Ogilvie v. Knox Insurance Company (59 U.S. 577)

THIS case came up from the circuit court of the United States for the district of Indiana, upon a certificate of division in opinion between the judges thereof.

As the record was very short, it is thought proper to insert the whole of it.

Be it remembered, that amongst the records of the United States circuit court for the seventh judicial circuit and district of Indiana, begun, continued, and holden at Indianapolis, in said district, on the first day of June, in the year of our Lord 1855 that being the eleventh day of said term of said court-before the Honorable John McLean and the Honorable Elisha M. Huntington, judges of said circuit and district, is the following order, to wit:

ADAM OGILVIE et al.  }

v.   }

THE KNOX INSURANCE COMPANY et al. }

Chancery.-No. 3.

Now at this time come the parties, and the judges of this court being opposed in opinion on certain questions arising in this cause, they order and direct that the following statement of the matters and questions upon which the opinions of the judges are so opposed be entered upon the record of this court, and that the same be certified under the seal of this court to the supreme court of the United States, to be finally decided.

OGILVIE and others, complainants,}

v.}

THE KNOX INSURANCE Co., Cullom and others, defendants.}

The complainants are the several creditors of the Knox Insurance Company, holding judgments and executions returned 'no property,' &c., against the company. Cullom and the other defendants, twenty-five in number, are charged as stockholders in default in the payment of their several stock subscriptions.

The bill charges substantially as follows:--

1. That some time before the 12th of February, 1850, the company was duly organized under its charter, and had authority to receive further subscriptions of stock; and that afterwards, at various times, between that time and the 1st of June, 1850, Cullom and the other defendants, severally, became subscribers for stock, and either paid in cash or secured by note or bill of exchange ten per cent. of the amounts severally subscribed, and for the balance made their notes or bills; and that the bills of exchange made for the ten per cent. was renewed by other bills of exchange drawn in September and October, 1850, and the bill sets out all the securities remaining due and unpaid.

2. That the complainants are creditors of the company by reason of losses on policies issued by the company, at various times, after the subscriptions of the defendants, and the judgments and executions are stated.

3. That the company is destitute of property subject to execution.

4. That the company has neglected to enforce the collection of the money due from the defendants.

5. That the defendants refuse to pay, on the pretence that their subscriptions were procured by means of certain false representations concerning the situation, prospects, and actual business of the company.

7. And that the complainants are advised, that it is not material to them or to others who have dealt with the company, how or why the defendants became stockholders; that, by becoming such, the defendants gave credit to the company, by means whereof the complainants were induced to deal with it.

8. That of the defendants, Battorff, Cullom, Hughes, Sparkes, and Savitz, and one Kegwin, a debtor, subscriber not made a party because a citizen of Kentucky, acted as officers of the company throughout the year 1850.

9. And that the defendants, nor any of them, did not, at any time in any manner, attempt to inform the public of the alleged facts now set up in defence.

The prayer is that the defendants pay, &c., and for general relief. The Knox Insurance Company answered, and admitted generally the facts stated in the bill, &c. Cullom and the other defendants severally answered. The answers admit the execution of the securities by the defendants on account of the stock subscribed by them, and set up as a defence substantially the following: That Robert N. Carnan was an agent of the company to procure subscriptions of stock, and as such, in February, 1850, made to defendants certain false representations, by which they were induced to subscribe for said stock, and give their said notes and bills. Their representations were as to the amount of stock then subscribed and secured at Vincennes, and as to the amount of funds on hand; and that defendants had not at that time any means of knowing the accuracy of these representations.

The depositions of Cullom, Savitz, and Schwartz (three of the defendants) were taken and offered to be read in evidence in behalf of the other defendants, but not in behalf of themselves, to prove the allegations of fraud set out in the answers. The complainants objected to the competency of said witnesses, because they were parties to this action, and the objections by consent of parties were reserved to the hearing.

At the May term, 1854, this cause was submitted to the court on the bill, the answers, and the depositions, including the depositions of Cullom, Savitz, and Schwartz, which were then read, subject to the objections above mentioned; and after argument, the said cause was continued under advisement to the November term following.

At the November term, 1854, the cause was continued to the May term, 1855, under advisement.

And now, at the May term, 1855, under the pleadings and on the state of facts above set forth, the following questions occurred:

1. Are the depositions of said Cullom, Savitz, and Schwartz, under the circumstances of this case, and to the effect above stated, competent as evidence for their co-defendants? And, on this question, the opinions of the judges were opposed.

2. Will the fraud of the agent of the Knox Insurance Company, in procuring said subscriptions, notes, and bills, if sufficient to avoid said subscriptions, notes, and bills, as against said Insurance Company, be a defence against the complainants in this suit.

And on this question the opinions of the judges were opposed.

Whereupon, it is ordered, according to the request of the complainants, and to the law in that case provided, that the foregoing statement of the pleadings and facts, which is made under the directions of the judges, be certified under the seal of this court to the supreme court to be finally decided.

I, Horace Bassett, clerk of said court, do hereby certify, that the above and foregoing is a true and correct copy from the records now in my office.

In witness whereof, I have hereto set my hand and affixed the seal of said court, on this sixth June, in the year of our Lord one thousand eight hundred and fifty-five.

H. BASSETT, Clerk.

[L. S.]

Mr. Justice DANIEL delivered the opinion of the court.