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Bruner, Receiver of the Crawfordsville Waterworks Co., v. Brown.

suggestion of a Nashville banker, it was resolved at the meeting in May that the stock should be increased eight hundred shares, five hundred of which should be turned over to the subscribers to the bonds, as a bonus or an additional consideration." The transaction was upheld in an exhaustive opinion.

In Bickley v. Schlag, 46 N. J. Eq. 533, the chancellor says: "The inquiry, therefore, in the court below, should have been, whether the agreement in question was fraudulent or not; for, if the transaction was an honest one, the difference in value between the property constituting the consideration of the sale and the stock had no legal significance. The character of this company authorizes. the corporation to exchange its capital stock for property, and, under that condition of things, a court of equity can not set aside a transaction of that kind simply on the ground that the bargain, on the side of the corporation, is a disadvantageous one. In such affairs the company and the purchaser stand on the common footing of buyer and seller; the valuations of property in making the exchange, either on the one side or the other, can not be supervised or controlled by the court of chancery, for, in the absence of deceit, or some other corrupt constituent, the bargain between the parties can not be disturbed. In the present instance fraud was not found, and the vice-chancellor ordered these stockholders to pay more than they had agreed to pay for the stock, on the ground that, in his opinion, the steamboats and other things they had exchanged were not worth as much as the stock was worth. Conspicuously the substance of the true issue has been overlooked." The case was reversed for the reason the trial court failed to find any fraud or deceit in the transaction.

In Du Pont v. Tilden, 42 Fed. Rep. 87, the United

Bruner, Receiver of the Crawfordsville Waterworks Co., v. Brown.

States Circuit Court cited and followed the case of Coffin v. Ransdell, supra.

These propositions are also sustained in Mallinckrodt Chem. Works v. Belleville Glass Co., 34 Ill. App. 404; Whitehill v. Jacobs, 75 Wis. 474; First Nat'l Bank, etc., v. Gustin, etc., Mining Co., 42 Minn. 327.

In the last case the court said: "While the courts have not always had occasion to state the limitations upon the doctrine that 'the capital is a trust fund for the benefit of creditors,' yet we think that it will be found that in every instance where they have impressed a trust upon the subscription of the shareholders, it has been in favor of creditors becoming such afterwards, and hence fairly to be presumed as relying upon the amount of capital which the company was represented as having. We are referred to none, and have found none, where any such trust has been enforced in favor of creditors, who have dealt with the corporation with full knowledge of the facts. The reason is apparent, for in such cases no fraud, actual or constructive, has been committed on such creditors. This doctrine with respect to trusts has no application to a case where a party, like the plaintiff, was cognizant of the whole arrangement under which the stock of the defendant company was issued, and of what was paid or intended to be paid for it, and who accepted a novation of its debt with full knowledge of these facts, and received as great or greater security than it had before. To hold otherwise would be to perpetrate a fraud on the stockholders and not on the creditors."

This proposition is upheld in Walburn v. Chenault, 43 Kan. 352; Callanan v. Windsor, 78 Iowa, 193, and in Knoop v. Bohmrich, 49 N. J. Ch. 82, 23 Atl. Rep. 118.

It is impossible to separate the consideration in the contract between Comegys & Lewis, and the waterworks

Bruner, Receiver of the Crawfordsville Waterworks Co., v. Brown.

company, and hold that the $150,000 of bonds were given in consideration of the construction of the works, and that the stock was turned over to Comegys & Lewis without any consideration. The contract was an entirety. The consideration on both sides was entire. On the part of Comegys & Lewis, it was the building of the waterworks. On the part of the company it was the stock and bonds. It would be absurd, under the circumstances, to say that the stock was the consideration and the bonds were a gift, or that the bonds were the consideration and the stock was a gift. This suit was instituted upon the theory that nothing had been paid for the stock.

The special finding of facts shows that a valid contract was made by which certain property which the company had a right to acquire and use in its business, was turned over to the company in payment for its stock, and this contract was fully executed on both sides. There is nothing in the special finding of facts tending to show that there has been any fraud to vitiate the contract and this court can not presume a condition to exist that does not so appear.

In Parke County Coal Co. v. Terre Haute, etc., Co., 129 Ind. 73 (81), the well-established doctrine was announced, that the burden is upon the appellant to prove fraud. It is the rule in this State that fraud is never presumed, but must be proven, and the presumption is always against bad faith. Stix v. Sadler, 109 Ind. 254 (258); Wallace v. Mattice, 118 Ind. 59; Stewart v. English, 6 Ind. 176; Morgan v. Olvey, 53 Ind. 6.

There is no such thing in Indiana as fraud in law in transactions of this kind. Fraud, actual or constructive, is a question of fact. Rose v. Colter, 76 Ind. 590; Cicero Tp. v. Picken, 122 Ind. 260 (263); Phelps v. Smith, 116 VOL. 139-39

Bruner, Beceiver of the Crawfordsville Waterworks Co., v. Brown.

Ind. 387 (393-4); Caldwell v. Boyd, 109 Ind. 447 (455-6); Burns R. S. 1894, sections 6645 and 6649.

The special finding must state ultimate facts not evidence.

"Where fraud is essential to the existence of a cause of action it must be found and stated in the special finding as a substantive fact or the plaintiff will suffer defeat." Wilson v. Campbell, 119 Ind. 286 (289-290); Citizens' Bank v. Bolen, 121 Ind. 301 (305); Bartholomew v. Pierson, 112 Ind. 430 (432).

These principles apply as well to contracts and transactions, such as the one under consideration, as to conveyances, as is shown in Caldwell v. Boyd, supra, which was a case involving a trust.

This court so held in Farmers' Loan, etc., Co. v. Canada, etc., R. W. Co., 127 Ind. 250, being an action. involving a contract between a railroad company and a construction company, wherein the former agreed to pay the latter with its stock and bonds. On page 269, the court said: "Cross-errors alleged by some of the appellees, present questions which require consideration. The first of these questions arises on the claim put forward. by counsel that the transaction between the Burns Construction Company and the railway company was a fraud upon the rights of the creditors. While there are circumstances indicative of fraud, there is no finding that there was fraud in fact, and hence the complaining appellees are not entitled to judgment, upon the ground that the transaction was a fraud upon their rights. It is settled by our decisions that fraud must be found and stated as an inferential or ultimate fact, and that it is not sufficient to state badges of fraud, or the evidences of fraud, in a special finding.'

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In Parke County Coal Co. v. Terre Haute, etc., Co., supra, it was held that the burden is upon the appellant to prove

The Board of Commissioners of Jackson County v. Nichols.

fraud; that the finding being silent on the subject of fraud, the conclusion follows that none exists, and that none was proven.

It seems well settled that when a finding is silent upon a fact material to be found, it is to be taken as found against the party having the burden of proving such fact. Brazil, etc., Coal Co. v. Hoodlet, 129 Ind. 327; Westfield, etc., Co. v. Abernathy, 8 Ind. App. 73.

Where the special findings made by the court indicate perfect good faith, and the presumption of good faith is not impeached by any finding or conclusion, we can not reverse the judgment of the lower court. It is only in cases where the trial court has found as a substantive fact that the transaction was infected with fraud that the courts of appeal will denounce contracts by which property has been transferred to a corporation at a gross overvaluation.

The judgment is affirmed.

Filed Oct. 11, 1894; petition for rehearing overruled Dec. 20, 1894.

No. 16,899.



BRIDGE.-Defective.-Negligence.-Watercourse.-Stream.- Fleading.—

139 611

143 151

139 6111

151 497

151 500

139 611

154 548

163 115 139 611



The mere allegation of the name of a stream will not supply an ål- 139 611 legation that it is a watercourse, but an allegation that a bridge spanned a stream shows that it was over a watercourse. SAME.-Complaint.-Motion to Make Specific.-Where a complaint to recover for injuries caused by a defective bridge alleges that "the plaintiff and her husband were driving," a motion to make it more specific by alleging which one was driving will not lie.

SAME.-Location of Bridge.-An allegation that the defective bridge

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