141 Ind. 332 | Ind. | 1893
On the 27th day of November, 1883, the firm of Benjamin F. Dow & Co., doing business at Peru, Ind., in the manufacture of threshing machines and engines, became financially embarrassed.
Their principal creditors, at the time, were the First National Bank and the Citizens’ National Bank, of Peru.
On the date named, said banks, by their attorneys, commenced suit upon the matured obligations of said firm in their favor, and asked the appointment of a receiver to take charge of the assets and business of said firm.
A receiver, the appellant James G. Blythe, was appointed in accordance with the prayer of their complaint, who was qualified, gave bond and filed an inventory.
At the time of his appointment it was made to appear to the court that a large proportion of the assets of said firm consisted of material in process of manufacture and notes taken in the course of the business of said firm, that could only be made available by a temporary and limited continuance of the business, and an order authorizing the receiver to so continue the business was made by the court below.
On taking charge of the business under such order of court, the receiver discovered that all the tangible per
In order to continue the business at all in pursuance of the order of court, it was necessary for the receiver to borrow money for temporary use, as there was none in the assets of the firm that came to his hands.
For the purpose of negotiating the necessary loans the receiver applied to the same banks that were mentioned above as the principal original creditors of said insolvent firm. Both said banks, through their officers, expressed a willingness to loan money under proper orders of court authorizing the receiver to borrow it; but having knowh edge of the mortgage upon the personal property above mentioned they declined to enter into negotiations until the same should be released by the several mortgagees, among whom was the intervening petitioner herein, William Gibbons.
By the first day of January, 1884, all of said mortgagees had entered upon the record of the mortgage in Miami county their several releases, except William Gibbons and three others.
With these parties, who were supposed to be bona fide creditors of B. F. Dow & Co., the receiver conditionally agreed that in consideration of the release of said mortgage by them they should be held, with the approval of the court, as creditors next preferred to those who should loan the receiver money for the purpose of carrying on the business.
To effectuate this purpose the receiver filed in court on January 15, 1884, his petition setting up the fact of the execution of said mortgage and the release thereof by all the mortgagees except said four creditors, to wit: William
Upon said petition the court made an order, on the proper construction of which, whether by its own terms or by the aid of other evidence, rests the principal controversy in the case.
It is as follows:
“Tuesday, Jan. 15, 1884.
“The First National Bank of Peru, et al., v. “Benjamin F. Dow, et. al. } 1,053.
“Comes now Jas. G. Blythe, receiver herein, by “Messrs. R. P. Effinger, Shirk & Mitchell, his attorneys, “and files petition for authority to borrow the sum of “ten thousand dollars, for the 'purpose of working up “materials on hand, paying for labor and material and for “order preferring claim, which petition is in these words [h. i.] which petition the court grants.
“Said receiver is authorized to make claims of Israel “Judd for $370 and interest from Jan. 1, 1884; claim of “Wm. Gibbons for $2,871.81, with 6 per cent int. from “March 28, 1881; claim of Mrs. David McDonald for “$2,000 and Allen Richardson for.$348.21 and interest “from Sept. 1883, preferred claims upon said claimants “releasing mortgages to secure same, and are made preferred claims next to those who may loan receiver money “to carry on the business and to manufacture the ma“terials on hand.
“And the said receiver is authorized to borrow ten “thousand dollars for that purpose, said sum to be a “prior claim upon the articles manufactured and the “notes received for the sale thereof.”
Following the entry of said order, the said Wm. Gib
“This mortgage as to me ¥m. Gibbons is fully satis“fied, my debt having been secured otherwise, and I “hereby release the same this 18th day of January, 1884.
“William Gibbons.
“Attest: Wm. A. Gibney, R. M. Co.”
Under this order of January 15, 1884, the said receiver borrowed money of these appellants to the full amount named therein, to wit: of the First National Bank the sum of eight thousand dollars and of the Citizens’ National Bank the sum of two thousand dollars.
Subsequently, on further petitions by the receiver to the Miami Circuit Court, he was authorized to borrow the following named additional sums, for the purposes named in said petitions, as follows:
On petition of February 4, 1884, the receiver was authorized to borrow the additional sum of two thousand and twelve and dollars.
On petition of April 22, 1884, the receiver was authorized to borrow the additional sum of ten thousand dollars.
On petition of August 9, 1884, the receiver wás authorized to borrow the additional sum of five thousand dollars.
On petition of May 13, 1885, the receiver was authorized to borrow the additional sum of three thousand dollars.
Nearly the whole of said several amounts so authorized, were by said receiver borrowed from these appellants, to wit: from said First National Bank the sum of $12,494.72, and from said Citizens’ National Bank the sum of $7,096.21.
Receiver’s certificates were issued by said receiver to the banks for the amounts borrowed, which certificates
On the 17th day of January, 1885, and prior to that date, several of the former employes of Benjamin F. Dow & Co. had applied to the court for orders preferring their labor claims, not exceeding fifty dollars each, as against the claims of general creditors.
The appellee Gibbons on that day filed his first intervening petition in said cause alleging the filing of labor claims by the employes of B. F. Dow & Co., and claiming preference over them under the order of court of January 15, 1884.
No action on this petition appears of record, except that the “labor claims’’ were allowed and preferred. Also, report of receiver filed February 14, 1885, which report was approved November 12, 1885.
The appellee Gibbons, next appeared as intervenor in the case on the 8th day of April, 1886, at which time he filed affidavit and motion for permission to sue the receiver; of the filing of which motion, written notice was served on these appellants.
Thereafter, .on the 1st day of July, 1886, he filed another petition, asking a cancellation of the release aforesaid, executed by him on the 18th day of January, 1884, and for other relief.
Afterwards, and before any action was taken upon this petition, to wit: on October 11, 1887, said appellee filed
Issues were formed on this petition. •
The receiver filed answer in two paragraphs.
Demurrer was filed by Gibbons to the second paragraph of receiver’s answer, which was sustained and exceptions taken.
The receiver then filed a third paragraph of answer.
To this third paragraph, Gibbons filed reply in two paragraphs, the second paragraph of which was subsequently withdrawn.
The First National Bank asked leave of court to be permitted to defend against said petition, and leave was granted.
The Citizens’ National Bank also filed a like petition, with same result.
The First National Bank and the Citizens’ National Bank each then filed a separate answer to the petition in two paragraphs.
To the second paragraphs of each of said answers last named, the said intervener filed replies in denial.
Each of the banks, before issues were closed in said cause, also filed a separate petition to the court to marshal the liens upon the funds in the hands of the receiver, and asking other relief.
Afterwards said Gibbons filed his motion to strike out both of said petitions last named, which motion the court sustained, and said banks severally excepted.
Judgment was rendered on said finding and conclusions of law, directing payment within ninety days of the amount .found due said Gibbons, to wit: The sum of $4,214. 28/100, with interests and costs; which order was unconditional and absolute.
Exceptions were taken by all the appellants to the conclusions of law upon the finding of facts. Motions for judgment on the finding, for a venire de novo, for a new trial and for modifications of the judgment, were severally made, overruled and exceptions reserved.
The errors assigned by each of the appellants, separately, are as follows:
1st. That the court erred in striking out the cross-petition of each appellant.
2d. That the court erred in its conclusions of law on the findings of fact.
3d. That the court erred in overruling the motion by each appellant for a venire de novo.
4th. That the court erred in overruling motions for a new trial.
The controlling question is as to the correctness of the conclusions of law.
A vast mass of testimony was introduced concerning
It was attempted to be shown by such testimony that the appointment of a receiver to wind up the affairs of the failing concern of B. F. Dow & Co., and that the necessity of continuing the factory in operation until the material on hand was worked up and sold, were apparent and conceded on all hands in order to avoid greater losses to the creditors of the firm. To do this under the order of the court large sums of money were needed by the receiver. The money could not be borrowed from the banks unless the chattel mortgage liens on the property could be released.
And it was claimed by appellee that the oral negotiations and conversations by which the scheme was agreed upon and subsequently attempted to be carried out by the entry of the order already recited, establish that the understanding was that if appellee released his mortgage lien, pursuant to the order, he was to have a lien next in priority to the ten thousand dollars, which the order authorized the receiver to borrow to work up the material on hand; and that his lien was to be prior to all other liens, whether for other moneys borrowed by the receiver under subsequent orders of the court, or the costs of the receivership. The appellee was not a party to the order, nor was he bound by its terms unless he afterwards voluntarily surrendered his mortgage lien in consideration of the benefits of the order. Instead of relying on his previous understanding as to what the
Any additional sum's that the best interest of the trust estate in the receiver’s hands required, the court had ample authority to authorize the receiver to borrow. This power existing, both under the order and without the order, it is difficult to see how the appellee could diminish or qualify that power by his act in releasing his mortgage and accepting the benefits of the order. Doubtless he could have declined to release his mortgage unless there was a provision added to the order making his claim prior to any other claim for money borrowed by the receiver under the order of the court in excess of the ten thousand dollars mentioned in the order. Had such terms been added to or contained in the order the conclusions of law would have been correct. But no such terms were required and none such are expressed in the order. The circumstance that appellee’s claim is “made a preferred one next to those who may loan receiver money to carry on the business, etc.,’’ is found in the same entry with an order authorizing the receiver to borrow ten thousand dollars for that purpose, furnishes no reason for saying that the court meant to make appellee’s claim prior to those who may loan additional sums to the receiver for the same purpose under subsequent orders of the court. The evidence discloses pretty clearly that such an order as that would have found no one ready to invest money and would have prevented the receiver from borrowing any more money. No financier in his senses would lend money to carry on the business of a failing and insolvent partnership for the purpose of making the most out of the assets of the firm for the benefit of the general creditors if the repayment of his loans were to be placed on a common level with the claims of general creditors, and not to be made a preferred claim.
The court erred in admitting, over objection, all that class of testimony.
Nor was it proper to consider whether the receiver had managed the trust to the best interest of the creditors, to throw light on or explain the meaning of the order.
The appellee’s counsel seek to avoid what seems to us the natural meaning of the order, by contending “that it does not expressly make Gibbons a preferred creditor, and that it authorizes the receiver to do so; and the receiver informed him of the order and sent him to Mitchell.” Concede that to be so and it is difficult to
Applying these principles here, we have no hesitation in holding that the meaning of the order is that on the release of the appellee's mortgage his claim for the amount thereof became, without any further action of
The appellee filed two intervening petitions about a year after the order was made seeking relief as to priority of his claim verified by affidavit, but in such verified petition he makes no claim that the construction he now places upon the order was the true one. The only excuse his counsel make for this significant act on his part is that that fact ought not to have great weight because his attorneys that prepared the petition were also the attorneys for the receiver. We can not see how that can lessen the weight to be attached to his act, his sworn statement. There is nothing in the record tending to show that they did not faithfully represent appellee’s interest in the matter, but the contrary is plainly inferable from the record. At no time did appellee contend for the construction now sought to be maintained until the filing of the intervening petition on which the trial and judgment below are founded, which was more than two years after the order was made. In one of his former intervening petitions he sought to set aside the release and satisfaction of his mortgage on the alleged ground that it was intended only to be a partial release and that by mutual mistake of the parties it had been made a complete release; he asked also therein leave to sue the receiver to foreclose his mortgage in case the court set aside the satisfaction and release. Failing in all of which he filed the present
END OF NOVEMBER TERM.