In re Liquidation of Bourbon Banking Co., In re Bourbon
| Decision Date | 09 December 1940 |
| Docket Number | 27420. |
| Citation | 30 N.E.2d 311,218 Ind. 96 |
| Parties | In re LIQUIDATION OF BOURBON BANKING CO., BOURBON. FIRST STATE BANK OF BOURBON v. BINKLEY et al. |
| Court | Indiana Supreme Court |
[Copyrighted Material Omitted]
Appeal from Marshall Circuit Court; Eli F. Seebirt, Special judge.
Walter R. Arnold, John Degnan, and Chas. Dohnalek, all of South Bend, for appellant.
Claude D. Carson and Don F. Kitch, both of Plymouth, for appellee.
This is an appeal from a judgment disallowing a claim of the First State Bank of Bourbon against the Bourbon Banking Company which is in liquidation. The claim is based upon a promissory note, and there are certain allegations which the claimant relies upon as establishing that the validity of the note as a claim against the Bourbon Banking Company was adjudicated in a proceeding in which one of the stockholders of the Bourbon Banking Company sought to have the liquidation proceedings dismissed.
When the claim was filed, Henry M. Binkley, a stockholder in the Bourbon Banking Company, appeared for himself and others in like situation, and for the Bourbon Banking Company, and filed objections to the allowance of the claim, which are in the nature of an answer. His objections are: First, that the Bourbon Banking Company did not execute the note; second, that it was executed without consideration and, third, that its execution was procured by fraud. There was a reply in general denial to the objections.
There was a trial, and a general finding and judgment against the claimant. A motion for a new trial, upon the grounds that the decision of the court is not sustained by sufficient evidence and that it is contrary to law, was overruled, and this ruling is assigned as error.
There is no conflict in the evidence. The Bourbon Banking Company was organized as a bank of discount and deposit under the laws of this state in 1907, and it continued in the banking business until December, 1926. In the latter month the following entry was made on the minute book of the board of directors of the First State Bank of Bourbon:
'Motion made by J. H. Matchett seconded by J. W. Davis to purchase such of the assets of the Bourbon Banking Co. as are required to pay the deposits of said Bourbon Banking Co. and its contingent liabilities.
C. M. Parks was at that time cashier of the Bourbon Banking Company, and Mr. Beck was president of both banks. On December 11, 1926, Mr. Beck delivered to C. M. Parks a written instrument in the following words:
'Bourbon, Ind., December 11th, 1926.
On December 13th the stockholders of the Bourbon Banking Company held a special meeting, at which all but two shares of stock were represented, and voted to liquidate the bank. On the following day the directors of the Bourbon Banking Company met, and their minutes show the following record of their proceeding:
'Bourbon, Indiana
'December 14th, 1926.
There is no direct evidence of the character of the undertaking entered into between the two boards of directors for the 'sale' of assets, and it might reasonably be concluded at this point that the First State Bank was to purchase and pay for certain assets of the Bourbon Banking Company, and that the Bourbon Banking Company intended to take the cash purchase price and pay its obligations. But, from the conduct of the parties in carrying the transaction forward, it appears that this was not their understanding. When the representatives of the parties met, the First State Bank assumed and agreed to pay the deposit liabilities and the other liabilities of the Bourbon Banking Company, and thereafter they were paid, and there are no outstanding liabilities of that company, and no claims against that company except the claim here in controversy. Mr. Parks met with the representatives of the First State Bank on December 25, 1926. The liabilities of the Bourbon Banking Company on that date amounted to $165,394.14. At that meeting the First State Bank selected and took over the following assets:
150 notes not secured by mortgage ....... $ 72,031.67
26 notes secured by mortgage .............. 80,002.84
Draft on Chicago bank ...................... 9,637.53
Cash on hand ............................... 2,721.53
Cash items ................................... 828.29
Vault boxes .................................. 175.00
Table ......................................... 12.00
Customers' bank books and blank checks ........ 85.79
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Total ................................ $165,494.65
The total of these exceed the liabilities assumed by $97.51, which was credited to the Bourbon Banking Company in a checking account which was opened for it in the First State Bank. The following assets were left in the hands of Mr. Parks as liquidating agent for the Bourbon Banking Company:
Notes ................................ $36,151.59
Furniture .............................. 1,800.00
Interest accrued, but not collected
on assets sold, computed to date
of sale ............................... 5,843.63
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Total ............................... $43,795.22
The only evidence which tends to disclose any further details of the transaction or of the manner or character of indorsement of the securities turned over to the First State Bank is furnished by four notes admitted in evidence, all dated in the year 1926 and payable to the Bourbon Banking Company, on the back of which there is stamped, with a rubber stamp, the following:
This rubber-stamp indorsement is not dated. There were other indorsements, such as notations of interest payments, all of which were dated subsequent to the 25th day of December, 1926. It was stipulated that these notes were among those transferred by the Bourbon Banking Company to the First State Bank under the agreement of December, 1926, and that, with the exception of the notations on the same, which were plainly and obviously placed thereon, as indicated by the dates, subsequent to December 25, 1926, the notes are in the condition in which they were in the month of February, 1927. The objector, while agreeing to the facts set out in the stipulation, reserved an objection on the ground of competency and materiality, but made no objection upon the ground that the execution of the indorsement on the notes had not been proven. These were but a small number of the notes transferred, and there is no evidence as to whether or not the remaining notes were indorsed with the same guaranty of payment.
Mr. Parks went to work in the First State Bank in January, 1927. The assets which had been turned over to the First State Bank were in the possession of that bank, but Mr. Parks had access to them, and the assets of the Bourbon Banking Company which he retained were kept in the First State Bank, in his nominal possession, but the officers and employees of the First State Bank had access to them.
The charter of the Bourbon Banking Company provided for nine directors. For a long time prior to December, 1926, the affairs of the bank were managed by five directors. In January, 1931, only three of these directors survived, and no other directors had been elected. On the 24th of January 1931, these directors were summoned to the First State Bank. Among them was Mr. Beck, who was also president of the First State Bank, and another director who was an officer of the First State Bank. There they met with Luther F. Symmons, Banking Commissioner of Indiana, and Mr. Osborn, an attorney for the First State Bank, and two of the directors of the First State Bank. The fact that the assets which had been assigned by the Bourbon Banking Company to the First State Bank had not produced an amount equal to the liabilities assumed and paid by the latter bank was discussed. It was disclosed...
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