Noe v. Headley

BLAND, P. J. — -In November, 1881, plaintiff and others associated themselves and incorporated under the laws of this State, under the name of the Springfield Driving Park and Pair Association, with a capital stock of four thousand dollars, divided into forty shares of one hundred dollars each, paid up. Plaintiff took one share of stock, which he still holds. With the four thousand dollars subscribed and paid in, the corporation acquired about seventy-six acres of land in or near the city of Springfield. Afterwards the capital stock of the corporation was increased to ten thousand dollars, and sixteen additional shares of stock were sold for sixteen hundred dollars. With this money and six or seven hundred dollars additional, borrowed by the corporation, it constructed a race track and made other improvements on the land. At a still later date the tract of land was leased to the Springfield District Pair Association (another corporation) for a rental of one hundred dollars per annum. The rent money was expended in the payment of taxes and the six or seven hundred dollars of borrowed money. About 1886 O. M. Headley, C. B. McAfee and H. P. Denton were chosen as directors of the corporation and continued to act as such until the life of the corporation expired by limitation (November, 1901),. In August, 1903, Headley, Mc-Afee and Denton, having first obtained the consent of all the stockholders in the corporation, except plaintiff, [725] sold forty-six and seventy-six hundredths aeres of the seventy-six-acre tract to the Springfield District Fair Association for twelve thousand five hundred and twenty-five dollars, and two days thereafter McAfee and Denton sold the remainder of the seventy-six-acre tract to O.'M. Headley for ten thousand dollars. Deeds purporting to be made by the Springfield Driving Park and Fair Association were executed and delivered to each of the purchasers. Afterwards a deed was executed to the Springfield District Fair Association by Headley, McAfee and Denton, as trustees of the defendant corporation, and a deed to Headley was made by McAfee and Denton, as trustees. The case was tried to Hon. J. E. Mellette, as special judge, who found, and there is evidence to support the finding, that Headley by the re-sale of the land he acquired realized seventeen thousand two hundred and ninety-six dollars, or a profit of seven thousand two hundred and ninety-six dollars. The court found that the deed from. McAfee and Denton, as trustees, to Headley, was void. But for the reason the land had passed to innocent purchasers for valuable considerations, the plaintiff was not in a position to disturb their title. It also found that plaintiff, as a stockholder in the defunct corporation, was entitled to participate in the profits made by Headley, and found his share of such profits to be one hundred and thirty-four dollars, and rendered judgment in his favor against McAfee and Headley for four hundred dollars, the amount conceded to be his distributive share from the proceeds of the sales of the seventy-six acres of land, plus the one hundred and thirty-four dollars found to be his share of the profits made by Headley. The suit was in equity, brought against Headley, McAfee and Denton, and all other parties who¡ claimed any interest in or title to any of the land and whose title was derived through the deed made by Headley, [726] McAfee and Denton, and the one made by McAfee and Denton. The petition alleged the lands were sold at much less than their actual value, and prayed for an accounting. Denton died pending the suit. It was dismissed as to him, and the court found that plaintiff had no cause of action against any of the defendants, except McAfee and Headley. They alone appeal. There is not a syllable of evidence showing or tending to show any actual fraud in the sale to Headley, or that the sale to him and the one to the Springfield District Pair Association was for less than the market value of the land at the time the several sales were made; to the contrary, the evidence shows that the land had been on the market for over a year and but for the fact that the Springfield District Fair Association wanted the land it purchased for fair purposes, it could not have been sold for the price obtained; and that Headley was enabled to make a profit on the portion of the land he purchased for the reason it was subsequently selected to make up the site of the Southwest or Springfield Normal School, established by the State. The evidence shows that plaintiff never took any interest in the affairs of the Springfield Driving Park and Fair Association during the life of said Association, and made no effort to close up its affairs after it expired by limitation. There is no evidence in the record to show that plaintiff assented to the sale to Headley, hence under the well settled rule, that a trustee must account to his cestui que trust for profits made out of the trust property, Headley, the trustee, who made the profit, is liable to plaintiff for his share of such profits, found by the court to be one hundred and thirty-four dollars. McAfee, though a co-trustee, was not a co-owner in the tract of land out of which Headley made the profit, received none of said profits, is not entitled to any of them, and there is no principle of law or equity bybwhich he should be held liable [727] in this suit, Headley being entirely solvent. There was no occasion to sne for the four hundred dollars, plaintiff’s pro rata share of the assets of the corporation. For, according to the evidence this sum, ever since the sales of the land were made, has been held for him, and the only reason he has not received it, is because he has refused to call for it. According to the facts found by the learned trial judge, and we think they were correctly found, the judgment should have been against Headley alone and only for one hundred and thirty-four dollars. If the four hundred dollars is not paid on demand, then suit against McAfee and Headley to recover it will be in order. But a suit to recover the four hundred dollars and the profits made by Headley cannot be joined, for the reason McAfee is not liable for the profits. The judgment is reversed, and judgment will be entered here against Headley alone for one hundred and thirty-four dollars, with interest thereon at the rate of sis per cent per annum from July 6, 1905, the date the suit was commenced. Nortoni, J., concurs. Goode. J., not sitting.