Ismert-Hincke Milling Co. v. Estate of Ismert

13 P.2d 279, 135 Kan. 745, 1932 Kan. LEXIS 389
Supreme Court of Kansas·Decided July 9, 1932·No. No. 30,406·Published·Cited by 3 cases

Opinion

The opinion of the court was delivered by

Burch, J.:

In his lifetime Theodore F. Ismert signed a note payable to the Ismert-Hincke Milling Company. After his death the note was allowed by.the probate court as a claim against his estate. The administrator appealed to the district court. In the district court the verdict and judgment were for the administrator. The milling company appeals.

Execution and delivery of the note were admitted. The ques[746] tions submitted to the jury were: first, whether the maker understood the purpose and consequence of signing the note; and second, whether he signed as the result of undue influence. The contention here is that the verdict was not sustained by any substantial evidence.

The Ismert-PIincke Milling Company is a corporation engaged in the business indicated by its name. 'It has a capital stock of one million dollars, divided into ten thousand shares. Theodore Ismert owned 2,392 shares, of the par value of $239,200, and was president of the company. George Hincke, a brother-in-law of Theodore Ismert; was vice president, and a large stockholder. Plenry Ismert, a cousin of Theodore, was secretary and treasurer, and had charge of the books and accounts.

Theodore Ismert was a large, powerful man, of great business ability, and of dominating mind and character, and was the chief figure in the management of the milling company’s affairs. His death occurred on September 4, 1924, and was caused by sarcoma.' In July his physicians relinquished hope of his recovery. Treatment was then directed to making him as comfortable as possible while the disease progressed steadily to the end. The palliative treatment commenced with bromides and chloral hydrates. Then his physician commenced to use morphine, to allay pain and to induce sleep. Morphine was administered for a time through the mouth, and then hypodermically. The dose at first was a quarter grain. The dose was increased as time went on to half a grain, and was administered more frequently. Continued use of the morphine had a cumulative effect, which with toxic consequences of the disease tended to produce stupor.

During July Theodore Ismert was quite active in attending to business. On August 2 he was at his office the last time. After he was confined to his home he kept in touch with his business. The note sued on was executed on August 5. After that he conducted important business transactions, some of which were adopted and vouched for and the benefits of which were appropriated by those now interested in defeating liability on the note.

After the world war the milling company encountered difficulty in disposing of certain of its products, and the Sun Ray Products Company was organized to provide an outlet for those products. Sun Ray’s specialty was ready-mixed pancake flour. Its capital of $125,000 was principally subscribed by shareholders and others con[747] nected with the milling company. Theodore Ismert was the largest shareholder. He owned 505 shares, of the par value of 150,500. The milling company was the financial backer of the Sun Ray company. The milling company supplied funds to erect Sun Ray’s plant. Sun Ray would purchase large quantities of mill products on account, and in July, 1924, Sun Ray owed the milling company $168,357, and owed Theodore Ismert personally $4,816.76.

About the time it became known that Theodore Ismert could not recover, the annual meeting of the board of directors of the milling. company occurred. Theodore Ismert himself attended the meeting and presided. His son, John Ismert, the present administrator of his estate, was a director and was secretary, and attended the meeting. The meeting occurred on July 16, 1924, and a resolution was formally adopted instructing the management to secure settlement of the debt due the milling company from the Sun Ray Products Company. The record discloses no dissent from this resolution.

The resolution referred to necessarily precipitated a crisis in the financial affairs of Sun Ray. Sun Ray could not secure credit from others which was denied to it by the milling company, and Sun Ray was in urgent need of funds or credit for two purposes: first, to pay the milling company, and second, for operating purposes. After repeated conferences between those who were interested, solution of the problem took the form of two propositions: first, that Theodore Ismert should give his note to the milling company for Sun Ray’s debt, and Sun Ray’s obligation to the miilling company would be cancelled; and second, to provide Sun Ray with working capital, Theodore Ismert and George Hincke would deposit securities with a bank upon which Sun Ray might draw funds to the amount of $50,000. Neither proposition was of any avail without the other. It was useless for Theodore Ismert to take over the indebtedness of Sun Ray to the milling company unless Sun Ray were provided with working capital, and it was useless to provide working capital if Sun Ray were obliged to pay the milling company.

There is no dispute that discussions concerning what should be done about Sun Ray’s affairs culminated in an agreement that Theodore Ismert and George Hincke would provide Sun Ray with working capital. Pursuant to the agreement, George Hincke deposited with the First National Bank of Kansas City, Mo., government bonds to the amount of $25,000. Theodore Ismert deposited the certificate for his milling company shares. George Hincke signed [748] an instrument guaranteeing payment to the bank of advances to Sun Ray up to the sum of $25,000, and Theodore 'Ismert signed an instrument of the same tenor. The credit thus supplied was used by Sun Ray.

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Ismert-Hincke Milling Co. v. Estate of Ismert, 13 P.2d 279, 135 Kan. 745, 1932 Kan. LEXIS 389 (kan 1932).

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