Gratzinger v. Arehart
| Decision Date | 19 December 1935 |
| Docket Number | 26659 |
| Citation | 198 N.E. 787,209 Ind. 547 |
| Parties | GRATZINGER et al. v. AREHART et al |
| Court | Indiana Supreme Court |
Action by Charles E. Gratzinger and others against George Arehart and others. From an adverse judgment, some of the plaintiffs and some of the defendants appeal, which appeal was transferred from the Appellate Court under section 1357, cl 2, Burns' 1926.
Judgment affirmed.
Appeal from Lagrange Circuit Court; Clyde C. Carlin, Judge.
Fred L Bodenhafer, of Kendallville, and Luke H. Wrigley, of Albion for appellants.
R. S. Emerick, of Kendallville, Howard W. Mountz, of Garrett, and Dunten & Dunten, of Lagrange, for appellees.
Appellants, Kendallville Trust & Savings Company, Noble County Bank & Trust Company, and Vermont Finley, as receiver of the Noble County Bank & Trust Company, were defendants below. Charles E. Gratzinger and the other appellants, eight in number, and the numerous appellees, were plaintiffs.
It appears from the special findings of fact that, prior to December 31, 1928, the Kendallville Trust & Savings Company was doing business as a trust company; that on that date it ceased to transact business under its charter and transferred all of its assets to the Noble County Bank & Trust Company under a written contract, by the terms of which the latter company agreed to pay all of the liabilities of the first-mentioned company. At the time of the transfer of its assets, the Kendallville Trust & Savings Company was solvent. For some two years prior to the assignment, the Kendallville Trust & Savings Company had issued what was termed its 'first mortgage real estate bond certificates,' by the terms of which the company acknowledged itself bound and agreed to pay a sum certain five years after date, with interest at the rate of 6 per cent. per annum, and in which it represented that it had set aside, to secure the payment of the so-called certificates, notes equal to the principal thereof, secured by first mortgages on real estate. In the instrument it expressly agreed: At the time the first of these certificates were issued, no mortgages had in fact been set aside, but thereafter, from time to time, mortgages in excess of the amount of the certificates outstanding were set aside in the offices of the company until at the time of the assignment there were outstanding, in the hands of appellees and certain other persons named in the complaint, certificates issued for cash amounting to $ 202,700, and it held separated and set aside from its other assets, mortgages of the principal face value of $ 230,700.81 to secure their payment. The mortgages were all recorded, and were assigned of record by the Kendallville Trust & Savings Company to the Noble County Bank & Trust Company in its own name, and not as trustee or in any other manner that would indicate that they were involved in a trust.
It was found that: 'At the time Kendallville Trust and Savings Company transferred and delivered all of its assets to Noble County Bank and Trust Company as hereinbefore found, it, the said Kendallville Trust and Savings Company, had in the manner, form and way as set out in this Finding, selected and separated and set aside the total sum of $ 230,700.81 of notes and mortgages, exclusive of interest, and at the time that the said defendant, Kendallville Trust and Savings Company, transferred its assets to said Noble County Bank and Trust Company, it, the said defendant, Kendallville Trust and Savings Company, transferred, assigned and delivered to said Noble County Bank and Trust Company the said notes and mortgages so selected, separated and set aside as aforesaid and totaling the aforesaid sum of $ 230,700.81, which said selected and separated notes and mortgages were then and there received by the said Noble County Bank and Trust Company as being the notes and mortgages selected, separated and set aside as aforesaid by the defendant, Kendallville Trust and Savings Company, for the purpose of securing the payment of the then outstanding Certificates which are described and designated in these Findings; that the amount of the outstanding Certificates issued by Kendallville Trust and Savings Company on and prior to December 31, 1928 amounted to the sum of $ 202,700.00 and at said time said Noble County Bank and Trust Company had full notice, knowledge and information that said Certificates so issued and delivered by said Kendallville Trust and Savings Company on and prior to the 31st day of December, 1928, amounted to the sum of $ 202,700.00; and that said Noble County Bank and Trust Company received the selected and separated notes and mortgages from said defendant, Kendallville Trust and Savings Company in the said sum of $ 230,795.61, and held the same as the security for the payment of said Certificates and for the use and benefit of the holders and owners of such Certificates, and did not receive said notes and mortgages so selected and set aside as aforesaid as general assets.' It is further found that the Noble County Bank & Trust Company continued thereafter to keep said notes and mortgages separate and apart from all its other assets for the purposes for which it received them; that, as certain of the notes and mortgages so segregated and transferred were paid, the Noble County Bank & Trust Company appropriated the proceeds to its own use and substituted other first mortgages therefor; that said mortgages so substituted were kept in the separate file and a record of them kept in the special ledger where records of the mortgages originally assigned for the special purpose were kept. After January 2, 1929, the Noble County Bank & Trust Company issued to the plaintiffs who are appellants, and to certain others, certificates identical in all respects with the ones issued by the Kendallville Trust & Savings Company, except that the Noble County Bank & Trust Company placed a written indorsement on the back thereof by which it guaranteed payment. These certificates aggregate $ 13,200. On January 10, 1931, the Noble County Bank & Trust Company discontinued business, and the appellant receiver was appointed and took charge of its affairs. From the beginning, the Noble County Bank & Trust Company carried in its daily statements and in its published statements, under the title of 'mortgage certificates outstanding,' the amount due on the certificates referred to, and under the designation 'mortgage notes securing certificates,' the amount of the mortgages held for that purpose. When the mortgages were set aside by the Kendallville Trust & Savings Company they were separated from other notes and placed in a separate file kept for that purpose only, and, for the purpose of identification, a distinctive number was placed upon each, different from any other number used for the identification of assets, and they were entered upon a special ledger. The Noble County Bank & Trust Company kept the mortgages separate and apart from its assets in a similar manner. The amount of said mortgages was not maintained, however, but between January 2, 1929, and January 10, 1931, the total was reduced by appropriation of payments for which other mortgages were not substituted, to the sum of $ 214,527.61. The Noble County Bank & Trust Company did not at any time select or set aside mortgages from among its own assets for the purpose of securing the certificates that had been issued by the Kendallville Trust & Savings Company, or for the purpose of securing the certificates which it issued and guaranteed, except in cases where mortgages which had been delivered to it for the use and benefit of the holders of certificates issued by the Kendallville Trust & Savings Company were paid and the proceeds appropriated by the Noble County Bank & Trust Company, in which case it substituted mortgages from among its own assets and placed them in the file and entered them in the ledger in lieu of the mortgages that had been paid. There is no necessity to consider the further findings of fact, none of which are...
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