Hawkins v. Aldridge

• Decision Date: 19 March 1937
• Docket Number: 26740.
• Parties: HAWKINS et al. v. ALDRIDGE et al.
• Court: Indiana Supreme Court

7 N.E.2d 34

211 Ind. 332

HAWKINS et al. v. ALDRIDGE et al.

No. 26740.

Supreme Court of Indiana

March 19, 1937

Appeal from Blackford Circuit Court; E. W. Secrest, Judge.

Geo H. Koons, of Muncie, R. L. Ewbank, of Indianapolis, Wm. H Eichhorn, of Bluffton, Robt. L. Smith, of Portland, and Lee F. Sprague, of Hartford City, for appellants.

Urban Bonifas, of Portland, James R. Emshwiller, of Hartford City Tod Whipple, of Portland, and Gov. Hutchinson, of Jacksonville, Fla., for appellees.

FANSLER, Judge.

This is an appeal from an interlocutory order appointing a receiver pendente lite, without notice. The proceeding is ancillary to the principal action, which seems to sound in tort and seek a money judgment. When the petition for the appointment of the receiver was filed, the action had been pending for more than a year. The defendants had been served with process, were in court by counsel, and had filed numerous

The complaint is too long to be made a part of the opinion. It is not verified. It alleges that, upon the death of Nathan B Hawkins, certain of his heirs, including his widow, entered into a partnership, and that the defendant Morton S. Hawkins became managing partner and took possession of the estate for the partnership, and acted as agent for his sisters and mother, who were codefendants; that the fact that a partnership existed was fraudulently concealed from the plaintiffs; that he transacted all of the business of his mother and sisters in his own name; that in 1918, in his own name, he, fraudulently and in collusion with his mother and sisters, and acting as their partner, organized 'a family corporation' for the purpose of defrauding and cheating the plaintiff; that he thereupon proceeded to organize, as partner, and acting for his mother and sisters, 'divers sham subsidiary corporations which they owned and controlled as partners to fraudulently and unlawfully and by gross misrepresentation sell to these defendants and other persons various worthless corporate stocks'; that he sold various worthless stocks to the various plaintiffs for sums aggregating $4,783; and that he in the same manner defrauded a large number of other persons; that the money used in the promotion of these enterprises was furnished by all of the defendants from the assets of the partnership, which consisted of the estate of Nathan B. Hawkins; that thereafter, and as part of the scheme to defraud the plaintiffs and to prevent the collection of any amounts due them, the defendants entered into a fraudulent trust agreement, by the terms of which Morton S. Hawkins, his mother and sisters, conveyed certain property to Jane B. Coughlin as trustee. The property involved in the trust agreement is certain claims against one A. A. Kist and others, of Portland, Ind., relating to a partnership in newspapers, and certain promissory notes of the Hawkins Mortgage Company. It is further alleged that plaintiffs 'and other persons similarly situated have no adequate remedy at law; in this, that Morton S. Hawkins has no property subject to execution and that all of the property that would and should be subject to execution has been concealed, transferred and involved among said defendants for the sole purpose of cheating and defrauding plaintiffs; that unless the broad powers of a court of equity are invoked, these plaintiffs and other similarly situated and to whom the defendants are justly and equitably indebted by reason of their fraud and the concealment thereof, will be without remedy and their wrongs go unrighted'; that the funds and money received from the sale of fraudulent stock was used in purchasing certain real estate in the city of Portland, which is described; that, as part of the estate of Nathan B. Hawkins, certain other described real estate came into the hands of the defendants; that a certain fraudulent suit had been brought in the Jay circuit court for a partition of said property by Genevra I. Hawkins; that part of the funds derived from the conspiracy to cheat and defraud were invested in a dairy farm; that plaintiffs had obtained a money judgment against Morton S. Hawkins for their claims, but at the time they did not know that his mother and sisters were partners in the fraudulent partnership; that the parties are non-residents of the state of Indiana; that all of the conveyances of real estate between the parties were unlawful and made for the purpose of cheating, defrauding, and concealing the property of said partnership and ought to be set aside; that the property of the partnership is being wasted, squandered, and misapplied, and the proceeds applied to the individual and private use of the partners; 'that an accounting should be had as the only equitable and proper means by which the matter can be determined; that unless the defendants are restrained they will further convey and involve and encumber the aforesaid property to the great and irreparable injury of the plaintiffs herein.' The prayer is that a trust be declared in all of the property of the defendants, and that it be found to be held in trust by the defendants for the benefit of the plaintiffs and all others defrauded by the illegal acts of the defendants, and that the court appoint a trustee or receiver, and do all things necessary to maintain the status quo of such trust, and that the defendant, Genevra I. Hawkins, be required to account for all of the acts of her agent, Morton S. Hawkins, 'and to pay these plaintiffs the amount of the judgment obtained by them in the Adams Circuit court, as aforesaid; * * * that a receiver be appointed for the property of the copartners, consisting of Genevra I. Hawkins, Morton S. Hawkins, Zella Jones and Stella Faul, and that he be authorized to sequester all assets consisting of real and personal property'; that the conveyances of the real estate of the defendants be set aside and that a commissioner be appointed to convey the real estate to a trustee, and 'that the same be sold and the proceeds derived therefrom be turned over to the receiver to be applied to the satisfaction of the amount due these plaintiffs and such other persons that may be similarly situated and that a receiver be authorized and permitted to make distribution and to receive claims from all persons other than the defendants who have been defrauded by the unlawful and fraudulent acts * * *; and the court to take all steps in equity to restore to the rights of all persons cheated or defrauded whether they be made plaintiffs to this action now or come in by method of claim to the receiver, and to set aside all trust agreements and assignments thereof and to declare the same null and void.'

No bond was tendered at the time the complaint was filed, and no restraining order pendente lite was sought, although the necessity for a restraining order, enjoining the defendants from conveying and encumbering their property, was alleged. After all of the defendants had appeared by attorney, filed various pleadings, and were in court, a petition was filed verified by one of the attorneys for the plaintiffs, reciting 'that this is a suit for a dissolution of a partnership, accounting, injunction and receiver'; that this cause concerns the partnership ownership of certain property, real and personal; that, since the bringing of the action, the defendants have conveyed certain described pieces of real estate belonging to the partnership, of the probable value of $30,000, and that the defendants are drawing $1,000 per month rentals from this property; that the defendant Genevra I. Hawkins has sold a number of fine cattle of the partnership property, of the value of $10,000. Whether the purchase price was received by her is not alleged. 'That plaintiffs are informed and believe and allege that the defendants will, unless a receiver is appointed for the property of said partnership pendente lite, dispose of all of said property and secrete and remove the same from the jurisdiction of this court and deprive this court of jurisdiction over the same.' There is a further allegation that the defendants are, and have been, filing dilatory pleadings, 'such as Pleas in Abatement and Changes of Venue,' for the purpose of delaying the trial in order that they might convey their property for the purpose of cheating and defrauding the plaintiffs; 'that if notice is given to the defendants herein they are threatening to and will leave the state of Indiana and remove themselves and their property from the jurisdiction of this court; that an emergency exists, making it necessary to appoint a receiver as the delay being caused by the defendants and their selling and desposing of the property and removing the same from the jurisdiction of the court will deprive these plaintiffs of any adequate remedy at law and that if a notice is given to the defendants, they will remove all their property and convey the same and will jeopardize the control and custody of the property.' The petition is verified, partly upon information and belief, and to that extent it connot properly be considered. Its allegations refer only to facts indicating that the defendants are about to dispose of their property, or otherwise defeat recovery. The complaint is not verified, and there...