Paxton v. The Vincennes Manufacturing Company

• Citation: 50 N.E. 583,20 Ind.App. 253
• Decision Date: 25 May 1898
• Docket Number: 2,357
• Parties: PAXTON, RECEIVER, v. THE VINCENNES MANUFACTURING COMPANY
• Court: Court of Appeals of Indiana

50 N.E. 583

20 Ind.App. 253

PAXTON, RECEIVER, v. THE VINCENNES MANUFACTURING COMPANY

No. 2,357

Court of Appeals of Indiana

May 25, 1898

From the Sullivan Circuit Court.

Affirmed.

W. H DeWolf, for appellant.

J. S Bays and Cullop & Kessinger, for appellee.

OPINION

BLACK, J.

The appellant, Thomas R. Paxton, receiver of the Vincennes National Bank, brought his action against the appellee in the Knox Circuit Court, upon a promissory note made by the appellee to said bank, dated May 23, 1885, upon which as shown by the complaint fifteen hundred dollars had been paid. Before the issues were fully formed the venue was changed to the court below. There was an answer in two paragraphs, the first being a plea of payment. In the second paragraph, purporting to be a counterclaim, a demurrer to which was overruled in the court below, the appellee admitted its execution of the note in suit, and alleged, in substance, that subsequent to the execution thereof, for the purpose of securing it and a number of other notes which the appellee had executed to the bank, and which had been indorsed to one Wilson M. Tyler, who was the president of the bank, and Hiram A. Foulks, cashier thereof, the appellee executed to said Tyler and Foulks, a mortgage on a large amount of property, personal and real, which the appellee then owned; that on the 5th day of July, 1885, subsequent to the execution of said mortgage, the plant of the appellee was burned and so damaged that the appellee could not longer carry on its business; that it then had a large stock and carried a large amount of insurance on its plant; that on the 8th of July, 1885, the appellee and said Tyler and Foulks, president and cashier of said bank, for the purpose of repaying the indebtedness which the appellee then owed said bank, entered into a contract as follows: "Whereas, Wilson M. Tyler and Hiram A. Foulks hold a mortgage on certain personal property described as logs, lumber, heading, staves, and material of every kind, engines, boilers, mills, machinery, tools, buildings, sheds and other personal property of every kind, owned and used by the Vincennes Manufacturing Company, and kept and situated upon the premises occupied and used by the said manufacturing company, to said Tyler and Foulks, to indemnify them as indorsers for said company; and as whereas, said company has failed to pay certain notes indorsed by said Tyler and Foulks, now past due, and which said Tyler and Foulks have paid, and are liable to pay for said company, the said manufacturing company, hereby transfer, set over, and deliver, now into the possession of the said Tyler and Foulks all said property, of every description as such mortgagees, and by witness of the terms of said mortgage, to be by them disposed of as provided in said mortgage; and the proceeds of sales of such mortgaged property shall be applied in payment of operating expenses now due, and that may accrue, as provided in said mortgage, in manufacturing and putting into shape for sale all material, machinery and other property as above described, to the expenses of selling and disposing of the same, and the balance of its proceeds to be applied in payment of said mortgage and a certain other mortgage executed by said manufacturing company to the Vincennes National Bank, so far as said indebtedness now exists or may remain after collecting all insurance money due to said manufacturing company by reason of its recent fire; and after the payment of all said sums, whatever money or property shall remain shall be returned to said Vincennes Manufacturing Company. It is hereby further understood that should said Tyler and Foulks fail to apply said proceeds of sale as above stipulated, they shall then be jointly and severally liable to said Vincennes Manufacturing Company and to each individual stockholder thereof for damages for such failure." There were some other provisions not here material. The agreement was signed by the appellee and by Tyler and Foulks.

It was further alleged in the second paragraph of answer, that said contract had been in full force and effect since the date of its execution; that the appellee in all respects kept and performed all the conditions of said contract on its part; that said Tyler, the president of said bank, collected and took charge, for the payment of said indebtedness, of property for which he never accounted to the appellee, but which he applied, as the appellee believed, upon said indebtedness. The answer set forth a list of this property, amounting to $ 27,600.00. It was alleged that said Tyler, as president of said bank, received said sum of money which he realized from the sale of said articles, for the purpose of discharging said indebtedness, and that the same "was fully discharged and paid upon the whole of said indebtedness;" that the amount of said indebtedness of the appellee to said bank at said time, including the demand sued upon in appellant's complaint, was not more than $ 16,000.00; that the proceeds realized from the sale of said articles "were under the control, management and direction of the plaintiff, and was by it used in its general banking business, and that it is indebted to the defendant for the overplus upon the sale of said articles in the sum of $ 11,600.00, with interest thereon from the 1st day of January, 1886, up to the present time; that all of the indebtedness which the defendant owed to the plaintiff was fully paid and satisfied out of the sale of the above and foregoing articles, and there was a surplus over and above the discharging of said indebtedness to the plaintiff in its hands of $ 11,600.00, with the interest thereon, which it justly owes the defendant and has refused to pay over, and account to the defendant for said sum or any part thereof; that the defendant often demanded of the plaintiff an accounting and settlement of said money, the overplus remaining in the hands of said plaintiff, which it realized from the sale of the above and foregoing articles at the prices stated herein; that it wholly failed and refused at any and all times to settle with the defendant or to account to it for said overplus or any part thereof. The defendant offers to set off against said plaintiff's claim any amount which may be found to be due from it to the plaintiff, and asks judgment against the plaintiff for the residue thereon remaining in its hands. Wherefore defendant demands judgment in the sum of twelve thousand dollars and all proper relief in the premises."

The appellee also filed a pleading denominated therein a cross-complaint, which counsel for appellant in argument say is in all respects the same as the second paragraph of answer, while counsel for appellee say that these pleadings are the same except that they are differently named. A demurrer to the cross-complaint was overruled. The objection urged by counsel to this pleading, thus unnecessarily duplicated, is that if it shows a cause of action it is one not against the bank or its receiver, but against Tyler and Foulks. The facts are not stated with desirable clearness.

It is alleged that a mortgage was given by the appellee to Tyler the president of the bank, and Foulks, its cashier, for the purpose of securing the note in suit and other indebtedness of the appellee to the bank. It is alleged that the agreement set out in the pleading was entered into for the purpose of repaying the indebtedness of the appellee to the bank. The agreement by its terms provided that the mortgaged property should be disposed of by Tyler and Foulks, that the proceeds should be applied in payment of operating expenses and the...