State v. Toombs

25 S.W.2d 101, 324 Mo. 819, 1930 Mo. LEXIS 562
CourtSupreme Court of Missouri
DecidedFebruary 19, 1930
StatusPublished
Cited by7 cases

This text of 25 S.W.2d 101 (State v. Toombs) 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
State v. Toombs, 25 S.W.2d 101, 324 Mo. 819, 1930 Mo. LEXIS 562 (Mo. 1930).

Opinions

An indictment was returned in the Circuit Court of City of St. Louis, charging that defendant, while president of the International Life Insurance Company, caused to be signed, with felonious intent to issue the same, in violation of Section 3350, Revised Statutes 1919, a certificate for three thousand shares of stock in that corporation, not authorized by the charter and by-laws. On a jury trial he was found guilty, April 13, 1929, and his punishment assessed at a fine of $3,000 and imprisonment for three years in the penitentiary. Appeal to this court followed.

The indictment places the offense on January 17, 1928. In August, 1927, the Great Southern Life Insurance Company of Dallas, Texas, through Mr. A.P. Greenwood, its president, loaned $500,000 to Toombs Daly Company. The note representing this indebtedness was executed by the defendant Roy C. Toombs, and was secured collaterally by common and preferred stock in the Toombs Daly Company. This loan was to mature on February 7, 1928. In January, 1928, before the maturity of the note, an exchange of securities took place. The note was renewed, and instead of the Toombs Daly stock, Mr. Greenwood, for the Southern Company, received nine thousand supposed shares of stock in the International Life Insurance Company, shown by three certificates for three thousand shares each. The Toombs Daly stock was returned to Mr. Toombs. Mr. Greenwood first received two certificates of three thousand shares each. He advised Mr. Toombs that he had not sent the agreed amount. Then followed the transaction complained of, the issuance of nine thousand shares of stock in the International Life Insurance Company.

The issuance of three certificates, numbered D-11009, D-110010 and D-110011, as testified to by W.G. Darst, secretary of the International Life Insurance Company, F.E. Bohle, assistant secretary, and W.F. Grantges, first vice-president, occurred in this way: A meeting of the board of directors of the International Life Insurance Company was held in St. Louis January 17th. After the meeting was over, Mr. Toombs came into the office of the secretary and asked him to issue to him, Toombs, three certificates of stock for three thousand shares each. Darst accordingly made them out and signed them. Mr. Grantges passed through the office, was stopped, and asked to sign and did sign those certificates. *Page 825

It appears that Mr. Greenwood, upon receiving the certificates, demanded what he termed "supporting papers," which should accompany the collateral, papers showing that Mr. Toombs had acquired the stock in the International Life Insurance Company from the International Company, a holding company. It included a certified copy of the resolution of the board of directors of the latter company to that effect. It appears that supporting papers were received by Mr. Greenwood, and that such as he had at the time of the trial were in the possession of the Southern Company at Dallas, Texas.

Of the three certificates thus issued, D-11009 is the one set out in the indictment. At the time these certificates were issued, the International Life Insurance Company was authorized to issue 37,500 shares, of the par value of twenty-five dollars each, of the stock of said corporation. At that time 37,500 shares of said stock were outstanding. This appears from the evidence of Mr. Bohle, who had charge of the books of the concern, and from the evidence of Mr. Brenaaun, who had charge of the assets of the Life Insurance Company after it went into the hands of the receiver. The books then showed that 37,500 shares were outstanding on January 17, 1928. This also appears from other evidence. In fact it is not seriously disputed that the three certificates, including D-11009, were over-issues.

The State introduced the certificate of Ben C. Hyde, Superintendent of Insurance, to the effect that January 17, 1928, the authorized and paid-up capital of the International Life Insurance Company was $937,500, divided into 37,500 shares of the par value of twenty-five dollars each. Also the certificate of Charles U. Becker, Secretary of State, to the same effect. At the time the three certificates for nine thousand shares, including the certificate mentioned in the indictment, were issued, no old stock was exchanged for them, no transfer was made. The secretary of the corporation, Mr. Darst, testified that there were 37,500 shares issued and outstanding. Then this question was asked of him: "Q. Was that the amount of the full paid, authorized capital stock of the company? A. Yes." That question and answer were repeated in another form. This evidence was not objected to.

Mr. Darst further testified that there was no time prior to January 17, 1928, including that day, when any stock was transferred from the holding company to the Life Insurance Company, for which this certificate D-11009 was issued. No record was made of the issuance of that certificate. Neither it nor either of the other two was placed on the ledger.

The defendant offered evidence attempting to show good faith in causing the certificate mentioned to be issued. The International *Page 826 Life Insurance Company was a Missouri corporation with a capital stock as above stated. The International Company was a holding company, incorporated under the laws of Delaware. It was organized for the purpose of liquidating life insurance companies and fire insurance companies. It also handled securities, selling and buying them. Its capital stock consisted of 460,565 shares of preferred stock, and 2,000 shares of common stock. On January 17, 1928, the defendant Toombs was the owner of practically all that common stock. Toombs had purchased the 2,000 shares of stock in the holding company for $3,101,211. He had borrowed $2,000,000 in cash in June, 1927, to pay for it. The holding company at that time owned as its principal asset 23,624 shares of the International Life Insurance Company stock. Some of the shares of the Life Insurance Company, amounting to over 11,000 shares, were in escrow in certain banks in St. Louis. It appears that these belonged to the holding company, and it had access to the boxes in which these shares were placed. The situation of the other shares owned by the holding company is not shown. On January 5, 1928, at a regular meeting of the board of directors of the holding company, a resolution was adopted, whereby that company sold to Toombs, the defendant, 15,924 shares of the stock of the Life Insurance Company for the price of ninety dollars per share. It was resolved that such stock be delivered to Toombs at such times and in such blocks and numbers of shares as he might from time to time desire, and be paid for from time to time as he desired. It was further resolved that the company accept from Toombs, in payment of said stock, certain municipal bonds which had been duly approved, etc. Then it was resolved that, pending the delivery of the bonds, the president of the holding company was authorized to receive in lieu of said bonds interim certificates or receipts, and upon the delivery of the interim certificates the president of the holding company was authorized to deliver to Toombs the certificates of stock, duly endorsed, representing the number of shares paid for by such interim certificates. At that same meeting one John C. Martin tendered his resignation as president and director, and George E. Toombs, brother of the appellant, was elected to fill the vacancy.

It is claimed by the appellant that in this transaction, by which the defendant was said to have bought stock in the LifeCompany from the holding company, to be paid for in municipal bonds, the interim certificates were to be received from Toombs by the holding company in lieu of those bonds.

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Bluebook (online)
25 S.W.2d 101, 324 Mo. 819, 1930 Mo. LEXIS 562, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-v-toombs-mo-1930.