Biggs v. Westen

OPINION. I. BOND, J. Trustee in Bankruptcy. (after stating the facts as above).— The trustee in bankruptcy is in law the representative of the creditors of the estate only in the sense that it is his duty to collect for their benefit and for <jue administration in the bankrupt e(rar£ ap -¿he assets of the estate. But it is not his duty to represent any creditor in the matter of prosecuting his claim against the bankrupt in any court. The position of the creditors as to each other in all cases where the estate is insufficient to pay its entire indebtedness, is one of antagonism; and the prosecution of their respective claims to an allowance in the bankruptcy proceeding, or a judgment in other courts, is a matter which concerns only the holders of such claims and forms no part of the legitimate duties of a trustee appointed to collect and conserve the estate ‘of the bankrupt in order that it may be applied to the payment, as far as possible, of all the debts and demands established against it. In the matter in hand, defendant J. B. Johnson appears to be the only claimant who felt aggrieved by the judgment of the circuit court. He could have appealed therefrom in his own right; and failing so to do, it was not the duty of the trustee to take that step in his behalf. Neither was it the duty of the trustee to appeal in his own right as a representative of the estate of the bankrupt, if, as is shown by his reports to the bankrupt court, the judgment of the circuit court was available to pay all the demands adjudged against the bankrupt. We think the appeal under the facts [344] .shown in this record was ill advised and necessarily tended to postpone the collection of enough assets to pay the liabilities adjudged against the estate in the hands of the trusteed We do not ascribe to the trustee any improper motive in the matter or intentional wrongdoing, but we do hold that he misapprehended the scope of his duties, and that the legal services of his attorneys in this court directed to the establishment of the claim of defendant J. B. Johnson are not justly chargeable to the estate and should not be compensated out of its assets. , We have decided, however, to reserve a ruling on •the motion to dismiss the present appeal on the ground that it is not prosecuted in the name of the “real party in interest” (R. S. 1909, sec. 1729 et seq.) and have concluded, after an examination of the entire record, to dispose of the question of the enforceability of the claim of the defendant J. B. Johnson on its merits. corporation: unpaid Stock. II. The testimony in the record shows that the name of J. Brooks Johnson was on the list of subscribers for the preferred and common stock of the Kline-Drummond Mercantile Company; and though said to have been written by the promoter, J. W. Baker, the fact remains that the stock set out opposite his name was received by him and that h'e paid the par value of the preferred portion to the corporation direct, and received without further payment the same proportion of common stock allotted to other subscribers. The indorsement on the back of the certificates is admittedly' in his own hand writing. Upon this evidence and that of other witnesses touching his knowledge of the plan of stock issuance, we find the fact to be that he knew that the. corporation was issuing its common stock to the subscribers and purchasers of its preferred stock, with the understanding that nothing whatever should be paid by the recipients of such stock. These conclusions as to the [345] evidence were reached hy the trial judge, and they are abundantly sustained by the weight of the credible testimony contained in this record. • We further find as a fact that the defendant J. B. Johnson had full cognizance of the foregoing facts at the time he exchanged his preferred and common stock for the bonds of the company, upon which he subsequently sought to establish an indebtedness against it in the bankrupt court. And that he became a creditor of the corporation with full knowledge at the time that it had issued its common stock npon an agreement that it was not to he paid for hy persons receiving it; and, hence, that he did not extend any credit to the corporation upon faith in its ability to demand payment for its common stock. The law is well settled in this State that no creditor of a corporation, who becomes such with knowledge that its stock, though purporting to have been paid in full, was in point of fact neither paid nor to he paid, hut was issued merely as a bonus for the subscription and payment for other stock, can enforce his claim against the corporation hy compelling its shareholders to pay to the corporation, its trustee or other representative, any portion of the stock so donated. [Meyer v. Mining & Milling Co., 192 Mo. 162; Trust Co. v. McMillan, 188 Mo. l. c. 567; Shields v. Hobart, 172 Mo. 491; Berry v. Rood, 168 Mo. 316; Woolfolk v. January, 131 Mo. l. c. 637.] In the light of this legal principle and according to the preponderance of the testimony in the record showing that defendant Johnson could not have been ignorant of. what every other stockholder knew when he acquired his stock in said corporation, the judgment of the trial court excluding the enforceability of the bonds held hy him just as it debarred all the other holders of such bonds was manifestly right; and it is affirmed. Woodson, P. J., Lamm and Graves, JJ., concur.