Court Opinion

ID: 9542556
Source: CourtListenerOpinion
Date Created: 2023-08-07 16:35:47.571548+00
Date Added: 2024-06-11T15:08:16.231306
License: Public Domain

MILLER, Judge,
dissenting.
OPINION ON PETITION FOR REHEARING
I dissent. Without duplicating the analysis of my earlier majority opinion published as Tolliver v. Mathas (1987), Ind.App., 512 N.E.2d 187 (C.J. Ratliff dissenting), I would again press that reliance upon Weil v. Neary (1929), 278 U.S. 160, 49 S.Ct. 144, 73 L.Ed. 243 in holding the present undisclosed contracts were unenforceable as illegal and violative of public policy is correct. Weil is an articulate 1929 Supreme Court decision penned by Chief Justice Taft interpreting a federal bankruptcy regulation that prohibited certain agreements which were likely, as were the agreements in the case at bar, to compromise the rights of the creditors of a bankrupt's estate.
The majority on this petition for rehearing, as did the dissent before, relies on our own 1924 decision involving a public policy concern, but no statutory violation, of a promise by a surety to reimburse a receivership for sums expended in supporting a failing enterprise. New Amsterdam Casualty Co. v. Madison County Trust Co. (1924), 81 Ind.App. 157, 142 N.E. 727. New Amsterdam is also distinguishable from the case at bar because the sums in question accrued to the disinterested third-party receivership and not to an inside officer and equity holder of the debtor-in-possession as in the case at bar. The New Amsterdam case has little applicability to the case at bar and, in light of Weil, is probably void.
In our earlier decision, we held in accordance with Weil that, while we did not condone Acutus's (Tolliver's) behavior, we could not, "however, ignore the fact the contract did violate the code and that, even though this contract might not have worked to the detriment of the creditors, other secret agreements whose disclosure [is] required are all too apt to do so." Id. 512 N.E.2d at 193. We were too deferential toward the supposed victim of our decision, Marte Mathas, because it is obvious the secret contracts in question were detrimental to the unsatisfied creditors of the T & M.
The majority errs in holding that Ma-thas's attempt to enforce the contracts was not an illegal attempt to obtain a double recovery for the $22,500.00 he spent to keep T & M afloat. As is obvious from the record and the majority's opinion on rehearing, Mathas submitted a claim for this amount and recieved $15,000.00 as a creditor of T & M's bankrupt estate. He had, at the same time, by an agreement not disclosed to the bankruptcy court, obligated Tolliver to pay him for this and other expenditures. Had Tolliver lived up to his end of the agreement.-and paid Mathas the money, Mathas would have obtained a double recovery. It is immaterial that ultimately, as a result of this present litigation, Mathas failed to exact the double dip. T & M's creditors nevertheless suffered the loss of this $15,000.00 that otherwise would have been available from the bankrupt estate. The bankruptcy trustee, had he or she known of Tolliver's and Mathas's agreement, would most certainly have denied this portion of Mathas's claim finding improper, as do we and the trial court before us, the prospect of Mathas receiving a double recovery.
In addition, the real or total amount Tol-liver agreed to pay to gain control over the assets of T & M should be calculated as including the amount he agreed to pay under the reorganization plan plus the amounts he promised to pay Mathas, by secret agreement, for his part in facilitating the reorganization. This amount includes the $25,500.00 Tolliver promised to reimburse Mathas for investing in the failing enterprise. It also includes the $65,-000.00 Tolliver promised to reimburse Ma-*979thas for buying out David Willis, another former equity holder of T & M. By enforcing the undisclosed agreements, we allow Mathas (who the record reveals was relieved of guaranty obligations) to receive preferential treatment over the other creditors and we allow Willis, derivatively, to receive $65,000.00 for his interest in the bankrupt enterprise.
Here, unlike in Weil, supra,-where our supreme court held secret agreements unenforceable as violative of public policy even though they did not inflict a detriment upon the creditors-I conclude the failure to disclose Mathas's and Tolliver's agreements had an impact upon the reorganization plan that prejudiced the rights of creditors. The agreements should not be enforced.
Therefore, I dissent.