Kellogg v. Bank

• fullCitation: Kellogg v. Bank, 58 Kan. 43, 48 P. 587 (Kan. 1897)
• Decision Date: 10 April 1897
• Citation: 48 P. 587,58 Kan. 43
• Docket Number: 9494. 9495. 9496
• Court: Kansas Supreme Court
• Parties: Q. A. KELLOGG v. THE DOUGLAS COUNTY BANK et al. Q. A. KELLOGG v. LATHAM, ALEXANDER & CO. et al. Q. A. KELLOGG v. THE CHEMICAL NATIONAL BANK OF ST. LOUIS et al

48 P. 587

58 Kan. 43

Q. A. KELLOGG v. THE DOUGLAS COUNTY BANK et al.

Q. A. KELLOGG v. LATHAM, ALEXANDER & CO. et al.

Q. A. KELLOGG v. THE CHEMICAL NATIONAL BANK OF ST. LOUIS et al

No. 9494. No. 9495. No. 9496

Supreme Court of Kansas

April 10, 1897

Decided January, 1897.

Error from Neosho District Court. Hon. L. Stillwell, Judge.

Three petitions in error, by Q. A. Kellogg, as plaintiff in error are attached to one record. Each of these has been given a separate number by the clerk. The defendants in error first named in the petitions, and who are the only parties appearing in this court, are the Douglas County Bank, in number 9494; Latham, Alexander & Co., in number 9495, and the Chemical National Bank, of St. Louis, in number 9496. The Douglas County Bank brought suit on a promissory note executed by Kellogg on the twentieth of November, 1891, for the sum of $ 4,100, payable to the order of M. D. Ewing cashier, and caused an attachment to be issued, and to be levied on property claimed by Kellogg to belong to the Kellogg Mercantile Company. Latham, Alexander & Co. brought suit on a note, executed by Kellogg on the twenty-fourth of October, 1891, for $ 3,700, payable to the order of M. D. Ewing, cashier, which was indorsed, "C T. Ewing, Pres.," and delivered to the plaintiff. An attachment was issued in this action also, and was levied on a stock of merchandise and certain real estate as the property of the defendant. The Chemical National Bank brought suit on a note, executed by Q. A. Kellogg to M. D. Ewing cashier, for $ 3,500, dated February 19, 1892, due four months after date, and indorsed as follows: "For value received we hereby guarantee payment of within note at maturity, waiving demand, protest, and notice of protest. M. D. Ewing, Cashier." The last-mentioned suit was brought May 24, 1892, before the maturity of the note. On application to the district judge, an order of attachment was allowed and issued, which was levied on real and personal property. A motion was made by Kellogg to discharge the attachment in each of the three cases, each of which motions was supported by his affidavit denying the grounds set cut in plaintiff's affidavits. In each of the two last-named actions, motions to dissolve the attachment and release the property attached were also filed by the Kellogg Mercantile Company. The motions to discharge the attachments in these cases were heard and considered together, and overruled June 20, 1892. The action of the Douglas County Bank was not brought until the twenty-first of June, 1892. The Kellogg Mercantile Company, claiming to own all the attached property, filed an interplea in each of the three cases. Interpleas were also filed by numerous other creditors, claiming a lien on the attached property under a chattel mortgage, executed by the Kellogg Mercantile Company, to secure their claims. By consent of all the parties interested, the court ordered that the three actions and all the interpleas filed in each case should be tried together; and this was accordingly done at the April term, 1893, resulting in judgments in favor of each of the plaintiffs against the defendant and all the interpleaders.

It was shown at the trial that C. T. Ewing carried on a banking business at Thayer, under the name of Ewing's Bank, M. D. Ewing acting as cashier. Q. A. Kellogg was a merchant doing business in the same town. For a number of years, Kellogg had executed promissory notes, as an accommodation to Ewing, which he had discounted. The three promissory notes sued on were executed in this manner, without consideration, for Ewing's accommodation, he agreeing to protect Kellogg from liability on them. These notes were negotiated by Ewing to the respective plaintiffs. Ewing was, and for a long time had been, insolvent. In the course of their dealings, Kellogg had in like manner executed accommodation notes aggregating in amount over $ 400,000, and a large amount of notes of this kind was outstanding at the time Ewing's Bank was closed. Being pressed for payment or security, by the National Bank of Kansas City, which held his note for $ 6,500, Kellogg, in the latter part of January, 1892, organized a corporation called the Kellogg Mercantile Company, fixing the capital stock at fifteen thousand dollars. Of this stock he took one hundred shares of one hundred dollars, par value, and the balance was distributed, as follows: To M. E. Kellogg, his wife, twenty shares; to E. W. Smith, twenty shares; to C. W. Smith, five shares; to John Diller, five shares. The stockholders, other than Kellogg, executed their promissory notes to him for an amount equal to the face of the stock taken; but E. W. Smith soon surrendered nineteen of his shares to Kellogg, and took up his note. On the tenth of February, 1892, Kellogg was elected president and treasurer, his wife, M. E. Kellogg, vice president, his nephew, C. W. Smith, secretary; and on the same day he conveyed to the corporation his business house, valued at three thousand dollars, his stock of merchandise, valued at $ 8,346.69, and notes and accounts valued at $ 3,653.31. The corporation assumed his outstanding indebtedness for merchandise, amounting to $ 1,499.47. He still retained a small amount of property which he did not transfer to the corporation. His total indebtedness at that time, including $ 15,350 of accommodation notes executed to Ewing, is found by the court to have been $ 26,199.47, and his total assets were $ 18,462.25. The court found that, at the time of the transfer, Kellogg was chargeable with notice of Ewing's insolvency; and that the incorporation of the Kellogg Mercantile Company, and the transfer of his property to it, were with the intent to hinder and delay his creditors. Judgments on the notes were entered in favor of each of the plaintiffs against Kellogg, and judgment was also rendered against all of the interpleaders. Kellogg, as plaintiff in error, brings this proceeding to reverse the judgments and orders of the court.

Judgment affirmed.

J. W. Deford, and J. M. Dunsmore, for plaintiff in error.

Lapham & Brewster, for...