State ex rel. Thompson v. City of Greencastle
| Decision Date | 23 March 1942 |
| Docket Number | 16775. |
| Citation | 40 N.E.2d 388,111 Ind.App. 640 |
| Parties | STATE ex rel. THOMPSON, State Auditor, v. CITY OF GREENCASTLE et al. |
| Court | Indiana Appellate Court |
George N. Beamer, Atty. Gen., and Urban C. Stover, Deputy Atty Gen., for appellant.
Clyde H. Jones, of Indianapolis, for appellees Perk, Edwards and Alexander.
Feslar Elam, Young & Fauvre, of Indianapolis, and Courtland C Gillen and Glenn H. Lyon, both of Greencastle, for other appellee.
This action was brought by the appellant against the appellees by a complaint in two paragraphs. The first paragraph of the complaint alleged that the Greencastle Water Works Company was a corporation which had been organized and had existed under the laws of the State of Indiana for many years prior to June 1, 1935.
The complaint alleged that in 1928 this corporation filed a petition with the Public Service Commission of Indiana for an increase in rates, and in such proceeding expenses were incurred by said Commission in the sum of $620.16, which amount the Greencastle Water Works Company was ordered to pay. This amount was not paid, however, and on or about the 1st day of June, 1935, the appellees, George H. Alexander Charles A. Edwards and Benjamin Perk, who were the owners and holders of all the stock of the said Greencastle Water Works Company, sold said capital stock to the city of Greencastle, Indiana for a named consideration of $363,600.
The complaint alleges that this transaction was a part of a general plan by which the property of the Greencastle Water Works Company was to be acquired by the city of Greencastle.
The complaint alleges that the capital stock of the Greencastle Water Works Company was transferred by the appellees to one Charles C. Huestis, under an arrangement whereby all the property of the Water Works Company, both real and personal, was to be acquired eventually by the city of Greencastle, leaving no assets belonging to the Water Works Company.
The complaint further alleges that to carry out this arrangement certain persons were selected by the appellees, Alexander, Edwards and Perk, and the city of Greencastle, and that the persons so selected acted as officers of the Greencastle Water Works Company, and executed the conveyances required to transfer the property. In order to accomplish such transfer, the city of Greencastle issued bonds in the amount of $450,000, the proceeds from which retired an outstanding obligation of $100,000 against the Water Works Company, $350,000 of which was paid to the appellees, Alexander, Edwards and Perk, and an additional amount of $13,600 was borrowed from a local bank and also paid to the appellees, Alexander, Edwards and Perk, in consideration for the transfer of their stock. The complaint alleges that the entire transaction involving the sale of the capital stock and the sale and transfer of the Water Works Company property was one transaction and was so understood and carried through by all of said parties; that this sale and transfer were consummated between the appellees, as stockholders of the corporation, and the city of Greencastle, in order to avoid the payment of the debt due by said company to the appellant.
The complaint alleges that after said sale and transfer of property the Greencastle Water Works Company was left without assets, and the appellees, Alexander, Edwards and Perk, received all of the consideration paid for such property, and thereby became liable for the payment of this obligation. The complaint alleges that the city of Greencastle also assumed the payment of this obligation, and became liable, therefore, as a party to this transaction, all of which is now due and wholly unpaid.
The second paragraph of complaint alleges in substance the same facts, with reference to the identity of the parties, and contains the further allegation that in 1934 in a proceeding before the Public Service Commission of the State of Indiana an investigation was made for rate making purposes, in which expenses in the amount of $2,444.28 were incurred, which expenses were ordered paid by the Greencastle Water Works Company. The second paragraph of complaint alleged the same facts with reference to the sale of the corporate properties, and charged that the instrument in writing, by which some of the corporate property was conveyed to the city of Greencastle, contained a statement by which the city of Greencastle assumed the account due and owing to the Public Service Commission of Indiana. The complaint charges that these transfers were made without the approval of the Public Service Commission of Indiana, and that all parties to this transaction are obligated in law for the payment of this debt.
Demurrers were filed to each paragraph of complaint by the city of Greencastle, Indiana and by the appellees, Alexander, Edwards and Perk. The demurrers of Alexander, Edwards and Perk were overruled, and the demurrer of the city of Greencastle was sustained as to the first paragraph of complaint, and overruled as to the second paragraph of complaint.
The appellees, Alexander, Edwards and Perk, filed a second paragraph of answer to the first paragraph of complaint, which answer alleged that the $620.16 in costs taxed by the Public Service Commission of Indiana against the Greencastle Water Works Company was entered as a part of the proceedings which were appealed to the United States District Court and was by said Court vacated and set aside. The appellees averred that because said order was held to be invalid by the Federal Court no liability arose on the part of the Greencastle Water Works Company to pay the costs.
For a third paragraph of answer, these appellees set forth a written copy of the agreement by which the appellees agreed to sell to Charles C. Huestis of Greencastle their common stock in the Greencastle Water Works Company. This paragraph of answer alleged the sale and delivery of the common stock of the Greencastle Water Works Company pursuant to said agreement, and denied that the appellees had any knowledge of, or information concerning, or participated in the proceedings by which the property of the Water Works Company was eventually conveyed to the city of Greencastle. This paragraph of answer also set forth a copy of the bill of sale from Charles C. Huestics to the city of Greencastle, one of the terms of which was the assumption by the city of Greencastle of the account due the Public Service Commission.
A fourth paragraph of answer recited again the method by which the appellees disposed of their common stock; alleged the assumption of the expenses taxed by the Public Service Commission by the city of Greencastle, and alleged the entire good faith of the appellees in these proceedings.
The city of Greencastle filed a second paragraph of affirmative answer to the second paragraph of complaint, in which it alleged the adoption of the city ordinance authorizing the purchase of the Greencastle Water Works Plant and Distribution System, and set forth a copy of the contract had with Mr. Huestis for the purchase thereof. The answer further averred that the city of Greencastle had no knowledge of any outstanding indebtedness or charges against the Greencastle Water Works Company and assumed no obligations therefor, and authorized no one acting for and on their behalf so to do.
A third paragraph of answer was filed by the city of Greencastle to the second paragraph of complaint which alleged that the costs incurred were not entered in the record until January 31, 1936, after the city of Greencastle had acquired the property, and was not an outstanding obligation against the Greencastle Water Works Company at the time of the purchase.
Demurrers were filed to all these affirmative paragraphs of answer. The appellant's demurrer was sustained as to the second paragraph of answer of the appellees, Alexander, Edwards and Perk. All other demurrers were overruled.
The case was submitted to the court and jury for trial, and, at the conclusion of the appellant's evidence, the appellees filed a motion to instruct the jury to find for the appellees. The court sustained these motions, and instructed the jury to return a verdict for each of the appellees, which was accordingly done. Judgment was entered upon this verdict. A motion for new trial was filed and overruled and this appeal has been perfected. The errors assigned on appeal are the alleged errors in sustaining the demurrer to the first paragraph of complaint, and in overruling the appellant's motion for a new trial.
The appellant contends that the court, in the trial of this case, committed reversible error in directing the jury to return a verdict for the appellees at the close of the appellant's case. The rule, as recognized in this State, is that:
"The trial court, before it gives a peremptory instruction, must accept as true all facts which the evidence tends to prove, and must draw against the party asking the instruction all inferences which the jury might reasonably have drawn, and, if there are legitimate inferences tending to support the right of recovery in favor of one against whom the instruction is asked, the question should be left to the jury." Gulbranson v. Hart, 1929, 90 Ind.App. 171, 177, 168 N.E. 483, 485.
There is evidence in the record from which the jury might have reasonably inferred that the city of Greencastle, Indiana was desirous of acquiring title to the public utility owned and operated by the Greencastle Water Works Company. This company was a corporation, all of whose stock was owned by the appellees, Alexander, Edwards and Perk, and these appellees were the officers and directors of said corporation. There is evidence from which the jury might infer that these appellees knew of...
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