Johnson Fare Box Co. v. C. L. Downey Co.

263 S.W.2d 413, 364 Mo. 521
CourtSupreme Court of Missouri
DecidedDecember 14, 1953
DocketNo. 43518
StatusPublished
Cited by1 cases

This text of 263 S.W.2d 413 (Johnson Fare Box Co. v. C. L. Downey Co.) 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
Johnson Fare Box Co. v. C. L. Downey Co., 263 S.W.2d 413, 364 Mo. 521 (Mo. 1953).

Opinion

BARRETT, Commissioner.

This suit originated when the Johnson Fare Box Company sued C. L. Downey Company on two demand notes, one for $12,000, dated December 16, 1946, and the other for $25,500, dated March 15, 1950.

The Johnson Fare Box Company is a Delaware corporation. That corporation, together with sixteen other companies, is a wholly owned or controlled subsidiary of Bowser, Incorporated, and they are all engaged in related manufacturing, selling and financing enterprises. Mr. R. Hoskin Damon,' a Chicago lawyer, either through stock ownership or finances, dominates and, for the purposes of this opinion, controls [414]*414all the corporations. The C. L. Downey Company is an Ohio corporation, owned and dominated by Mr. C. L. Downey until his death on March 3, 1953, during the pen-dency of this appeal. Mr. Downey was an inventor and manufacturer of coin counting and coin wrapping machines, and in 1917 organized the C. L. Downey Company. In 1941 the C. L. Downey Company moved its manufacturing plant and offices from Cincinnati to Hannibal. C. L. Dow-ney Co. v. Commissioner of Internal Revenue, 172 F.2d 810.

In response to the suit on the notes the C. L. Downey Company filed an answer and two counterclaims. In addition, Mr. Downey and his adopted daughter, Mrs. L. Craig Jackson, and another individual filed an intervening petition in which they personally sought to set aside a transaction with Mr. Damon and the transfer of the common stock of C. L. Downey Company to Johnson Fare Box Company. In substance, the answers set up that the notes were “not due” and that Johnson Fare Box Company was not entitled to demand payment for the reason that “pursuant to an agreement” on the 16th day of November 1945 “and on numerous other occasions,” in consideration of the transfer of all the common stock of C. L. Downey Company, Johnson Fare Box Company and Bowser, Incorporated, (assignor of the $12,000 note), agreed to loan the Downey Company such amounts of money as would be required from time to time to finance its business and “not demand repayment of any amount of money so loaned at any time when such amount of money was required for use by defendant in the operation of defendant’s business” and that the sums represented by the notes were so loaned and are now “required for use in the operation of defendant’s business.” For this reason the C. L. Downey Company asked that the suit on the notes be dismissed. For its first counterclaim the Downey Company stated that at the special instance and request of the plaintiff -the Downey Company had rendered valuable services in connection with the sale of forty-three coin counting machines to the Federal Reserve banks at $10,000 a machine for which there was a commission due of $43,000. For its second counterclaim the Downey Company alleged that on the 16th day of November 1945, and “on numerous other occasions” the Johnson Fare Box Company, in consideration of the transfer of all the common stock of Downey Company, agreed to transfer to Downey Company all its machinery and business in connection with its paper wrapper products but had failed to do so and that for the breach of the agreement Downey Company was entitled to $82,500 damages. In the intervening petition the individuals set forth the fact that prior to January 1946 they had owned all the common stock of the C. L. Downey Company and were thereby the owners of all possible beneficial interests of the company and that Mr. Damon, as a lawyer, rendered legal services to “In-tervenors with respect to the stock of defendant owned by Intervenors, estate planning, estate taxes and income taxes,” that they relied upon Mr. Damon but he breached his duty to them as a lawyer and caused the transfer of all the shares of common stock and the issuance to them as a stock dividend of 1,500 shares of preferred stock, all of which was of no benefit to them and that they “were unaware of the true nature of said transfer” until January 1951. In this connection the intervenors alleged that Mr. Damon promised that Bowser, Incorporated, would loan Downey Company such sums of money as would be needed to finance its business and not demand payment as long as needed and because of the fiduciary relationship of the parties inter-venors agreed to and did transfer their common stock to Johnson Fare Box Company. As a further inducement to the transfer of the stock and in breach of their fiduciary relationship the intervenors alleged that Mr. Damon promised that the paper wrapper business of Johnson Fare Box Company would be transferred to C. L. Downey Company. Because of all these matters the individual intervenors asked to have the transfer of the common stock set aside and that they be declared the owners; 288 shares to Mr. Downey, 11 shares to Mrs. Jackson and 1 share to Ann Dorsey Hodgdon.

[415]*415The trial court found all the issues on these various claims against the corporate defendant and the individual intervenors and in favor of the plaintiff, Johnson Fare Box Company. Specifically, the trial court found that Johnson Fare Box Company was entitled to recover on the two notes, with interest at 3⅞'% from July 15, 1951, and that there was “no substantial evidence of any promise, understanding, agreement, contract or representation” that payment of the notes would not be demanded as long as the amounts were needed in the defendant’s business. Likewise, as to the first counterclaim for a commission on sales to the Federal Reserve banks, the court found that there was no promise, agreement or contract, either express or implied, to pay a commission on such sales. As to the second counterclaim for damages for failure to transfer the paper division to Downey Company the court found that there was no evidence of an enforceable agreement or contract to make such a transfer. Upon the intervening petition, the court found that “there was no confidential relationship existing between or among the parties, and even if there had been such a relationship the evidence clearly shows there was no fraud, deceit, misrepresentation or overreaching but that the. transaction was fair and legitimate and the consideration given for the transfer of the common stock was fair and adequate.” The C. L. Downey Company and the individual intervenors have appealed from the decree and judgment entered upon the court’s finding of fact.

By way of introduction it may be,noted that while Mr. Damon is a lawyer and maintains a law firm in Chicago, he is in fact a “lawyer-businessman,” interested in financing, promoting and consolidating manufacturing corporations engaged in somewhat similar lines of business. Mr. Downey was an inventor, manufacturer and distributor of coin counting and coin wrapping machines, a veritable pioneer in the industry. The business of C. L. Downey Company is related to that of several of Mr. Damon’s companies, in some respects they were competitors. Mr. Downey and Mr. Damon first met at stationers’ conventions in 1931. Their casual acquaintance developed into some business dealings and finally into a rather active social relationship. Mr. Dow-ney first sold Johnson Fare Box Company several hundred 'coin counting machines and in 1937, through Mr. Damon, Mr. Downey sold Johnson Fare Box Company a whole division of its business. Mr. Downey was-an elderly gentleman, eighty years of age at the time of-this trial,-and Mr. Damon is a middle.-aged man. Both of these gentlemen were indeed experienced in corporate management and were astute corporate financiers.

Throughout the years Mr. Damon and Mr.

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306 S.W.2d 610 (Missouri Court of Appeals, 1957)

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Bluebook (online)
263 S.W.2d 413, 364 Mo. 521, Counsel Stack Legal Research, https://law.counselstack.com/opinion/johnson-fare-box-co-v-c-l-downey-co-mo-1953.