Hamilton v. Meiks
| Decision Date | 20 December 1935 |
| Docket Number | 15279. |
| Citation | 198 N.E. 833 |
| Parties | HAMILTON v. MEIKS et al. |
| Court | Indiana Appellate Court |
Appeal from Decatur Circuit Court; John W. Craig, Judge.
Action by Emma Hamilton against George H. Meiks and another individually and as trustees under a certain trust agreement of October 22, 1930, and others. Judgment for defendants, and plaintiff appeals.
Affirmed.
Noel Hickam, Boyd & Armstrong and Gavin & Gavin, all of Indianapolis, James L. Shannon, of Greensburg, and Herbert C Jones, of Shelbyville, for appellant.
Robert C. Porter, of Cincinnati, Ohio, Ed. K. Adams and Wilbur F. Pell, both of Shelbyville, and Rollin A. Turner, of Greensburg, for appellees.
This was an action for a declaratory judgment by Emma Hamilton to determine her personal liability on a guaranty appearing on the back of what was originally $170,000 par value of preferred stock (now $148,750 par value outstanding) issued in the year 1922 by the J. B. Hamilton Furniture Company, a corporation, to the Porters and Hester Porter Fuller. This guaranty read as follows:
The said stock was caused to be issued by the Hamiltons, including the appellant herein, pursuant to a written contract of February 23, 1922, by the terms of which the Hamiltons purchased from the Porters what was then known as the C. H. Campbell Furniture Company at Shelbyville, Ind. Under the terms of this contract, the Porters were to turn over to the Hamiltons, including the appellant, all of the capital stock of the C. H. Campbell Furniture Company, which consisted of 300 shares of common stock, par value $100 each (no preferred stock having been issued of the $50,000 par value authorized by the state of Indiana), and they were also to turn over to the Hamiltons all of the property and assets of said company, in consideration of which the Hamiltons agreed to reorganize the company under the name of the J. B. Hamilton Furniture Company, to increase the capital stock from a total authorized capital of $80,000 to $255,000, of which $170,000 par value would consist of preferred stock, all of which was to be taken up by the Hamiltons and by them assigned and transferred to the Porters. The stock was to be " due and payable" ten years from February 15, 1922, to carry a guaranteed dividend at the rate of 7 per cent. per annum, payable in semiannual payments which would be cumulative, and if the dividend was not paid, then upon a demand being made by the holders of the stock within fifteen days of the due date of the dividend, a penalty of 10 per cent. of the amount of the preferred stock was to be added thereto and paid to the holders. None of the preferred stock was to be callable under four years, from four to six years it could be redeemed at par at any dividend paying date, plus 2 per cent. premium. After six years it could be redeemed at par at dividend paying time. All of the preferred stock to be turned over to the Porters was to be indorsed personally by J. B. Hamilton and Emma Hamilton, appellant herein. In so far as formalities are concerned, the requirements of said contract of purchase and sale of February 23, 1922, were substantially carried out by the parties.
The issues were made as follows: The appellant filed her complaint for a declaratory judgment and injunction which she followed later with an amended complaint. The principal difference between the two complaints is that after the Porters, appellees herein, had filed answers disclosing that there was a written contract of purchase and sale of February 23, 1922, which had been entered into between the parties, appellant inserted a copy of said contract in her amended complaint and made such other changes as were necessary in order to have the allegations thereof consistent with this additional disclosure.
The appellees, the Porters and Fuller, filed an answer in two paragraphs, the first paragraph of which consisted of a general denial, and in the second paragraph they set out certain facts which they alleged constituted an estoppel, to wit, that the purchase agreement of February 23, 1922, had been entered into between the Porters and the Hamiltons, including Emma Hamilton, covering the sale of said furniture factory and other assets, none of which has ever been returned or tendered back to the Porters; that under this contract, the Porters were to get $170,000 par value of preferred stock guaranteed by Emma Hamilton and Joseph B. Hamilton in exchange for their interest in the factory; that the property was all transferred and delivered over to the Hamiltons, including the appellant, pursuant to the written contract and the Hamiltons had run the factory ever since the transfer; that the $170,000 par value of preferred stock was issued with the guaranty of Emma Hamilton, appellant herein, and Joseph B. Hamilton thereon; that a copy of the resolution adopted with respect to the stock issue was filed with the secretary of state and approved by him; that Emma Hamilton was made a stockholder in the company as reorganized, also a director and a vice president; that certificate No. 1 in the reorganized company for 1,700 shares of preferred stock was issued by Joseph B. Hamilton to himself without any direction or instructions from the Porters; that he subsequently canceled this certificate which had no guaranty on it and thereafter the Porters were issued nineteen different certificates of preferred stock for a total of $170,000 par value, on all nineteen of which Emma Hamilton signed her name as guarantor; that at the time this preferred stock was delivered to the Porters, it was complete as to execution including the guaranty; that the factory turned over by the Porters to the Hamiltons had a physical value of $250,000 and was operating at full capacity; that for several years after the purchase the Hamiltons operated the factory making nice profits therefrom; that they paid the Porters and Fuller dividends regularly on the preferred stock held by them; that just before the factory went into receivership in October, 1930, Emma Hamilton assigned her individual estate to her trustees; that these trustees continued to pay the interest or dividend payments to the Porters and Fuller for approximately two years without any objection on the appellant's part; that appellant listed the Porters and Fuller as creditors of hers in Schedule C of the trust agreement or assignment she made October 22, 1930, and the Porters and Fuller were not creditors of hers in any other sense than by reason of the guaranty on the preferred stock; that Emma Hamilton was not unduly influenced by any one to sign the contract of purchase of February 23, 1922, nor the guaranty on the stock certificates and never made any objection, not even in her complaint in this action, about undue influence or fraud; that she was a woman of superior intelligence and had had large experience in the management of her vast estate; that she knew the preferred stock was given to the Porters for the factory; that she knew that her trustees were making payments to the Porters between October, 1930, and July 15, 1932, but allowed same to continue without protest; that she had admitted to one of the appellees she was deeply interested in the factory venture; and that while in control of the company the Hamiltons had declared a 17 1/2 per cent. dividend one year on the common stock they held, including appellant's stock, besides which appellant's son had drawn a good salary out of the business. The answer further set out that Edwin M. Porter, one of the original contracting parties, was dead and his widow, Bertha T. Porter, had acquired his stock consisting of 800 shares by " devise" ; that Enos Porter had acquired 362 1/2 shares of his stock by " devise" from Luella E. Porter, his wife, who was one of the contracting parties in 1922, but was now dead; and that the balance of 225 shares of the stock Enos Porter held was acquired by a purchase of 100 shares from Earle M. Porter of California. The answer also set out that Hester Porter Fuller had acquired her 100 shares of preferred stock from her mother, Luella E. Porter, by gift. By reason of all of these facts, appellees alleged that the appellant was estopped to maintain her cause of action against them and they asked for judgment for costs.
The appellees George H. Meiks and the Shelby National Bank individually filed disclaimers and asked for their costs. There was also an answer filed by George H. Meiks and the Shelby National Bank as trustees under the assignment for the benefit of creditors executed by Emma Hamilton under date of October 22, 1930, in which answer it was alleged that a memorandum of her obligations had been prepared by Emma Hamilton; that thereafter the trust agreement had been entered into under date of October 22, 1930; that there had been a transfer by Emma Hamilton to said trustees of all of her property excepting one small piece; that the various creditors, including the Porters and Hester Porter Fuller had been listed in the trust agreement as creditors of Emma Hamilton and had submitted their written consents to the trustees which had been accepted by said trustees; that the Porters had thereafter submitted the guaranty on their preferred stock certificates; that the matter had been discussed with Emma Hamilton, the appellant, and that the trustees had subsequently made the Porters various payments up to July 16, 1932, without complaint from the appellant; that Wilbur Pell had been appointed receiver of the J. B. Hamilton Furniture Company on October 31, 1930; that the company did not have...
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