Iglehart v. Tood
| Citation | 203 Ind. 427,178 N.E. 685 |
| Decision Date | 08 December 1931 |
| Docket Number | Nos. 26138-26140.,s. 26138-26140. |
| Parties | IGLEHART et al. v. TODD et al. SAME v. APPEL et al. SAME v. MILLIKAN et al. |
| Court | Supreme Court of Indiana |
OPINION TEXT STARTS HERE
Appeal from Superior Court, Marion County; Linn D. Hay, Judge.
Actions by Robert I. Todd, by John J. Appel, and by Frank M. Millikan, against Eugene H. Iglehart and another, receivers for J. F. Wild & Co., in which defendants filed a cross-complaint. Todd died before the trial, and Appel died before judgment, and their legal representatives, Charlott V. Todd, executrix, and others, and Frederick G. Appel and others, were substituted as parties. From judgments for plaintiffs, defendants appeal.
Reversed, with directions.
Superseding opinion in 173 N. E. 289.
Frank B. Ross, Norman Patrick, Matson, Ross, McCord & Clifford, Adolph A. Schreiber, and Harry T. Ice, all of Indianapolis, for appellants.
David E. Watson, F. Winter, Fesler, Elam & Young, and Irving M. Fauvre, all of Indianapolis, for appellees.
The appellants are receivers, appointed by the probate court of Marion county, of the J. F. Wild & Co., a bank incorporated under the laws of the state of Indiana (hereinafter referred to as the bank or the Wild Bank). Among the assets of the bank coming into the hands of the receivers were three promissory notes payable to the order of the bank, one for $25,000 executed by Robert I. Todd, one for $25,000 executed by John J. Appel, and one for $50,000 executed by Frank M. Millikan. These three actions were brought by Todd, Appel, and Millikan against the receivers, each alleging that his note was executed without consideration and solely for the accommodation of the Wild Bank, and asking that the receiver be enjoined from asserting the same to be valid and enforceable and for the surrender and cancellation thereof. Subsequently, upon maturity of the notes, appellants by cross-complaints sought recovery thereon. Todd died before the trial, and Appel died before judgment, and their legal representatives were substituted as parties.
The causes were tried simultaneously by the court, and judgments were rendered in favor of the several plaintiffs (appellees) and against the cross-complainants (appellants). From these judgments the receivers of the bank have appealed, and the three appeals have been consolidated for briefing and decision; the issues, facts, and questions of law involved in each being substantially the same. The error assigned is that the court erred in overruling appellants' motion for a new trial wherein it is alleged that the decision is not sustained by sufficient evidence and is contrary to law, and that the court erred in admitting, and refusing to admit, certain evidence.
Briefly stated, the evidence shows the following undisputed facts: In November, 1926, Liberty bonds in the amount of $271,000 were stolen from the Wild Bank of Indianapolis. Two or three weeks thereafter (November 29-December 3), an examination of the bank was made by the state banking department, which revealed a shortage-an impairment of capital-of about $80,000. (The capital stock was only $100,000, while the deposits were about $5,000,000). The bank commissioner thereupon told Mr. J. F. Wild, the president of the bank, and his associates that it would be necessary for them to levy a 100 per cent. assessment, or that there would be required $100,000 in money (to guarantee the impairment).
Mr. Wild informed the bank commissioner that the question of increasing the capital stock was under consideration, but probably could not be accomplished before a period of ten to thirty days, and that he had some influential friends who had plenty of wealth and would respond to any request he would make. The commissioner required (as the condition upon which the bank be allowed to continue operation) that government bonds or high-grade securities worth at least $100,000 be delivered to him to hold, and that then the matter could rest until the new stock could, in the near future, be subscribed. Mr. Wild named Frank M. Millikan as one man from whom he expected to obtain bonds or money to deliver to the bank commissioner.
Mr. E. C. Fisher, vice president of the Wild Bank, had called on Mr. Millikan in his office on December 1, 1926, and asked him to subscribefor some capital stock in the Wild Bank. Millikan, who had been president of the Columbia National Bank, vice president of the National City Bank, and director of the Irvington State Bank and the Farmers' Trust Company, told Fisher he was not in position to do so, and was not anxious to become a stockholder in any bank, due to unpleasantness he had gone through in the past in banking circles, but said: “If I can be of any assistance to you or can help you I will be glad to have you call on me.” Fisher told Wild of this. On December 9 Fisher telephoned Millikan to come to the bank, as Wild wanted to see him. Millikan came, and Wild asked him if he (Millikan) would give him (Wild) accommodation paper for $50,000-temporarily, while he could get his stock subscribed. Wild did not tell Millikan what he was going to do with the note, and Millikan did not ask him. Millikan said he did not want to give anything that would be a liability that he would have to pay, and Wild said there would not be any liability on it. Wild said that Mr. John J. Appel and Mr. Robert I. Todd would give him similar paper, and Millikan signed the $50,000 note payable to the order of the bank without any further conversation. Millikan knew about the bond theft from the Wild Bank, from what he had read in the newspapers. He owed the Wild Bank more than $100,000 (secured by collateral) at the time he signed the accommodation note for $50,000, and he owed the bank more than $100,000 at the time of its failure, exclusive of the note in litigation.
Mr. Wild on the same date saw Mr. Todd, and asked him if he would sign a note for $25,000. Todd said he would, signed the note made payable to the order of the bank, and gave it to Wild, who delivered it to the bank. Wild did not tell Todd about the examination of the bank a few days previous. Todd did not ask Wild what the note was to be used for, and Wild did not tell him what the bank was going to do with it. Wild made no promises to Todd.
Mr. Wild, on the same day, called Mr. Appel on the telephone, and told him that Mr. Millikan was going to sign a note for $50,000, that Mr. Todd was going to sign one for $25,000, and that he (Wild) wanted Appel to sign one for $25,000. Appel said, “Alright, Frank, I will do it,” and he signed a note in the amount stated payable to the order of the bank. A few days previous to this, Wild had talked to Appel, and had asked for some financial help, but did not say in what amount. He said he might want Appel to sign a note, that he wanted some accommodation notes to use in the bank, and wanted them given to the bank. Wild did not tell Appel that there had been an examination of the bank or that the bank commissioner had required him to get more money into the bank, nor did he explain how he wanted to use the notes, or what for-simply that he wanted to use them in the bank. Appel did not know that the capital of the bank was impaired at the time, but testified that, “when Mr. Wild told me he wanted to use this note in the bank, my notion was he wanted to use it.” Wild testified that he might have said to both Appel and Todd that he desired their notes for the purpose of building up the undivided profits account of the bank.
Mr. Appel, who was in the insurance, real estate, and loan business, and was a director in the Indiana National Bank, the Union Trust Company, and the Railroadmen's Building & Savings Association, was a close business associate of Mr. Wild. He knew of the bond theft from the Wild Bank, but did not know the amount thereof. He was a director of the Majestic Building Company (owned largely by the Wild Bank), and was an officer of Gregory and Appel, which had issued its notes, indorsed by Appel personally, to the extent of several million dollars, which had been delivered to (and sold by) the bank. At the date Appel executed the original note December 10, 1926, he was indorser on $5,000 or more of Gregory and Appel paper in the Wild Bank; on the date the note was renewed he was indorser on more than $3,000 of the same paper, and at the time the bank failed, July 30, 1927, it held $75,000 of such paper bearing Mr. Appel's personal indorsement. Appel testified that he did not remember whether or not he withdrew his personal account of $1,500 the day before the bank closed its doors.
The makers of the notes, and Wild himself, testified that no consideration passed from the J. F. Wild & Co. to the makers for the notes.
Wild delivered the three notes obtained from Millikan in the sum of $50,000, from Todd in the sum of $25,000, and from Appel in the sum of $25,000, to the bank's cashier, who at Wild's direction entered them in the books on December 13, 1926. The notes were entered in the “discount and collection book,” the same as all the notes the bank took in that day. The face value of the notes was added to the “loans and discounts” as shown by the books increasing them in the sum of $100,000.
Four or five days after Mr. Millikan executed the note, he asked Mr. Wild: “Isn't it customary to give some kind of collateral for accommodation paper?” Wild said: A day or two later Wild handed Millikan an indemnifying agreement signed by Wild personally agreeing to indemnify and save harmless Millikan, Appel, and Todd on account of the several notes executed by them to the Wild bank.
On December 11, 1926, the day after the notes were executed and delivered to the bank, Mr. Wild met the state banking commissioner at the Indiana National Bank, and delivered to him $100,000 of Indianapolis school bonds. Wild did not tell the...
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