Hornaday v. Cowgill
| Decision Date | 29 May 1913 |
| Docket Number | 7,994 |
| Citation | 101 N.E. 1030,54 Ind.App. 631 |
| Parties | HORNADAY v. COWGILL ET AL |
| Court | Indiana Appellate Court |
Rehearing denied November 20, 1913.
From Huntington Circuit Court; Samuel E. Cook, Judge.
Action by Peter Hornaday against Carey W. Cowgill and others. From a judgment for defendants, the plaintiff appeals.
Affirmed.
C. W Watkins and Charles A. Butler, for appellant.
Lesh & Lesh, Sayre & Hunter and Frank O. Switzer, for appellees.
Action by appellant in assumpsit for the balance of deposits made by him in The Bank of North Manchester An amended complaint in two paragraphs was filed. The first alleged in substance, that appellant was a depositor in The Bank of North Manchester, a copartnership consisting of D. W. Krisher, Carey E. Cowgill, Harvey B. Shively, Dayton C. Harter, J. B. Harter, Jacob Harter, Jennie C. Lawrence, Elizabeth H. Mills and August C. Mills, guardian of George W. Lawrence, (all of whom were made defendants) organized November 3, 1894, under articles of agreement the material provisions of which are as follows:
"1. The capital stock of this partnership shall be limited to the sum of Twenty-Five Thousand ($ 25,000) Dollars, which for convenience, shall be divided into shares of One Hundred ($ 100) Dollars each; and each of the undersigned partners do hereby subscribe for the number of shares and for the sums of money, respectively set opposite our names, such sums to be paid as is provided elsewhere herein.
2. Such partnership shall begin November 3, 1894 and shall continue for the term of time of Twenty (20) years thereafter. * * *
4. For convenience in the transaction of the business of said partnership, there shall be elected from among the partners, a President and Cashier. The duties to be performed by such officers, shall be those usually incident to the offices which they occupy respectively, in the business of Banking.
5. Before the opening of business, such officers shall be chosen by a meeting of the partners, and when so chosen, shall serve until the first Wednesday of July, 1895. And thereafter, on the first Wednesdays respectively, of January and July of each year, during the continuance of said partnership, a meeting of the partners shall be held at the partnership's place of business, at which their successors shall be elected for the ensuing semi-annual term. All officers shall serve without compensation other than is specially provided for, and until their respective successors shall have been elected and qualified, according to such rules as may be adopted. * * *
8. It is further agreed that if any member of this firm shall desire to withdraw he or she shall first ask permission to do so, of all the partners, and then may do so, upon such terms as they may agree upon, and not otherwise.
9. Any partner desiring to sell all or any part of his interest, shall first give the refusal thereof, to the remaining partners, and it shall be their privilege to take the same pro rata with their previous holdings. In no case, shall any partner be permitted to sell any part of his interest to an outsider, until he shall ascertain in good faith that the remaining members of the firm will not pay as much as can be obtained elsewhere, and that no member of the firm will do so.
10. It is expressly agreed that in case of the death of any member of the firm, the law in relation to surviving partners is waived, and that the business shall be carried on the same as if such death had not occurred, until the expiration of the term of partnership, and no part of the capital shall be withdrawn by any administrator, executor, heirs, or legatees, or other personal representative; provided, that should such interest of the decedent be required to pay his debts, in course of lawful administration, then there shall be a withdrawal only, and upon such terms as the remaining members of the firm, and such administrator, executor, heirs, legatees, and personal representative may agree upon, of such capital, with profits already accrued, over and above ascertained and probable losses; but in no case, shall there be a sale of such stock.
That on June 11, 1904, said bank failed and appellant had deposited at that time $ 2,600, fifty-one per cent of which has been repaid, leaving due and owing him a balance of $ 1,378 and interest from said date; that D. W. Krisher who signed the articles of agreement (hereafter referred to as the contract) died previous to the commencement of this suit, leaving no estate, and is not made a party to the action; that Jacob W. Harter died since the commencement of this suit, and Katherine Harter, his administratrix is made a party; that Harvey B. Shively died since this suit was commenced, and Catherine Shively, his executrix is made a party. The second paragraph is substantially the same as the first, but alleges in addition that appellees, Cowgill and Shively, denied any liability and for this reason a demand before suit would be unavailing. Demurrers to each paragraph were overruled. Thereupon appellee Cowgill filed nine paragraphs of answer, the first a general denial. Appellee Shively filed ten paragraphs of answer including a general denial. Demurrers to each paragraph of these separate answers were overruled except as to the sixth paragraph of Cowgill's answer, to which a demurrer was sustained. The court also sustained a demurrer to the seventh paragraph of Shively's answer as being similar to the sixth paragraph of Cowgill's answer. Appellant replied in seven paragraphs to each answer by Cowgill and Shively. All the paragraphs except the first, a general denial, and the third, were stricken out on motion.
Various errors are predicated upon the rulings of the court on the demurrers and the motion to strike out, all of which may be fully determined in considering the conclusions of law announced by the court upon the special finding of facts, the substance of which is as follows: That the persons named in the complaint made and entered into the articles of copartnership filed therewith; that the firm was conducted under the name of "The Bank of North Manchester", and the articles were deposited in a safe of the bank and nothing was done by any member of the firm to disclose the contents thereof, nor the names of Cowgill or Shively to appellant or the public. By common consent Daniel W. Krisher acted as president and Dayton C. Harter as cashier, exercising exclusive control and management of the bank from its organization until it closed, and all members of the firm were residents and prominent wealthy citizens of North Manchester, except Cowgill and Shively; that in 1897, Shively sold his interest to Dayton C. Harter, and published a notice of withdrawal in the North Manchester Journal; which was his only notice, and no actual notice was given appellant; that Shively gave his note for $ 750 for a thirty per cent assessment, which was surrendered by Harter, when Shively sold to him, and Harter entered on the books a reduction of the capital of the bank from $ 25,000 to $ 22,500; that Shively in fact withdrew from the bank, never held himself out as a member of the firm thereafter, and when he withdrew, the bank and its other members were solvent; that business continued under the same contract until in 1899, when Cowgill sold out to Dayton C. Harter, and Harter held Cowgill's share as his own property; that Cowgill did not give any notice of his retirement, and no actual notice to appellant. After selling his interest to Harter, Cowgill did not participate in the affairs of the bank in any manner, and the bank and other members of the firm were then solvent. The business continued under the same articles until in 1901, when Jennie C. Lawrence, died, solvent, and notice of her death appeared in the North Manchester Journal. Appellant knew she died, but did not know she was a member of the firm or interested therein; that after her death neither her administrator nor her heirs assumed her place in said firm. Neither Shively nor Cowgill asked permission to sell their stock or to withdraw, from the other partners, but Krisher and Dayton C. Harter had actual notice thereof. Cowgill did not give the refusal of his stock to the other partners as provided in the contract, and neither Shively, Cowgill nor Harter ever did anything to conceal from the other persons who had signed the contract the fact that Dayton C. Harter had purchased or that they had sold their interest to him, and retired. Appellant Hornaday commenced doing business soon after the bank started, but none of the money sued for was deposited prior to 1901 (when Jennie C. Lawrence died) and the indebtedness arose from certificates of deposit amounting to $ 2,600; that appellant had no knowledge of the contract at the time he deposited money in said bank and did not know that Cowgill or Shively were ever partners therein, nor that they had ever signed the articles of copartnership; that neither Cowgill nor Shively, after 1897 and 1899 ever held themselves out to the public as interested in the bank, and appellant did not deposit money upon the belief or assumption that they were partners; that on June 10, 1904, the bank made an assignment and afterwards it was declared bankrupt. Appellant has received sixty-four per cent of the amount of his deposits.
The conclusions of law were, in effect, that Cowgill and Shively were unknown or dormant partners of said firm, and as such had a right to sell their stock and retire from the firm and were not members nor bound thereafter; that being unknown or dormant partners, they are not required to give notice, and there is no basis for liability for appellant's deposits.
Judgment was rendered on the findings and conclusions that appellant take...
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