163 Ind. 216 | Ind. | 1904
Action below by appellant, as trustee in bankruptcy of tbe J. E. Scbell Loan & Investment Company, against tbe Hamilton Rational Bank, to recover tbe sum of $1.6,000, alleged to have been received as an unlawful preference from tbe said company when it was in a state of insolvency.
Tbe following is an epitome of tbe facts alleged in tbe complaint: Said J. E. Scbell Loan & Investment Company, as a loan and investment company, was organized under tbe laws of this State, and was doing business at tbe city of Et. Wayne. On March 30, 1899, tbe company was adjudged a bankrupt by tbe district court of tbe United States for'tbe district of Indiana, and, on tbe 1st day of May following, appellant was elected trustee of tbe estate of said bankrupt, and • duly qualified as such trustee and entered upon tbe discharge of tbe duties of bis office. It is charged in tbe complaint that appellee bank loaned to tbe said J. E. Scbell Loan & Investment Company, on several notes, signed only by tbe seven directors of said company, and not by tbe company itself, certain, sums of money, aggregating $16,000; that tbe money so loaned was by appellee entered upon its books to tbe credit of said company. At tbe time tbe bank loaned tbe money, it is alleged that it knew that tbe same was obtained for tbe use of tbe company, and in fact tbe money borrowed by said directors was used by said J. E. Scbell Loan & Investment Company in carrying on its business. It is averred that tbe notes in question were not paid at maturity, and thereupon a renewal note, in tbe sum of $16,000, was exe
The appellee answered the complaint in three paragraphs, the first of which was the general denial. The second paragraph alleges facts to show that the J. E. Schell Loan & Investment Company, at the time it was adjudged to be a bankrupt and at all other times, was a moneyed corporation, and never was engaged in the business of manufacturing, trading, printing, publishing, or in mercantile pursuits, and therefore was not liable, as alleged, to be adjudged a bankrupt under and by virtue of the bankrupt laws of the United States. It is further charged that said district court of the United States had no jurisdiction or authority to adjudge said company a voluntary bankrupt, etc. The third paragraph averred the same facts set up in the second, and further charged that appellee never agreed to and never did loan any money to the said J. E. Schell Loan & Investment Company in pursuance of the agreement as alleged in the complaint, or otherwise. It is averred that all of the said sums of money represented by the notes set forth in the complaint were loaned to Jere
Upon the issues as joined between the parties, the court, upon the trial, at the request of appellant, made a special finding of facts, and stated conclusions of law thereon adversely to appellant.
Counsel for appellee insist that no question is presented by appellant’s exception to the several conclusions of law upon the special finding, for the reason that said exceptions were not seasonably reserved. The record shows that' on February 3, 1902, the court filed its special findings, with conclusions of law thereon. No exceptions thereto seem to have been taken by appellant until the 17th day. of said, month, at which time appellant excepted separately to each of the conclusions. Appellant’s learned counsel earnestly urges that the question herein involved should be decided upon its merits, and not dismissed upon technical grounds. He asserts that the main question to be determined is, was there an unlawful 'preference, and that all others “are mere obstructions in the way of that question ?”
Appellant’s contention is that the cause of action, as alleged in the complaint, is based on subdivisions “a” and “b” of section sixty of the bankruptcy act passed by con
We pass over the argument of appellee’s counsel in regard to the proposition that the exceptions to the conclusions of law were not timely reserved. Conceding, without deciding, this point in favor of appellant we proceed to consider the facts found by the court bearing upon the question of the unlawful preference upon which appellant rests his cause of action. The special finding of facts is along the lines and in support of those averred in appellee’s answer. Upon no view of the facts as found by the court-can it be said that they sustain appellant’s complaint, but, on the contrary, there is a decided variance between the material facts set out in the complaint, and those disclosed by the special finding.
Eliminating the evidentiary facts embraced in the finding, and passing over others which are not material to what we deem the primary question in this case, the following .may be said, in substance, at least, to be the facts exhibited by the special findings: The J. E. Schell Loan & Investment Company was incorporated under the laws of the
The defendant never agreed to, and never did, loan any money to the said L E. Schell Loan & Investment Company, but refused to make such loans hereinbefore mentioned to said company. The said $16,000 note was not paid by said company, nor was it paid out of the funds or money owned by the'company or belonging to it; but the amount thereof was paid to the defendant by the makers thereof out of money borrowed by them from the Colonial National Bank of Cleveland, Ohio, for the express purpose of paying said note. At the time of the payment of said $16,000, as heretofore stated, the J. E. Schell Loan & Investment Company was insolvent; but, as the court finds, neither said company nor any of its officers contemplated insolvency, or any proceedings in bankruptcy, but believed the company .could and would continue in business. The defendant never regarded said company indebted to it, and never made any investigation or inquiries concerning its financial condition, and, at the time of receiving payment of the $16,000 note as aforesaid, defendant had no notice or knowledge that the company was insolvent, and had no knowledge or reason to believe that it was thereby receiving a preference over any of the said company’s creditors. On the 3d day of April, 1899, a petition in bankruptcy was pending against the said J. E. Schell Loan & Investment Company in. the United States District Court for the State of Indiana, and the said company appeared to said proceedings, and, with its consent, it was adjudged by said court to be a bankrupt; and appellant thereafter was elected by the creditors of the company as trustee in bankruptcy, and on the 6th day of May he duly qualified as such trustee. No claim has been filed or made against the said company, or with the said trustee, or otherwise, against the assets of said company, by either the defendant or the Colonial National Bank of Cleveland, or any of the makers of
Upon the facts as found, the court, among others, stated substantially the following conclusions of law: (1) That the said notes executed by Schell, Antrup, and the other persons mentioned, were each the individual obligation and evidence of the indebtedness of the said makers, and not the obligation or evidence of indebtedness of the said J. E. Schell Loan & Investment Company; (2) that by the payment of the $16,000 note to the defendant, as found, the latter did not secure or receive an unlawful preference from the said J. E. Schell Loan & Investment Company out of its property, over other creditors of said company, or in violation of the bankrupt law; (3) that the plaintiff is not entitled to recover anything from the defendant in this action.'
Appellant’s counsel concedes that if certain findings of the court can be regarded as findings of fact they will justify the conclusion that the law is with the defendant, and entitle it to a judgment. The findings referred to show (1) that appellee bank never agreed to and never did loan any money to the J. E. Schell Loan & Investment Company; (2) that the $16,000 note was neither paid by that company, nor out of any funds or money owned by or belonging to it, but was paid out of funds borrowed by the makers of the note for that express purpose; (3) that at the time of the payment of the note in question the company was insolvent, but this fact was not known to appellee, or had it any reason to believe that in the payment of said note it was receiving a preference over the company’s creditors. It is insisted, however, that, these findings are not sustained by the evidence, and that the court therefore erred in denying the motion for a new trial wherein it was assigned, among other grounds, that these
Appellant’s counsel places some stress upon the fact that the money secured as a loan from appellee by the makers of the notes in question was, at their direction, placed to the credit of the L E. Schell Loan & Investment Company, but that fact in no manner served to create the relation of debtor and creditor between appellee and the company.
In Quill v. City of Indianapolis (1890), 124 Ind. 292, 7 L. R. A. 681, Mitchell, J., speaking for the court, said: “An indebtedness can not arise unless there is either a legal, equitable or moral obligation to pay a sum of money to another, who occupies the' relation of creditor, and who has a legal or moral right to call upon or constrain the debtor to pay.” That the directors of the J. E. Schell Loan & Investment Company had the legal right to borrow money from the ^ appellee on their own credit, and then turn it over to the use of the company, must be conceded.
Counsel further contends that, by a finding of the court not hereinbefore set out, it is shown that the money applied to the payment of the renewal note belonged to the J. E. Schell Loan & Investment Company. The finding in question discloses that in February, 1899, the makers of the $16,000 renewal note arranged and agreed among themselves to borrow $25,000 from the Colonial National Bank of Cleveland, Ohio. The proceeds of this loan, when obtained, were to be- first applied to the payment and satisfaction of said note. In furtherance of this agreeement and arrangement, in March- following, they executed a note dated on the 10th of that month, for $25,000, and made it payable to that bank at its office in the city of Cleveland, four months after date, with six per cent, interest. On the 10th of March, 1899, it is shown that Schell and Gruber, two of the makers, negotiated this note to the Colonial National Bank, and obtained a loan from the latter for $25,000. Schell, in the. absence of Gruber, and
It is contended that these facts show that the note in controversy was paid out of money belonging to the company. Counsel argues that as the note was paid by checks drawn, by the J. F. Schell Loan & Investment Company, upon a fund which had been placed to its credit on the books of the Colonial National Bank, therefore, under the circumstances, such payment must be considered as made by the company. But the facts do not sustain this eon
The law has regard for substance, rather than “shades or shadows,” and the mere fact that the money, under the circumstances, was credited to the company did not make it the funds of the company, and liable to be distributed among its creditors in the event of its being adjudicated a bankrupt. The court finds that Schell deposited the money secured by the loan to the credit of the company as a mere matter of convenience, and not for its use. Under the circumstances, the funds in question in the hands of the company were impressed with a trust, and the law recognizes 'that money so held by a person adjudicated to be a bankrupt is- not subject to distribution among his creditors.
Without further comments, we conclude that the record in this appeal presents no reversible error, and the judgment is therefore affirmed.