Lindemann v. Rusk

• Citation: 104 N.W. 119,125 Wis. 210
• Parties: LINDEMANN v. RUSK ET AL.
• Decision Date: 23 June 1905
• Court: Wisconsin Supreme Court

125 Wis. 210

104 N.W. 119

LINDEMANN

v.RUSK ET AL.

Supreme Court of Wisconsin.

June 23, 1905.

Appeal from Circuit Court, La Crosse County; J. J. Fruit, Judge.

Action by Albon Lindemann against Elizabeth M. Rusk and others, in which defendants filed a cross-bill. From a judgment for defendants on their cross-bill, both parties appeal. Affirmed.

This is a creditors' action to wind up the affairs of the Bank of Viroqua, a corporation. The Bank of Viroqua was organized by Jeremiah M. Rusk and William F. Lindemann on December 13, 1890, under articles of incorporation which were recorded December 30, 1890, in the office of the register of deeds for Vernon county. By these articles Rusk and Lindemann associated themselves to establish and conduct an office of discount and deposit under the terms and provisions of “An act to authorize the business of banking,” approved April 19, 1852, and the amendments thereto. As such corporation under the name of the Bank of Viroqua they conducted such a business at Viroqua, Wis. The period of existence of this corporation, as provided in the articles of organization, was from January 5, 1891, to January 4, 1901, and the bank was actually engaged in business during this period. The capital stock of this bank was $50,000, divided into 100 shares, of $500 each, of which the incorporators, Rusk and Lindemann, each owned one-half. They each so owned and held such stock up to the time of their deaths. At no time during the existence of the bank did they pay in more than 50 per centum of the capital stock. From the time this bank entered upon its business to January 4, 1901, William F. Lindemann was an officer thereof, and was in the active management of the bank's affairs. Both the incorporators are now deceased. Jeremiah M. Rusk died testate November 21, 1893, and William F. Lindemann died intestate December 13, 1901. The will of Jeremiah M. Rusk was probated January 2, 1894. He left a widow, Elizabeth M., and four children, Lycurgus J., Mary E., Blaine D., and Charity Rusk Craig, who are the legatees under his will. On January 15, 1902, special letters of administration were issued by the probate court for Vernon county to Henry Lindemann in the administration of the estate of William F. Lindemann, deceased, who left surviving him his widow, Rebecca, and the following children: Henry, William F., Albon, and Regina L. Trowbridge.

After January 4, 1901, when the bank ceased to do a general banking business, William F. Lindemann, as surviving director, took charge and management of its affairs to settle and close them up. He continued in this capacity to the time of his death, and at that time had closed and adjusted the greater part of its business and affairs. At his death the unliquidated and unsettled accounts of the bank needed administration, and plaintiff, as a creditor of the bank, on his own behalf as a creditor, and in behalf of all others similarly situated, commenced this suit to close and finally wind up this banking business, and to conserve and enforce his rights as heir at law of William F. Lindemann under the ownership and rights held by William F. Lindemann in his lifetime to any of the property of the bank. All the legatees under the will of Jeremiah M. Rusk, deceased, and all the heirs at law and the widow of William F. Lindemann, deceased, and the Bank of Viroqua were made parties defendant; and plaintiff prayed that the affairs of this bank be wound up under the court's direction, and that for that purpose Henry Lindemann be appointed receiver, with full powers, and that, after a full and complete administration of the bank's affairs, he make distribution of the property in his hands to those entitled thereto. On February 6, 1902, the court, by order, made Lycurgus J., as executor, and Mary E. Rusk, as executrix, of the will of Jeremiah M. Rusk, deceased, and Henry Lindemann, Albon and William F. Lindemann, Jr., as administrators of the estate of William F. Lindemann, deceased, parties defendant, with the privilege of answering in the case. On the same day Fred Eckhart was appointed receiver in the action, and on February 17, 1902, he filed his bond. On February 17, 1902, upon petition of Lycurgus J. Rusk, as executor, and Mary E. Rusk, as executrix, which petition bears date February 6, 1902, the court by order granted them leave to serve and file a cross-bill against their codefendants, the administrators of the estate of William F. Lindemann, deceased, and permitted them to allege such facts as they might be advised constituted a cause of action in their favor as representatives of the estate of Jeremiah M. Rusk, deceased, and for the benefit of the Bank of Viroqua, its stockholders and creditors, and against the representatives of the Lindemann estate, for an accounting by the Lindemann estate of the proceedings and conduct of William F. Lindemann as the trustee of the bank, in the management and settlement of its affairs, and for the recovery of whatever sum might be found due from them as such administrators, or from the estate they represented, on account of the appropriation by William F. Lindemann of the good will of the business of the Bank of Viroqua, and of any of its assets, or on account of any other default in the discharge of the decedent's duty as such trustee of the bank. Pursuant to this order, Lycurgus J. and Mary E. Rusk, as the representatives of their father's estate, served a cross-bill, alleging that William F. Lindemann, in the month of December, 1900, organized a new bank under the name of the Bank of Viroqua, and that he subscribed for the greater part of the capital stock, and that his children subscribed for the remainder; that this new bank opened and started doing business on the morning following the day on which the old Bank of Viroqua ceased conducting its business as a going concern under its articles of incorporation; and that the Lindemanns, as officers of the new bank, took possession of the banking house wherein the old bank was located, used the same furniture and bankbooks, and dealt with the patrons of the old bank as though there had been no interruption in the conduct of the old bank's business and in their relation thereto. It is also alleged that the old Bank of Viroqua had acquired a good will, and that it and other valuable assets had been appropriated by William F. Lindemann. They prayed for an accounting of these assets, and that the court decree that the avails and the profits which had accrued to the Lindemann estate from the appropriation of these assets be recovered against it and paid to the receiver in this action, and that he distribute them among the proprietors of the old bank under the orders of the court. The administrators of the Lindemann estate demurred to this cross-bill upon several grounds, and the demurrer was overruled. They thereupon served an answer to the bill, and, among other things pleaded, they denied the existence and possession of a good will by the bank, and they denied that any of the bank's assets had been diverted and appropriated as alleged. The case went to trial upon the issues framed by the cross-bill and the answer thereto.

Upon the testimony the court found the facts of the transaction, as to their history and relation, substantially as above stated, and as to the question of a good will, and a misappropriation thereof and of other assets by Lindemann, as follows:

“(11) That prior to the expiration of the charter of said banking corporation, and on or about the 8th day of December, 1900, the said William F. Lindemann, without notice to the legal representatives, heirs, or widow of the said Jeremiah M. Rusk, deceased, of any intention so to do, caused to be incorporated and organized, under the banking laws of the state of Wisconsin, a new banking incorporation under the same name of said old banking corporation, to wit, Bank of Viroqua, with a capital stock of fifty thousand dollars, and that, in and by the certificate of incorporation of said new bank, the business thereof was to begin on the 5th day of January, 1901, and that said new bank was so caused to be incorporated by the said William F. Lindemann without affording to the defendants Rusk, either individually or in their representative capacities, any opportunity to participate in the incorporation or organization or subscription to the stock of the said new bank, and with the purpose on the part of said William F. Lindemann of appropriating to himself and to members of his family the good name and the good will of the said former Bank of Viroqua without payment therefor.”

“(13) That said new bank began its banking business on the morning of the 5th day of January, 1901, under the said name, Bank of Viroqua, in the same banking office and building in which the former bank had conducted its banking business, and that the said William F. Lindemann, up to the time of his death, was the president and general managing officer of the said new bank; that, acting as legal administrator of said former bank, the said William F. Lindemann proceeded to close up the business of said former bank, by collecting in the debts due it, and by liquidating its obligations, the business of so closing up said former bank being conducted in the same office and building in which the said William F. Lindemann was conducting said new bank; that when customers of the old bank came to the bank to do business they were informed that the old bank did not have power to do any further business, and were informed that, if they desired to do so, their business could be transferred to the new bank, which was generally done, and that he thus secured to said new bank most of the deposits of said old bank, and that at no time did he make any effort to dispose of the assets of said old bank, other than by the collection thereof as the same matured; and that he at no time made any effort to so dispose of said assets so as to realize...