Feucht v. Real Silk Hosiery Mills

• Decision Date: 15 February 1938
• Docket Number: 15729.
• Citation: 12 N.E.2d 1019,105 Ind.App. 405
• Parties: FEUCHT et al. v. REAL SILK HOSIERY MILLS, Inc.
• Court: Indiana Appellate Court

12 N.E.2d 1019

105 Ind.App. 405

FEUCHT et al. v. REAL SILK HOSIERY MILLS, Inc.

No. 15729.

Appellate Court of Indiana, in Banc.

February 15, 1938

John G. Rauch and Thompson, Rabb & Stevenson, all of Indianapolis, for appellants.

Bamberger & Feibelman and Julian Bamberger, all of Indianapolis for appellee.

LAYMON Chief Judge.

This action was instituted by the American National Bank at Indianapolis (successor to the Fletcher American National Bank pursuant to a reorganization agreement) against appellee to recover upon a promissory note executed by appellee and payable to the Fletcher American National Bank. After the commencement of the action, and before final judgment appellants were substituted by the trial court as parties plaintiff.

The complaint was in one paragraph, to which were filed answers in general denial, plea of payment, and a plea of setoff, in which appellee sought to set off against the note sued upon a deposit in the Fletcher American National Bank in the name of Trojan Hosiery Mills, Inc. The cause was tried by the court without a jury, and upon request the court made a special finding of facts. Upon these findings the court stated the following conclusions of law:

"1. Defendant is indebted to plaintiffs upon the note in suit in the sum of $12,242.09.

"2. The liability of The Fletcher American National Bank of Indianapolis to Trojan Hosiery Mills, Inc. for a deposit balance in the sum of $12,242.09 constitutes a valid set-off applicable to the balance due upon said note."

Judgment was rendered in accordance with the conclusions of law. Appellants excepted to the second conclusion of law and in due time filed their motion for a new trial which was overruled, and this appeal followed. Appellants have assigned as error for reversal: Error of the court in its second conclusion of law and error of the court in overruling the motion for a new trial. The grounds in the motion for a new trial are that the decision of the court is not sustained by sufficient evidence and that the decision is contrary to law.

The evidence consisted of a stipulation of facts, the substance of which is as follows: American National Bank at Indianapolis is a national bank with its principal place of business in the city of Indianapolis, Ind. The Fletcher American National Bank of Indianapolis is a national bank which did business at Indianapolis prior to, but not after August 23, 1933. Real Silk Hosiery Mills, Inc., appellee, is an Illinois corporation manufacturing silk hosiery and products with its executive office and mills in the city of Indianapolis. The Real Silk corporation and its predecessors have been engaged in the manufacture of silk hosiery and products in Indianapolis since 1918, selling direct to the public and subsequently developing a wholesale trade to department stores under the name of "Trojan." On the 18th day of July, 1929, the Real Silk corporation caused the Trojan Hosiery Mills, Inc., to be incorporated as an Indiana corporation, with its principal office and place of business in the city of Indianapolis. The Trojan corporation did not engage in manufacturing and had no liabilities and assets except as hereinafter mentioned. From time to time the Real Silk corporation made financial reports to the Fletcher Bank, and in such reports frequently referred to the Trojan corporation as a selling agency. As merchandise was sold and invoiced under the name of and through the Trojan corporation, checks and remittances were received under the latter name. On the 16th day of September, 1931, the board of directors of the Trojan corporation adopted a corporate resolution and caused a certified copy of this resolution to be transmitted to the Fletcher bank, accompanied by a letter from the president of the Trojan corporation stating in substance that said corporation was forwarding a resolution adopted at a meeting of the board of directors, authorizing the opening of a general account and giving a list of the persons authorized to sign checks against this account. The resolution reads as follows:

"Resolved, that the Fletcher American National Bank is hereby designated a depository for funds of Trojan Hosiery Mills, Inc., in an account to be known as General Account and the Fletcher American National Bank is authorized to honor checks against this General Account when signed in the name of Trojan Hosiery Mills Inc., by any two of-[the names of five individuals follow] provided such checks are countersigned by G. B. Carson, Comptroller." (A certificate by the president to the resolution follows.)

Checks and remittances to the Trojan corporation were indorsed for deposit and deposited at said bank in the account under the name of the Trojan corporation. From time to time checks were drawn against the Trojan corporation deposit and transferred to the Real Silk corporation deposit. Checks were also drawn by the Trojan corporation against its own account to meet its pay roll and for other minor purposes. Among the reports furnished the Fletcher Bank by the Real Silk corporation was the annual report of the auditor of the Real Silk corporation for the year 1932, which report was substantially similar in form and in content to the other reports. This annual report listed the subsidiary companies of the Real Silk corporation but did not refer to the Trojan corporation as a subsidiary. This report referred to "Trojan Division," "Operating Profit," "Gross Profit," "Operating Expenses," "Net Operating Profits of the Trojan Division," "Trojan Net Sales," "Trojan Numbers," referring to styles; and under the caption "Due from Employees Real Silk Hosiery Mills Inc., December 31, 1932," was a subheading, "Due from Trojan Employees"; and under the heading included in such report "Comparison of shipments, unit costs, and selling prices Real Silk Hosiery Mills, Inc.," containing comparactive figures for the years 1931 and 1932, were "C. O. D." and "Wholesale Trojan," referring to the business done with the trade under the name of "Trojan." Said annual report contained "Comparative statement of shipments Real Silk Hosiery Mills, Inc.," including C. O. D. shipments and Trojan shipments. At the time of the adoption of the resolution by the Trojan corporation heretofore referred to, the five individuals designated by such resolution as having authority to issue checks against the Trojan corporation account (provided such checks were countersigned by the comptroller) were the officers of the Real Silk Hosiery Mills, Inc., consisting of the president, chairman of the board of directors, treasurer, secretary, and secretary to the president. On June 8, 1931, the Real Silk corporation owed banks in Indianapolis and New York City several...