Andres v. Morgan

• Decision Date: 06 March 1900
• Citation: 62 Ohio St. 236,56 N.E. 875
• Parties: ANDRES v. MORGAN.
• Court: Ohio Supreme Court

56 N.E. 875

62 Ohio St. 236

ANDRES v. MORGAN.

Supreme Court of Ohio.

March 6, 1900

Error to circuit court, Jackson county.

Action by one Andres against one Morgan, trustee of the Franklin Milling Company. Judgment for defendant, and plaintiff brings error. Reversed.

The suit below was brought by the plaintiff against the defendant, assignee of the Franklin Milling Company, an insolvent corporation, to compel the allowance of a claim held by him against the company. The claim was for the amount due on a promissory note of $1,000 made January 1, 1896, due six months after date, with interest, signed as follows ‘Rufus Peters. Franklin Milling Company, per J. A Long.’ It was presented to the assignee and rejected. The gist of the answer is that it is the note of Peters, and the name of the company was signed thereto by Long, who was its general manager, without authority, and that there is no consideration for the note as to it. The plaintiff had judgment in the common pleas, and the assignee appealed. It was there tried to the court, and, on request, it found and stated its conclusions of fact and law separately, and rendered judgment thereon for the defendant. The plaintiff in error claims that the conclusions of law are erroneous, and asks the reversal of the judgment, and for judgment in his favor on the findings of fact. The findings of fact and law are as follows:

‘(1) That for many years prior to April 9, 1889, a partnership known as the Franklin Mill Company existed, composed of Rufus Peters, who owned a one-fourth interest, Henry Hunsinger, who owned a one-fourth interest, Rufus Hunsinger, who owned a one-eighth interest, Thomas P Sutherland, who owned a one-eighth interest, and Jacob A Long, who owned one-eighth; the other one-eighth interest having been acquired by the partnership and owned by it. (2) That on April 9, 1889, a corporation composed of the members of the partnership was organized under the name of the Franklin Milling Company, in which each partner took stock in proportion to the interest he had owned in the partnership, with the addition of M. L. Sternberger, who not having been a member of the partnership, subscribed for the one-eighth that had been owned in common by the members of the partnership, amounting to $5,000. The interest in the partnership of each subscriber of stock was turned over to said corporation in payment for the stock subscribed. (3) At the date of the organization of the corporation, the partnership conveyed all of its property, both real and personal to the corporation, including a flouring mill, woolen factory, two houses and lots adjoining the same, and two lots in the city of Wellston, Ohio; that said corporation was formed for the purpose of continuing the business in which the partnership had before that time been engaged. (4) The stock subscribed by M. L. Sternberger was held by him one year, when he elected to and did surrender the same to the corporation, which afterwards held the same as company property until the assignment was made. (5) At the time of the reorganization April 9, 1889, the partnership was indebted in the sum of about $20,000, among the creditors of which was the plaintiff, Eliza Burk, Gershom David, James Hatton, and others. A short time previous to organization of the corporation an assessment was made among the members of the firm of $1,000 to the share of one-eighth, aggregating $7,000, to be applied upon the indebtedness. The balance of the indebtedness over and above this $7,000 was carried by the corporation, and renewed from year to year, and a large portion of it comprised the indebtedness at the time of the assignment. At the time of the assessment of the $7,000 upon the members of the partnership, Rufus Peters, who owned one-fourth interest in the partnership, was assessed the sum of $2,000. He, not having the money to pay his part of the assessment, agreed with the other members of the partnership to assume the payment of the debt to the plaintiff, amounting to $2,000, and that, subsequent to the reorganization, plaintiff sent his note to the Iron Bank of Jackson, Ohio, for payment of principal and interest, and that the interest was paid annually, and portions of the principal, by said corporation, which immediately charged such payments to said Rufus Peters, and deducted the same from his salary due him from said corporation; that said payments reduced the plaintiff's claim to the sum of $1,000, which was evidenced by a promissory note payable to the order of the plaintiff, bearing the signatures of Rufus Peters and the Franklin Milling Company, which, upon the payment of accruing interest, was renewed from time to time in the same form until the execution of the note set forth in the petition, which last-named note remains unpaid. (7) That Thomas P. Sutherland was president of the corporation for a portion of the time that the renewals of the indebtedness to the plaintiff were being made, and J. A. Long was the secretary thereof, and that said Sutherland was the financial agent and manager of said corporation at all times till his death, which occurred in March, 1896; that said renewals were made by J. A. Long, as secretary of said corporation, at the request and order of said Sutherland, down to and including the note in suit, but that no resolution of the board of directors of said corporation or by-laws of the same in any way authorized the signing of commercial paper of any kind or character by the officers or agents of said corporation. (8) That the notes as renewed from time to time were sent by plaintiff to Thomas P. Sutherland, who was president of the Iron Bank of Jackson, for collection of the interest, and for such portions of the principal as were paid thereon, and said Sutherland paid the interest thereon, acting for the corporation, the Franklin Milling Company, together with the sums by which the principal was reduced, and sent to the plaintiff from time to time renewals for the amount still due said plaintiff,-said renewals being signed, as heretofore found,-and charged such amounts upon the books of the corporation against the salary of Rufus Peters. (9) At the time, or shortly after the organization of the corporation, J. Ellis Evans became a member of the corporation, having purchased a portion of the stock of Rufus Peters, for which he paid the sum of $500; he still owing the said Peters the sum of $500 thereon at the time of the assignment. (10) That the liabilities of the partnership were treated by the corporation as debts of the corporation, and in renewing the partnership liabilities the corporation treated them in the same way, as liabilities of the corporation made after the incorporation, and that the transactions of Sutherland with the plaintiff in causing the notes to be renewed were well known to all the stockholders of the corporation, save M. L. Sternberger; the renewal notes having been signed by the partnership name during the time he was a subscriber to the stock of the corporation. The plaintiff, Jacob S. Andres, had not been for twenty years in the county of Jackson, nor did he have any knowledge whatever of the incorporation of the Franklin Milling Company, nor of any of the contracts, agreements, or arrangements by and between the partnership and the corporation, or of any of the agreements or contracts by and between any of the members of the partnership or corporation, nor of the fact that said Peters had agreed to assume or pay his said claim; nor did the plaintiff give credit to the corporation, but looked to the firm for his loan.

‘And the court coming now to state its conclusions of law from the facts so found and above set forth, it is considered by the court: (1) That said corporation had no authority to sign said note, and that the signing...