20 Ind. App. 263 | Ind. Ct. App. | 1898
The appellee Eosetta Allen brought her action against appellants, Kennedy F. Clapp and Walter M. Carson, upon a promissory note not negotiable by the law merchant, made by the appellants, payable to the order of James S. Banister and Joseph Kelly, and assigned by indorsement in writing by the payees to the plaintiff.
The judgment was rendered on the 19th day of June, 1896, and the transcript of the record, with the assignment of errors, was filed in this court on the 16th day of February, 1897. Under an application of the appellants filed April 1, 1898, for the issue of notice of this appeal to the administrator of the estate of said James S. Banister, deceased, and a motion of the appellees filed April 22, 1898, to dismiss the appeal, it has been made to appear that said Banister died on the 22nd day of December, 1896, and that a person named, residing in this State, is administrator of his estate, having been appointed as such December 81, 1896; that is, that said Banister died and said administrator of his estate was appointed, after the rendition of the judgment and before the filing here of the transcript and assignment of errors, naming said
There was a special finding, in which the court stated the facts, in substance as follows: The Alert Nursery Company was organized in 1891, and was still in existence at the time of the trial. Immediately after its organization, it adopted rules and by-laws for the management of its business and the government of its affairs, which still remained in force, one of which provided that five of the directors of the company should constitute a quorum for the transaction of business. The company carried on a general nursery business, selling and delivering fruit trees, from the time of its organization to the 5th of June, 1894, on which day there was a meeting of the board of directors of the company at the office of its secretary, at Alert, Decatur county, Indiana, at which were present six directors — James S. Banister, William Banister, Joseph Kelly, W. H. Baker, A. B. Kiefer and Kennedy F. Clapp — all of whom participated in transacting the
On the 8th of February, 1896, John W. Spears was appointed receiver of said company by the Circuit Court of Decatur county, Indiana, and he was still acting as such receiver. On the 25th of September, 1894, one William L. Heaberlain recovered a judgment in said Decatur Circuit Court against said company, and on the 24th of December, 1894, an execution was issued upon said judgment, and placed in the hands of the sheriff of Decatur county. On the 26th of February, 1895, said sheriff returned said execution, with his return indorsed thereon nulla bona, and on the 7th of January, 1896, another execution was placed in the hands of the sheriff of said Decatur county, to enforce the collection of said judgment. On the 15th of February, 1896, said sheriff offered for sale the property that was sold to the appellants by said company on the 5th of June, 1894; and Elizabeth Heaberlain bid at said sale the sum of $200.00, and the sheriff returned said execution with his return indorsed thereon, April 6, 1896. The property so offered for sale by the sheriff had been sold, delivered and turned over to the appellants by said company on the 5th of June, 1894. At and prior to the time of said sale to the appellants, said company “was contemplating, that is, was intending” to collect in all amounts due it, and together with the proceeds derived from the sale to the appellants, to apply the same on the debts and liabilities of said conpoany.
Upon the foregoing facts the court stated its conclusidns of law, two of which conclusions only are discussed by counsel as follows: First, that the appel
There has been some discussion of a motion of the appellants to make the finding of facts more specific, but such a motion does not appear to have been made a part of the record, and the matter is not embraced in any of the alleged errors assigned. The substantial merits of the cause are shown by the special finding.
It is contended, in effect, on behalf of the appellants, that, under the facts stated, the sale of the property of the nursery company to the appellants was invalid, and that the payees could not confer title to the note given for the purchase price by their indorsement thereof; that the sale being illegal, the property had rightfully been taken upon execution by a creditor of the company; and that the note, under the facts, still legally belonging to the company, there could be no recovery upon it against the appellants.
By agreement between the company selling the property for which in part the note in suit Avas given by the appellants, the purchasers, it was made payable to two of the directors, who were to pay the proceeds to a creditor of the company, the plaintiff, in part payment of her valid claim against the company on which the payees were indorsers. Instead of collecting the note and paying over the proceeds to her, the payees assigned the note by their indorsement to her. The indorsement was substantially an accomplishment of the purpose of all the parties under their agreement thus to pay off a debt of the company. The ownership of the note was disclaimed by the payees named in the note, and by the company through its receiver. The appellants claim, in effect,
The express finding of the court eliminates from the case all consideration of the effect of fraud upon such a sale as that under examination. The sale of the property for which the note in suit was given appears to have been in all respects a bona fide transaction. Though the corporation was in truth insolvent, its directors making the sale believed its assets sufficient to pay its debts. The note in suit, with others, was destined by agreement of all the parties, to pay an indebtedness of the corporation to the appellee Allen,' a stranger, whose claim was based upon an actual loan of money to the corporation. Two of the directors were incidentally benefited, being the indorsers on the claim so to be paid. Another portion of the consideration appears to have been the payment, through the sale, of a debt which the corporation owed upon its note to one of the purchasers, the appellant Clapp, who was a director.
It does not appear that the price agreed upon between the corporation and the appellants was not the full value of the property. The property at the time of the sale was in the possession and control of the corporation, not subject to any liens. It had not passed into the control of a court for administration at that time or at the time of the sale on execution.
In First National Bank v. Dovetail, etc., Co., 143 Ind. 550, it was decided that the expression that “the property of a corporation constitutes a Trust fund’ for its
In Henderson v. Indiana Trust Co., 143 Ind. 561, an insolvent corporation, whose financial condition was known by the board of directors, made an assignment of accounts which were owing to the corporation to a certain creditor of the corporation for the purpose of protecting the indorsers upon a collateral note held by said creditor (said indorsers being directors and stockholders), and by way of preference in the payment of the debt secured by said collateral note. The court decided that in such a case an insolvent corporation may, while it has the possession and control of its property, prefer any of its creditors who are not stockholders or directors of the corporation, even though the claims so preferred be secured by the indorsements of the directors and a part of the stockholders. Whether an insolvent corporation may pre
In Levering v. Bimel, 146 Ind. 545, it was said: “As between'the corporation and its creditors, it cannot, in reason, be said that the relation is anything more than that of debtor and creditor. The relation of trustee and cestui que trust does not exist so far as to create a lien upon its assets in favor of the creditor, in any other sense than applies to an individual debtor.” Referring to Henderson v. Indiana Trust Co., supra, and First National Bank v. Dovetail, etc., Co., supra, it was said: “By these decisions it is also, in effect, held that an insolvent corporation is not to be denied the right to prefer a creditor or creditors, when such preference does or may inure to the benefit of some of its officers who are sureties upon the claims of the creditors preferred. * * * The broad doctrine that the officers of a corporation cannot in their own names contract with it is unreasonable. Such a holding would virtually deny to corporations the credit upon which their business may be transacted. If the right of the stockholders and officers of a corporation to advance money to it to carry on its affairs, or to indorse for it to obtain money for such purpose, is denied, it would result in depriving the corporation of its most ready and frequent source of credit. If directors can lend money to the corporation, or indorses for it, under the laws of this State, they should certainly have the right to collect their debt or be secured therein as is accorded by the law to other creditors. * * * Where, however, an officer of an insolvent corporation is preferred, the rule properly asserted by the authorities is, that such act, when assailed, should be closely scrutinized by the court, and the burden will be cast upon the preferred officer to establish that he held a bona fide debt against the cor
While the reasoning in Levering v. Bimel, supra, is therein limited to the case in hand, which was one of preference of debts upon which directors were sureties, yet the language of the court, as we have shown above, goes to a greater extent, to which it seems the court would have gone in its application of the law if the facts of the case had so required. The sale to the appellants was not void.
The attack made upon the sale to the appellants is not urged, and does not appear to have been at any time urged, by or on behalf of any or all of the creditors of the company. The sale was made to two persons, one of whom does not appear to have been a member of the company, while the other was a di: rector. They alone are asserting the invalidity of their purchase. The appellant Clapp, who, with his co-appellant, took possession of the property and enjoyed it as an owner, selling a considerable portion of it, and never returning or offering to return any portion to the company, is not in a position to claim the invalidity of the sale because thereby a claim of his against the corporation was paid. The application of the remainder of the consideration to the payment of the just claim of the appellee Allen, without fraud, did not, under the decisions to which we have referred, render the sale invalid by reason of the fact that two of the directors were sureties for the company thereon.
The fact that the property was sold on the execution
A motion for a new trial was overruled, but the causes assigned therein cannot be considered, for the reason that the bill of exceptions by Avhich it was sought to bring the evidence before us affirmatively shows that certain evidence was introduced which does not appear, in the bill. The judgment is affirmed.