Soeding v. Bonner & Zollner Iron Co.

Rombauek, P. J., delivered the opinion of the court. The plaintiff, in her petition, states that she is the owner of ten shares of the capital stock of the defendant company, upon which dividends aggregating $364.63 [352] were heretofore declared by defendant’s board of directors, out of the company’s net earnings, which dividends remain unpaid to her. That she has demanded payment thereof and was refused, wherefore she sues. The defendant denied these allegations by answer, and set up the following affirmative defense. That in June, 1882, it transferred and sold to plaintiff’s husband, Charles Soeding, ten shares of its capital stock at the price of one thousand dollars, being its par value, which shares for convenience sake, were placed on the books in plaintiff’s name. That neither plaintiff nor her husband paid anything for said stock. That subsequently, the company made a gift of three of these shares to Charles Soeding, and it was then agreed that the remaining seven shares should be credited with accruing dividends, until their purchase price with six per cent, interest was repaid to the company, by such dividends. That in violation of said agreement, CharlesSoeding in his lifetime drew 1462.38, as for dividends on said stock, although the dividends from date of transfer to date of his death, amounted only to $365.63. That the amount due the defendant on account of said stock,, principal and interest is $1090.72. That the defendant is willing to release all claims on said stock and pay all dividends due thereon, if the amount thus-due it is first paid. The new matter in the answer was denied by reply. Upon the trial of the cause by the court without a jury, there was a judgment in plaintiff’s favor for the dividends sued for with interest, and the defendant appeals. Upon the trial of the cause, the plaintiff gave evidence tending to show the following facts : The defendant’s articles of association provided for a total stock of five hundred shares, out of which number, one Bonner subscribed for four hundred and seventy-four, one Zollner for twenty-five and plaintiff for one. Bonner subsequently transferred, out of his four hundred and [353] seventy-four shares, nine to the plaintiff’s husband, and they were put in plaintiff’s name on the company’s books. Charles Soeding thereafter died, and the one share subscribed for by him was turned over by the public administrator in charge of his estate to the plaintiff, his widow. The nine shares of stock remained in plaintiff’s name on the books of the company, and the dividends sued for were credited on said books to said stock. The defendant thereupon, in order to establish the affirmative defense set up in its answer, called Bonner as a witness. The plaintiff objected to his competency, among others, upon the ground that the matter in controversy grew out of a contract or transaction between Bonner and Soeding, and that Soeding being dead, Bonner was incompetent to testify. The court received Bonner’s evidence, subject to this objection. When it appeared by such evidence that all the material part thereof related to what had passed orally between witness and Soeding, touching his stock transaction, the court, upon plaintiff’s renewed objection, rejected Bonner’s evidence on the ground that he was an incompetent witness to prove such facts. This ruling of the court is the main error complained of. It will be seen from what has been stated above, and which appears more fully by Bonner’s own evidence, that the controversy in this case, while nominally one between plaintiff and defendant, is in effect one between plaintiff and Bonner. It stands conceded that when the corporation was organized, it was in substance a converting of Bonner’s business into a corporate business. Bonner subscribed for four hundred and seventy-four out of the five hundred shares of stock, and, as far as appears, gave no other value for it, than his property turned over to the corporation. The shares claimed by plaintiff are part of the four hundred and seventy-four [354] thus subscribed for by Bonner, for the consideration of which Bonner, and not the plaintiff, or plaintiff’s husband, was responsible to the corporation. Schaeffer v. Ins. Co., 46 Mo. 250. If Bonner subsequently sold part of these shares to the plaintiff’s husband, the contract was one essentially his own, even though the corporation assented to it, and even though the benefit of it nominally was to be derived by the corporation. Under the ruling in Meier v. Thieman, 90 Mo. 442, 444, Bonner was an incompetent witness, inasmuch as the •contract in question was his own, and under the ruling in Williams v. Edwards, 94 Mo. 447, he was incompetent in so far as it was the contract of the corporation for whom he was the sole contracting agent with the party to the contract, since deceased. In either view of the case he was an incompetent witness to establish the facts in controversy. Conceding as we must, that Bonner’s evidence was properly rejected, and the defendant’s second assignment of error has nothing in the record to rest upon. That assignment is, that there is a dispute in regard to the true ownership of this stock, and hence the corporation is justified to decline payment of dividends until such controversy is determined in proper proceedings. The plaintiff has by her evidence made a prima-facie case, showing ownership in herself and a right to recover the dividends sued for. The defendant’s evidence showing a controversy as to the title, being properly rejected, there is nothing in the record which presents the point urged in the second assignment. Judgment affirmed. All the judges concur.