Jennings v. Dark

• Decision Date: 28 October 1910
• Docket Number: No. 21,557.,21,557.
• Citation: 92 N.E. 778,175 Ind. 332
• Parties: JENNINGS v. DARK et al.
• Court: Indiana Supreme Court

175 Ind. 332

92 N.E. 778

JENNINGS

v.DARK et al.

No. 21,557.¹

Supreme Court of Indiana.

Oct. 28, 1910.

Appeal from Circuit Court, Hendricks County; J. L. Clark, Judge.

Action by Harry E. Jennings against Charles E. Dark and others. From a judgment for defendants, plaintiff appeals. Affirmed.W. J. Whinery and E. M. Blessing, for appellant. James P. Baker, Jameson & Hay, and Howe & Batchelor, for appellees.

MYERS, J.

Appellant sued appellees by a complaint in four paragraphs. The first two are grounded upon a claim of statutory liability as stockholders in an insurance corporation, claimed to have been organized under the act of January 14, 1850 (Loc. Laws 1850, p. 30), with the amendment of February 22, 1893 (Acts 1893, p. 133), the last two upon a liability as copartners in an association of persons claiming to be incorporated, in which incorporation was not effected, and hence a liability is claimed as of a copartnership. Demurrers were sustained to the first, third, and fourth paragraphs, and overruled as to the second, upon which trial was had, a special finding of facts made, and conclusions of law stated, and judgment rendered for appellees.

Errors are here urged upon the ruling upon the demurrers to the first, third, and fourth paragraphs of complaint and conclusions of law, and in overruling the motion for a new trial on the second paragraph of complaint.

The facts found are substantially: The enactment of the statute of January 14, 1859, and that in 1891 the defendant McGilliard, for a valuable consideration, purchased and took an assignment from one McCullock, a son and heir of Hugh McCullock, named as one of the grantees in said charter, all and whatever interest said McCullock might then have in said charter as a son and heir of said Hugh McCullock. That McGilliard had no knowledge of any of the other parties named in said charter, or of their heirs or assigns, and at the time no corporation was in existence or doing business under said charter, nor had any corporation prior to that time transacted any business under said charter. That McGilliard and a number of other persons attempted to organize a corporation for the purpose of doing an insurance business under said charter by virtue of the authority and rights obtained through said assignment, and established themselves as an insurance company under the style of the Indiana Insurance Company of Ft. Wayne, with their general offices in Ft. Wayne, Ind., and carried on a general insurance business throughout the state, and other states, issuing policies of insurance, establishing agencies, electing boards of directors, and officers, such as president, secretary, and treasurer, and continued such business as a corporation under said name until the 22d day of February, 1893, when the parties in interest procured the passage of the act found on page 133, Acts 1893, changing the name to the Ft. Wayne Insurance Company. That in 1899 the Ft. Wayne Insurance Company became insolvent, and a receiver of its assets was appointed by the Lake Superior court, in which court an order was made directing the sale by the receiver of the assets, books, and charter of said so-called corporation, under which order the receiver did sell or attempt to sell, and said McGilliard and others purchased, or attempted to purchase, the assets, books, and charter, and the sale was approved by the court, and the charter was assigned, or attempted to be assigned, to said McGilliard and others, free from any claims or liens of the creditors or stockholders of the Ft. Wayne Insurance Company. That in June or July, 1901, said McGilliard, Charles E. Dark, W. W. Dark, Edward E. Dark, Wilmer Christian, and David Cline attempted, by virtue of the authority and rights held by them through said purchase, to organize an insurance company under the name the Equitable Insurance Company of Indiana, with its principal office in the city of Indianapolis, Ind. That said McGilliard was a stockholder in said Ft. Wayne Insurance Company, but neither of the other persons named as the organizers of the Equitable Insurance Company held stock in the Ft. Wayne Insurance Company. That McGilliard in his participation in the attempted organization of the Equitable Insurance Company did not represent, or pretend to represent, the capital stock held by him in the Ft. Wayne Company. That said parties in their meeting for the purpose of organizing the Equitable Insurance Company and in their records of said meeting denominated themselves the stockholders of the Ft. Wayne Company, and by resolution changed the name to the “Equitable Insurance Company of Indiana,” and changed the location of the home office from Ft. Wayne to Indianapolis, retained the stock at $200,000 with $100,000 only of the stock issued, and accepted, or attempted to accept, the provisions of the act of March 6, 1883 (Acts 1883, p. 135), respecting corporations created and existing at and before November 1, 1851, and filed a copy of the resolution in the office of the Secretary of State, who issued a certificate of the fact. That said so-called Equitable Insurance Company issued common stock, elected officers, and conducted a general insurance from its general offices in the city of Indianapolis until the appointment of a receiver. The stock certificates recited that the company was incorporated under the laws of the state as the “Equitable Insurance Company of Indiana,” with $200,000 capital stock, divided into shares of $100 each, subject to the terms of the charter of the company, and were in the usual form, signed by the president, and attested by the secretary. That by an agreement of the stockholders an issue of $25,000 of preferred stock was authorized, and a part of the issue sold. These certificates recited that the company was organized under the laws of the state of Indiana, and the shares of preferred stock, $100 each, nonassessable and nontaxable, the company guaranteeing to redeem them in five years, and to pay semiannually a cash dividend of 8 per cent. per annum, January 1st, and July 1st, with the right to cancel at the end of one year or any interest maturing date. These certificates were signed by the president and attested by the secretary. That no record was made of the action of the stockholders authorizing the issue of the preferred stock. That the defendant McGilliard was the owner of 25 shares, and Hackedorn and Wagner the owners each of 1 share of common stock, Charles E. Dark, the owner of 22 shares, McGilliard 7 shares and Hackedorn 10 shares, Christian 5 shares, McGilliard and Charles E. Dark, as partners, 8 shares, Wilbur W. Dark 1 share, Jameson 5 shares, Wilson 1 share, Tarlton 5 shares, E. R. Owen 1 share, B. F. Owen 10 shares, Holman 10 shares, White 1 share, Edward Dark 1 share, Wilbur and Edward Dark, as partners, 1 share of the preferred stock. Wagner and Hackedorn owned their preferred stock from July 14, 1902, to July 1, 1903. Christian, Jameson, Wilson, Tarlton, Owen, Owen, White, and McGilliard owned their preferred stock April 1, 1903, and ever since. Charles E., W. W., and E. E. Dark surrendered their preferred stock in July, 1902, and said shares were canceled on the books of the company, and they were paid the par value of the stock. All of the common stock, except that held by Wagner and Hackedorn from July 14, 1902, to April 2, 1903, was sold, assigned, and transferred on the books of the company on or before July 14, 1902. Tarlton, Jameson, Owen, Owen, White, and Wilson in no way participated in the business, the management, or the meetings of directors or stockholders, but received one or two dividends on their stock. The defendant McLain at no time held any stock in his own right, but for a time held five shares of the preferred stock of McGilliard as collateral to a loan which had been paid, but McLain has the custody of the stock. The facts are found as to the ownership in plaintiff of the property insured,the issuance of the policy April 4, 1903, the loss by fire May 15, 1903, and a loss to plaintiff of $500, the appointment of a receiver in the Lake Superior court, July 15, 1903, of the assets of the Equitable Insurance Company as an insolvent corporation. July 3, 1906, plaintiff filed his claim for damages in the receivership proceedings and the claim was allowed. There were no assets at any time in the hands of the receiver out of which the claim could be paid. That no attempt was at any time made by the parties interested to incorporate under the general laws for the incorporation of insurance companies, other than as has been shown. The seal was impressed as “The Equitable Insurance Company of Indiana Chartered January 14, 1850.” Charles E. Dark died since the commencement of the action, and W. W. Dark, administrator of his estate, was substituted in his stead. The defendants Christian, Charles E., W. W., and E. E. Dark, McGilliard, Hackedorn, Holman, and Wagner attended and participated in meetings of the stockholders and were elected officers, such as president, secretary, assistant secretary, and directors in the company, prior to the dates when they parted with their common stock, and each received dividends upon the preferred stock held by them. Upon these facts the court concluded that plaintiff was not entitled to recover against either defendant.

In determining whether sustaining the demurrers to the first, third, and fourth paragraphs of complaint was harmful to appellant, we may look to the finding of facts, and in so doing we discover that they cover the entire subject-matter of each paragraph, which is but the different statement of the same cause of action, and hence the error, if any, was harmless. Gilliland v. Jones (1895) 144 Ind. 662, 43 N. E. 939, 55 Am. St. Rep. 210;Evansville, etc., Co. v. Maddux Co. (1893) 134 Ind. 571, 33 N. E. 345, 34 N. E. 511;Walling v. Burgess (1890) 122 Ind. 299, 22 N. E. 419, 23 N. E. 1076, 7 L. R. A. 481;McComas v....