Louisville Trust Co. v. National Bank of Kentucky

• Decision Date: 15 September 1932
• Docket Number: No. 693.,693.
• Citation: 3 F. Supp. 909
• Parties: LOUISVILLE TRUST CO. v. NATIONAL BANK OF KENTUCKY et al.
• Court: U.S. District Court — Western District of Kentucky

3 F. Supp. 909

LOUISVILLE TRUST CO. v. NATIONAL BANK OF KENTUCKY et al.

No. 693.

District Court, W. D. Kentucky.

September 15, 1932.

COPYRIGHT MATERIAL OMITTED

Robert G. Gordon, Squire R. Ogden, and Gordon, Laurent & Ogden, all of Louisville, Ky., for Louisville Trust Co.

Edward P. Humphrey, of Louisville, Ky., and Nichols, Morrill, Wood, Marx & Ginter, of Cincinnati, Ohio, for Paul C. Keyes, receiver of National Bank of Kentucky, and National Bank of Kentucky.

ANDREW M. J. COCHRAN, District Judge.

This suit is before me upon final hearing and for decree. Plaintiff seeks thereby to recover a personal judgment against the defendant National Bank of Kentucky for the sum of $857,096.50 with interest from October 11, 1930, until paid; to have same allowed as a claim against its assets in the hands of the defendant Paul C. Keyes, its receiver; and that it be adjudged a lien on the Lincoln Bank property in Louisville subject to a vendor's lien thereon in favor of the Lincoln Bank & Trust Company for the sum of $109,000 to secure payment of that sum; and that said property be sold to satisfy that lien.

The right to such personal judgment is based on an alleged oral contract of sale made by plaintiff to the defendant bank, June 21, 1929, of a certain lot or parcel of land on the north side of Market street in Louisville, Ky., upon which a building had recently been erected for use in banking and trust business, which it then owned, for the sum for which judgment is sought, which contract plaintiff claims is evidenced by a memorandum or note in writing signed by it, and possession of which property, it is alleged, was delivered by it to such defendant, October 11, 1930. The defendants have it that it is a suit to compel specific performance of such contract. If such be its real nature it is not so pitched. Pending the suit the property which was the subject of sale was, by the agreement of the parties, exchanged for the Lincoln Bank property subject to the lien for $109,000, with the same right against such property that was had against the property which was the subject of the sale.

The principal defenses relied on are that there was no contract of sale and, if there was, it was not evidenced as alleged. I will first consider whether in fact there was a contract of sale. The determination of this question calls for a detailed statement in chronological order of certain facts, most of which are undisputed. In the early part of 1927 plaintiff was engaged in carrying on a trust and banking business at the southwest corner of Fifth and Market streets in Louisville in a building which it owned. The defendant National Bank of Kentucky was engaged in carrying on a banking business in a building on the northeast corner of Fifth and Main streets in Louisville under a lease. In April, 1927, the two institutions were unified through their stock, all the stockholders in each becoming stockholders in the other. The stock was placed in the hands of trustees, and the stockholders received trustees' participation certificates in lieu of their stock. The board of directors in each was identical, but each retained its separate and distinct identity as a corporation. They were officered by different individuals. John Stites was the president of the plaintiff and James B. Brown of the defendant bank. Mr. Brown was the dominant personality in bringing about this unification. There was in Louisville another institution known as the Louisville National Bank & Trust Company. Between March, 1928, and April, 1929, it had erected the building at 421 West Market street, which, and the land on which it stands, was the subject-matter of the oral contract claimed by plaintiff, at a cost including the land of $857,096.50, exclusive of cost of supervision by its president and interest on the investment. In April, 1929, that institution was merged with plaintiff. Its directors became directors of plaintiff, and its president, Richard Bean, became plaintiff's president. Thereby plaintiff became the owner of No. 421 West Market street property in addition to that occupied by it on the southwest corner of Fifth and Market in which it had been and was then doing business, i. e. of two buildings on Market street; not far apart. It only needed one. That such would be the result of the merger was a substantial objection to it, and objection thereto on this ground was made. The merger was brought about by the defendant bank. It was on its recommendation that it was made. Mr. Brown, president of the defendant bank, met the objection by the assurance that the defendant bank would buy one or the other of the two buildings and by so doing would solve the problem of its home. That this took place was testified to by Mr. Dodd, one of plaintiff's directors, and Mr. Bean, its president. There can be no question as to the admissibility of this testimony and its reasonableness makes certain that it did take place. It is hardly conceivable that plaintiff would have become the owner of two buildings, when it only needed one, except for such assurance, and it was reasonable for the defendant bank to acquire one of them and change its place of business to it. It was occupying as a tenant an old building on the northern edge of the city. Its standing and pretentions called for a more modern building further up in the city. It is not against this having taken place that there is no mention of it in the minutes of the meetings of the board of directors of either institution. The defendants have it that plaintiff claims that the assurance was that the defendant bank would purchase the 421 West Market street building and that it was one of the terms of the consolidation between the plaintiff and the Louisville National Bank & Trust Company. They characterize it as an attempt to inject or interpolate this into the terms thereof covered by a written contract by parol testimony. Such is not plaintiff's claim. Its claim is that the assurance was that the defendant bank would take one or the other of the two buildings, it not being then determined which one, and it does not claim that it was one of the terms of that consolidation. Manifestly it was not. It had no place in those terms. It was simply the inducement which led the plaintiff to go into the consolidation. The significance of this circumstance is in its bearing on the question as to whether the defendant bank did subsequently agree to purchase the 421 West Market street building and, if it did, as an equitable consideration for it standing by its bargain. That such assurance was given is one of the sure things of this case. The entry of the plaintiff into the consolidation cannot otherwise be accounted for and the circumstances were such that it was to the interest for the defendant bank that it acquire one or the other of these two buildings. It is not against its having taken place that plaintiff moved into the building at 421 West Market street on May 24, 1929, held a public reception in the afternoon of that day, and celebrated it with a banquet and speeches at the Pendennis Club that night. It had not then been determined that the defendant bank would take that building, and for aught that appears it was the then contemplation that it would take the other building. It was not until after May 24, 1929, and between that date and June 19, 1929, that it was definitely conceived that the defendant bank would take the 421 West Market street building. It was determined that it should at a conference on that day between Mr. Bean and Mr. Brown. They agreed to recommend to their respective boards that the defendant bank purchase that property at what it had cost. The two boards met on the afternoon of June 21, 1929, plaintiff's board at 2:30 p. m. and defendant bank's board at 3 p. m. At the meeting of plaintiff's board, Mr. Bean, its president, was authorized to offer the property to the defendant bank at that price. At the meeting of the defendant bank's board Mr. Bean made the offer and that board accepted it. There can be absolutely no question that this took place. It is testified to distinctly and positively by six of plaintiff's directors and Mr. Bean. That the offer was made and accepted by the defendant bank's board is evidenced by the minutes of their meeting. According thereto this took place at that meeting: "The Louisville Trust Company offered to sell to the National Bank of Kentucky the property now occupied by it known as 421 West Market Street for eight hundred & fifty thousand ($850,000.00) dollars, more or less, which offer was accepted. It was agreed that the National Bank of Kentucky shall occupy said property and that the Louisville Trust Company shall occupy the building at the southwest corner of 5th & Market Streets; and that the removal to the respective locations shall be made as soon as the necessary alterations to said building at Fifth & Market Streets are completed."

The only thing against the claim that this contract was so authorized and entered into is the denial of Mr. Brown and the absence of any mention on the minutes of the plaintiff of Mr. Bean being authorized to make the offer and the testimony of its secretary that the minutes of the meeting of June 21, 1929, cover all that then took place. No weight can be given to the testimony of Mr. Brown because of its unreasonableness. The fact that Mr. Bean was so authorized did not have to appear on the minutes of the meeting. Parol evidence of what took place is admissible. Bank of U. S. v. Dandrige, 12 Wheat. 64, 6 L. Ed. 552; Pittsburgh, C. & St. L. R. Co. v. Keokuk & H. Bridge Co., 131 U. S. 371, 9 S. Ct. 770, 33 L. Ed. 157; Jacksonville, etc., R. Co. v. Hooper Bridge Co., 160 U. S. 514, 16 S. Ct. 379, 40 L. Ed. 515; U. P. R. Co. v. Chicago, R. I. & P. R. Co., 163 U. S. 564, 16 S. Ct. 1173, 41 L. Ed. 265; 2 Thompson, Corp. § 1296.

The fact that no mention of the authorization was made on plaintiff's minutes may be due to the...