Mock v. P.F. Goodrich Corporation
| Decision Date | 22 January 1942 |
| Docket Number | 16530. |
| Citation | 38 N.E.2d 900,110 Ind.App. 685 |
| Parties | MOCK v. P. F. GOODRICH CORPORATION, et al. |
| Court | Indiana Appellate Court |
Brubaker & Rockhill and Donald F. Vanderveer, all of Warsaw, for appellant.
Goodrich & Emison, of Indianapolis, and Albert Chipman, of Plymouth, for appellees.
The controlling facts herein, each established by at least some competent evidence, are substantially as follows: Prior to January 1st, 1930, the State Bank of Warsaw, hereinafter referred to for brevity as the State Bank, and the Indiana Loan and Trust Company, hereinafter for brevity referred to as the Trust Company, had been operating as two separate and distinct state banking institutions in the City of Warsaw Indiana. On that date both banks were solvent going institutions, at which time there was executed a written contract in which all of the stockholders of each of said two banks joined. This contract made provision for the unification of said two banks into one institution. This unification was accomplished, and the name of the new institution was Indiana State Bank and Trust Company, which for the sake of brevity is hereinafter referred to as the Unified Bank. The important provisions of the said contract provided that the capitalization of the Unified Bank should be $200,000 in paid-up capital stock and $25,000 in surplus that the banking plant of the said State Bank was to be abandoned and the plant of the Trust Company would be used to carry on the banking business of the Unified Bank. Paragraph 11 of the said agreement provided that each of said banks was required to put into the Unified Bank $112,500 of the $225,000 Unified Bank aggregate banking capital. Said contributions were to consist of the said banking plant used and assets to be valued and approved by a joint committee named in the agreement. A sufficient amount of approved assets of each of said banks to equal and cover their respective deposits and all other liabilities was likewise to be selected and placed into the Unified Bank. We now quote Paragraph 23 of said agreement as follows: "All property of every kind belonging to The Bank and all property of every kind belonging to the Trust Company, which is not put into the Consolidated institution in accordance with paragraph 11," (providing the mode of making up capital, surplus and banking assets to cover liabilities) "shall become respectively the joint property of the stockholders of The Bank and the Trust Company, in proportion to their several stock interests, immediately prior to the consolidation, and shall be managed as trusts by the trust department of the consolidated institutions, in the usual way and at the usual and established compensation, and reports of such property held in trust shall be rendered to each of such stockholders from time to time by the consolidated institution."
Provision was also made in the said agreement authorizing the committee named therein to take the necessary steps either to form a new corporation or to amend the charter of the Trust Company so as to bring the said union into legal being at the time the agreement was to be consummated. The committee was granted full power to carry the provisions of the agreement to a completion, and was to have power to arrange and determine the details of procedure where no specific provision was made in the agreement, and to meet any contingency that might arise. As Paragraph 24 of the said agreement has some relation to the matter under consideration, we now set it forth as follows:
In carrying out its powers, the committee caused the name of the Trust Company to be changed and the capital stock to be increased from one thousand shares of common stock of the par value of $100 each to two thousand shares of common stock of the par value of $100 each, and made the required exchange of stock certificates to all former stockholders of the two institutions who were issued stock proportionate to their holdings in the respective banks. In carrying out the agreement, each bank duly delivered to the Unified Bank approved assets to cover its portion of the capital structure of the Unified Bank, to-wit, $112,500, together with other sufficient approved assets to cover the deposits and liabilities of each, all of which assets were placed upon the books of the Unified Bank pursuant to such agreement.
Each Bank had assets which at the time of the unification were not needed for use to form their respective portions of said new capital structure and to cover completely their respective deposits and other liabilities. During the trial of this cause these remaining assets were called and referred to as overplus. This so-called over-plus was treated as in the nature of a dividend in kind declared by the stockholders of each institution and held in trust by the Unified Bank for them respectively under the provisions of Paragraph 23, above quoted.
There was a record made by the committee of these so-called dividends in kind of the Trust Company. This record was lost or destroyed and not produced at the trial, but there was oral evidence from a member of the committee that such said so-called dividend in kind was made up substantially of the items of property listed and set forth in the petitioner's amended petition and consisted of specifically described real estate and choses in action and the like. These overplus assets were carried on the statement of the Unified Bank as a trust fund and dealt with by it as a trust account for the benefit of the shareholders of the Trust Company and of the bank respectively, the evidences of debts being filed in separate portfolios. There was some evidence that meticulous care was not exercised entirely in the segregation but that in the main there was substantial segregation. The overplus account in the Trust Company (the one under consideration herein) consisted of choses in action, promissory notes, certificates of deposit, and five separate parcels of real estate which the Trust Company owned at the time of the unification. There never was any formal conveyance of this real estate to the Unified Bank as trustee, but the title continued in the name of the Trust Company. It appears from the evidence that the trust ledger items were not accurately described, and the principal evidence of identification at the trial consisted of personal recollection of the officers of the Trust Company and of the Unified Bank, who were actively in contact with the said items both before and after the unification. At no time were any of the assets, which were segregated into the trust fund, as provided by said Section 23 of the contract, carried as assets of the Unified Bank other than in its trust capacity, except in a few instances where exchanges and transfers from one to the other were made. The evidence also shows that from time to time some questionable items of debts due to the Trust Company would be charged off as worthless. In some instances these items that were charged off would later be paid, and the cash so taken in would be treated as if it were a time deposit made by a stranger to the...
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