American Associated Companies v. Vaughan

• Decision Date: 16 September 1953
• Docket Number: No. 18233,18233
• Citation: 78 S.E.2d 43,210 Ga. 141
• Parties: AMERICAN ASSOCIATED COMPANIES, Inc. et al. v. VAUGHAN.
• Court: Georgia Supreme Court

Page 43

78 S.E.2d 43

210 Ga. 141

AMERICAN ASSOCIATED COMPANIES, Inc. et al. v. VAUGHAN.

No. 18233.

Supreme Court of Georgia.

Sept. 16, 1953.

Rehearing Denied Oct. 15, 1953.

Syllabus by the Court.

1. The defendants' amendment seeking equitable relief, which was stricken on motion, coverted the case from an action at law into an equity case, that is within the jurisdiction of this court.

2. After the judgment of the Court of Appeals, reversing without direction the rulings of the auditor and of the trial court, overruling exceptions of fact and law to the material findings of the auditor, was made the judgment of the trial court, the latter court erred, without having a de novo trial, in entering a final judgment in favor of the plaintiff.

3. The case being in order for a new trial, it was error to strike the amendment of the defendants seeking equitable relief, and to refuse to allow the filing of other amendments, on the ground that, because of the auditor's report having been filed, no new pleadings setting up new and distinct issues were allowable.

George M. Vaughan filed his petition against American Associated Companies, Inc., and Armand May, seeking an accounting for a sum of money alleged to be due him. Demurrers filed by the defendants were overruled, and that judgment was affirmed by the Court of Appeals. American Associated Companies v. Vaughn, 76 Ga.App. 121, 44 S.E.2d 921. Thereafter the case was referred to an auditor to pass upon all issues of fact and law. Hearings were had and the auditor filed his report, which was to the effect that the plaintiff was entitled to a judgment for $4,187.29. The auditor concluded as a matter of law that the plaintiff was not entitled to receive any sum in addition to that which he had already received from October 1, 1945, to December 1, 1945; and that, upon payment by the defendant of said sum plus interest from December 5, 1945, the plaintiff would have no claim against either defendant, arising out of the contract of December 5, 1945. The plaintiff filed exceptions to certain findings of fact and law. The defendants filed exceptions to certain findings of fact. The exceptions were submitted to the judge of the superior court for determination without a jury. Substantially all the exceptions of the plaintiff were overruled, and judgment was rendered in favor of the plaintiff for $1,282.45, which was the amount the defendants had tendered to the plaintiff before the suit was filed. The plaintiff excepted directly to the rulings of the court on his exceptions to the 8th, 12th, 21st, and 25th findings of fact, and to the 4th and 6th conclusions of law. The Court of Appeals, in Vaughan v. American Associated Companies, 86 Ga.App. 672, 72 S.E.2d 149, held that the auditor and the trial judge reviewing the auditor erred, under the pleadings and evidence, 'in holding that the expression in quotations is explainable by prior practices, waivers, and agreements, and in not holding that the plaintiff's percentage of profits is to be computed from data shown by the books of the company and not according to an irregular formula of the defendant company not shown generally on the books of the company but only on a specific page where the results of the formula were placed,' and reversed without direction the judgment of the trial court. In its opinion, the Court of Appeals stated: 'After a careful rereview of the case, we are of the opinion that the finding by the court on the grounds stated was not authorized by the evidence. * * * The auditor and the court should have found, under the pleadings and evidence before them, that the plaintiff's share of the profits should be computed from the data shown by the defendants' books generally, and not according to the formula which was used by the defendants and the results of which were placed on special pages of the books. It follows that the court erred in its findings of law and fact contrary to the rulings of this court.' 86 Ga.App. at page 698, 72 S.E.2d at page 164. A full statement of the case will be found in the above two reports of the Court of Appeals.

The remittitur of the Court of Appeals in the second decision cited above was made the judgment of the trial court on October 28, 1952. On the same date, the opinion of the Court of Appeals was filed in the office of the clerk of the superior court. On October 30, 1952, the plaintiff filed a motion for a 'money judgment on the remittitur,' the ground of the motion being that, under findings of fact numbers 20 and 26, which findings were unexcepted to, the auditor found as follows: 20--'That the accounting procedures of American Associated Companies insofar as they determined net profits of the converting department were not procedures usually followed by expert accountants in determining net profits, in that interest on invested capital used by the converting department was deducted from gross profits in determining net profits of the converting department, and in that a portion of the income taxes paid by the American Associated Companies, Inc., was deducted from gross profits in determining net profits of the converting department.' 26--'That if the American Associated Companies, Inc., had followed account procedures usually followed by expert accountants that Vaughan, in addition to what he did receive, would have received as his previously stated percentages of the profits of the converting department through September 30, 1945, the following sums for the periods indicated, totalling $52,965.05: July 1st to December 31, 1941-$3,886.97; January 1, 1942 to December 31, 1942-$11,611.66; January 1, 1943 to September 30, 1943-$14,239.51; October 1, 1943 to September 30, 1944-$15,929.80; October 1, 1944 to September 30, 1945-$7,301.11;' and he prayed for a judgment against the defendants, 'without further trial or hearing of any kind,' in the sum of $52,969.05, with interest at 7% per annum. The defendants filed a written response to this motion, and asserted that, if the judgment of the Court of Appeals was given the effect claimed by the plaintiff, it would deprive them of their property without due process of law, contrary to stated constitutional provisions, 'in that it would substitute an opinion of the Court of Appeals on a question of fact in the place of a finding by the tribunal specifically designated by these Constitutions to find the facts,' and prayed that the motion be denied, and 'that the case stand for trial as a result of the general reversal by the Court of Appeals.' On November 26, 1952, the defendants filed an amendment to their plea and answer, and by cross-petition sought equitable relief, praying primarily for a reformation of the contract between the parties, and in the alternative that it be held that the contract of December 5, 1945, was entered into under a mutual mistake of fact and should be rescinded; and for such other and further relief as the court may deem meet and proper. This amendment was allowed and ordered filed, subject to objections and further pleadings by the plaintiff. The plaintiff filed his demurrers to this amendment and moved to strike the same, one of the grounds being 'because the report of the auditor in this case has been filed, and no new pleading setting up a new and distinct issue is allowable.' After argument, the court sustained this ground of the demurrer and struck the amendment. Exceptions pendente lite were filed by the defendants to this order. On December 19, 1952, the defendants tendered eight separate and distinct amendments to their plea and answer, which were disallowed by the court on separate objections, each of which asserted that no new pleadings are admissible after the report of the auditor which has now been filed, after the time for taking exceptions to such report has expired. Exceptions pendente lite were duly filed to the disallowance of these amendments. On December 19, 1952, the court entered a money judgment in favor of the plaintiff for $50,590.37 principal and $23,585.68 interest. In this order, the court sustained exceptions of the plaintiff to certain findings of fact and law made by the auditor which the Court of Appeals had held that the trial judge erred in overruling. The defendants filed exceptions pendente lite to this order, and also filed a motion for new trial. A brief of the evidence was prepared and certified, and after argument this motion was overruled, the trial court expressly stating that, even if it had any discretion in ruling on the motion, it felt compelled to overrule it in order to make the judgment consistent with the judgment rendered on the plaintiff's motion for new trial, which order the trial court felt it had to render pursuant to the judgment and opinion of the Court of Appeals. The defendants filed their bill of exceptions, in which error is assigned on the various exceptions pendente lite, and on the order denying their motion for a new trial.

Joseph F. Haas, Thomas B. Branch, Haas, Holland & Blackshear, Atlanta, for plaintiffs in error.

C. Baxter Jones, Jr., Sutherland, Asbill & Brennan, Atlanta, for defendant in error.

ALMAND, Justice.

1. The question has been raised as to whether the case under review is one over which, under the provisions of article 6, section 2, paragraph 4 of the Constitution of 1945, Code Ann.Supp. § 2-3704, this court has exclusive jurisdiction. Though the case originated solely as an action at law, the amendment which was first offered and allowed subject to objection, and thereafter stricken on motion and disallowed, alleged facts and contained prayers whereby the defendants sought a reformation of the contract between the parties. In our opinion, under previous rulings of this court, Dunson v. Lewis, 156 Ga. 692, 119 S.E. 846; Dyson v. Washington Telephone Co., 157 Ga. 67(3), 121 S.E. 105; Harrell v. Parker, 186 Ga. 760(1), 198 S.E. 776; Fuller v. Calhoun National Bank, 186 Ga. 770, 199 S.E. 116; Gibbs v. H....