Summary
discussing recovery of damages by a person improperly discharged by a corporation
Summary of this case from Powell v. St. Louis Dairy CompanyOpinion
No. 41255.
June 13, 1949. Rehearing Denied, July 11, 1949.
In 1929 plaintiff filed a statutory wage action against a Missouri corporation which was subsequently dissolved. In 1948 the officers and directors of the dissolved corporation, and a Delaware corporation which had acquired the assets of the Missouri corporation, were made parties. The statute of limitations had run against these subsequent parties and the motion to dismiss was properly sustained.
1. LIMITATIONS OF ACTIONS: Corporations: Dissolved Corporation: Action Against Trustees and Successor Corporation Barred. Plaintiff's action for a statutory liability was filed in 1929 against a Missouri corporation which has since been dissolved. In 1948 a supplemental petition was filed joining the president and last board of directors as trustees of the dissolved corporation, and also a Delaware corporation which had taken over the assets and business of the Missouri corporation. The statute of limitations has run against these added parties and the supplemental petition was properly dismissed.
2. LIMITATIONS OF ACTIONS: Parties: Statute Runs Against New Parties. The statute of limitations continued to run against the parties who were subsequently joined, although such defense was not available to the original defendant.
3. LIMITATIONS OF ACTIONS: Corporations: Transfer of Assets: Deception Not Pleaded. There were no facts pleaded to toll the statute of limitations on the ground of deception in the transfer of assets from the Missouri corporation to the Delaware corporation.
4. LIMITATIONS OF ACTIONS: Corporations: Trustees of Dissolved Corporation: Statute Not Tolled. The statute of limitations was not tolled because the last officers and directors of a dissolved corporation are trustees.
5. LIMITATIONS OF ACTIONS: Corporations: Secret Dealing Not Pleaded. There is no pleading of any secret dealing among the officers of a dissolved corporation which would toll the statute of limitations.
6. LIMITATIONS OF ACTIONS: Pleading: Motion to Dismiss Properly Sustained. Since it appears from the face of the petition that plaintiff's cause of action is barred by limitation, the motion to dismiss was properly sustained.
Appeal from Jackson Circuit Court; Hon. Paul A. Buzard, Judge.
AFFIRMED.
Henry W. McFeely and George Hornecker for appellant.
(1) The trial court erred in finding that plaintiff's supplemental petition fails to state a claim against Katz Drug Company, the Delaware corporation, upon which relief can be granted. Plaintiff's supplemental petition states a cause of action against the Delaware corporation, as the subsisting corporation in a merger, consolidation, reorganization or sale, the transfer being substantially "by themselves to themselves," and creating an identity of parties. Hibernia Ins. Co. v. St. Louis New Orleans Transportation Co., 13 F. 516; Sweeney v. Heap O'Brien Mining Co. and Grand Haven Mining Co., 194 Mo. App. 140, 186 S.W. 739; Abeken v. United States, 26 F. Supp. 170; Kinsello v. Marquette Eastern Finance Corp., 28 S.W.2d 427; Blackington v. United States, 6 F.2d 147; State ex rel. Consolidated School Dist. Number 8 of Pemiscot County v. Smith, 343 Mo. 288, 121 S.W.2d 160; Schneider v. Schneider, 347 Mo. 102, 146 S.W.2d 584. (2) Plaintiff's rights and cause of action under Section 5082, Revised Statutes of Missouri, 1939, continues against Katz Drug Company, the Delaware corporation. The identity of the Missouri and the Delaware corporations eliminates a negative to plaintiff's statement of this issue, but the point will be further considered here. State v. Arkansas Oil Co., 116 Ark. 74, 171 S.W. 1192; Fair Labor Standards Act, 1938, 29 U.S.C.A. 216 (b); Greenberg v. Arsenal Bldg. Corp., 144 F.2d 292; Brooklyn Savings Bank v. O'Neil, 324 U.S. 697, 65 S.Ct. 895, 89 L.Ed. 1296; Overnight Motor Transportation Co. v. Missel, 316 U.S. 572, 62 S.Ct. 1216, 86 L.Ed. 1682; Mason v. Adoue, 30 Tex. Civ. App. 276, 70 S.W. 347. (3) The trial court erred in applying Section 1014, Revised Statutes of Missouri, 1939, as a bar to plaintiff's supplemental petition and his cause of action against Katz Drug Company, the Delaware corporation and in finding plaintiff failed to diligently prosecute the cause. Limitation did not run in favor of the Delaware corporation, because it is the subsisting corporation in a transfer of assets from the controlling interests in one corporation to the same interest controlling the other corporation, with notice. Sec. 5082, R.S. 1939; Manhattan Oil Co. v. Mosby, 72 F.2d 840; N.Y. Central Hudson River R. Co. v. Kinney, 260 U.S. 340; Wabash Ry. Co. v. Bridal, 94 F.2d 117; 41 Am. Jur., p. 48, sec. 267; 49 C.J., p. 570, sec. 795; Berssenbrugge v. Luce Mfg. Co., 30 F. Supp. 101; Boonville Special Road Dist. v. Fuser, 184 Mo. App. 634, 171 S.W. 962. (4) The trial court erred in applying Section 1014, Revised Statutes of Missouri, 1939, as a bar to plaintiff's supplemental petition and his cause of action, against Katz Drug Company, the Delaware corporation, because there was deception by defendants as to the relationship of Missouri and Delaware corporations and assets involved. Where there is deception and the deception is repeated or continued, Statute of Limitation does not run. Oregon Mortgage Co., Ltd. v. Renner, 17 F. Supp. 727; 54 C.J.S., p. 198, sec. 192. (5) The trial court erred in finding that plaintiff's supplemental petition fails to state a cause of action against Katz Drug Company, the Delaware corporation, and the individuals named in petition, as Trustees of the assets of the Missouri corporation. The statutes indicate clearly that any one taking the assets of a corporation ". . . by whatever name they may be known in law, shall be trustee of such corporation . . ." Secs. 5036, 5094, R.S. 1939; Abeken v. United States, 26 F. Supp. 170; Schneider v. Schneider, 347 Mo. 102, 146 S.W.2d 584; Blackington v. U.S., 6 F.2d 147; Sweeney v. Heap O'Brien Mining Co. and Grand Haven Mining Co., 194 Mo. App. 140, 186 S.W.2d 739. (6) The plaintiff's rights and cause of action under Section 5082, Revised Statutes of Missouri, 1939, continues against the individuals named in the supplemental petition and the Delaware corporation, as trustees of the assets of the Missouri corporation. State v. Arkansas Oil Co., 116 Ark. 74, 171 S.W. 1192; Cases construing the Fair Labor Standards Act, 1938, 29 U.S.C.A. 216 (b) as remedial; Greenberg v. Arsenal Bldg. Corp., 144 F.2d 292; Overnight Motor Transportation Co. v. Missel, 316 U.S. 572, 62 S.Ct. 1216; Brooklyn Savings Bank v. O'Neil, 324 U.S. 697, 65 S.Ct. 895, 89 L.Ed. 1296. (7) There is an identity of parties in the original petition and supplemental petitions and the cause of action stated in each is the same. Manhattan Oil Co. v. Mosby, 72 F.2d 840; Wabash Ry. Co. v. Bridal, 94 F.2d 117. (8) There is a trust and trusteeship as to the Delaware corporation, and the individuals, by Sections 5036 and 5094, Revised Statutes of Missouri, 1939, and by the facts and circumstances. Especially as to the Delaware corporation, there has been a secret trust. The trust was not repudiated. There is a continuing offense and continuing remedy. All of which takes this case out of the Statutes of Limitations. Secs. 5036, 5082, 5094, R.S. 1939; Cape County Sav. Bank v. Wilson, 225 Mo. App. 14, 34 S.W.2d 981; Koppel v. Rowland, 319 Mo. 602, 4 S.W.2d 816; Boonville Road District v. Fuser, 184 Mo. App. 634, 171 S.W. 962. (9) Katz Drug Company, the Delaware corporation, and the individual defendants all collaborated and took part in the deceptions that have been mentioned, which tolled the Limitation Statute to a date not earlier than September 23, 1943. Oregon Mortgage Co., Ltd., v. Renner, 17 F. Supp. 727; 54 C.J.S., p. 198, sec. 192. (10) By Section 847.22 (3) (d), Missouri Civil Code of Procedure, 1943, liability extends to all the defendants. (11) The order of dismissal referred to plaintiff's cause of action "if any he had." That is a reference to the merits of the case, and no part of the case has ever been tried on the merits.
Paul R. Stinson and Lawrence R. Brown for respondents Katz Drug Co., a Delaware Corporation, M.H. Katz, Isaac Katz, Rose Katz and Minnie Katz; Stinson, Mag, Thomson, McEvers Fizzell of counsel.
(1) The motion to dismiss was properly sustained by the trial court because if plaintiff ever had any right of action against any of these defendants it has long ago been barred by the statute of limitations. Jaicks v. Sullivan, 128 Mo. 177, 30 S.W. 890; Sears v. Missouri Mortgage Loan Co., 56 Mo. App. 122; Landis v. Saxton, 105 Mo. 486, 16 S.W. 912; Thompson v. Allen, 86 Mo. 85; Hiller v. Schulte, 184 Mo. App. 42, 167 S.W. 461; Haney v. Thomson, 339 Mo. 505, 98 S.W.2d 639; Anderson v. Doran, 211 S.W. 80; Meyer v. Interurban Ry. Co., 271 S.W. 865, 219 Mo. App. 360; De Vault v. Truman, 354 Mo. 1193, 194 S.W.2d 29; Bruun v. Katz Drug Co., 351 Mo. 731, 173 S.W.2d 906; Bruun v. Katz, 211 S.W.2d 918; Johnson v. United Rys. Co., 243 Mo. 278, 147 S.W. 1077; Oklahoma Natural Gas Co. v. Oklahoma, 273 U.S. 257, 71 L.Ed. 634; Blum v. Postal Telegraph, Inc., 54 F. Supp. 898, 60 F. Supp. 237; 74 A.L.R. 1280, 1282, Annotation Re Substitution of Defendants; Sec. 1014, R.S. 1939. (2) The motion to dismiss was properly sustained by the trial court because the suit is based upon a penal statute, and as such it did not survive the dissolution of the original defendant, the Missouri corporation. Quinn v. Sayman Products Co., 296 S.W. 198; Williams v. Gideon-Anderson Lumber Co., 224 S.W. 51; State v. Arkansas Oil Co., 116 Ark. 74, 171 S.W. 1192; Auslen v. Thompson, 38 Cal.App.2d 204, 101 P.2d 136; Brown, Price Admr. v. Cummins Distilleries Corp., 56 F. Supp. 941; United States v. Mitchell, 163 F. 1014; In the matter of Francis Schreiber, 110 U.S. 76, 28 L.Ed. 65.
This is an appeal from an order dismissing the appellant's supplemental petition because (a) the petition failed to state a claim against these respondents upon which any relief could be granted; (b) the claim is barred by the five year statute of limitations (section 1014, R.S. Mo., 1939); and (c) this cause was filed on March 30, 1929, and appellant had failed to diligently prosecute it. There have been two previous appeals in this cause to this court. They are reported in 351 Mo. 731, 173 S.W.2d 906 and 211 S.W.2d 918.
This supplemental petition was filed on July 2, 1948. Briefly it states that since the filing of the original petition against the Katz Drug Company, a Missouri corporation, the Katz Drug Company, a Delaware corporation, was incorporated June 13, 1929, and licensed to do business in Missouri June 26, 1929; that the same [718] individuals who had control of the Missouri corporation became the officers and directors of the Delaware corporation; that the assets and business of the Missouri corporation were transferred to the Delaware corporation; that on June 26, 1929, the Missouri corporation changed its name to Famous Drug Company, which charter was forfeited by the State on January 1, 1930; that the answer of the Missouri corporation was filed May 15, 1929; that the president and last board of directors of the Missouri corporation were M.H. Katz, Isaac Katz, Rose Katz and Minnie Katz, and as such are trustees of the assets of the former Missouri corporation; that appellant was employed by respondents as clerk at a salary of $120 a month; that on February 1, 1929, the respondents discharged appellant and failed to pay him $8.96 as wages due him; that on February 14, 1929, he made a written request of defendants for the money due him but they refused to pay him and still have failed and refused to pay him; and that this action is based upon section 4610, Revised Statutes of Missouri, 1929, which provides for a penalty for failure to pay wages when an employee is discharged by a corporation, which penalty being that the wages of such employee shall continue at the regular rate from the date of discharge until paid. The prayer of the petition was that appellant be given a judgment in the sum of $8.96, together with a continuing penalty of $120 a month, which amounted to $27,968.96 at the time of filing the supplemental petition.
On the first appeal of this case to this court we held that this suit could no longer be maintained in the name of the dissolved corporation but could be maintained against the officers and directors or manager of the affairs of the corporation at the time when forfeiture was declared, under sections 5036 and 5094, Mo. R.S.A. Under these sections they became statutory trustees for the dissolved corporation.
In February, 1947, appellant filed a motion to add parties defendant and to list the cause for trial. The prayer of that motion was that M.H. Katz, Isaac Katz, Rose Katz and Minnie Katz, as trustees of the Famous Drug Company and the Katz Drug Company of Delaware be made parties defendant. The trial court overruled this motion and appellant appealed. On the second appeal we held that the trial court could not bring in new parties on a mere motion to add new parties without first service of process upon the new parties, and the appeal was dismissed because the overruling of his motion was not a final appealable order.
We are of the opinion that the trial court properly sustained respondents' motion to dismiss appellant's supplemental petition because the action against the named individuals as trustees of the dissolved Missouri corporation and the Katz Drug Company, the Delaware corporation, was barred by the five year statute of limitations. Since it appears from the petition that the cause of action accrued on February 1, 1929, and this supplemental petition making these new parties defendants was not filed until July 2, 1948, more than five years has elapsed and this action against these new defendants is barred by section 1014, Mo. R.S.A., which provides, among other things, "an action upon a liability created by a statute other than a penalty or forfeiture." This action is based upon section 4610, R.S. Mo., 1929, which is now section 5082, R.S. Mo., 1939. It may be that since this action is for a penalty it is barred in three years under section 1015, Mo. R.S.A.; however, it is not necessary to decide that question upon this record as more than nineteen years have elapsed since the cause of action accrued and that may have been the view of the trial judge.
Where a plaintiff files an amended petition bringing into the case new defendants, and if between the time of the commencement of an action and the time when new defendants are brought into the case the period of limitation prescribed by law for such an action has expired, the new parties may plead the statute as a bar of their liability, although the defense may not be available to the original defendants. Jaicks v. Sullivan, 128 Mo. 177, 30 S.W. 890. It follows that appellant's contention that there is no new cause of action stated in the supplemental petition [719] but a continuing cause of action bringing in facts and circumstances occurring after the filing of the original petition and therefore the running of the statute of limitations is tolled is without merit. We held in the first appeal that this case could not proceed against the Missouri corporation because its charter was forfeited and could only proceed against the last president and directors of the Missouri corporation as statutory trustees. Certainly these are new parties.
Nor is there any merit in appellant's contention that the statute of limitations was tolled "because there was deception by defendants as to the relationship of Missouri and Delaware corporations and assets involved" for the simple reason that no such facts were pleaded in the supplemental petition.
If we understand the appellant correctly, he contends the statute of limitations is tolled because the last officers and board of directors are trustees, and a statute of limitations does not run against a trustee. It is true they are trustees and are made so by statute but appellant's contention was overruled by this court in the case of Landis v. Saxton, 105 Mo. 486, l.c. 489-490:
"Was the action of the plaintiff barred by the statute? The trusts against which the statute will not run are those technical and continuing trusts which are not at all cognizable at law, but fall within the proper, peculiar and exclusive jurisdiction of a court of equity, but other trusts which are the ground of an action at law are open to the operation of the statute. Kane v. Bloodgood, 7 Johns. Ch. 90. The kind of trusts which fall within the exclusive jurisdiction of a court of equity are direct trusts created by deed or will, or by appointment of law, e.g., executorships or administrations; but cases of constructive or implied trusts, which result from partnerships, agencies and the like, are subject to the operation of the statute. Farnam v. Brooks, 9 Pick. 212. The crucial test in all such cases is: Is there a remedy at law? If there is, that is a conclusive answer to the claim that a technical trust as aforesaid has been created. Murray v. Coster, 20 Johns., loc. cit. 583."
The statute created the liability of the last officers and board of directors of a dissolved corporation. Certainly, then, this action is an action at law and is subject to the operation of the statute.
If the appellant means that there was some secret dealing among these officers in transferring the assets from the Missouri corporation to the Delaware corporation such facts are not pleaded. If such facts would toll the statute of limitations, which we do not decide, it is not shown on the face of the supplemental petition and therefore is not before us.
Since it appears from the face of the petition that appellant's cause of action, if any, is barred by the applicable statute of limitations, the motion to dismiss was properly sustained. DeVault v. Truman, 354 Mo. 1193, 194 S.W.2d 29.
Because of what we have said it is not necessary to discuss the other reasons assigned by the trial judge in sustaining the motion to dismiss, and the judgment is affirmed. All concur.