Heitzenreither v. Long

Opinion by

Willard, J.,

The bank of DuBois was a private banking company or co-partnership. J. E. Long, M. W. Wise, P. S. W eher, L. A. Brady, William Wingert, C. C. Hindman and Sidney Fuller were the members of the copartnership. On the 14th day of March, 1895, the bank closed its doors and suspended payment. On the 22d of March a meeting of the creditors was called for the purpose of formulating and adopting a plan of action for the best interest of all the creditors. At this meeting a committee of five creditors was appointed to act for themselves and, other creditors, and they were instructed to procure a judgment bond in the sum of $100,000 to be signed by the individuals composing the copartnership. On the 23d of March by a decree of the court of Clearfield county in equity, Hugh McCullough was duly appointed as receiver to take charge of the partnership property and effects and wind up its business according to law, subject to the order and direction of the court. To this pro*533ceeding there was no objection raised by debtors or creditors. On the 24th or 25th of March a second meeting of the creditors assembled and to this meeting the committee of five reported that they had procured a judgment bond for $100,000. It was signed by all the alleged copartners except Sidney Fuller. The committee also reported that they had procured the appointment of Hugh McCullough as receiver. The report of the committee was approved by the meeting. At this meeting the committee was reduced to three in number and constituted a permanent committee, to act for the creditors. They were authorized and empowered by the meeting to bring suits and do whatever they deemed necessary in their judgment to secure the interest of the creditors of the bank of DuBois as a whole. This committee subsequently received a proposition from the individual members of the banking firm proposing a settlement as follows: J. E. Long to turn over property and convey real estate of the value of $32,400 ; M. W. Wise to convey real estate of the value of $13,350; P. S. Weber to convey real estate of the value of $3,350; and L. A. Brady of the value of $1,000, amounting in all to the sum of $50,050. The individual members of the firm were also to contribute $22,000 in cash with a further guaranty, of $6,750 to meet any necessary deficiency. That this proposition, if accepted, should discharge the copartners from all liability to the creditors or depositors of the bank.

The committee being satisfied with the proposition agreed on their part to procure the assent of the creditors, and for that purpose called another meeting in July, 1895. By a vote of that meeting the proposition was accepted and by another vote it was agreed that the money should be turned over to Hugh McCullough and that he should take conveyances of the real estate and hold it for 'the creditors until it could be converted into cash for the benefit of all the creditors.

At this time the receiver had realized cash from the assets of the bank of DuBois equal to twenty per centum of the claims against the bank. The monej'- and real estate furnished by the individual partners under the agreement, after it passed into the hands of Hugh McCullough by the joint action of the creditors and the .persons who furnished and conveyed it, appears to have been'treated by orders and decrees of the court as under its jurisdiction and control and no one appears to have objected thereto.

*534On tbe 16th of January, 1896, on presentation of tbe receivers’ petition reciting the offer of settlement and the action of the creditors thereon, the court made the following order: “ The receiver, Hugh McCullough,- is authorized and directed to do whatever is necessary to be done in order to carry out and consummate the arrangement and proposition mentioned in the within petition.”

In January, 1896, the receiver had in his hands, undistributed, a sufficient sum of money, derived from the assets of the bank, to pay to its creditors twenty per centum of their claims, and a sufficient sum derived from the property turned over to him by the individual copartners, under the direction of the committee and the agreement made between them, to pay thirty per centum of all the claims. Most of the creditors took the dividend and released the stockholders in writing according to the offer. This the appellant refused to do and the receiver refused to pay him unless he would sign a paper releasing the copartners. Whereupon the appellant filed his petition in the equity proceeding setting forth that there were large sums of money in the hands of the receiver derived from the copartnership assets and from the assets of the members of the copartnership, which was a proper fund for general distribution among the creditors; that in the negotiations attending the transaction of the affairs of the bank by the receiver or creditors he had not joined; that he had not been represented by any person or committee of creditors' authorized to act for or bind him; that Hugh McCullough, the receiver, had paid to some of the creditors and depositors about fifty per centum of their claims; that he had demanded of the receiver the same pro rata payment that he had paid to other creditors of the bank, but had been refused except as to the twenty per centum derived from the assets of the bank; that he is informed that the receiver will pay him fifty per centum of his claim if petitioner will sign a paper discharging the persons composing the copartnership, late trading as the bank of DuBois, from further liability, and the refusal of your petitioner to sign said agreement is given by the receiver as his reason for refusal to pay your petitioner fifty per centum.

Upon this petition a rule was granted as prayed for on Hugh McCullough, receiver, to show cause why he should not forth*535with pay to the petitioner the same pro rata dividend upon his claim that he had paid to other creditors and depositors of the bank of DuBois. On the return of the rule, no answer having been filed, the court made the following order: “ Now, June 1, 1896, the rule in this case is made absolute, and the receiver of the bank of DuBois, Hugh McCullough, is hereby directed to pay unto the petitioner fifty per centum of his claim, being the amount he has paid to the other creditors of the bank of DuBois, and for so doing, this shall be his sufficient voucher in the settlement of his accounts as receiver.”

The plaintiff brought his action on the 22d day of March, 1895, to recover the sum of $200 deposited by the plaintiff in the bank of DuBois and unpaid. On the trial there was positive testimony that each question relative to the settlement was determined by a vote of the creditors in three meetings thereof, and that upon each question, including the appointment and authority of the negotiating committee, there was an unanimous affirmative vote. There was also testimony that the appellant was present at each of these meetings. He denied that he was present at the last two meetings, but the question was submitted to the jury. In January, 1896, the receiver forwarded to the appellant a notice and form of receipt, which receipt was signed and returned by the appellant’s attorney under date of June 10, 1896 ; it is as follows:

“DuBois, Pa., January, 1896. “Mb. H. HeitzenbeitHeb:—
“ Your account on the books of Bank of DuBois is $200.
“Enclosed find check for $100, being a 20 per cent, dividend of said account from assets of said bank, and 30 per cent, special dividend from funds contributed by stock holders pursuant to agreement.
“ Please sign the receipt below and return to me at once.
“ Hugh McCullough,
“ Receiver of Bank of DuBois.”
“ Received, June 10,1896, of Hugh McCullough, Receiver of the Bank of DuBois, $100, as a payment of a dividend of account against Bank of DuBois.
“Singleton Bell,
“ Attorney for H. Heitzenreither. ”

*536Indorsement on back of receipt:

“No. 606. Voucher. Claim of H. Heitzenreither versus Bank of DuBois.
Dividend 20 per cent..... $
Special 30 per cent......
Total 50 per cent...... 100.00.
Deduction 6 per cent......1.20.
Am’t. Check remitted, .... 98.00.
“The amount deducted above is, your pro. rata share of the 1 per cent, of your claim which you agreed to pay to creditors’ committee.”

To the action in the court below the defendant pleaded payment. The jury found a verdict for the defendant.

When the appellant brought his action in the court below he had an undoubted right to recover the full amount of his deposit in the bank of DuBois, as set forth in his statement of cause of action. If however he subsequently compromised and settled his claim, that fact could be shown on the trial under the plea' of payment. In affirming appellant’s first point the learned trial judge added no more by way of qualification than the facts of the case demanded in order to protect the rights of the parties. It is the duty of a judge to answer points, and it is his right and privilege to so answer them as to place before the jury the true question to be decided.

The copartnership assets, when converted into cash, were sufficient to pay only twenty per centum of the creditors’ claims. By an agreement, however, fully set forth in our statement of the facts, certain money was turned over and certain real estate was conveyed to the receiver, in trust, to be by him applied in payment of the claims of all the creditors, with the agreement that the turning over of the money and the transfer of the real estate should discharge the individual copartners from any further liability to the creditors. This transfer, it is claimed by the appellant, was not a contract to which he was a party, but amounted to a general assignment for the benefit of creditors, and he having received but a portion of his claim from the assignee was entitled to a verdict for the balance ; while on the part of the appellees it is contended the property was placed in *537the hands of Mr. McCullough'under an express agreement that it was for the purpose of paying all the creditors alike, with the single condition that the assignors should be discharged from further liability on turning over the property, and that the appellant was a party to that agreement and, therefore, a purchaser for value, and having received a part of his purchase money he is now estopped from asserting that the transaction amounted to a general assignment for the benefit of creditors.

If the jury arrived at a correct conclusion under proper instructions, that the appellant was a party to the agreement, and by said agreement his claim was settled and paid, it matters not by what name it is designated. But as the appellant’s printed argument is directed largely to this question, we have carefully considered it.

The bank of DuBois, as a partnership concern, came far short of responding to the just claims of its creditors. The individual members of the firm saw fit to make up the deficiency in part at least out of their individual property, stipulating at the same time for immunity from further liability. This, under the circumstances of this case, they had the right to do without having the transaction declared a general assignment on their part for the benefit of creditors. If the assignors were insolvent at the time of the transfer and conveyances and unable to pay their debts, and made the assignment for that reason, there might be some force in the appellant’s contention. The act of assembly relied upon apply to persons making assignments on account of the inability of such assignors to pay their debts. The question of the inability of these assignors to pay their debts at the time they made their transfer of the property to Hugh McCullough was only adverted to incidentally in the court below, one or two witnesses on cross-examination expressing the opinion that they could not collect their claims in full out of the copartners. But so far as this record throws light upon the subject, the fact is not established that the members of this firm were unable to pay their debts at the time of the transfer of property by them to help out the bank of DuBois in paying its creditors. The question of their ability or inability to pay their debts was not raised in the issue tried, nor was it submitted to or passed upon by the jury. Therefore, two essentials to make this transaction a general assignment under our statutes are wanting, to wit: *538First, inability of the assignors to pay their debts; second, assignment on that account: In re Bryden, Trustee, 42 Leg. Int. 80.

That a person who happens to be a member of an insolvent banking institution may not assign his individual property in trust to aid the bank in paying its debts without having his act declared a general assignment for the benefit of all his creditors, is a proposition that cannot be entertained, unless it appears that the assignment is made because of his inability to pay his debts.

Many of the points presented by the appellant in the court below involved disputed questions of fact. The points were affirmed with a proviso that the jury found the facts as therein stated. It would have been error to have affirmed them without the proviso. The sérious question involved in this case turns upon the agreement between the creditors and the appellees, and the appellant’s connection therewith. After the bank closed its doors, there was the usual excitement attending the failure of a bank and the locking up of moneys placed on deposit for safe keeping. A meeting of the creditors was soon called for consultation and to dévise a plan of necessary concerted action. A committee was appointed by the meeting to act for the creditors and the appellant was present at that meeting, and according to the testimony the action of the creditors was unanimous. At a second meeting a permanent committee was appointed and empowered to'act for the best interests of the creditors. At a third meeting of the creditors the proposition of the appellees was presented and acted upon, and according to the testimony was unanimously adopted. There was evidence that the appellant was present at the last meetings; 'he denied it upon the witness stand and it was left for the jury to decide. There was also evidence of conversation between the appellant and other creditors and persons concerning the proposition, and that through his attorney he received and receipted for fifty per centum of his claim under the terms of the agreement.

The agreement was not equivocal or difficult to comprehend, it provided for the turning over of certain property by the appellees to increase the fund for distribution among the creditors, and the turning over was conditioned ’upon the release of the *539appellees from further liability. The acceptance of the property, or the proceeds thereof when converted into cash, was evidence in connection with'other evidence in the case to warrant the jury in finding the appellant a party to the agreement and bound thereby. It is urged, however, that because the money was paid to him under an order of the court based upon certain facts alleged by him in his petition, that by reason of said order and allegations the appellant was not estopped from proceeding and recovering the balance of his claim. In reply to a point put to the court upon this subject the court answered: “ Whether or not the facts stated in this point of themselves would operate as an estoppel, it is not our province to determine, as the facts stated therein must be considered by the jury in connection with the other facts in the case, which if found by the jury, and taken together may constitute an estoppel to plaintiff’s right to recover.”

The appellant’s petition was filed in the proceeding in equity and was the foundation for a rule on Hugh McCullough, receiver. We do not think the order or allegations conclusive upon the appellees in the action against them as copartners. If Hugh McCullough did not answer the allegations contained in appellant’s petition, it was no fault of the- appellees. They had the right to answer the same allegations when confronted with them in this action, and appear to have done so to the entire satisfaction of the jury. The petition and decree were put in evidence on the trial of this case without objection, and considered by the jury-with the other evidence. We think the answer to the point was correct.

The fact that there was a stipulation for a written release of the appellees from further liability by all who accepted the proposition, and the appellant’s refusal to sign it, is a circumstance urged and relied upon by the appellant. The jury have found under sufficient evidence and proper instruction as to the effect of the evidence, that the appellant was a party to the agreement, reaped its benefits and received his full pro rata share of the money derived therefrom and receipted therefor under its terms.

The evidence in the case fairly submitted to the jury established the fact of a common purpose among the creditors to secure the payment of their claims by compromise and settlement. Relying upon each other and each influenced by the *540presence, action and acquiescence of the others, meetings were held and by united action without a dissenting voice questions were Aroted upon and decided, committees were appointed and authorized to act according to their best judgment for the whole body of creditors, the action of the committees adopted, resulting finally in the adoption and ratification of the proposition presented by the individuals composing the copartnership, and a receipt of a large sum of the money by the creditors, under the terms of the accepted proposition. Under the evidence submitted as above stated, the jury was fully warranted in finding the appellant a party to the settlement by his presence, action, acquiescence and subsequent ratification. He reaped the full benefit of the settlement with' the other creditors, and we see no reason why the verdict in this case should be disturbed.

After a thorough examination of the testimony, the charge of the court and the answer to points, we are satisfied that this case was carefully tried in the court beloAV, and every question fairly presented for the consideration of the jury.

■ The specifications of error are all overruled and the judgment affirmed.

Smith, J., concurs in the judgment.