OPINION
Howard, J.
In May
1896, and for a long time previous thereto, the appellee
Alexander G. Patton, was a resident of Columbus, in the state
of Ohio, and was engaged in the business of manufacturing,
under the name and style of the Alexander G. Patton
Manufacturing Company. He had one factory at Columbus, Ohio,
one at Muncie, Indiana, and one within the Indiana Prison
South, at Jeffersonville.
Prior
to Saturday, May 16, 1896, the State of Indiana had a suit
pending in the Floyd Circuit Court against said appellee, and
on said day there was a finding by said court in favor of the
State in the sum of $ 28,242.62. Judgment was entered on this
finding on May 19, and execution thereon issued on May 20,
which execution came into the hands of the sheriff of
Delaware county on May 21, 1896.
On
Sunday, May 17, 1896, the appellee, Patton, at Columbus,
Ohio, learned of the finding against him in the Floyd Circuit
Court, and also that judgment had not as yet been rendered
upon the finding. Early Monday morning chattel mortgages on
the property at Muncie and Jeffersonville were prepared and
executed by Patton. Those upon the Muncie property were at once sent on to that city by Wilden E. Joseph
and L. L. Rankin, bookkeeper and attorney respectively for
Patton, while Patton himself went to Jeffersonville.
The
Union National Bank of Muncie, one of the appellees, held
four promissory notes against Patton, and it was to secure
this indebtedness that one of the chattel mortgages was
intended. On the advice of counsel, renewal notes were made
out for three of the old notes and the time extended. The
remaining note was already sufficiently secured, and the bank
preferred not to include that in the new notes to be secured
by the mortgage. The bank had not expected to receive any
mortgage as security for its indebtedness but, after learning
the situation, accepted the mortgage and then believed its
debt secure.
Afterwards
the cashier of the bank was called up and informed that it
was thought better that a receiver should be appointed for
the Patton property, and that the bank should make the
application. Thereupon Ryan & Thompson, attorneys, who
acted in relation to the matter of the renewal notes and
chattel mortgage, were directed by the bank to go ahead and
procure the appointment of a receiver for Alexander G.
Patton.
The
complaint for a receivership was then, on said 18th day of
May, 1896, prepared and filed by said attorneys, the material
parts of said complaint being as follows:
"State
of Indiana, County of Delaware.
ss.
"Union
National Bank of Muncie v. Alexander G. Patton.
"The
plaintiff complains of the defendant, doing
business under the name and style of Alexander G. Patton
Manufacturing Company, and says; said defendant, on the 18th
day of May, 1896, by the name of Alexander G. Patton,
executed and delivered to said plaintiff his certain chattel
mortgage on the following personal property, situate and
located in Delaware county, Indiana, to-wit: (describing the
property) to secure the payment of three notes of the date of
May 18, 1896, executed by said defendant by the name of
Alexander G. Patton, and payable to the order of the Union
National Bank of Muncie, Indiana, plaintiff; one of which
said notes is for the sum of $ 214.00, due June 17, 1896,
with eight per cent. interest from date; one for $ 1,410.48,
due July 17, 1896, with interest at 8 per cent. from
maturity; and one for $ 1,513.00, due October 18, 1896, with
8 per cent. interest after maturity; all providing for the
payment of attorney's fees, and payable without any
relief from
valuation and appraisement laws, a copy of which is filed
herewith, marked "B," and made a part hereof. And
which said notes are renewals and similar notes for similar
and the same amounts.
"Plaintiff
avers that said indebtedness is for loans of money from said
plaintiff, borrowed for and used in the operation of the
business of said company.
"The
plaintiff avers that in the taking of said mortgage security
aforesaid, plaintiff learned that there already existed a
mortgage in full, which by its terms covered some parts and
portions of the above mortgaged property, and that the
property herein described as covered by the mortgage is
inadequate to and wholly insufficient to secure the payment
of said plaintiff's debts.
"That
on this day, for the first time, plaintiff has learned said
defendant is in imminent danger of insolvency; and plaintiff
believes, from information secured by it this
day, said defendant is insolvent and unable to pay his
indebtedness.
"The
plaintiff is informed that the defendant is indebted, in the
sum of fifty or sixty thousand dollars, to a large number of
creditors in various amounts, and is on the verge of being
sued in numerous cases for parts of said sum, and writs will
be levied, and much of said property will be wasted and
dissipated.
"And
plaintiff avers that it has just learned that the State of
Indiana has recovered a judgment of some $ 28,000.00 in the
Floyd Circuit Court against said defendant, and an execution
may be expected to come into the hands of the sheriff of
Delaware county whereby all the property of said defendant,
not already covered by liens, will be taken, and other
creditors will be deprived of any funds from which any parts
of their debts can be collected.
"That
plaintiff is informed that said defendant has other personal
property than such as is included in said mortgage, which
plaintiff could secure by the aid of the power of this court
by the appointment of a receiver herein. The plaintiff is
informed that a receiver either has been or will be appointed
in the State of Ohio in suits pending against said defendant,
to take possession of such property of defendant as may be
found in said State. And the plaintiff avers that if the
property covered by said mortgage should be taken by said
execution from the said Floyd Circuit Court, it will result
in great damage and detriment to the security of
plaintiff's claim, and is in danger of being removed and
materially injured.
"Wherefore
plaintiff prays the court for the appointment of a receiver
or receivers to take charge of the property of defendant and
of the property covered by and included in said mortgage, to
hold and protect the said mortgaged property for plaintiff,
and to sell and otherwise dispose of all the
property of the defendant for the benefit of his, said
defendant's, creditors and this plaintiff, and to do and
perform all the duties incident to such receivership.
"Ryan
& Thompson, Attorneys for Plaintiff."
"Wilden
E. Joseph, being first duly sworn, upon his oath says that he
makes this affidavit for and in behalf of the plaintiff, and
upon his said oath he further says that the matters and
things in the above and foregoing complaint are true and
correct.
"Wilden
E. Joseph."
"Subscribed
and sworn to before me this 18th day of May, 1896.
"John E. Reed, Clerk."
Ryan
& Thompson prepared an answer to this complaint, which
was signed by the said L. L. Rankin, and is as follows:
"State
of Indiana, County of Delaware.
ss.
"Union
National Bank of Muncie, Ind. v. Alexander G.
Patton.
"Comes
Alexander G. Patton, defendant in the above entitled cause,
and admits and confesses that the facts set forth in the
complaint in this cause are true, and further says not.
Alexander
G. Patton, By Rankin & Rector, his attorneys."
Mr.
Ryan, of the firm of Ryan & Thompson, filed this answer
with the complaint in the Delaware Circuit Court; and
thereupon, on said 18th day of May, 1896, the court
"orders that a receiver be appointed as prayed for, and
that John C. Johnson and Wilden E. Joseph be and they are
hereby appointed as such receivers, to take charge and
possession of all the books, papers, property,
and assets of every kind and description owned and possessed
by the defendant, and apply the same, under the order and
direction of the court, to the payment and liquidation of the
debts of the defendant.
"And
it is further ordered that said receivers be authorized and
directed to, in their own name as such receivers, sue for and
recover any and all claims and demands in law or in equity
due the defendant, and take into their possession such real
estate and personal property of said defendant as shall be in
the State of Indiana, and title and right of possession
thereto is vested in such receivers hereby, and such
receivers to bring and maintain all suits necessary in
relation to said trust.
"It
is further ordered that John C. Johnson and Wilden E. Joseph
execute their undertakings to John E. Reed, the clerk of this
court, for the faithful performance of their duties as such
receivers, each in the sum of $ 65,000, and now said John C.
Johnson tenders his said undertaking to the clerk of this
court, with Abbott L. Johnson as surety thereon, which is
approved by the court and said undertaking accepted and
approved in open court, and in these words (H. I.); and now
comes Wilden E. Joseph and tenders his said undertaking to
the clerk of this court, with Edward Alcott, the Union
National Bank of Muncie, Edward Alcott, cashier, and William
Abbott as sureties thereon, which is approved by the court,
and said undertaking accepted and approved in open court, and
in these words (H. I.); and now comes John C. Johnson
and Wilden E. Joseph, and each file their oath of office
herein, which is in these words (H. I.). And day is
given."
It was
afterwards...
