McKee v. Rudd

121 S.W. 312, 222 Mo. 344, 1909 Mo. LEXIS 105
CourtSupreme Court of Missouri
DecidedJuly 12, 1909
StatusPublished
Cited by17 cases

This text of 121 S.W. 312 (McKee v. Rudd) 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
McKee v. Rudd, 121 S.W. 312, 222 Mo. 344, 1909 Mo. LEXIS 105 (Mo. 1909).

Opinion

GRAVES, J.

Defendants were the incorporators of a Missouri business corporation styled the American Sand & Supply Company. Defendant Rudd had filed application in the U. S. Patent Office for letters-patent for a certain mechanical device and process by which to remove sand from a river and load the same on to cars. To demonstrate the feasibility of his invention and pending his application for patents thereon, he contracted to build a plant at Tokepa, Kansas,, for the Kaw River Sand Company, equipped with his invention or device for the price and sum of $10,000. Rudd seems to have had no means, and he induced plaintiff, McKee, to go in with him and furnish money to the extent of $5,000, with the understanding that McKee should be repaid out of the contract price and to share the profits of the venture which went to the construction and operation of the plant. McKee furnished in fact $5,025. These two parties also had a further written agreement, by the terms of which Rudd was to organize a two hundred thousand dollar cor[349]*349poration to take in the “Rndd Sand Handling Apparatus and the Rudd & Meyers Portable Sand Plant” at the price and sum of $100,000, in full paid-up stock and in which proposed corporation the said McKee, in consideration of $2,000, was to have a 4-25 interest in the said inventions, which interest was to be taken in said corporation for one hundred and sixty shares of full paid stock of the par value of $100 per share. McKee was also to purchase five shares at $100 per share. McKee was to pay both the $2,000 and the $500, when the plant to be constructed at Topeka was in successful operation.

Rndd did not organize the $200,000 corporation, but instead he and his codefendants organized the corporation first herein named, having a capital stock of $300,000. It appears that for some reason they did not want McKee in the corporation, and it was finally determined that they would buy him out, so accordingly it was agreed between the officers of the new corporation, that such corporation should take over all of McKee’s interest at the price of $5,500. The final culmination of the deal was a written contract of date January 13,1904, although there had been a previous written contract. on December 23, 1900, which was destroyed upon the execution of the January contract. By this last named contract McKee sold and assigned his interest in both of the written contracts which he had with Rudd, to the American Sand & Supply Company. The Topeka plant was only then partially constructed, but McKee had' therein $5,025. McKee and Rudd both signed the contract, and as to the consideration to be received by McKee, who was in the contract designated as party of the second part, the contract reads:

“First party as a part of the consideration passing from it has this day paid to second party in cash the sum of five hundred dollars and has executed and has delivered to second party its two promissory notes, [350]*350one for five hundred dollars dated January 12, 1904, payable thirty days after date, without interest, and one for forty-five hundred dollars, dated January 12, 1904, payable on or before sixty days after date, with interest at six per cent per annum from date until maturity, and eight per cent per, annum after maturity.”

The party of the first part was the American Sand & Supply Company, and Rudd was the third party, as the parties to the contract were designated. McKee was paid the $500 in cash and upon maturity was paid the $500 note. The $4,500 was never paid. McKee sued the corporation and got judgment, but an officer with an execution failed to find property.

Thereafter McKee filed a petition which was the origin of this suit. The petition upon which trial was had is an amended petition and the corporation is not a party. Under the first petition it was a party and a receiver was appointed, who qualified, but was later discharged. The receiver found no assets and upon the dropping out of the defendant corporation from the case, was likewise dropped out and directed to return what he had to the corporation.

Omitting caption the petition upon which the .cause was tried reads:

“Plaintiff states that on or about the — day of December, 1903, defendants filed with the Secretary of State of Missouri, duly authenticated articles of incorporation, under the name and style of American Sand & Supply Company; and represented to said Secretary of State and the State of Missouri that said company had a capital stock of $30'0,000', and further represented .to said Secretary of State and to the State of Missouri that of said capital stock $150,000', or one half thereof, was actually paid up in cash in good and lawful money of the United States; that upon the strength and’belief of said representa[351]*351tions, articles of incorporation were issued to said company.
“That in truth and in fact all of said representations were false, fraudulent, and untrue, and defendants and each of them then and there well knew that the same were false,, fraudulent and untrue.
“That said pretended corporation was insolvent at that time, and said capital stock was not paid up nor any part thereof, which facts defendants and each of them well knew.
“That said pretended corporation never had any legal existence and no legal authority to do business as a corporation in this State, for the reason that said articles of association were procured by false and fraudulent representations, knowingly made by defendants as aforesaid; and that said pretended corporation had no assets and was insolvent from its inception, as defendants and each of them well knew.
“That defendants and each of them falsely and fraudulently represented to this plaintiff that said pretended corporation was a duly and legally organized corporation; that one-half of its capital stock, amounting to $150,000, was actually paid up in good and lawful money; that said company was solvent and was ready to comply with any and all contracts it might make and that it was amply able to meet any and all liabilities it might incur.
“That plaintiff, believing said representations to he true and relying upon them as true; and further relying upon the articles of association of said company, and the statements therein, was induced to extend credit to said pretended corporation and did loan to said pretended corporation the money for which the jugment hereinafter mentioned was obtained, and sued said company as a corporation as they purported and pretended to be.
‘ ‘ That plaintiff is a creditor of said company and pretended corporation and has judgment against it in [352]*352the sum of $4,570', with interest from the date of its rendition, and the same is still unpaid, and cannot he collected.
“That plaintiff contracted with said company, pretended corporation, in good faith, believing it to be what its articles of association warranted it was, viz.: solvent, and as so held out and represented to plaintiff by defendants, and each of them.

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Bluebook (online)
121 S.W. 312, 222 Mo. 344, 1909 Mo. LEXIS 105, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mckee-v-rudd-mo-1909.