Roberts v. Vonnegut

• Decision Date: 25 February 1914
• Docket Number: No. 8645.,8645.
• Citation: 58 Ind.App. 142,104 N.E. 321
• Parties: ROBERTS et al. v. VONNEGUT et al.
• Court: Indiana Appellate Court

58 Ind.App. 142

104 N.E. 321

ROBERTS et al.

v.VONNEGUT et al.

No. 8645.

Appellate Court of Indiana, Division No. 1.

Feb. 25, 1914.

Appeal from Superior Court, Marion County; Joseph Collian, Judge.

Application by the receiver of the Mais Motor Truck Company for a determination of the priority and allowance of the claims of the creditors of said company, wherein various creditors filed intervening petitions. From a judgment establishing the priority of the claims of Franklin Vonnegut and others, William H. Roberts and others appeal. Affirmed.William L. Taylor, William P. Kappes, and Louis B. Ewbank, all of Indianapolis, for appellants. Roscoe O. Hawkins, Gaylord R. Hawkins, and Alexander G. Cavins, all of Indianapolis, for appellees.

FELT, J.

The receiver of the Mais Motor Truck Company filed his report showing that the property of the company had been sold, and that he had in his hands for distribution to the creditors $71,000. He also made recommendations for the allowance of several classes of claims in his report, and requested the court to set them all for hearing on the question of priority, and to determine the same, and order payment accordingly. Some time prior to the appointment of a receiver the company was in embarrassed financial condition, and, to prevent the appointment of a receiver, and keep the company in business as a going concern, on December 4, 1911, certain of the stockholders entered into a “new capital agreement,” by which they undertook to provide $75,000 for the company. Contemporaneously therewith the creditors of the company executed a “creditor's extension agreement,” by the terms of which they extended the time of the payment of the company's indebtedness by installments covering a period of 30 months. “Class A” of the creditors included merchandise and bank creditors existing on December 4, 1911, and are the appellees in this suit. “Class B” includes the subscribers to said “new capital agreement,” who present claims on notes of the company given them in payment for the money furnished the company in pursuance of said agreement. “Class C” represents the claims of assignees of notes given the same as those in “Class B,” and the creditors of “Class B” and the Central Trust Company of “Class C” are the appellants in this suit. There is no question as to the amount or validity of any of the claims. In addition to the request of the receiver for the court to determine the question of priority, and to direct him in the payment of the claims, the several claimants in classes A, B, and C filed the intervening petitions, in which they alleged the facts they claimed entitled them to priority. On request duly filed the court made a special finding of facts, and stated its conclusions of law thereon, which sustain appellees' claim of priority. The court rendered judgment on the conclusions of law, from which the appellants have appealed, and assigned as error said conclusions of law; also the overruling of the motion for a venire de novo, and the overruling of their motion for a new trial.

The substance of the finding of facts, as far as material to the questions presented, is as follows: That on December 4, 1911, the Mais Motor Truck Company, a corporation, was in embarrassed financial condition, and its assets were insufficient to pay its debts. That a suit was then pending against it for the appointment of a receiver, which the stockholders desired to avoid. That thereupon a conference was held by the stockholders and certain creditors of the company. That as a result of said conference the stockholders agreed to advance and pay into the treasury of said company not less than $75,000, to be used in payment of the debts of the company, and as working capital, which money was to be advanced on the condition “that certain of the creditors of said company would extend the time of payment of their respective obligations.” That the creditors of said company accepted said offer of said stockholders, and thereupon two contracts were executed. That one of said contracts was executed by the stockholders, the substance of which is as follows: That the proposed creditors' extension agreement is conditioned on the company's procurement of not less than $75,000 for working capital, with the further condition that the repayment of the money so provided shall be subject to the payment of extension notes to be issued to said creditors, “so that neither in the course of business of the company nor in liquidation, or otherwise, shall any part of the principal of such new capital be repaid until such extension notes given creditors shall have been fully paid.” That, conditioned on “the ratification of said creditors' extension agreement by the creditors of the company,” the undersigned agree to pay on demand, after such extensions have been executed by the creditors, the several amounts subscribed, respectively, provided not less than $75,000 shall be so subscribed. That notes of the company shall be issued to cover the amount so subscribed; “but no part of the principal of said notes shall be paid until all of the existing indebtedness covered by said extension agreement shall have been paid in full, which fact shall be plainly stamped upon or inserted in each of said notes.”

Said agreement further provides: “The subscribers hereto do hereby name, nominate, constitute, and appoint the following named persons, to wit: J. V. Stimson, A. S. Lockard, H. G. Francis, W. M. Pearce, W. H. Roberts, Will H. Brown, and Alfred W. Markham as a stockholders' committee, who shall have charge of carrying out the extension agreement of the creditors. Said committee shall continue in existence until the claims of existing creditors, and the money advanced for additional capital as above specified, both principal and interest, shall have been fully repaid, and shall have power and authority to demand the resignation of the present directors, and to elect new directors in their stead, to exercise general supervision and management of the property and business of said company, to fill vacancies in the committee, and to add to or reduce the number thereof as they shall deem expedient, and to do anything else which, in its sound judgment and discretion, shall be deemed advantageous to the company. Said committee is authorized to act in conjunction with a committee or committees appointed by the creditors, and to assign a share of stock in order to qualify any one not now a stockholder to become a member of the board of directors of said company. A majority of said committee shall constitute a quorum for the transaction of business. *** The undersigned do hereby severally agree to and do hereby assign to said committee, and its successors and assigns, all of the shares of common stock in the Mais Motor Truck Company owned by them, or in which they have any interest, with full power and authority to said committee to hold and vote the same at all regular and special meetings of the stockholders of said company, to the same extent and with like effect as though said stockholders were personally present, and personally voted the same; and this power and proxy shall be absolute and irrevocable until the present indebtedness and the amount of the new capital advanced by the subscribers hereto shall have been fully repaid. *** This is not to be binding until seventy-five thousand dollars ($75,000) is subscribed and paid in.” Here follows list of subscribers and amount subscribed by each.

The court also found: That said stockholders executed said contract on the condition that the same was not binding, and their subscriptions were not enforceable against them until $75,000 was actually subscribed and paid in. That the creditors' extension agreement is in substance as follows: That all creditors of said company holding claims amounting to not less than $100, on account of the inability of the company to pay its debts as they mature, and in consideration of advantages to the creditors, agree to extend the time of payment of their several claims, so that they shall be payable in ten equal installments, three months apart, beginning March 1, 1912, to be evidenced by the promissory notes of the company on forms used by the Capital National Bank of Indianapolis. “Upon the delivery of such extension notes all promissory notes or other written evidence of indebtedness now held by said creditors, respectively, shall be canceled and delivery to said company. *** The foregoing extension is conditioned upon the procurement of said the Mais Motor Truck Company of such amount of money as shall reasonably be required for working capital, estimated at $100,000, but which shall not be less than $75,000, the foregoing extension not to be effective until at least $75,000 of such capital has been paid into the treasury of the company. The foregoing extension is also conditioned upon the procurement of such new capital in such manner as that the payment of the principal thereof shall in all respects to be subject to the payment of the aforementioned extension notes, so that neither in the course of business of said company nor in liquidation, or otherwise, shall any part of the principal of such new capital be repaid until such extension notes have been fully repaid. *** Said company may make special arrangements with any other creditor holding independent security, subject to the foregoing provision.”

A creditors' committee composed of Henry E. Riker, John R. Norholt, and James W. Lilly, “appointed at a meeting of creditors at Indianapolis December 4, 1911, is hereby assented to and confirmed by the undersigned, which committee shall represent the undersigned severally in all matters relating to said extension, and there is given over to it by the undersigned full power to determine for all the undersigned creditors all matters relating to the procurement of said new capital, and the payment thereof into the treasury, and the terms,...