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BUFFALO COLOROGRAPH CORP. v. GENERAL PRODS. CORP.

DISTRICT COURT, W.D. PENNSYLVANIA


May 14, 1937

BUFFALO COLOROGRAPH CORPORATION
v.
GENERAL PRODUCTS CORPORATION

The opinion of the court was delivered by: SCHOONMAKER

SCHOONMAKER, District Judge.

On Rehearing.

I. A. S. Guggenheim Claim, $6,000.

 In an opinion filed February 18, 1936, we disallowed exceptions filed by A. S. Guggenheim to the report of the special master disallowing claim of Guggenheim for $6,000.

 The special master disallowed this claim because of an entry on the corporate ledger showing that Guggenheim had released this claim. Guggenheim alleges in his petition for reargument that there was no supporting evidence to justify this book entry.

 The court allowed a rehearing on the matter and took further testimony. On this further hearing we now find the facts with reference to this claim to be as follows:

  The claimant was a stockholder and a director of defendant corporation. May 29, 1931, the corporation executed a promissory note of $15,000 payable in ninety days, with Guggenheim and Po'Chapin (president of the corporation) as indorsers. This note was then taken by the Potter Title & Trust Company, which issued a certificate of deposit to the defendant corporation for $10,000 and held that certificate as collateral to the $15,000 note along with 1,000 shares of the capital stock of the Pursglove Mining Company issued to one Myrtle Pursglove, who assigned this stock to the trust company as collateral to this note of $15,000. The trust company then credited $5,000 to account of the defendant corporation on its books. On June 23, 1931, the certificate of deposit of $10,000 was surrendered to the bank and canceled; a new certificate of deposit for $9,000 was issued and held by the trust company as collateral to the note of $5,000; and $1,000 was deposited to the credit of the defendant on the trust company's book.

 On August 5, 1931, the certificate of deposit of $9,000 was canceled and the note of $15,000 was turned over to Guggenheim and Po'Chapin along with the Pursglove stock, whereupon Guggenheim and Po'Chapin executed and delivered their own note to the trust company for $6,000. The books of the defendant corporation under date of August 4, 1931, show the issuance of 600 shares of its capital stock to Myrtle Pursglove of the value of $6,000, of which amount $600 represents the par value and $5,400 paid-in surplus, with a notation that $5,000 thereof is "to offset A. Guggenheim note from which General Products Corporation has been released," and an additional $1,000 "to offset a loan from A. Guggenheim to M. Po'Chapin, which is in addition to the $5,000, as recorded above." This entry was made on the books of the Company by the bookkeeper under the direction of M. Po'Chapin, the president of defendant corporation. At this time Guggenheim was not in Pittsburgh.

 Our conclusion is that, in view of this entry and in view of the fact that Guggenheim signed the new note as a maker, this indicates that it was his intention to release the defendant corporation from this note. He must have known about the transaction or he would not have executed the new note for $6,000 as a maker instead of as an indorser.

 We are still of the same conclusion as expressed in our original opinion herein.

 II. V-B Corporation.

 We granted a reargument to this claim on its exceptions to the special master's report, and have carefully considered this matter again; we arrive at the same conclusion that we did in our original opinion. We do not care to add anything to what we then said.

 The exceptions of the V-B Corporation will be disallowed.

19370514

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