First Nat. Bank of Chicago v. F.C. Trebein Co.

• Decision Date: 29 November 1898
• Citation: 59 Ohio St. 316,52 N.E. 834
• Parties: FIRST NAT. BANK OF CHICAGO et al. v. F. C. TREBEIN CO. et al.
• Court: Ohio Supreme Court

52 N.E. 834

59 Ohio St. 316

FIRST NAT. BANK OF CHICAGO et al. v. F. C. TREBEIN CO. et al.

Supreme Court of Ohio.

November 29, 1898

Error to circuit court, Greene county.

The First National Bank of Chicago and the Rock Island National Bank, both of the state of Illinois, having recovered judgments, aggregating $30,000, against F. C. Trebein, in the common pleas court of Greene county, filed their petition in that court against F. C. Trebein and the ‘F. C. Trebein Company,’ ostensibly a corporation under the laws of Ohio, to set aside a certain conveyance of real estate made by F. C. Trebein to the company, on the ground that it was made to hinder, delay, and defraud them. Upon issue joined as to these allegations, the court found in favor of the defendants, and dismissed the action. An appeal was taken by the plaintiffs to the circuit court. In that court an amendment to the petition was filed, alleging that the object and purpose of the formation of the F. C. Trebein Company and the conveyance to it of the real estate and about $20,000 of personal property, was, while securing certain creditors to the exclusion of others, to enable F. C. Trebein to retain for himself a beneficial interest in the property, real and personal, and asking that the conveyance of said property real and personal, be declared to be a deed of assignment and held in trust for the benefit of creditors. Issue was taken on these averments. On the trial the court found for the defendants, and dismissed the action of the plaintiffs. The judgment was, however, rendered on findings of fact made at the request of the plaintiffs, and an exception taken to the judgment on the findings. Plaintiffs bring error. Reversed.

The findings are as follows: ‘First. We find that, for many years prior to the formation of the corporation known as the ‘F. C. Trebein Company,’ the defendant F. C Trebein carried on the business of buying, selling, and milling grain in Greene county, Ohio, under the business name of F. C. Trebein & Co.; that his property connected with this business consisted of the Excelsior Mills, at Trebeins, Ohio including valuable water rights and real estate near by also, the Shawnee Mill, in Xenia, Ohio, and the Jamestown Elevator, at Jamestown, Ohio, with the personal property used in the business. Second. We find that Mr. Trebein also owned prior to December, 1894, and January, 1895, a large amount of real estate and personal property, including common and preferred stock of the Columbia Straw-Paper Company. Third. We find that F. C. Trebein was on, and had been for several years prior to, January 22, 1895, an indorser, with six other directors of the Columbia Straw-Paper Company, of the notes of that company to the extent of about $85,000, which sum includes notes to the City National Bank of Dayton, Ohio, for $18,000; to the Xenia National Bank of Xenia, Ohio, for $10,000; also $25,000 to the First National Bank of Chicago, Illinois; and for $5,000 to the Rock Island National Bank of Rock Island, Illinois. Fourth. We find that not later than November, 1894, F. C. Trebein knew that the Columbia Straw-Paper Company was then, and soon would be, financially embarrassed, and not later than January, 1895, knew that said company would not further be able to take up or renew its obligations as they became due, and knew that upon January 19, 1895, there was a meeting of the directors, including F. C. Trebein, of said company; that the officers were authorized by a resolution to take such steps as might be necessary to put all of said company's property into the hands of a receiver; and that, pursuant thereto, a receiver was appointed by the circuit court of the United States, on the 24th day of January, 1895, to take charge of the property of the said company. Fifth. We find that Mr. Trebein, in December, 1894, and January, 1895, conveyed and assigned in payment, in part, of an alleged prior indebtedness to his wife, real and personal property to the value of $40,900, and to his daughter real estate to the value of $2,100, which he had promised to her as a wedding gift in June, 1894; and that he pledged a large amount of stocks, probably valueless, to his wife, as collateral for an alleged balance of about $8,700 due her. But, for the reason that the validity of a number of these transactions is questioned in another action now pending a hearing in the common pleas court in this county, and because there is not sufficient evidence before us on which to predicate a finding of an intent to defraud in these contemporaneous acts, we do not so find, and therefore have not considered them in the determination of this action. Sixth. We find that when the directors of the said straw-paper company determined to borrow from the banks, upon their indorsements, they agreed together, among themselves, that, in case of necessity, each would protect the banks from which they obtained their loans upon the Columbia Straw-Paper Company's notes, with the indorsements of the directors, and that Mr. Trebein had stated to the three banks in his vicinity when he made loans for the Columbia Straw-Paper Company, with the indorsements of the directors, that he would protect them; but counsel for the defendants do not claim, for the purposes of this suit, that the plaintiffs knew of such agreement. Seventh. We find that on the 28th day of August, 1895, by the consideration of the court of common pleas of Greene county, Ohio, the First National Bank of Chicago, Illinois, recovered a judgment against the said F. C. Trebein for the sum of $25,362.50, and that the Rock Island National Bank, of Rock Island, Illinois, by the consideration of the said court, recovered a judgment against F. C. Trebein for the sum of $5,145.82; that executions were issued upon the said judgments, and levies were made upon the real estate described in the petition. Eighth. We find that upon January 22, 1895, all the residue of the property owned and held by F. C. Trebein, remaining after the said conveyance to his wife and daughter, consisted of the real estate described in the petition, and the personal property, accounts, and merchandise connected with his milling business, and thereafter conveyed and transferred to the F. C. Trebein Company, and which was believed at the time by Mr. Trebein to be worth $60,000, and this his attorney then thought to be too high a valuation. Ninth. We find that upon January 22, 1895, F. C. Trebein had not sufficient property to pay his outstanding obligations, including his liability as indorser for the Columbia Straw-Paper Company, and thereupon, for the purpose and with the intent in good faith to secure the City National Bank of Dayton, Ohio, the Xenia National Bank of Xenia, Ohio, and the Farmers' & Traders' Bank of Jamestown, Ohio, upon their claims against him as indorser and otherwise, did, with his wife, Joan Trebein, his daughter, Elizabeth T. Flynn, his son-in-law, P. H. Flynn, and his brother-in-law, Horace Ankeney, who acted with him for his accommodation, at his request and to carry out the purposes and object of the said F. C. Trebein, form and organize the ‘F. C. Trebein Company,’ with a capital stock of $60,000, divided into 600 shares of $100 each; that, pursuant to said intention, said corporation purchased all of the property of said F. C. Trebein connected with his said business, the same being all the property he then possessed, on the said 22d day of January, 1895, and on the same day the said Trebein conveyed and transferred said property to said corporation; that on the same day, in the further pursuance of said purpose, there were regularly issued certificates for 596 shares of stock in said corporation to said F. C. Trebein in payment therefor, which said stock, except one share, pursuant to said purpose, said Trebein placed as a general collateral with said three banks, as security upon their claims against him as indorser and otherwise; and, in pursuance of the further intention of the said Trebein in the formation of the said corporation, the said F. C. Trebein remained in the charge of the affairs of the said corporation as president, treasurer, and general manager, and continued the business theretofore conducted by him, and the remaining four shares of stock were taken by the said Joan Trebein, P. H. Flynn, Elizabeth Flynn, and Horace Ankeney, respectively, and paying $90 a share therefor. Tenth. We find that, upon January 23d, the stockholders of the F. C. Trebein Company authorized, in writing, the president of the company to issue, without said company being liable therefor before said authority, its notes to the City National Bank of Dayton, Ohio, for $23,000; to the Xenia National Bank of Xenia, Ohio, $20,000; and to the Farmers' & Traders' Bank of Jamestown, Ohio, $5,000,-in lieu of notes held by them on which F. C. Trebein and the firm of F. C. Trebein & Co. were liable as makers and indorsers; and on January 23, 1895, the F. C. Trebein Company had a meeting, and gave this authority to the president of the company. We find $12,000 of notes made by F. C. Trebein & Co. were, in pursuance to the resolution, taken up and replaced by the notes of the F. C. Trebein Company, as they respectively became due. We find that said action did not form a part of the intention of Mr. Trebein, or those acting with him, at the time of the formation of the corporation, or at the time of the conveyance of the property by Mr. Trebein to the corporation, but was the result of an afterthought. Eleventh. We find that none of said indebtedness of the said City National Bank of Dayton, the Xenia National Bank of Xenia, and the Farmers' & Traders' Bank of Jamestown has been paid, and said banks still hold said stock as collateral. Twelfth. We find that the directors of the...