Dorris Motor Car Co. v. Colburn

270 S.W. 339, 307 Mo. 137, 1925 Mo. LEXIS 573
CourtSupreme Court of Missouri
DecidedMarch 12, 1925
StatusPublished
Cited by11 cases

This text of 270 S.W. 339 (Dorris Motor Car Co. v. Colburn) is published on Counsel Stack Legal Research, covering Supreme Court of Missouri primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Dorris Motor Car Co. v. Colburn, 270 S.W. 339, 307 Mo. 137, 1925 Mo. LEXIS 573 (Mo. 1925).

Opinion

*144 RAGLAND, J.

On December 5, 1923, tbe Dorris Motor Car Company, a corporation organized under the laws of this State and having its principal office in the city of St. Lonis, instituted in the circuit court a proceeding for voluntary dissolution, under the provisions of Section 9756-9759, Revised Statutes 1919, as amended by the Act of 1921 (Laws 1921, p. 264). On that day it filed its petition which complied substantially with paid Section 9757, as amended, and which set forth, among other things, that the authorized capital stock of the corporation was $1,000,000; that 1,000' shares of preferred stock and 7,160.68 shares of common stock, each of the par value of $100, ha,d been issued and paid up in full; and that on.December 3, 1923, at a stockholders’ meeting duly called for the purpose, a resolution favoring the dissolution of the corporation on the ground that its business had shown a loss for many months and its continuance in active business would result in further loss and ultimate insolvency, had been adopted by a vote of more than two-thirds in amount of all the issued and outstanding shares of stock. The petition further specified the names of the stockholders, together with their respective residences and the number of shares owned by each, from which it appeared that one H. B. Krenning was the holder of the entire issue of preferred stock.

Upon the filing of the petition an order was made requiring all persons interested in the corporation to show cause, if any they had, on or before January 2, 1924, why the corporation should not be dissolved. Thereupon the holders of- more than two-thirds of the stock entered their voluntary appearance and consented to a dissolution. Summons issued for the others and a general notice was given by publication, all as required by said Section 9758. ■;

A return was made to .the order to show cause by Scott, Magill and Colburn, non-consenting stockholders. The allegations of their return may be epitomized as follows:

*145 (1) That the Act of 1921, heretofore referred to as amendatory pf Section 9756 et seq., Revised Statutes 1919, is void because violative of both State and Federal constitutions (the .particulars of which are fully set forth); (2) that the petition upon which the order to show cause is based is insufficient in respect to a jurisdictional matter, in this, that it “fails to contain a full and true inventory of all books, vouchers and securities relating to the estate, both real and personal, in law and equity, of such corporation;” (3) “that the said corporation is, and was at the time ... of the adoption of said resolution, wholly solvent, and the par value of the common stock of said corporation but slightly impaired; that the said H. B. Krenning is the holder' of the entire issue of 1,000 shares of preferred stock of said company and holds 192% shares of the' common stock of said company; that the preferred stock is entitled to cumulative dividends out of the earnings of said corporation at the rate of seven per cent per annum and has priority over the common stock in the liquidation of said corporation, but that the said dividends are not payable out of the assets of said corporation other than, such as represent earnings of the company; that the said Krenning well knowing that he was not entitled upon liquidation to receive out of the assets of said company more than the par value of his stock and while standing in the fiduciary relation of director, did offer to the stockholders of said corporation, at a meeting held on the 3rd day of December, 1923, to waive a portion of his claim' to dividends upon his said preferred stock' in consideration of the voting by stockholders in favor of the dissolution of the company and the liquidation of its assets; that the alleged vote of stockholders in favor of the resolution set out in the petition filed by the said corporation herein was obtained through the said threat of receivership and the said offer to waive dividends made by the said Krenning;” (4) “that the board of directors in office at the date of the holding of said meeting, December 3, 1923, without waiting for the rendition of judgment of dissolution by this *146 court, and although, the said directors knew that the annual meeting of the stockholders for the election of directors would be held on December 18th, proceeded to sell the assets of said company at a great sacrifice and are continuing to do so;” (5) “that upon the rendition of a decree of dissolution the board of directors of the said corporation then holding office wonld, under the statutes, constitute the trustees for the liquidation of the assets of the Company and the winding up: of its affairs; that the said H. B. Krenning as a member of the said board of directors woffild constitute one of the said trustees, and that the interests of the said Krenning are antagonistic to those of the holders of common stock;” and (6) “that it is the purpose of the said H. B. Krenning and other members of the board-of directors of the said corporation, who; together with the said Krenning, constitute a majority of the said board, to sacrifice the assets of the said corporation and to- have the same purchased for their benefit and to re-organize the said corporation and thereby freeze out all of the other holders of common stock of said company.”

A return was also made by Guthrie et al., who were also non-consenting stockholders. Their pleading consisted of a return proper and a cross-bill. The return embodies substantially the same matters that are set forth in paragraphs 3, 4, 5 and 6 of the return of Scott et al. The cross-bill, omitting matters of inducement, was as follows: j

‘ ‘ 1. That for a period of fifteen years or more after the organization of said company it did a large and profitable business throughout the United States in the manufacture and sale of auto-vehicles and thereby established a high reputation for the excellence of its products, a large credit with banks and other institutions engaged in loaning money to manufacturing corporations and a good will of great value as an established and going concern.
“2. That under the management and control of a majority of its present directors the business of the company has lately been conducted at a loss creating an impair *147 ment of the book value of its common stock to the extent of twenty-five per cent and its credit with banks and trust companies engaged in loaning money to manufacturing concerns has been greatly impaired. That on or about the 16th day of November, 1923, said board of directors in the preamble to a resolution framed .by them to be submitted to, a vote of stockholders, on December 3,1923, for the purpose of authorizing a, dissolution of the corporation and a liquidation of its affairs, confessed themselves unable to continue' the business of the company otherwise than at a loss, although at that time some of the executive officers of the company had adopted a policy of retrenchment in overhead expense gradually curtailing losses and impairment of capital stock, and had begun the building of auto-trucks and auto-busses for which there is a rapidly (growing demand at profitable prices, which effort on the part of said officers was defeated by H. B.

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Bluebook (online)
270 S.W. 339, 307 Mo. 137, 1925 Mo. LEXIS 573, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dorris-motor-car-co-v-colburn-mo-1925.