The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1885-06-27
TIE TILE WORKS CASE.
A Special Finding of Facts in the Pickens
Suit Against the Harrisons and Others.

Yesterday Judge Taylor gave his decision on
a special finding of facts in the case of Robert,
John and William Pickens against Alfred and
G. Douglass. He found that on May IL. 1881, a
note for $4,000, payable twelve months after
date at Harrison's Bank, to the order of Alfred
and John c.. S. Harrison, Douglass and Lyon,
was given by the United States Encaustic Tile
Works Company. The Harrisons. Douglass and
Lyon Endorsed this note for the accommodation
of the company. The next day this note was
transferred to the Harrisons, and the company
received in return two notes of 81, 900 each, held
by them against the company. The company paid
the interest due on these notes, and, also, six
months advance interest on the said 81, 900 note.
On Aug. Ii, 1882, the directors Of the COM
rany-Douglass, Alfred Harrison and Lyon,
met, and with them John G. S. Harrison, a
stakeholder, who was invited to be present.
At this meeting it was resolved to issue $50, 900
in bonds, payable in ten years. in annual install
ments of So, 200, for increasing the capacity
of the works. To secure these bonds all the
real estate of the company was mortgaged by
the president and secretary to the Portsmouth,
New Hampshire, Savings Bank. The money
was received and deposited in Harrison's Bank
subject to the order Of the company, as fol-
lows: Aug is, 1882, $40, 600; Sept. l, 1882,
SIG, 900, and Sept. 9, 1882, $24, 900. In order
to make the security satisfactory, the Harrisors,
prior to the making of the loan, conveyed certain
of their private real estate, by deed of quitclaim,
to the company, that it might be included with
the company's real estate mortgaged to the
Savings Bank. On the 18th of August the di-
rectors ordered that the company give a quit
claim to the Harrisons for all property conveyed
by them to the company for the purpose of Sc
curing said loans. This was done. 1t was
further ordered. that in consideration of the quit
claim $50, 900 of the company's stock be issued to
the Harrisens, $40, 000.of stock to Douglass and
So, 600 of stock to Lyon. To the last two this
stock was ordered to be issued on account of
personal guarantees and Endorsements in raising
funds for the said company.
It was agreed that out of the money secured
on the bonds the Harrisons should be paid $40.
900, which was one of the purposes of this loan.
OF the aggregate sum tie note at issue, and an
other for the same amount, were all that were
due the Harrisons at the time of the procure
ment of the Savings Bank loan. The note at
issue was in possession of the Harrisons until it
was transferred to the complainants in this case.
On Dec. III, 1882, the company's deposit in the
Harrison Bank was sufficient to take up the note
sued on, and also all Indebtedness of the COM
pany and leave an oyerplus to apply to other
purposes for which the loan was made.
On Sept. 7, 1882, Douglass retired from the
presidency of the board of directors. Alfred
Harrison succeeded him in that position. John
c. S. Harrison became vice president, and Will
lam w. Lyon remained as secretary and treas
urer. Although a director from 1877. Douglass
never made an examination of the books of the
company, as he had a right to do. There was a
sufficiency of funds in the Harrison Bank to pay
the notes at issue and other indebtedness to
them, without a formal order of the directors,
and without first obtaining a check from the
treasurer. Either one of the Harrisons could have
requested a check from Lyon either in advance
or after such application of the companys
money. The note was not paid, but the money
was consumed for other purposes, on orders and
checks of the company. Nov. IL, 1882, John &.
S. Harrison told Douglass that the note had
been paid, and Douglass knew no better until
he learned that it was transferred to plaintiff
about the time of the Harrison failure. The
principal and interest from Nov. IL, 1882, on this
note remain unpaid.
On and prior to July Is, 1884, the plaintiffs
were depositors and creditors of Harrison's
Bank. They applied that day for money or Sc
curity due them on deposits and were given the
note in suit by John c. S. Harrison as col
lateral, and not in payment of what was due
them. Judge Taylor therefore held from these
facts that Douglass is not liable for the note
of 81 735, but the Harrisons and Lyors are.
Douglass, he also said, is entitled to his costs in
this suit. Exceptions were taken to these con-
illusions.