application here. Each of the children, the parties to this proceeding, had reached full age at the time of the death of their father, Solomon Ensley. This provision may therefore be dismissed from consideration, except as to the effect its elimination may, as contended by appellants, have upon the determination of their title. Appellants ’ contention in this regard is that under the first section of the act (1895) the husband is debarred from alienating the homestead in any manner whatever; and under the second section of the act, there being no minor heirs and the life estate of the widow having terminated with her death, that the fee in said property vested in ■appellants under the provision that “it shall pass to the heirs of the husband.” This conclusion necessitates a literal and mandatory construction of the statute and it remains to be determined if it is in harmony with the rules of interpretation applicable hereto and as a consequence comports with the spirit and purpose' of this character of legislation. We have repeatedly held that the nature of the homestead law is benign and its purpose the protection of the widow and minor children from the vicissitudes of fortune when they have been bereft by death of the strong arms and helpful hands of the husband and father. He, therefore, in whose kindly mind this statute had its origin, framed it in comprehensive terms with a mandatory meaning that its beneficient purpose might not be thwarted and the objects of its' tender care thus deprived of its protection.

From the nature of a will as contradistinguished from a conveyance of real property, Rebecca Ensley cannot be said to have joined therein with her'husband in such manner as is contemplated by the statute to render the alienation valid (Sec. 5435, supra). This portion of the statute must, in our opinion, from its terms, be held to have a more specific reference to conveyances than to wills. So far, however, as it was possible for her to join in the will she did so. Not that any overt act of hers was necessary at the time of the death of her husband to complete her investiture of title, because the homestead comprised all of the real property of the estate and did not exceed the value of this interest. Being in possession she continued therein and while her right and title to the property terminated in law upon her remarriage, her peaceful possession continued until severed by death. This attitude, although not determinative, affords persuasive support to the conclusion that while not joining in the will, which as we have indicated, was not possible, she at least acquiesced in its provisions in accepting and enjoying the extended tenure if afforded. We are not, however, and we should not be, limited to persuasive reasoning in determining the propriety of the husband’s will. The statute itself and the purpose of its enactment, .interpreted in the light of the rules stated, should furnish the safest measure as to its mean-

The hjiband’s alinenation by devise in no wise injuriously but rather beneficially affected the'widow’s use and occupancy of the property. She took a life estate coupled with a condition under the statute, and a like estate five from a condition under the will Her last estate was therefore better than her first.

It being apparent that the disposition of this property by the testator in Ms will helped rather than hurt the beneficent purpose of the law, we are of the opinion that the inhibition therein in regard to alienation as here exercised has not been violated. While it is true that a mandatory statute should as a general rule be literally construed and strictly applied, this rule becomes inoperative when its application will limit, if it does not destroy, the purpose of the act being construed. There is nothing in our ruling in Rockhey v. Rockhey, 97 Mo. 76, which militates against this conclusion. We simply held there that a husband could not by a will deprive his widow and minor children of their homestead right in his estate. This is consonant with the purpose of the homestead law, but furnishes no precedent for the determination of the matter at issue. Here there are no minor children and the widow had no cause of complaint and made none.

The ruling of this court in Kaes v. Gross, 92 Mo. l. c. 659, to the effect that it is out of the power of a husband to devise the homestead, as much so, as by his sole deed to convey or mortgage it, was under a statute (Sec. 2693, R. S. 1879) which excepted a homestead out of the law relating to devises. This exception was eliminated by the amendment of Section 2693 in 1895 (Laws 1895, p. 186). Moreover, the above conclusion, reached in the Kaes-Gross case, was in Greer v. Major, 114 Mo. l. c. 155, declared to be obiter and expressly overruled-.

All that was decided in Schorr v. Etling, 124 Mo. l. c. 46, and cases cited, pertinent to the matter at bar was that a widow cannot by the will of her husband be deprived of rights secured to her under the Law of 1875, and that the homestead passes to the widow by operation of law and is expressly excepted from the operation of the will of her husband. This ruling, as stated in reference to the Kaes-Gross case, was under the LaV of 1875 and has since been eliminated from the statute by repeal. These cases, therefore, are fallen timber so far as concerns the matter here seeking solution. f

A further ruling is made in the Schorr-Etling case as to the Homestead Law of 1865 concerning the widow’s right of election which is not relevant in the determination of the instant case; nor is anything in Ball v. Ball, 165 Mo. 312, which construd a will under the Law of 1865, or in Armor v. Lewis, 252 Mo. 568, construing the Homestead Law of 1895, decisive of the question here demanding solution.

The foregoing are all of the cases cited by appellants in support of their contention. It is apparent that they fall short of accomplishing this purpose.

There is no dearth of technical reasons based purely upon the canons of construction to su'stain the conclusion we have reached herein. The language of that portion of the statute (Sec. 5135, supra) under discussion is as follows: “The husband shall be debarred from and incapable of selling, mortgaging or alienating the homestead in any manner whatever,” etc. A rule of construction provides that where general words follow particular words, the former will be construed as applicable only to persons or things of the same nature or class as the latter; or, as we have stated it, ‘ ‘ general words do not explain or amplify particular terms preceding them, but are themselves restricted and explained by the particular terms. [State ex rel. Pike County v. Gordon, 268 Mo. 321.] In the application of this rule to the statute quoted the meaning of the general word “alienation” may properly be restricted to that embodied in the particular words “selling” and “mortgaging.”

A like construction may be given to that portion of the proviso of the same section that “nothing herein contained shall be construed to prevent the husband and wife from jointly conveying, mortgaging, alienating or in any other manner disposing of such homestead or any part thereof. ” As we have shown, there eonld not well he a joint alienation by devise and the framers of the law evidently did not so intend. The reasonable con'struction of this proviso, therefore, is that such a joint alienatiop was authorized as is expressed by the words “conveying or mortgaging” and that the word “alienating” should be restricted in its mening to that given to the preceding words, while the words “or in any manner disposing” may be construed as suppletory. Thus interpreted, the husband’s power of alienation by devise is not prohibited by the statute. In the application of this rule the purpose of the homestead law is not to be lost sight of. This necessitates a modification of the foregoing rule of construction which, while not prohibiting alenation by devise, limits the exercise of same to cases where the rights of the widow and minor children are not thereby affected.

Our rulings in Ball v. Ball, supra, and in Wetzel v. Hecht, 281 Mo. 610, while not precedents decisive of the instant case on account of a difference in the issues, nevertheless recognize the right of the husband to alienate the homestead by devise where the spirit and purpose of the law is not thereby violated. Of such is the instant case.

The right of alienation having been established under the facts at bar, the ruling of the trial court was not error and its judgment should be affirmed. It is so or dered.

All concur.


source: Caselaw Access Project

author: WILLIAMSON, J.-

license: Public Domain

text:
    BANK OF SLATER v. UNION STATION BANK, Appellant.
    Division Two,
    June 25, 1920.
    1. EXCLUSION OF PROOF: No Proffer: Review. Wliere the trial court refuses to permit a witness to answer certain questions propounded by appellant, it becomes necessary for appellant, in order to have such ruling reviewed on appeal, to offer to show what he expects to prove by the witness in answer to the questions. The appellate court cannot speculate upon -what the witness would have testified had he been permitted to answer.'
    2. BANKING: Credit to President. Where there was no proof or offer of proof that an arrangement was made by defendant bank and the president of plaintiff bank that the money represented by a loan made to plaintiff, for which the president alone gave his individual note, was to remain on deposit with defendant and never to be drawn out either by plaintiff or its said president, the trial court did not err in permitting plaintiff to prove that it passed the loan to the credit of its president and that he checked it out.
    3. -: Deposit Por Use of President: Trustee. An indorsement of the words “Use of I. W. Avitt” upon the deposit slip sent by the defendant bank to the bank of which Avitt was president did not make his said bank trustee of the money in the slip named, nor did Avitt thereby alone have the right to draw out the money or assign the right to some one else. On the contrary, the deposit slip, showing a deposit to the credit of the bank of which Avitt was president, authorized said bank to collect from defendant bank, which had issued the slip, the amount of money named in it, and authorized its assignee, upon an assignment by said bank, to collect the amount.
    4. -: -: To Pay Note. The bank to which defendant bank sent a deposit slip indorsed “Use of I. W. Avitt” is not bound . to pay a note for the amount given to defendant bank by Avitt at the time the slip was sent, nor can the defendant bank, when the assignee of the bank to which the slip was sent attempts by "suit to collect the amount named in the deposit slip, receive credit on the deposit for the amount of Avitt’s individual note. The statute (Sec. 9989, R. S. 1909) says that “no person is liable upon the instrument whose signature does not appear thereon, except as herein otherwise expressly provided.”
    5. -: Action to Collect Debt: Peremptory Instruction. Where the facts adduced demonstrate plaintiff’s right as a matter of law to judgment for a named sum, and the only point at issue is the date of demand, it is not error for the court to instruct the jury to return their verdict for plaintiff for said amount, plus interest .from the date the evidence shows demand was made.
    6. -: Loan. To lend is to allow the custody and use of a certain thing, on condition of a return of the thing lent, or, in case of money, and perhaps other things, of its equivalent in kind. A contract by which neither the bank nor its president was to have the custody or use of money at any time, but all of it was to remain in the actual custody and control of the bank which issued a deposit slip to the other showing a, deposit to its credit of the amount, was not a loan.
    7. -: Deceiving Public Officers: Public Policy: Estoppel. It is a question of the gravest doubt whether an agreement which in effect is a mere device to aid a bank and its president to mislead and deceive the officers of the law whose duty it is from time to time to examine into and ascertain its financial condition, and whereby its required reserve under the law was made to appear to be greater than it really was, by keeping the whole transaction off the books of both banks, except that the one could enter the amount of a deposit slip issued to it by the other upon its own books, is not void for reasons of public policy, and whether any defense in a suit for the amount of the deposit is not barred by estoppel. But the propositions, though discussed, are not decided, ' because not raised, and because a contrary doctrine is countenanced in Title & Trust Co. v. Brady, 165 Mo. 197.
    Appeal from St. Louis City Circuit Court. — Hon. Karl Kimmel, Judge.
    Affirmed.

      Marshall é Henderson for appellant.
    (1) Upon the case made, the plaintiff was not entitled to recover and the trial court erred in not giving the instruction to find for the defendant. (2) The circuit court erred in refusing to admit evidence of the agreement between the defendant bank and I. W. Avitt, under which the loan of eight thousand dollars was made. The whole of the contract between Avitt and the defendant bank, which was partly represented by the deposit slip and partly by 'the note Avitt gave to the defendant bank, did not express the whole contract. It expressly declared that the eight thousand dollars was for the use of I. W. Avitt, but it did not express what the use was. to be, and parol evidence was, therefore, admissible to show what use it was agreed Avitt should make of the eight thousand dollars. Greening v. Steele, 122 Mo. 294; Bowers v. -Belle, 193 Mo. App. 218. (3) The case of Sparks v. Dispatch Transfer Company, 104 Mo. 531, has no application to the case at bar. (4) The law applicable to the case at bar is clearly set forth in Hanover National Bank v. First National Bank, 109 Fed. 421; Flower v. Commercial Trust Company, 223 Fed. 321, and Flower v. Central National Bank, 223 Fed. 323.

      Jones, Hooker, Sullivan & Angert for respondent.
    (1) The defendant did not offer to prove its alleged affirmative defense, and the ruling of the trial court on the admission of parol evidence is not here foi review. Bank v. Aull, 80 Mo. 202; Mfg. Co. v. Ry. Co.. 230 Mo. 77; Shelby Co. Railway v. Dimmitt, 235 Mo 492; Holzemer v. Ry. Co., 261 Mo. 411. (2) The agree' ment of the parties was in writing and parol evidence was inadmissible to vary it. R. S. 1909, sec. 9989; Sparks v. Transfer Co., 104 Mo. 531; Wurlitzer Co. v. Rossmann, 190 S. W. (Mo. App.) 636; Bank v. Lead Co., 173 Mo. App. 634. (3) Even if the Farmers Bank had received the proceeds of Avitt’s note to its own use, the law would imply no agreement of the bank to pay the notet Walker v. Brown, 28 111. 288; Hospital v. Fairbanks, 129 Mass. 78; Sullivan v. Ry. Co., 135 Mich. 661. (4) By the terms of its certificate of deposit, appellant estopped itself to set up the defense pleaded in its answer. Bank v. Frame, 112 Mo. 513.
   WILLIAMSON, J.-

The defense was a general denial, coupled with allegations to the effect that on or about September 15, 1910, defendant loaned the Farmers’ Bank the sum of $8000, upon a parol agreement that the entire sum should remain on deposit with defendant to the credit of the Farmers’ Bank; that the Farmers’ Bank should pay defendant interest thereon at the rate of six per cent per annum, and that defendant might, at any time, credit said loan with said deposit and thereby discharge the indebtedness of the Farmers’ Bank to it, but that this money was never to be drawn out of appellant’s bank. The purpose of this arrangement was to swell the apparent assets of the Farmers’ Bank to that extent, presumably for the benefit of inquisitive bank examiners, since appellant alleges that the loan was desired in order to keep up the reserve of the Farmers’ Bank as required under the laws of Missouri. Since this purpose would be defeated by the execution of an obligation by the Farmers’ Bank in evidence of this loan, it was further agreed by the borrowing and lending banks above named, as defendant alleges, that one I. W. Avitt should execute •and deliver to defendant his personal note for $8000, bearing interest at six per cent per annum, which he’ accordingly did. Defendant then credited the Farmers’ Bank with $8000. Avitt was then president of the Farmers’ Bank. It is alleged that the original note was renewed on March 1, 1913, subject to the same understanding; that the Farmers’ Bank paid the interest, both on the original and the renewal notes, and that prior to July 1, 1913, defendant applied so much of the deposit as then remained in its hands, to-wit, $7560.43, to the payment of the Avitt renewal note, given in evidence of the alleged loan to the Farmers’ Bank, and thus closed the account. Defendant also averred that the money was loaned to the Farmers ’ Bank, and not to Avitt, and that the Farmers’ Bank got the benefit of the loan “as aforesaid.” The reply was a general denial.

The evidence tended to support the allegations of the petition and answer, except as to the alleged parol agreement, concerning which no evidence was admitted. Whether or not any was offered will be determined later, The evidence also showed that upon the delivery of the original Avitt note, defendant issued to the Farmers ’ Bank a deposit slip showing a deposit of $8000 to the credit of the last named hank. The Farmers’ Bank passed the amount to the credit of Mr. Avitt, who promptly '-checked it out. This slip was in the usual form except that it bore this memorandum: “Use of I. W. Avitt, E. C.” The letters “E. C.” were the initials of Emerson Chanselor, who was the cashier of the defendant hank when the slip was made, but who was dead at the time of the trial. Mr. Avitt also executed to defendant another note upon which he secured the sum of $8000. By a contract bearing date of July 1, 1913, the Farmers’ Bank in writing assigned to plaintiff certain assets, including the claim here in question, in consideration of an agreement upon the part of plaintiff to pay the claims of the depositors of the Farmers’ Bank, and thereupon the last named institution, being insolvent, went out of business. Mr. I. W. Avitt, in like unfortunate condition financially, took up his abode in Winnipeg, Canada, of which city he was a resident at the time this case was tried.. It is alleged in the answer that “prior to, to-wit, July 1, 1913,” defendant applied the deposit in question to the payment of “the loan aforesaid,” meaning thereby the loan of $8000 to the Farmers’ Bank. The evidence showed the application was made August 8, 1913. This was the sum of plaintiff’s evidence.

Defendant then asked for a peremptory instruction to the jury to find for defendant, This instruction was refused, and" defendant excepted. No evidence being offered by defendant, the court thereupon gave to the jury a peremptory instruction to find for the plaintiff in the sum of $7569.43, with interest at the rate of six per cent per annum from the date that payment was demanded by plaintiff. Defendant duly saved an exception to this instruction. The verdict was in favor of plaintiff in the sum of $7569.43 and interest at six per cent per annum from July 5, 1913, or a total sum of $9504,12. A motion for a new trial having met with' defeat, defendant lias duly appealed. Its assignments of error are shown, in substance, in the opinion.

of°Proof.

I. Appellant’s first assignment of error relates to the refusal of the trial court to permit appellant to prove the alleged parob agreement between itself and I. W. Avitt concerning the $8000 deposit. The record touching this matter is as follows:

The president of the appellant bank, called as a witness for respondent, testified that he instructed appellant’s cashier to take I. W. Avitt’s note for $8000 and place that amount to the credit of the Farmers’ Bank. On cross-examination, he was asked by appellant to tell the jury what he knew about “the arrangement under which this note was executed to the Union Station Bank.” To this question respondent objected on the ground that the note was an obligation in writing and that parol evidence concerning any negotiations leading up to its execution was inadmissible. The court sustained the objection. Later, this witness testified concerning the original $8000 note, in substance, that Avitt came to St. Louis to negotiate a loan, and, in the words of the witness, “after talking over the matter with Mr. Chanselor, the latter telephoned to me, and then explained to me why he desired a loan of $8000.” At this point, respondent again objected on the grounds above stated, and the court sustained the objection. Appellant then asked the witness “what, in banking circles, is understood when a deposit ticket, such as this is, issued by a bank, by [bears] the words, ‘Use of I. W. Avitt’ ”? The witness answered that he knew the custom of his bank, but not of others. He was then asked what was the purpose and intent of the Union Station Bank, in putting the words “Use of I. W. Avitt” on this deposit slip. Respondent’s objection was sustained. The witness was then asked to what use this money was to be applied, and respondent’s objection to that question was sustained. Appellant duly saved an exception to these rulings in each instance. This is all that appears in the record on this proposition. It will be noted that appellant made no offer to show what it expected to prove by the witness in this connection. So far as this record discloses, the witness might have been utterly ignorant concerning any matter to which these questions related. We cannot reverse a judgment on a speculation as to what a witness would have said had he been permitted to testify. In the absence of an offer of proof showing what appellant expected to prove by the answers of the witness to these questions, we must hold that the matter is not before us for review. ‘ This is the immemorial rule in' this jurisdiction. [Arfstrum v. Baker, 214 S. W. (Mo.) 859, l. c. 860; Smith v. Riordan, 213 S. W. (Mo.) 61, l. c. 64; Holzemer v. Railway Co., 261 Mo. 379, l. c. 411; Shelby County Railroad v. Dimmitt, 235 Mo. 489, l. c. 492.] We rule this point against appellant.

No Proof

II. Appellant’s second assignment of error is that the trial court erroneously permitted respondent to prove that the Farmers’ Bank passed the loan in question to the credit of I. W. Avitt, and that he thereupon checked that sum out of that bank. The essence of appellant’s argument upon this point is that since Avitt was president of the Farmers’ Bank, his knowledge was the knowledge of the bank, and therefore that bank was charged -with notice of the arrangement alleged to have been made by Avitt with the appellant that the money was to remain on deposit with appellant, and was never to be drawn out either by Avitt or the Farmers’ Bank. -The fundamental fault in this argument is, of course, that there is neither proof nor an offer to prove that any such arrangement ever was made. We' rule this point against appellant for that reason. Other reasons might easily be assigned, but this suffices.

credit^of0 Bank.

III. Appellant assigns as error the refusal of the trial court, upon the close of respondent’s evidence, to give to the jury a peremptory instruction to- find in favor of the appellant. In substance, appellant argues, under this assignment, that by the indorsement of the words “Use of I. W. Avitt” upon the deposit slip which it sent to the Farmers’ Bank, that bank “became the trustee of the $8000 . . .' and I. W. Avitt became the beneficiary of that money, and he alone had the right to draw it or assign his right to some one else, none of which was ever done.”

Again appellant is confronted with the fatal flaw in its case, that there is in this record neither proof nor an offer to prove that the use of this money by I. W. Avitt was subject to any limitation or restriction whatever. So far as this record discloses, the Farmers’ Bank was merely notified that it had on deposit with appellant the sum of $8000, which was for the. use of I. W. Avitt. So far as appears here, the Farmers’ Bank might as well have had this $8000 in its own vaults as in the vaults of appellant. ' If it had had the money in its actual, physical possession, could there be any doubt of its right to credit it to Avitt’s account and to honor his cheeks for the full amount? We think not. In effect, that is what it did. All that the Farmers’ Bank knew was that Avitt was entitled to use $8000 which it had to its credit for his use. Avitt got the use of it. There is no doubt about that. It appears that appellant had loaned Avitt, another $8000 also. There is no question about his right to use that sum. Now suppose that appellant had notified some bank other than the Farmers’ Bank that appellant had credited such other bank with that second sum of $8000 for the “use of I. W. Avitt,” and the bank so notified had thereupon cashed Avitt’s check, drawn upon itself for $8000, would anybody question the right of such bank to collect $8000 from appellant? We cannot imagine upon what grounds such a contention could be entertained.

; But the whole matter may be disposed of upon another ground. In effect, appellant is asserting that respondent, as assignee of the Farmers’ Bank, must pay a note which appellant holds against I. W. Avitt, and upon which, so far as appears in this record, the Farmers’ Bank was never bound. This note is á renewal of another note which was executed in 1910. There was at that time, as there has ever since been, a terse declaration in our statute relating to negotiable instruments, which reads as follows:

“No person is liable upon the instrument whose signature does not appear thereon, except as herein otherwise expressly provided.”' [Sec. 9989, R. S. 1909.]

We do not know of any exception whose saving grace would relieve appellant from the effect of this sweeping statute, nor has appellant’s eminent counsel pointed out such an exception. True, this is not an action brought by appellant upon that note, but observe the guarded language of the statute: “No person is liable upon the instrument.” To support appellant’s contention here would be as effectually to hold the Farmers’ Bank liable upon the Avitt note as if appellant were directly suing that bank upon that note. But if it be said that appellant is simply seeking to enforce a parol agreement made at the time the note was executed, we are again confronted with the insuperable objection that there is no proof nor offer of proof that there ever was such an agreement. There is no merit in this assignment.

. SZ5S

IV. As a fourth and last assignment of error, appellant asserts that the court erred in the instruction given to the jury, as above set out. This instruction is a peremptory direction to the jury to find for the respondent. The only matter left for the jury to determine was the date upon which respondent demanded and appellant refused payment. ■ The determination of that date fixed the time from which interest should be calculated. There was substantial evidence to' support the verdict upon that proposition. Unless the instruction was erroneous upon other matters, the appellant must fail on this point also. The undisputed facts are that on July 1, 1913, the Farmers’ Bank had on deposit with, appellant the sum of $7569.43; that oh that day the Farmers’ Bank for a valuable consideration assigned that credit to the respondent and that on July 5, 1913, respondent demanded payment and appellant refused to pay. There was neither proof nor offer of proof to the contrary. Appellant’s argument under this assignment is based upon the assumption of error on the part of the trial court in refusing to admit evidence of the alleged parol agreement. For the reasons stated in paragraph one of this opinion, we hold that that point is not before us for review.. No assault is made upon this instruction upon any other ground. We hold that this assignment is likewise without merit.

V. Certain other phases of this case are worthy of consideration, because of their peculiar character. Appellant’s whole case is based upon the alleged parol agreement. As pleaded, this agreement, was, in effect, merely a device to aid Avitt and the Farmers’ Bank to mislead and deceive the officers of the law whose duty it was from time to time to examine into and ascertain the financial condition of the Farmers’ Bank, for the protection of its depositors and others having business dealings with it. Furthermore, the alleged loan was not a loan. To lend is to allow the custody and use of a certain thing, on condition of the return of the thing loaned, or, in the case of money, and perhaps other things, of its equivalent in kind. [Webster’s Dictionary; Century Dictionary; Anderson’s Dictionary; Black’s Dictionary; Words & Phrases, Vol. 5, p. 4196; Grriffen v. Train, 81 N. Y. Supp. 977, l. c. 981.] But the very pith and marrow of this alleged contract of lending was that neither Avitt nor the Farmers’ Bank was for a single instant to have the custody or use of any part of this money. Every dollar of it was to remain in the actual possession and control of appellant. Neither Avitt nor the Farmers’ Bank was to get-anything whatever, except an entry upon appellant’s books — and that entry appellant reserved the right to cancel at any time without cause and without notice. Neither of the pretended borrowers had the right to use a single dollar of the money for any purpose whatever — except to deceive the State Banking Department. It was for that explicit reason that the alleged contract was not reduced to writing. - No hint of it was written, except the cryptic phrase, “Use of I. W. Avitt,” which, signed by initials only, appeared upon the deposit slip, but not upon the books of either bank. The transaction had one, and but one, earmark of a loan — it bore interest. In plain terms, appellant and Avitt, intending to evade the law, entered into a scheme whereby the assets of the Farmers’ Bank were to be made to appear to be $8000 greater than they actually were, “in order to keep up its reqmred reserve under the laivs of the State of Missouri,” but, to quote the answer itself, “as said bank did not want said loan evidenced by a note or bill payable ivhich ivould show on its books a liability,” it was. agreed that the true nature of the matter should rest in parol. In other words, the books of both of the banks were to be falsified. The Farmers’ Bank was to be liable, but was not to appear liable. For a money consideration, appellant lent its active aid to this plan, well knowing the full intent and purpose of it. The alleged parol agreement might well be held void for reasons of public policy.

“The law will not enforce contracts that are against the public good, and, therefore, are forbidden by public policy.” [Harlan, J., in Ritter v. N. Y. Met. Life Ins. Co., 169 U. S. 158; Miller, J., in Sprott v. United States, 20 Wall. 463.]

“Public officers should act from high consideration .of public duty, and hence every agreement whose tendency or object is to sully the purity or mislead the judgments of those to whom the high trust is confided, is condemned by the courts. The officer may be an executive, administrative, legislative or judicial officer. The principle is the same in either case.” [9 Cyc. 485; Greenhood on Public Policy, p. 529.]

Similar defenses are also barred in many well considered cases on the ground of estoppel. [Lyons v. Benney, 79 Atl. 250; Harrington v. Connor, 51 Neb. 214; Pauly v. O’Brien, 69 Fed. 460; State Bank v. Kirk, 216 Pa. 452; Lyons v. Westwater, 104 C. C. A. 664, 181 Fed. 681; State Bank v. Forsyth, 108 Pac. (Mont.) 914; Hurd v. Kelly, 78 N. Y. 588; Best v. Thiel, 79 N. Y. 15, and Murphy v. Gumaer, 18 Colo. App. 183, 70 Pac. 800.]

The facts in this case inevitably suggest the question we have discussed in this paragraph. Counsel for respondent, however, have not raised it — being deterred, doubtless, by the decision in Title & Trust Co. v. Brady, 165 Mo. 197, where a contrary doctrine is countenanced —and we therefore refrain from ruling upon the proposition. We have touched upon it, for the reason that if the Brady case, supra, is considered as announcing “the Missouri rule” upon this topic, as some commentators have said, that rule is apparently in conflict with numerous and respectable authorities, and its soundness may admit of question.

For the reasons stated in preceding paragraphs, the judgment is affirmed.

All concur.


text:
    CYRUS E. HODDE, Receiver, v. PETER HAHN, JAMES H. ROACH and VICTOR DIESING, Appellants.
    Division Two,
    June 26, 1920.
    1. CORPORATION: Unpaid Stock: Actio» to Recover. A subscription for tbe stock of a corporation whose articles of association represent its capital stock as fully paid up implies a promise on the part of the subscriber that he will pay for the stock in full, and authorizes an action against him by the corporation or its assignee or receiver, after its conditions have been performed, to recover the amount due and unpaid.

      2. -: -: Suit by Receiver. Upon the failure of the stockholder to pay a stock subscription there arises a liability on his part in the nature of a debt to the corporation; and the receiver, being invested by his appointment by the court with the title of the property and the rights of action of the corporation, becomes the proper party to enforce obligations due-it, by proper legal proceedings. .The right of the receiver, under the order of the court, to institute and maintain’an action for the. balance due on unpaid stock represented to be full-paid-up, is well established.
    3. -: -: Estoppel. The receiver is not estopped to maintain an action for unpaid stock subscriptions represented to be fully paid up, by a transfer by the directors, at their own suggestion and the decision of the creditors, to a trustee of all the properties and business of a corporation in financial straits, whose assets were practically worthless, except that it was still a going concern, the purpose being to permit the trustee to continue to operate the business in the hope that the returns might result in the payment of its debts, though such. transfer proved to be a mistake.
    4. --: -: Burden: Payment in Property. Where the articles of association of a corporation recite that its capital stock has been paid up in lawful money and that, the same is in the custody of it,s board of directors, it is the duty of the stockholders, when sued for unpaid stock subscriptions, to show, if payment is-pleaded otherwise than in money, that the property substitute for money, together with the money paid, was equal in money value to the par value of the stock.
    5. -: -: Payment in Property and Good Will: Consolidation of Companies. Where the articles of association of a corporation recited that $50,000 of its capital stock had been paid up in lawful money, but its actual property consisted of the transfer of $7,000 in property and the good will of two other corporations, whose stockholders became the stockholders of the consolidated company, then the duty rested upon the stockholders of the con- . solidated company, when sued for the amount of their unpaid subscriptions, to show that the good will of the two old companies was in fact a real asset and had a value equal to the value placed upon it in their books; and where the two companies, whose assets and good will were transferred to the consolidated company and constituted its capital, during their business lives had sustained in one case an operating loss of 77 pep cent and in the other of 66 per cent of their respective capitalizations, their good will had no value.

      6. -: -: Good Will: Definition. Good will is the advantage or benefit acquired by an establishment beyond the mere value of capital stock, funds or. property employed in the business, in consequence of the general public patronage; and if in consequence of the general public patronage, such declared advantage turns out to be a disadvantage and a loss, the good will becomes nothing more then an imaginary quantity.
    7. -- — : -: Sale of Stock. The sale of their stock by stockholders of a corporation whose capital had not been paid up as its articles represented, before suit brought by the receiver, will not relieve them from liability to the creditors of the company for their respective balances due" on such stock.
    Appeal from St. Louis City Circuit Court. — Hon. Thos. C. Hennings, Judge.
    Affirmed.

      O. F. Karbe' aud S. G. Rogers for appellants.
    (1) Estoppel applies under the facts and circumstances here. Plaintiff is but the creditors and they waived their rights, elected to forego pursuing the rights they waived and are now estopped to hold these defendants. It would be a double burden on them. 2 Cook on Corporations, sec. 548, p. 1616; Brooks v. Brooks, 174 Pa. St. 519; Daugherty v. Poundstone, 12:0 Mo. App. 310; Bigelow on Estoppel (6 Ed.), p. 732; 1 Cook on Corporations, p. '583, sec. 216; Willis v. Black, 117 Cal. 161; 10 Cyc. 665; 14 Corpus Juris,' secs. 1544, 1621, 1633, 164.4, and notes; Morawetz on Private Corps. (2 Ed.) sec. 871; Lawrence v. Greenup, 97 Fed. 906; Berry v. Rood, 168 Mo. 335; McMahon v. Transit Co., 85 N. J. Eq. 544; McClaren v. Franciscus, 43 Mo. 466; Hobbs v. Henley, 186 S. W. 981; State ex rel. Hayes v. Ellison, 191 S. W 51; Bowman v. Anderson, 268 Mo. 28; Kelsay v. Bank, 166 Mo. 171. (2) The stock was fairly and properly paid up in the first instance. Beebe v. Hatfield, 67 Mo. App. 615. (3) Goodwill is property. Milling Co. v. Hanebrink, 247 Mo. 221; Pope-Turnbo v. Bedford, 147 Mo. App. 698; Fox v. Glynn, 191 Mass. 344; Bloom v. Ins. Agency, 91 Ark. 373; Mfg. Co. v. Hall, 61 N. Y. 230; Heneger v. Sundseth, 106 Minn. 133. The value of goodwill can he ascertained by its dividend producing capacity. Bank v. Home Lbr. Co., 118 Mo. 462; 14 C. J. 960, sec. 1487; Greer v. Lafayette Co. Bk., 128 Mo. 575. (4) Good faith is all that is necessary in setting a valuation upon property in such cases. 10 Cyc. 476, 477, 478 and notes; 2 Cook on Corps., sec. 423, p. 1213; Coleman v. Hagey, 252 Mo. 102. (5) The court should not have permitted plaintiff to prevail under the allegations of his petition and the evidence offered by him as to appellant Diesing, as he was not a stockholder subsequent to 1912; he had disposed of his stock prior to the insolvency of the corporation in March, 1914, and the transfer to the trustee. Sec. 9, art. 12, Mo. Constitution; Banta v. Hub • bell, 167 Mo. App. 43; McClaren v. Pranciscus, 43 Mo. 452; Miller v. Ins. Co., 50 Mo. 55; 1 Cook on Corp., p. 747, sec. 259; Secs. 3004-3006, R. S. 1909; Berry v. Rood. 168 Mo. 333. (6) The court based its judgment on the value of the assets at the time the receiver took charge. Under the circumstances in this case this was not proper. The value of the property turned into the corporation by these appellants individually at the time of the organization of the corporation in 1909 is the proper basis for estimating the liability and this enhanced by additional property acquired by it is the proper basis of recovery for unpaid stock subscription. (7) The liability is several and not joint. Perry v. Turner, 55 Mo. 418.

      Grant & Grant for respondent.
    (1) The stock of a corporation must be paid for in money or money’s worth. If paid for in property then such property must be the fair equivalent of the par value of the stock. It is the duty of the stockholders and not the duty of the creditors to see that it possesses such value. Yan Cleve v. Berkey, 143 Mo. 136; Berry v. Rood, 168 Mo. 316; Meyer v. Mining & Milling Co., 1921 Mo. 188; Houston v. Edgar, 207 Mo. 301; Bank v. Rockefeller, 195 Mo. 15; Hequembourg v. Edward, 155 Mo. 520; Steam Co. v. Scott, 157 Mo. 525'; Sawyer Bkg. Co. v. Independent Co., 168 Mo. 643; Shields v. Hobart, 172 Mo. 510; Rumsey v. Kain, 173 Mo. 560; Rogers v. Mining Co., 185 Mo. App. 672; Sec. 1312, R. S. 1909. (2) Good will may be considered a species of property for certain purposes. It may be sold; its willful destruction may be the basis of an action for damages; it may be taxed under appropriate statutes, but in states which hold that capital stock is a trust fund for creditors, it has never been held that it may take the place of “lawful money of the United States.” It has no market value so that it can be readily disposed of to pay creditors. Good will has been defined by this court. Milling Co. v. Hanebrink, 247 Mo. 221. Assets, worth $7,000, of two dying corporations whose capital stock had been almost entirely depleted by losses in business cannot, by the fiction of an imaginary good will, be made by the stockholder to pay up capital stock of a new corporation with par value of $50,000. If the stockholders of a corporation dissolve it, organize a new corporation with the same stockholders and transfer all its assets to the new corporaton, the status of the parties is not changed, and the law will disregard the form, consider the substance of the transaction and treat the new corporation as a continuation of the old. Thompson v. Abbott, 61 Mo. 176; Winkelman v. Levee District, 171 Mo. App. 53 ; Many v. National Surety, 103 Mo. App. 721; Coffey v. Bank, 46 Mo. 140; Lighting Co. v. Hobart, 98 Mo. App. 235; Barrie v. United Rys., 138 Mo. App. 649. A corporation cannot capitalize its good will by paying up an increase *of capital stock by an alleged good will. Coleman v. Booth, 268 Mo. 64. (3) The facts upon which an estoppel might be based are wholly lacking. The principles underlying estoppel are well settled. They have been stated in various ways. Henson v. Merc. Co., 48 Mo. App. 214; Acton v. Dooley, 74 Mo., 63; Hart v. Giles, 67 Mo. 175; Hequembourg v. Edwards, 155 Mo. 514; Spurlock v. Sproule, 72 Mo. 503; Osborn v. Court of Honor, 152 Mo. App. 652; De Lashmutt v. Teetor, 261 Mo. 412.
   WALKER, C. J.

This is an action against appellants, and others not appealing, for alleged unpaid stock subscriptions. In January, 1909, the George Henseler Oil Company, a $10,000 corporation, was doing business in oils and kindred commodities in the City of St. Louis. None of these appellants were stockholders in this company. It enjoyed a lucrative business. The Mercantile Supply Company was a $50,000 corporation having $30,000 of its capital stock paid up. All of these appellants were stockholders therein. A suggestion of merger or consolidation of the two companies was made, agreed to and consummated in January and' February, 1909. The Mercantile transferred all its assets and good will to the consolidated corporation, the Henseler Mercantile Oil & Supply Company, for stock issued to the several shareholders thereof to the extent of $25,000. The merged or consolidated company did business with varying success until in 1914. Some time in 1912 appellant Hiesing, while the corporation was solvent, disposed of his stock. Appellant Hahn disposed of all his stock to his wife, who was a defendant below, saving four shares. In March, 1914, the directors realized the company was in financial straits and attempted to settle with their creditors. As a result there was a meeting of the creditors held on the 26th day of March, 1914, when there was presented to them an expert accountant’s statement of the condition of the company. It was proposed to do anything the creditors might direct. The creditors finally appointed a committee of three to determine the course to be pursued.. It decided to transfer the assets and property of the company to a trustee. In the meantime the creditors had charge of the affairs, of the company. They prepared a deed, named their trustee, the transfer was made to him and he took charge without bond or the taking of an inventory or appraisement of the assets and attempted to operate the business. The first two months he made a profit of $3,145. Thereafter the creditors enlarged the business, created various liabilities and assets began to depreciate and decrease and the liabilities increase until in October or November, 1914, when the trustee advised discontinuance, but the creditors were obdurate and a substitute trustee was appointed at the request of the Union Petroleum Company, one of the largest crditors. The new trustee attempted to operate the business until in March, 1915. The result was disastrous financially and the Union Petroleum Company applied for the appointment of a receiver, and the present plaintiff was appointed as such. According to the books of the company in March, 1914, the assets exceeded the liabilities, that is, the assets were in excess' of $37,000' and the liabilities less than $34,000. During the operation of the trusteeship under the direction of the creditors the entire assets were dissipated, lost or squandered and the liabilities increased, with the result that when the receiver sold the assets on hand there was not enough to pay the liabilities incurred during the trust.

Thereafter the receiver brought this suit against the then and former stockholders for balances due on their unpaid stock.

The petition alleges the appointment of a receiver, sets forth the facts upon which the liabilities of the defendants were based, to-wit, the amounts due and unpaid by each upon their respective shares of stock, the assets on hand, the debts, the order authorizing the receiver to institute this action, the allowance of claims amounting to $27,037.94 and that there remained but $1,300 in the receiver’s hands with which to pay the same, that the defendants were liable as subscribers for their unpaid stock, the incorporation of the Henseler Mercantile Oil & Supply Company, that the two former corporations had been so operated that their capital stock was impaired and that on the 30th day of January, 1909; there was but $7,253.72 as assets on hand in payment of the capital stock of the Henseler Mercantile Oil & Supply Company, that said articles represented $50,000 of the stock was paid up and all of it subscribed, that there were no assets of the value of $50,000 paid in in payment of the capital stock, and that the difference between the value of the property paid over to said corporation and the face value of the stock was therefore due.

An account was prayed to be taken of the amount due the creditors and costs and the amount paid by each of defendants on account of the subscriptions and the stock issued to them, and that judgment be entered for the amount due respectively from each of the defendants on unpaid stock and for other relief.

The answers, which were several, were, first, general denials, and, second, pleas of estoppel. Other defenses were also pleaded but the assignment of errors does not render a reference to them necessary, there being no question as to the sufficiency of the pleadings. The reply was a general denial.

A hearing was had before the court in which it was decreed that plaintiff have and recover from defendants Frederick Nobbe, Peter Hahn, Belle Gregory, Victor Diesing, James H. Roach and William Grafeman the stun of $27,087.94 and that execution issue against said defendants as follows: against Frederick Nobbe, $21,793.58; Peter Hahn, $874.06; Belle Gregory, $1748.12; Victor Diesing, $874.06; James H. Roach, $874.06; William Grafeman, $874.06.

If for any reason any one or more of said apportionments could not be made out of the defendants then such apportionment so in default was to be levied out of the property of the other defendants in proportion to their respective liabilities as hereinbefore set forth.

After unavailing motions for new trial and in arrest, this appeal was perfected.

Much of the foregoing statement, seemingly irrelevant, is inserted that a clearer understanding may be had of the grounds of appellants’ defense.

Error is assigned in the trial court’s holding that the .receiver was not authorized- to maintain this action. The attitude assumed by appellants is best stated in their own language, which is as follows: “Where the creditors of a financially embarrassed or insolvent corporation, after being duly advised of its condition, take over its business and assets while there is a dispute as to the amount of the liabilities and the value of the assets, without adjusting that question and also the question as to whether the assets, if disposed of and the proceeds applied to the debts, were sufficient to satisfy the debts, and they continue the business of the company after being warned by the receiver of the inadvisability of such a course and they refuse to heed'his warnings and upon his resignation secure the appointment of another‘trustee and thereafter there is an utter failure of the business as conducted by the trustee and none of the original debts are paid but all of the assets dissipated, the creditors cannot disregard the assets they had in their possession and which they squandered or dissipated but which might have been applied by them on the liabilities, and then hold the stockholders for their unpaid stock, if there remained when the creditors took charge of the assets sufficient funds to pay the liabilities then extant.”

In short, it is contended, that the receiver is but the creditors, whose conduct has been such as to estop him from prosecuting this action.

Action by Receiver.

I. The right of the receiver, under the order of the court, to institute and maintain an action of the character here under review, is too well established to refiniré discussion. [Lyons v. Corder, 253 Mo. l. c. 559 and cases.] Nor is it necessary in defining the legal status of a stockholder who has not paid for stock subscribed for by him, to say more than that the prevailing rule is that upon his having made the subscription, such a promise is implied that he will pay for the stock in full, as to authorize an action against him by the corporation or its assignee or receiver, after the conditions of the subscription have been performed, to recover the amount due and' unpaid thereon. [Berry v. Rood, 168 Mo. 316; Shields v. Hobart, 172 Mo. 491.] The reason of this rule becomes apparent when we’ consider the relation which the stockholder and the receiver hear to the corporation. Upon the failure of the former to pay a stock subscription there is created a liability on his part in the nature of debt to ¿he corporation; and the latter by his appointment being invested with the title of the property and the rights of action of the corporation, becomes the proper party to énf orce obligations due to it by legal proceedings. [Coleman v. Hagey, 252 Mo. 102; Thompson v. Greeley, 107 Mo. l. c. 590.]

Estop ei

II. This brings us to the affirmative defense that the receiver is estopped from'prosecuting this action on account of the conduct of the directors. Preliminary to a consideration of this contention it is not inappropriate re^er briefly to what has been declared necessary' to constitute estoppel. Our reports, as well as those of other jurisdictions, are replete with definitions of this defense. Among others are the following:. A preclusion in law which prevents a man alleging or denying a fact in consequence of his own previous act, allegation or denial of a contrary tenor. [Reid’s Admr. v. Benge, 112 Ky. l. c. 814, 57 L. R. A. 253; Coogler v. Rogers, 25 Fla. l. c. 873; Gavin v. Graydon, 41 Ind. l. c. 566.] A conclusive ascertainment of a fact by the parties, so that it can no longer be controverted between them. [Wilkins v. Suttles, 114 N. C. l. c. 556.] A fictitious statement treated as true. [Gen. Finan. Co. v. Liberator Bldg. Soc., 10 Ch. Div. 15.] The conclusion of a truth. [Moore v. Willis, 9 N. C. l. c. 558.] Where a man has done some act which the law will not permit him to gainsay or deny.' [South v. Deaton, 113 Ky. l. c. 320.] Where one is concluded from speaking against his own act or deed. [Demarest v. Hopper, 22 N. J. L. 619.] Our rulings are in effect the same as the foregoing. [De Lashmutt v. Teetor, 261 Mo. 412; Osburn v. Court of Honor, 152 Mo. App. 652; Spurlock v. Sproule, 72 Mo. 503; Acton v. Dooley, 74 Mo. 63; Hart v. Giles, 67 Mo. 175; and numerous other cases cited in 16 Cyc. 679, note 1.]

As concisely applying the foregoing definitions, the St. Lonis Court of Appeals in Henson v. Mercantile Co., 48 Mo. App. 214, holds that to constitute an estoppel three things must occur, first, fraudulent representations or -withholding the truth when it is one’s duty to speak; second, reliance upon such representations; third, the consequent act by the defrauded party to his disadvantage. Let the facts determine, therefore, whether the doctrine can be applied here. It is conceded that the management of the business of the company under the trusteeship created by the directors was a losing venture. The creditors, however, did nothing nor made any false representations which misled the defendants, including appellants, which caused them to execute the trust deed whereby the loss was incurred in their attempting in this manner to continue the business. The proposition and plan pursued did not originate with the creditors, but with the defendants.

As it now appears a mistake was made by the defendants as well as the creditors in attempting to continue the business. But the record discloses no act of the latter essential to sustain the plea of estoppel. The assets were such, due to the nature of the business, that they were practically worthless except to a going concern; if, therefore, the business was discontinued the. property practically ceased to have "any commercial value and if subjected to sale would have commanded no greater price than the separate value of the wood and iron it contained, classified by the respondent as “junk.” This will apply to the filling stations and other equipment. Moreover, a large proportion of the accounts receivable were afterwards shown to be uncollectable. If, under this state of facts, the affairs of the company had been liquidated, the assets, if any had been realized-from a sale, would have been nominal. The receivership inaugurated by the directors, therefore, viewed from' any vantage, was a mistake, but it does not appear that another course would have wrought a different pecuniary result or have resulted in any greater advantage. In no sense was the conduct of the creditors such as to justify the plea of estoppel now sought to be interposed by appellants, whose legal relation to the company is nothing more than that of debtors made so by their own obligations.

Payment: in moperty.1

TIT. The liability of a stockholder for unpaid stock, if not made clear by what has been said, is too well defined to admit of question. Our statute (Sec. 1312, R. S. 1909) provides explicitly that capital stock shall be paid up in lawful money of the United States. The articles of this company recited that this had been done and that it was then in the custody of the board of directors. It now appears that this statement was false and the receiver, to sustain this action, was only required to establish this fact and the several liabilities by reason thereof of the appellants, when it became their duty to show, if payment was pleaded otherwise than in money, that the substitute therefor was equal in money value to the extent of the par value of the stock.

As we said in Van Cleve v. Berkey, 143 Mo. l. c. 136, “the proposition that the stock of a corporation must be paid for ‘in meal or in malt,’ in money or in money’s value, is not a mere figure of speech but really has the significance of its terms. It may be paid for in property,'but in such case the property must be the fair equivalent in value to the par value of the stock issued therefor; that it is the duty of the stockholders to see that it possesses such value; that when a corporation is sent forth into the commercial world, accredited by them as possessed of a capital in money, or its equivalent, in property, equal to the par value of its capital stock, every person dealing with it, unless otherwise advised, has a right to extend credit to it on the faith of the fact that its capital stock has been so paid and that the money or its equivalent in property will be forthcoming to respond to the legitimate demands. In short, that it is the duty of the stockholder, and not of the creditor, to see that it is so paid,”

win 00 '

IV. In the case at bar the incorporators of the Hen.seler Mercantile Oil & Supply Company stated in the ar^c^es °f incorporation, in the language of the statute, that $50,000 of the capital stock of this company had been paid up in lawful money of the United States.

The creditors had a right to rely upon that statement. Therefore, when the receiver showed that this statement was false and that the incorporators had not paid up the $50,000 in lawful money of the United States, but, in truth, had merely transferred to the new company property with a real value of some $7,000 and good will, in payment of the remainder of the $50,000, then the duty devolved upon appellants to show that what was called good will was in fact a. real asset and,had a value equal to the value placed on it in their books, to-wit, $30,433.10 (afterwards increased to $34,268.73). A portion of the $50,000 capital stock was never paid up, even by good will. This is evident from the following facts: Some of the defendants were owners of the Geo. Henseler Oil Company, others were owners of the Mercantile Oil & Supply Company. The two sets got together; as a result, all the assets of the two companies were transferred to defendants, including appellants, and these in turn transferred them to the new company and received back 500 shares of its stock as full paid. The assets of the Geo. Henseler Oil Company were set out in the books of the new company as amounting to $25,000, in which was included good will at a valuation of $14,143. However, in the agreement by which these assets were turned over to the new- company it was further provided that the new company should pay the debts of the Geo. Henseler Oil Company, amounting to $7,606.75. Some of these accounts receivable were worthless. When these accounts and the amount of liabilities assumed by the Geo. Henseler Oil- Company were deducted from the real assets, it-left net assets actually turned over to the new company by the Geo. Henseler Oil Company, goq>d will, of course, excluded, of only $2,219i.56.

The assets of the Mercantile Oil & Supply Company, also transferred to the new company, were entered on the hooks of the Henseler Mercantile Oil & Supply Company at $25,000, and include good will, $16,290, and other assets, $8,710, but included in these assets- are a number of accounts worthless at the time and subsequently charged to good will so as to increase the amount of good will on the books. Deducting these bad accounts from the real assets left net real assets of $5,592.55. From this is to be deducted a dividend paid to the stockholders of the Mercantile Oil & Supply Company by the new company, under an agreement to that effect, amounting to $800, making real net assets received by the new company from the Mercantile Oil' & Supply Company of only $4,792.55. We have, therefore, in the first instance, capital stock to the extent of $30,433, represented by alleged good will of the two constituent companies, afterwards, to the extent of $34,268.73, being the aggregate debts of the Geo. Henseler Oil Company, the dividend paid to stockholders of the Mercantile Oil & Supply Company, worthless accounts receivable of the Mercantile Oil & Supply Company, and the remainder, $7,012.11, which represents tangible assets of approximately that value.

Conceding, therefore, that the capital stock of the corporation may, be represented by good will of constituent companies where no money passes and that all the stockholders of the constituent companies become stockholders of the new company, did these constituent companies have any real good will? There was no competent proof offered of the value of the good will of either of these companies. One witness, it is true, testified that he thought the good will of the Mercantile Oil & Supply Company was worth $15,000, because that company had always paid a dividend and had also paid its debts. In this statement he evidently ignored the fact that these dividends had been paid out of the capital stock, as is sometimes done in mushroom organizations, to which class none of these companies, it is but fair to say, belonged. The position of the receiver was that the good will of a company can only be estimated by tbe l-esnlts of its business operations from tbe time it commences until it ceases to do business; and, where the consolidated company, as here, was controlled and managed by the same people as those who managed and controlled the constituent companies, good will may also be shown by the results of the business operations of the consolidated company. The books of these companies showed that the Geo. Henseler Oil Company started out with a paid-up capital stock of $10,000 and that after five years operation it wound up with assets of only $2,219.56. The Mercantile Oil & Supply Company commenced business with a paid-up capital of $30,000, of which $15,000 was preferred and $15,000 was common stock. The common stock paid no dividends, but during the five years of operation the preferred stock paid a dividend of eight per cent. At the close of these five years of business, the net assets of this company amounted to only $4,792.-55. Inasmuch as during that period the company paid. out to its stockholders $5,200' in dividends, it is proper, in order to arrive at the total loss, to add this to the assets above stated, making $9,992.55. Deducting this from $30,000 assets with which the company started, leaves a balance of $20,000, which represents the net loss of the company in five years of operation. The two companies, therefore, during their business lives show an operating loss in the one ease of 77 per cent and in the other case 66 per cent of their respective capitalizations. Under this state of facts the companies can hardly be said to have had a good will which can be represented by dollars and cents when the continued business was managed by the same persons as when operated at the loss stated. It was further shown that the consolidated business with the added good will of the former companies, when operated by the same persons who had owned and operated said former companies, resulted in no profit, but, on the contrary, suffered a net loss in its five years of business.

We have defined good will to be “the advantage or benefit acquired by an establishment beyond the mere value of the capital stock, funds or property employed therein in consequence of the general public patronage, ’ ’ etc. [Milling Co. v. Hanebrink, 247 Mo. l. c. 221.] If in consequence of the general public patronage, such declared advantage or benefit turns out to be a disadvantage and a loss, then the good will becomes nothing more than a purely imaginary quantity. Paraphrasing a Pauline mysticism, it is neither “the substance of things hoped for nor the evidence of things not seen.” Heb. xi-1.

Depreciation

V. During the five years of business, although this company possessed wagons, horses, tools, oil stations, e^c-> 7e^ it charged nothing off for loss, depreciation or waste, except $90 for the' loss of a horse. Everthing else it owned or possessed was carried during the five years of business at orginal cost. The loss which, according to its books, was due to operation, is much less than the actual loss. An expert accountant found that there was an actual deficit of difference between assets and liabilities of $13,302.68. As we have shown, the company commenced business with real assets of about $7,000. Five years later, when the books ■were examined, not only had the capital stock been dissipated, but the company owed $13,000 more than it had assets; therefore, there was a total loss during this priod of $20,314.79. While this was but the estimate of an experienced accountant, the events proved it to be fairly accurate and tallied with that made by the receiver two years afterwards. . ■

stock°f

VI.. The sale of their unpaid stock by certain of the appellants before the institution of this suit will not relieve them from liability to the creditors of the company for their. respective balances due on such stock. [Eyerman v. Krieckhaus, 7 Mo. App. l. c. 457; Epstein v. Clothing Co., 67 Mo. App. l. c. 226.]

We lave thus reviewed the facts to enable it to be determined whether there was a payment in any manner by these appellants of the amounts they respectively obligated themselves to pay upon their subscription for and the issuance to them of the shares of their stock. We do not find that the stock was paid for either “in money, meal or malt;” and if good will be held to be property, however its existence may be ascertained, it constitutes no factor in the determination of the matter at issue, because it did not exist; if it did exist, its value was negligible.

Under no view of the facts in this case have appellants interposed a meritorious defense and the judgment of the trial court is therefore affirmed.

All concur.