Conrad v. Olds
| Decision Date | 14 November 1941 |
| Docket Number | 16692. |
| Citation | 37 N.E.2d 297,110 Ind.App. 208 |
| Parties | CONRAD v. OLDS. |
| Court | Indiana Appellate Court |
Earl B. Barnes and Charles M. Wells, both of Indianapolis, and Oscar L. Williams, of Shelbyville, for appellant.
Fae W. Patrick and Thomas E. Garvin, both of Indianapolis, and Pell & Pell, of Shelbyville, for appellee.
The appellant filed an intervening petition in the receivership represented by the appellee, by which she sought to force the appellee to return to her certain corporate stock of the Continental Steel Corporation and to account for dividends thereon. There was a trial by the court and a finding for the appellee.
Appellant is relying solely upon the overruling of her motion for a new trial and upon the ground thereof that specified that the decision of the trial court was not sustained by sufficient evidence.
The following facts are shown by the record: On December 29 1926, appellant's decedent, Albert A. Charles, was the owner of 210 shares of the common stock of Kokomo Steel and Wire Company and he then entered into a written agreement with the Federal Underwriters, Inc., an Indiana corporation by which he agreed to trade such stock for $21,000 worth of the common stock of the Federal Underwriters, Inc., at $10 per share, or for 2,100 shares. This agreement contained a clause giving Charles the right to reacquire the 210 shares of stock of the Kokomo Steel and Wire Company upon sixty days written notice, and a return of the 2,100 shares of stock of the Federal Underwriters, Inc. The certificates were exchanged between Charles and the Federal Underwriters, Inc. between December 29th and December 31st, in the year 1926 but the Federal Underwriters, Inc., did not cause the title to the 210 shares of stock of Kokomo Steel and Wire Company to be transferred on the books of the corporation.
During the period between December 31, 1926, and July 27, 1927, the Kokomo Steel and Wire Company merged with certain other corporations and the resulting corporation was known as the Continental Steel Corporation. On July 27, 1927, appellant's decedent was the record holder of 166 shares of the preferred stock and 1,105 shares of the common stock of the Continental Steel Corporation, which stock, prior to such merger, had been represented by the 210 shares of common stock of the Kokomo Steel and Wire Company that had been transferred as heretofore set forth. On such date appellant's decedent and the Federal Underwriters, Inc., entered into the following written agreement:
In connection with such agreement a certificate for 3,423 shares of the capital stock of the Federal Underwriters, Inc., was issued to appellant's decedent and he, or his executrix, has continued to hold such certificate and the prior certificate for 2,100 shares since such time.
Following the making of such agreement and the delivery of the stock certificates, the Federal Underwriters, Inc., placed the stock certificate for the stock of the Continental Steel Corporation in the reserve funds of the subscribers at the Federal Automobile Insurance Association, a place where reciprocal insurance contracts were exchanged in accordance with the reciprocal insurance laws of the State of Indiana (Burns' R.S.1933, Secs. 39-2801 to 39-2815, both inclusive). These reserves are required by the insurance law of the State of Indiana, which requires, "there shall be maintained, in the case of automobile insurance, in cash or such securities, assets sufficient to discharge all liabilities on all outstanding losses arising under policies issued, same to be calculated on the basis of net premiums or deposits, as in this section defined, and in accordance with the laws of the state relating to similar reserves for companies insuring similar risks." Sec. 39-2806, Burns' R.S.1933, Sec. 9853, Baldwin's Ind.Statute 1934. The words "such securities" refer to securities of the kind designated by the laws of Indiana for the investment of funds of insurance companies doing the same kind of business as the subscribers at Federal Automobile Insurance Association, which was the insuring of automobiles. Such stock certificate had been indorsed in blank by Charles and delivered to the Federal Underwriters, Inc., with knowledge that it would place the same in the funds of the subscribers at the Federal Automobile Insurance Association. The stock was not transferred on the books of the Continental Steel Corporation until after the appointment of appellee as receiver. A receiver was appointed for the Federal Underwriters, Inc., because of its insolvency on March 2, 1928, and on the same day appellee was appointed receiver for the funds and assets of the subscribers at Federal Automobile Insurance Association. These funds and assets were at that time and ever since have been insolvent and insufficient to discharge the liabilities. The receivership of Federal Underwriters, Inc., has been closed in the Marion Superior Court, which had jurisdiction of both receiverships, but prior to the closing thereof there was a determination that as between the two receiverships, the appellee receivership owned the stock of the Continental Steel Corporation by virtue of the aforesaid transfer to said funds.
From February 9, 1920, to the date of the appointment of such receivers, the Federal Underwriters, Inc., was the attorney in fact for each subscriber at the Federal Automobile Insurance Association, and at the time that the stock of appellant's decedent was deposited in the reserve funds of such subscribers, he was a stockholder of Federal Underwriters, Inc., and a regularly elected, qualified and acting member of the advisory committee of the subscribers at Federal Automobile Insurance Association. After appellee was appointed receiver, appellant's decedent made a written demand upon him for the return of the Continental Steel Corporation stock and tendered the stock of the Federal Underwriters, Inc., obtained therefor. Prior to the appointment of the receivers heretofore mentioned, the insurance department of the State of Indiana, and the insurance departments of certain other states, had questioned the solvency of the reserve fund of the subscribers, and on November 9, 1927, the advisory committee of the subscribers held a meeting at which appellant's decedent was present and a letter was prepared, delivered to and accepted by him, which was as follows:
Thereafter, and on November 17, 1927, a written contract was entered into between the Federal Underwriters, Inc., as party of the first part, and certain individuals, including appellant's decedent, as party of the second part, by which the members of the party of the second part agreed to furnish to Federal Underwriters, Inc., the sum of $57,300 to be advanced by it to the funds of the subscribers at Federal Automobile Insurance Association.
There is but little, if any, dispute in the evidence, but the trial court was justified in inferring therefrom that the reserve funds of the subscribers at the Federal Automobile Insurance Association were in a precarious condition during the years 1926 and 1927 and for sometime prior thereto; that such condition had resulted because their attorney in fact Federal Underwriters, Inc., had not properly managed the business and that there was danger that the subscribers would be barred from continuing in business in...
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