Krull v. Pierce

• Decision Date: 06 March 1947
• Docket Number: 17520.
• Citation: 71 N.E.2d 617,117 Ind.App. 638
• Parties: KRULL v. PIERCE et al.
• Court: Indiana Appellate Court

71 N.E.2d 617

117 Ind.App. 638

KRULL v. PIERCE et al.

No. 17520.

Appellate Court of Indiana, in Banc.

March 6, 1947

Appeal from Superior Court, Marion County; Emsley W. Johnson, Jr. Judge.

Henry M. Dowling, of Indianapolis, for appellant.

Gilliom Armstrong & Gilliom, of Indianapolis, for appellees.

CRUMPACKER Chief Judge.

This litigation has its origin in a written contract dated January 27, 1931, whereby Elizabeth V. Pierce assigned to her son the appellee Henry Douglas Pierce, Jr., 332 shares of the capital stock of the Vinton-Pierce Company, an Indiana corporation. This contract of assignment contained certain conditions subsequent whereby the said appellee Pierce was obligated to devote the dividends 'apportionable' to said stock to the use and benefit of his mother, the said Elizabeth V. Pierce, and his sister, the appellant herein, during their respective lives.

The Vinton-Pierce Company has paid no dividends on its stock since June 30, 1934, and feeling that its failure to do so is directly attributable to the wrongful acts and conduct of the appellee Pierce, the appellant brought this suit. She complains that (1) said appellee Pierce, as the controlling stockholder and director of the Vinton-Pierce Company, wrongfully appropriated to his own use large sums of money which were properly applicable to the payment of dividends; (2) the said Pierce so dominated the affairs of said company that he received sums therefrom tantamount to dividends upon 660 shares of stock he claims to own while denying any corresponding return to the 332 shares assigned to him for the appellant's benefit; (3) the stock so assigned is in danger of becoming worthless through the acts and omissions of the appellee Pierce; and (4) the purpose for which said company was organized and incorporated has become impossible of performance. By way of relief she asks that the appellee Pierce account for his misuse of the company's income; that her lien on the stock assigned for her benefit be foreclosed; that a receiver be appointed for the Vinton-Pierce Company to sell its assets and distribute the proceeds in such manner as to give approximation to the objective Elizabeth V. Pierce sought to reach by the assignment agreement of January 27, 1931.

Trial was to the court which found the facts specially and stated conclusions of law thereon unfavorable to the appellant and, over her motion for a new trial, entered judgment denying her any relief whatever. Error is predicated on each conclusion of law and on the overruling of the motion for a new trial which charges that (1) the decision is not sustained by sufficient evidence; and (2) such decision is contrary to law.

It has been held repeatedly in Indiana that an assignment of error to the effect that the decision of the court is not sustained by sufficient evidence presents no question for review when the decision involved is negative. Wadler v. Mogul Rubber Corp., Ind.App., 1945, 61 N.E.2d 472; Scoopmire v. Taflinger, 1943, 114 Ind.App. 419, 52 N.E.2d 728; McKee v. Mutual Life Ins. Co. of New York, 1943, 222 Ind. 10, 51 N.E.2d 474; Wilson, Admx. v. Rollings, 1938, 214 Ind. 155, 14 N.E.2d 905. In the Scoopmire case we said [114 Ind.App. 419, 52 N.E.2d 729]: 'The reason for this rule is obvious as a verdict unfavorable to the party having the burden of proof does not rest upon the persuasiveness or quantum of the evidence against him but rather upon his failure to sustain the burden of establishing his own case by a preponderance of the evidence.' Such being the reason for the rule, the appellant contends it has no application here because the undisputed evidence discloses a trust or fiduciary relationship between the appellee Pierce and herself and that said appellee dealt with the subject matter of the trust for his own benefit and thus cast upon himself the burden of proving that he acted honestly and absolutely in good faith. Therefore, says the appellant, what appears to be a negative decision is in fact an affirmative one in favor of the party having the burden of proof and must be sustained by sufficient evidence.

The fallacy of such argument, however, lies in the fact that under the rule in this state the burden of proof never shifts from the party who tenders the issue. Though the burden of going forward with evidence to satisfy presumptions may shift during the trial the basis necessity of proving the allegations of the complaint by a fair preponderance of all the evidence always remains with the plaintiff. McAdams v. Bailey, 1907, 169 Ind. 518, 534, 82 N.E. 1057, 13 L.R.A., N.S., 1003, 124 Am.St.Rep. 240; Fletcher Savings & Trust Co. v. American State Bank, 1925, 196 Ind. 118, 130, 147 N.E. 524.

A negative decision, however, may be contrary to law if the evidence positively requires a conclusion contrary to that reached by the trial court. See Daniels v. Indiana Trust Company, 1943, 222 Ind. 36, 49, 51 N.E.2d 838. The appellant contends that such is the situation in respect to many of the ultimate facts found by the court and upon which its decision rests. Before discussing this question it is well to have the provisions of the assignment agreement clearly in mind as it is the charter of the appellant's rights. The agreement is dated January 27, 1931, and is executed by Elizabeth V. Pierce and the appellee Henry Douglas Pierce, Jr. It recites that in consideration of the assignment to him of 332 shares of the capital stock of the Vinton-Pierce Company by the said Elizabeth V. Pierce he, the said Henry Douglas Pierce, Jr., undertakes to pay out of dividends 'apportionable' to said stock, the following sums of money in the following manner: (1) $100 per month during the lifetime of Elizabeth V. Pierce and $300 after the death of Elizabeth V. Pierce, to be paid to Theresa V. P. Krull during her lifetime, all the dividends apportionable to said stock during the lifetime of Elizabeth V. Pierce after paying said sum of $100 per month to Theresa to be paid to Elizabeth V. Pierce. (2) 'If and when' the Vinton-Pierce Company, after the death of Elizabeth V. Pierce, shall sell its property at the corner of Meridian and 14th Streets in Indianapolis, an additional sum of $250 per month. Which sum is to be paid during her lifetime to Theresa. (3) 'If and when' said Vinton-Pierce Company, after the death of Elizabeth V. Pierce, shall lease its property at the southwest corner of Pennsylvania and Market Streets in Indianapolis for 50 years or more, a further additional sum of $450 per month, which sum is to be paid to Theresa during her lifetime. All payments are cumulative and terminate upon the death of Elizabeth or Theresa, whoever shall live the longer, at which time ownership of said shares of stock shall 'become fully vested in Henry Douglas Pierce, Jr., free from all liens and limitations.' This agreement sets up a formula by which the dividends 'apportionable' to the stock assigned are to be determined. According to such formula said dividends are 'to consist of all the income received by said Vinton-Pierce Company during the current year, after first deducting from its gross income actually received during such year the necessary current taxes, insurance premiums and interest on mortgage indebtedness existing against the real estate of said company, together with a necessary amount required for current operating expenses and upkeep of the property of said company for such year, but without deduction for payment or payments on the principal of the mortgage debt unless 'required by the mortgagee so to do.' In the event the said Henry Douglas Pierce, Jr., fails to carry out any of the material provisions of the assignment agreement all right and title to said shares of stock shall revert to Elizabeth V. Pierce if living at the time of such default or, in case of her death prior to such default, then to said Theresa V. P. Krull, as her sole and absolute property. The payment of dividends as above provided is forgiven if the building at the southwest corner of Pennsylvania and Market Streets is destroyed or so damaged by fire or an act of God as to render it untenantable in whole or substantial part; or if it becomes untenantable by virtue of natural depreciation or obsolescence; or because of an order of municipal, state or national authority or an order of condemnation; or if the revenues should drop because of lack of tenants.

Endorsed on this agreement, and duly executed as a part thereof, is the following: 'In consideration of the foregoing assignment according to its provisions, and in further consideration of the payment to me of the sum of $4,000.00, the receipt of which is hereby acknowledged, the foregoing assignment is accepted by the undersigned, Theresa V. P. Krull in full payment, satisfaction and settlement of all rights and interests which I have or claim to have now or hereafter in any or all of the properties now owned or hereafter to be owned by the Vinton-Pierce Company or by said Elizabeth V. Pierce or both of them.' Certificate No. 12, evidencing the stock in controversy, was deposited with the appellee Indiana National Bank of Indianapolis to assure the performance of the terms of said agreement.

The evidentiary background of this litigation, as disclosed by the record, indicates beyond controversy that the paramount object of the above assignment agreement was to provide a substantial monthly cash allowance for the appellant during her lifetime in lieu of any provisions that otherwise would be made for her by her mother's will. The conclusion is irresistible that it never occurred to the mother that the dividends apportionable to the assigned stock would ever be insufficient for such purpose except under the conditions she specifically enumerated as...