129 N.E.2d 553 (Ind. 1955), 29346, Hinds v. McNair

Docket Nº:29346.
Citation:129 N.E.2d 553, 235 Ind. 34
Party Name:Lawrence H. HINDS, as Executor of the last will of Lucia H. Slckels, deceased, and as Trustee for Ralph G. Sickels and Evelyn Sickels, Appellants, v. Xen Mc,NAIR, Xen McNair, as Trustee, and Gary Real Estate Exchange, Inc., Appellees.
Case Date:October 26, 1955
Court:Supreme Court of Indiana

Page 553

129 N.E.2d 553 (Ind. 1955)

235 Ind. 34

Lawrence H. HINDS, as Executor of the last will of Lucia H.

Slckels, deceased, and as Trustee for Ralph G.

Sickels and Evelyn Sickels, Appellants,

v.

Xen Mc,NAIR, Xen McNair, as Trustee, and Gary Real Estate

Exchange, Inc., Appellees.

No. 29346.

Supreme Court of Indiana.

October 26, 1955

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[235 Ind. 39] Clair McTurnan, Alembert W. Brayton, Indianapolis, Emmet M. LaRue, Rensselaer, Draper & Eichhorn, Gary, for appellant.

Albert H. Gavit, Gary, for appellees.

ARTERBURN, Judge.

This cause is before this court on a petition to transfer from the Appellate Court. It is an appeal arising from a judgment adverse to the appellants-plaintiffs in proceedings supplemental to execution pursuant to Acts 1881, Spec. Sess., ch. 38, § 592, p. 240; 1937, ch. 84, § 1, p. 440, being § 2-4401 Burns' 1946 Replacement. The object of the proceedings was to determine if appellee, McNair, (judgment debtor) owned certain property and subject any such property to the payment of the judgment. The original creditors and holders of the judgment upon which these proceedings are based have died. The appellant, Hinds, in his dual capacity as Executor and Trustee, was properly substituted for the interest represented by the original and now deceased judgment holders. The original judgment was in the amount of $61,330.27 and rendered on the 27th day of September, 1943. The complaint in the statutory proceedings supplemental to execution was in four paragraphs alleging in substance, (1) that appellee, McNair, owned 1496 shares of common stock and 1500 shares of preferred stock of his co-appellee, Gary Real Estate Exchange, Inc.; (2) that appellee, McNair, owned a farm and an apartment building, title of which he carried in the corporation's name; (3) that the Gary Real Estate Exchange, Inc. is McNair's alter ego; (4) that McNair in reality owns the shares of stock above mentioned but falsely claims that he holds it a Trustee. The statute, pertaining to proceedings supplemental to [235 Ind. 40] execution, permits no defensive pleadings and none were filed. The cause was tried by jury on appellant's request and over appellees' objections. Upon this point we render no opinion since the appeal is by the party who requested the jury. From a verdict and judgment in favor of appellee, McNair, the appellants have appealed. The first question raised is by the appellees, who claim that the question involved in this litigation has become moot because the lien of the judgment upon which the proceedings supplemental were based became ten years old on September 27, 1953 and expired. However, it was in effect when the proceedings herein were begun. It is true that a lien of a judgment expires in ten years and the lien of execution expires on its return date, but we are not concerned here with the liens of judgments and executions. Proceedings supplemental are brought solely for the purpose of subjecting property allegedly belonging to a judgment debtor to the satisfaction of the judgment debt, not to a lien. An outstanding execution is a condition precedent to the filing of a proceeding supplemental under the statute, but we find no valid reason for holding that the action dies unless it is fully and finally disposed of before the return date of the execution or the expiration of the judgment lien. Yeager v. Wright, 1887, 112 Ind. 230, 13 N.E. 707. Such a rule would put it in the power of any defendant to defeat the basic purpose of proceedings supplemental by delaying tactics. We hold, therefore, that the expiration of the judgment lien or the lien of the execution pending the proceedings supplemental does not terminate such proceedings and make them ineffectual.

We come now to a major point raised on this appeal. The error assigned is the overruling of the motion for [235 Ind. 41] a new trial, the first specification being that the verdict of the jury is not sustained by sufficient evidence. We have repeatedly held that such assignment of error presents no question for review where the verdict is negative. Capes v. Barger, 1953, 123 Ind.App. 212, 109 N.E.2d 725; McKee v. Mutual Life Ins. Co. of New York, 1943, 222 Ind. 10, 51 N.E.2d 474. However, a negative verdict may be attacked under the second specification, namely, the verdict of the jury is contrary to law. Wilson v. Rollings, 1938, 214 Ind. 155, 14 N.E.2d 905. If the undisputed evidence entitles the one who has the burden of proof to a verdict which has been denied him, such verdict is contrary to law. To determine this question

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we may consider only the evidence most favorable to the appellees, together with all reasonable inferences which may be drawn therefrom.

'It is only where the evidence is without conflict and can lead to but one conclusion, and the trial court has reached an opposite conclusion, that the decision of the trial court will be set aside on the ground that it is contrary to law.' Pokraka v. Lummus Co., 1952, 230 Ind. 523, 532, 104 N.E.2d 669, 673.

We shall consider the evidence with reference to the real estate first.

Under paragraphs 2 and 3 of appellants' complaint they had the burden of proving that the real estate, the legal title of which was in the Gary Real Estate Exchange, Inc., was actually the property of appellee, McNair, and that the corporation was the alter ego of McNair. The evidence discloses that the real estate was purchased from a stranger by the [235 Ind. 42] corporation and was never in the name of McNair; that the consideration for the real estate was paid by the corporation and not by McNair; and that McNair, at no time prior to its purchase, was ever connected directly or indirectly with the real estate or had any interest therein.

The evidence further shows that most of the assets of the Gary Real Estate Exchange, Inc. when it was organized were acquired from another corporation in which McNair had only a 1% interest and his wife a 99% interest. The distinct corporate entity of this latter corporation is not questioned. The evidence further shows that at the time the property settlement was made between McNair and his wife in 1948, the Gary Real Estate Exchange, Inc. owed him $95,000 and this indebtedness was used in making the property settlement. All of this evidence is without conflict. If the evidence on these items were in conflict however, still this court would have no authority to set aside a negative verdict against the appellants who had the burden of proof. There is other evidence besides that above recited concerning the ownership of the real estate and the alter ego of the corporation, which we need not recite here. The above evidence makes the verdict of the jury on those issues not contrary to law.

We next take up the more complicated problem as to the ownership of the corporate stock which is the subject of the first and fourth paragraphs of complaint. Originally, the appellee, McNair, and his wife, Esther, owned all of the stock in a corporation known as the Xen McNair Inc. which was engaged in an insurance and loan business. McNair had one share and his wife 99 shares. These shares were given to her by her husband. Thereafter, the Gary [235 Ind. 43] Real Estate Exchange, Inc. was organized. In consideration of Xen McNair Inc. transferring all its assets to the new corporation, the new corporation agreed to issue all of its shares of stock (1500 shares of common stock and 1500 shares of preferred stock) to such persons as designated by Xen McNair Inc., the old corporation. Accordingly, after some discussion with his wife, Esther, in 1931, appellee and his wife decided to use this stock as a turst res for their children. All of the preferred stock (1500 shares) was put in the name of Marie Reed, a sister of the wife, Esther McNair, and 1496 shares of the common stock was likewise placed in Marie Reed's name. The other four shares of the common stock were used to qualify directors. One of such shares was transferred to Esther McNair, the wife, and one to Xen McNair. All of these stock certificates were delivered to appellee McNair. Thereafter, Marie Reed made a blank assignment of each certificate. However, the stock book of the corporation still showed Marie Reed as the owner of record. Sometime between 1934 and 1936 the appellee, McNair, was injured in an automobile accident and he placed the name of his wife in the blank assignment of the common stock certificate, but for some reason the preferred stock certificate still remained open and later McNair, for some unexplained reason, wrote 'cancelled' on the assignment of the preferred stock. Appellee, McNair, in the

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testimony states that sometime about 1931 he and his wife discussed the matter of using all of the stock in the Gary Real Estate Exchange, Inc. as a trust for their two small children. That in line with this discussion he took out additional life insurance policies. He states their understanding was as follows:

[235 Ind. 44] 'That I should act as trustee for both children during my life time, and I should manage the affairs of the Gary Real Estate Exchange during my life time, that I should do things that I thought in my judgment were to the betterment, that is to the financial betterment of the Gary Real Estate Exchange. I was to draw a salary from the Gary Real Estate Exchange in keeping with my own conscience. I was to vote the stock--in other words it was a pretty broad agreement. I would have liberty to do with the Gary Real Estate Exchange as I thought best so long as it was my judgment (Tr. p. 334, 11. 1-30) to the betterment ultimately of the Gary Real Estate Exchange. If I died prior to Mrs. McNair...

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