Harris v. Barnett

253 S.W. 1005, 300 Mo. 234, 1923 Mo. LEXIS 249

• Court: Supreme Court of Missouri
• Decided: July 31, 1923
• Status: Published

Opinion

JAMES. T. BLAIR, J.-

— -This case has been reassigned. This is an appeal from a judgment for defendants upon appellant’s refusal to plead over after demurrers had been sustained to the petition following:

“Comes now the plaintiff and states that the defendants Signet Oil & Gas Company is a corporation, existing under and by virtue of a charter granted by the State of Missouri; that the defendants El. G. Huston, S. McCajughey, A. T. Barnett, Roy B. Moynihan, W. H. Clark and Emil iDorn were directors of said company previous to May 3, 1918; that on the 15th of October, 1918, B. C. Christopher, Jr., and A. M. Clark became directors.

“Plaintiff further states that on or about the 3rd day of May, 1918, he purchased of the defendants for the sum of five hundred dollars, ten shares of stock in the Signet Oil & Gas Company, a corporation; that said stock was a part of two thousand shares of stock which the defendants sold in the State of Missouri, as an incident to the promotion and exploitation of said Signet Oil & Gas Company. That previous to the selling of said stock, to the plaintiff herein, the defendants E¡. H. Huston, A. T. Barnett, S. McCaughey, Roy E. Moynihan, W. H. Clark and Emil Djorn, obtained no permit to sell stock in Missouri, from the Bank Commissioner of the State of Missouri; that by virtue thereof, said stock and the contract for the purchase thereof, is void and worthless; that the proceeds of said stock has been converted by.the defendants and utilized by them, in the exploitation aforesaid, all of which was done knowingly, wilfully, intentionally and unlawfully.

“ That prior to the filing of this petition plaintiff has tendered to defendants: said worthless stock and again tenders the same herein.

“That although the defendants A. M. Clark and B. C. Christopher did not become directors of said company until after said stock was sold, they, as directors, were familiar with the affairs of the company, and as directors had control oyer the disbursement of the funds derived from the sale of stock aforesaid.

“Wherefore, because of the aforementioned facts, plaintiff prays damages against the defendants in the sum of five hundred dollars, with interest thereon from the 3rd day of May, 1918, and his costs in this behalf incurred and expended.

“That because the acts of the defendants were wilfull and unlawful, plaintiff asks punitive and exemplary damages in'the sum of seventy-five hundred dollars.”

Before he took his appeal appellant dismissed as to the Signet Oil & Gas Company.

Appellant’s" position is that the sale alleged was violative of the Act of 1913 (Secs. 11919' et seq., R. S. 1919) and that his right to damages accrued from that fact. The act in question is directed against investment companies which are defined as “every corporation, every co-partnership' or company and every association” (other than certain designated organizations) ‘ ‘ organized or which shall be organized in this State, whether incorporated or unincorporated, which shall sell or negotiate for the sale of any stock, bonds, or other securities of any land or character’’ (other than designated obligations) “to ,any person or persons in the State of Missouri, other than those specifically exempted herein.” It provides that each of such organizations “shall be known for the purpose of this article as a domestic investment company.” E’oreign investment companies are then defined. The act and its requirements and prohibitions relate solely to investment companies as these are defined in it. The title of the act (Laws 1913', p. 112.) confines the act to investment companies. The petition contains no allegation of fact which tends to show that the corporation, originally a party, was organized for a pur pose which would show it to be an investment company under the act. It is not alleged that the defendants (who do not now include the corporation) were organized or incorporated or united in any way such as to bring them as a body within the terms of the act nor that they were acting for any such organization. It is alleged, so far as this question is concerned, simply that the individual defendants sold appellant ten shares of stock in the corporation; “that said stock was a part of two thousand shares of stock which the defendants sold as an incident to the promotion and exploitation of said Signet Oil & Cas Company;” and had secured no permit under the act in question. Appellant plants his cause of action solely upon .the statute. It was necessary for him to allege facts which would bring his case within it. [Chandler v. Railroad, 251 Mo. l. c. 600, 601.] It is clear that he has not done this, and other questions need not .be considered. There is nothing alleged which excludes the idea that the respondents individually owned the stock sold, or all the stock. The petition is bad for the reason stated, if for no other, the ruling of the trial court in sustaining the demurrer was right, and its judgment is affirmed.

Graves, T?. J., and Ragland, J., concur; Wood-son, J., dissents.