McNulta v. Corn Belt Bank

• Citation: 45 N.E. 954,164 Ill. 427
• Parties: McNULTA v. CORN BELT BANK.
• Decision Date: 15 January 1897
• Court: Supreme Court of Illinois

164 Ill. 427

45 N.E. 954

McNULTA

v.CORN BELT BANK.

Supreme Court of Illinois.

Jan. 15, 1897.

Appeal from appellate court, Third district.

Assumpsit by John McNulta against the Corn Belt Bank to recover a percentage claimed to be due on unissued stock of defendant, and for certain services. From a judgment of the appellate court affirming a judgment in favor of defendant (63 Ill. App. 593), plaintiff appeals. Affirmed.Welty & Sterling and Rowell, Neville & Lindley, for appellant.

J. E. Pollock, A. J. Barr, and Fifer & Phillipps, for appellee.

This is an action of assumpsit, brought on January 25, 1894, by appellant against appellee, to recover $3,750, or 2 1/2 per cent. on $150,000 of unissued stock, claimed to be due to appellant for accepting the office of president of the appellee bank, and for certain services alleged to have been performed. The declaration, which contains the common counts and two additionalcounts, declares upon the resolution hereinafter set forth, which was adopted by the directors of said bank on November 21, 1891. The pleas are the general issue, non est factum, and setoff. Under the latter plea, it is sought to recover bank from appellant $3,750, alleged to have been wrongfully paid to him. A jury was waived, by agreement, and the cause was tried before the circuit judge without a jury. The trial court found the issues for appellee upon the first and second pleas, and against it on the third plea, being the plea of set-off. A motion for a new trial was overruled, and judgment rendered in favor of appellee for costs. From the judgment so rendered an appeal was taken to the appellate court. The latter court affirmed the judgment of the circuit court, and the present appeal is prosecuted from such judgment of affirmance. The appellee assigns a cross error upon the finding against the allowance of the amount claimed in the plea of set-off. The material facts in the case are as follows:

On October 5, 1891, the auditor of the state issued to appellant and other persons a permit to organize a banking association under the banking act of Illinois of June 16, 1887, amended June 3, 1889. 3 Starr & C. Ann. St. p. 105 (Rev. St. c. 16a). The application to the auditor for permission to organize stated the name to be Corn Belt Bank; business to be carried on in Bloomington, Ill.; capital stock, $100,000, with purpose to hereafter increase to $300,000; amount of each share, $100; number of shares, 1,000, to be increased to 3,000; duration of association, 99 years. Appellant subscribed for 900 shares of stock; and 10 others, for 10 shares each. At a meeting of the subscribers held, pursuant to notice, on October 27, 1891, at which all the shares of stock were represented, and at which appellant was elected temporary chairman, the number of directors was fixed at 11, and all of the 11 subscribers to the stock were elected directors. On the same day, and immediately following the meeting of the stockholders, a meeting of the directors was held at which appellant was elected president of the board of directors. J. T. Snell was elected vice president. The salaries of the teller and bookkeeper were fixed, and committees were appointed. At a subsequent meeting of the directors, held on November 21, 1891, the resolution set out in the declaration, and heretofore mentioned, was adopted, the full board being present. That resolution is as follows: ‘Whereas, John McNulta has been elected president of the Corn Belt Bank, and, preliminary to his acceptance of said office and entering upon the duties of the same, it is necessary to fix and agree upon compensation for his services as such president; therefore, be it resolved, that it is understood and agreed that the compensation of John McNulta, as such president, shall be one hundred dollars per year, payable in semiannual installments, and, as a further consideration for his acceptance thereof, an additional sum equal to two and one-half (2 1/2) per cent. on all stock to be issued, payable at the time fixed for such issues; that is to say, at least one hundred thousand dollars, par value, of the said stock is to be issued within one year after the opening of the said bank for business, and another additional one hundred thousand dollars, making three hundred thousand dollars in all that is to be issued, including the first issue of one hundred thousand dollars, within two years from that date. The said John McNulta, by his acceptance hereof, agrees to subscribe for and take, at par value, all of such stock, in lots of not more than fifty thousand dollars each, within any one period of thirty days after the preceding lot has been fully disposed of, paying therefor in cash, par value, with his own funds, whenever the board of directors shall find responsible persons agreeing to purchase the same from him at such a price as may be fixed by the board, not less than 105, and interest at 7 per cent. from the date of the issue of such stock, and to sell the same to the persons, and in the amounts designated by the board, with only the restrictions in transfer in use at the time of the commencement of business. For the purchase and sale of which stock said John McNulta is also to have interest at the rate of seven (7) per cent. per annum, and exchange on New York, on all sums so invested by him. The overplus arising from the sale of said stock by him to inure to the benefit of the bank, and be disposed of as the board of directors may see fit.’

Subsequently, on December 2, 1891, a meeting of the directors was held, and the minutes of that meeting, before proceeding to state the other business that was transacted, recite that the full board was present, and that the bank was ‘formally opened at 10:30 a. m., after inspection by auditor's deputy.’ The action that was taken at the meeting of December 2, 1891, is hereafter referred to; and, before further alluding to such action, the facts in regard to the ‘inspection by the auditor's deputy’ may be here stated: Appellant and the 10 other original subscribers to the capital stock paid nothing upon their subscriptions. The 10, who subscribed for 10 shares each, gave their notes for $1,000 each; and one of the witnesses says: ‘McNulta owed the other $90,000. To my knowledge, he did not pay any money into the bank for that $90,000.’ Arrangements were made with the First National Bank of Bloomington to furnish $100,000 in currency, which was so furnished. This amount of currency, $100,000, was taken over from the First National Bank to the Corn Belt Bank, and was there counted by the deputy of the auditor as money paid in upon the subscriptions to the capital stock; but after it was so counted, and upon the same day, it was taken back to the First National Bank, or, to speak more accurately, $75,000 of it was taken back to the First National Bank, and $25,000 of it was applied, for the benefit of that bank, upon a purchase by it of certain drafts, as hereafter stated. Appellant obtained in Chicago certain certificates of deposit, issued by a bank of that city, payable to his order, and certain drafts drawn by said Chicago bank to his order upon a bank in New York, amounting altogether to $100,000. These certificates and drafts were brought from Chicago to Bloomington by a special messenger, and were indorsed by appellant, who left them with the First National Bank of Bloomington, and thereby obtained $100,000 in currency to use for the inspection of the auditor. The president of the First National Bank says that he concluded to purchase $25,000 of the drafts; so that he only received back $75,000 of the currency, and surrendered $75,000 of the drafts and certificases. The $25,000 in currency and $75,000 in drafts were at once sent back to Chicago. They did not belong to the Corn Belt Bank. They were placed to the credit of the appellee at the bank in Chicago, but drafts to the amount of $101,250 were at once drawn, dated December 2, 1891, by the assistant cashier of appellee, upon the Chicago bank, payable to appellant's order. Upon the back of these drafts appear indorsements by appellant and others. Mr. Howell, the present president of the appellee bank, and one of the original subscribers for 10 shares, says: ‘When the matter of organization was talked up, McNulta assured us he had made arrangements with a syndicate in Chicago for the money; it could be sent down here, and held while the auditor counted it; could then be sent to Chicago; and could then sell stock to parties desiring it. My understanding is, it was so done.’ The appellant, after stating that he transferred the drafts and certificates to the First National Bank to get the currency, says: ‘I got this money to use it as long as we thought it would be required. That time was made as short as possible.’ Whether or not the parties whose names were indorsed upon the drafts drawn upon the Chicago bank belonged to the syndicate furnishing the money, does not definitely appear. But certain it is that the money which was used for the inspection of the auditor on December 2, 1891, was in Chicago on December 3, 1891, in the hands of other parties than appellee.

After the inspection of the money by the auditor, and the formal opening of the appellee bank, on December 2, 1891, the directors, at their meeting on that day, adopted by-laws, fixed the salaries of the teller and cashier at the rates previously adopted by the board, and ‘on motionthe salary and compensation of the president was fixed as previously adopted by vote of the board. The vice president presiding, the vote was taken by roll call, and all members voting in favor thereof. In each case of the fixing of salary and compensation the several original resolutions were readopted, ith the understanding that the time of employment was as provided in the by-laws.’ At a meeting of stockholders immediately following the meeting of directors, all the stock was represented. All the members and...