Trapp v. Aldridge

• Decision Date: 17 April 1902
• Parties: TRAPP et al. v. ALDRIDGE. [1] ALDRIDGE v. TRAPP et al.
• Court: Kentucky Court of Appeals

67 S.W. 834

TRAPP et al. v. ALDRIDGE. ^[1]

ALDRIDGE v. TRAPP et al.

Court of Appeals of Kentucky.

April 17, 1902

Appeal from circuit court, Campbell county.

"Not to be officially reported."

Action by Adam Waggoner, trustee of the Swift Iron & Steel Works Company, and others, against the Fidelity National Bank and others, for a settlement of the assigned estate. Judgment upon exceptions to commissioner's report of settlement and John Trapp and others and J. F. Aldridge, receiver prosecute separate appeals. Affirmed upon appeal of John Trapp and others, and appeal of J. F. Aldridge, receiver dismissed.

C. L Raison, Jr., for appellants Trapp and others. W. H. MacKoy and John W. Herron, for appellant Aldridge.

BURNAM J.

The Swift Iron & Steel Works Company was a corporation created in January, 1871. For several years prior to the transactions out of which this litigation grew E. L. Harper was president of the company, and owned a controlling amount of its stock. He was also a member of the firm of E. L. Harper & Co., large dealers in pig iron, ore, and other necessary materials used by iron factories; and this firm for many years previous to its failure in June, 1887, furnished to the steel company the bulk of the raw material used by it, accepting in payment therefor the notes of the company; and Harper as an individual was also at all times a large creditor of the iron and steel company. On the 1st of March, 1886, Harper organized the Fidelity National Bank of Cincinnati, and became its vice president and general manager. At this date the Swift Iron & Steel Works Company was largely indebted to other banks, which had been renewing its paper from time to time. In fact, there seems to be little doubt, from the record filed upon the former appeal, that the company was insolvent at the date of the organization of the Fidelity Bank. On the day on which the bank was opened for business, the iron and steel works company borrowed $25,000 from it upon a call loan, and from that time until the failure of both corporations on the 21st day of June, 1887, the steel company was a large and constant borrower of the bank. During the year 188--, Harper became involved in an enormous wheat deal in Chicago that ultimately resulted in his financial destruction, and that of both the Fidelity National Bank and the Swift Iron & Steel Works Company. To raise money to carry on this deal, Harper had his brother-in-law, J. H. Mathews, who was the treasurer of the Swift Iron & Steel Works Company, draw checks on various banks in favor of the Fidelity National, to be held by the Fidelity as cash, and which were taken up by checks upon the Fidelity Bank. As the result of this system, the Fidelity Bank was carrying, when it failed, nine checks drawn between the 23d of May and the 18th of June, aggregating $418,292. After the failure of the bank and the assignment of the iron and steel works company, Armstrong, as receiver of the bank, presented to the commissioner a claim against the bank aggregating $611,000, which included the $418,292 above referred to. About $586 of this claim was allowed by the circuit judge, but on appeal to this court it was held that the nine checks, aggregating $418,292, should have been disallowed as claims against the iron and steel company, and the case was remanded, with instruction to allow the parties to take additional proof as to the residue of the claims asserted by the receiver of the bank against the steel company, which consisted of the following items:

Call loans, March 1, 1886 .........................................	$ 25,000
Call loans, June 9, 1886 ..........................................	40,000
Call loans, July 26, 1886 .........................................	12,000

Discounts.
1887. March 7.	Swift's I. & S. Works note .........................	5,000
1887. April 30.	Swift's I. & S. Works and E. L. Harper, per note ..	10,000
' April 30.	Swift's I. & S. Works note ............................	10,000
' April 30.	Swift's I. & S. Works note ............................	10,000
' April 30.	Swift's I. & S.W. note ...............................	10,000
' May 18.	S. I. & S.W. note ......................................	10,000
' May 27.	S. I. & S.W. note ......................................	10,000
' June 8.	S. I. & S.W. note

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