Callan Court Co. v. Citizens & Southern Nat. Bank

• Decision Date: 13 March 1937
• Docket Number: 11503,11504.
• Citation: 190 S.E. 831,184 Ga. 87
• Parties: CALLAN COURT CO. v. CITIZENS & SOUTHERN NAT. BANK et al. CITIZENS & SOUTHERN NAT. BANK v. CALLAN COURT CO. et al.
• Court: Georgia Supreme Court

190 S.E. 831

184 Ga. 87

CALLAN COURT CO. v. CITIZENS & SOUTHERN NAT. BANK et al.

CITIZENS & SOUTHERN NAT. BANK v. CALLAN COURT CO. et al.

Nos. 11503, 11504.

Supreme Court of Georgia

March 13, 1937

Error from Superior Court, Fulton County; Virlyn B. Moore, Judge.

Suit by the Citizens & Southern National Bank, trustee, against the Atlanta Biltmore Hotel Company, wherein William Candler and the Callan Court Company intervened. To review the judgment rendered, the Callan Court Company brought error and the plaintiff filed a cross-bill of exceptions.

Judgment affirmed on the main bill of exceptions and the cross-bill dismissed.

Syllabus by the Court.

1. An exception to an interlocutory order (where no exception pendente lite was filed), in a bill of exceptions tendered more than thirty days after the entry of the order, comes too late for consideration.

2. The plaintiff is not required to demur to an intervention. Failure to demur to an intervention does not admit that the intervener is entitled to the relief sought, notwithstanding the intervener may prove the intervention as laid. A denial of a conclusion of the pleader without corresponding allegations of fact does not form an issue.

3. Courts of equity will grant relief against mistake. The mistake relievable against must be in reference to a material present or past fact. A mistake in opinion or mental conclusion as to an uncertain future occurrence, or the accident or surprise of economic change, does not afford ground for equitable relief.

4. Disapproval of an exception to an auditor's report, and refusal to submit the exception to a jury in an equity case will not be disturbed on review, where the evidence warranted the finding of the auditor.

5. Subrogation will not be decreed in favor of a volunteer who, under no obligation to make the payment or not being compelled to do so to protect any right or property of his own, pays the debt of another without any assignment or agreement for subrogation.

Statement by Judge Graham.

On September 1, 1923, the Atlanta Biltmore Hotel Company, a corporation, hereinafter referred to as the hotel company issued and sold its corporate bonds in the sum of $3,000,000. It thereupon conveyed in trust its certain property to the Citizens & Southern Bank, a corporation, now the Citizens & Southern National Bank, as trustee for the holders of said bonds, to secure their payment. William Candler personally guaranteed the payment of said bonds, and on said date he conveyed to said trustee certain property to the amount of $500,000, further securing the payment of said bonds. Thereafter the Callan Court Company, a corporation financed by William Candler, purchased at various times a large number of said bonds, aggregating in amount $1,766,800, in which amount was included the bonds aggregating $500,000, to secure the payment of which the said Candler had conveyed certain property to the trustee. Upon the purchase of said bonds amounting to $500,000, the property which Candler had so conveyed to the trustee was released to him. The Callan Court Company owned about 97 per cent. of the capital stock of the hotel company. William Candler owned practically all of the capital stock of the Callan Court Company, and was president of and controlled and financed both companies.

After the bonds were purchased by Callan Court Company, apparent title to them was placed in the hotel company; and the hotel company, with the consent of Candler, the Callan Court Company, and the trustee, cremated and destroyed the bonds so purchased. $700,000 of the bonds were cremated on December 31, 1928; $575,000 on February 28, 1929; $450,000 on July 31, 1929; $16,500 on August 31, 1929; $8,500 on November 30, 1929; $6,800 on December 31, 1929; $9,500 on February 27, 1930. All of these bonds were cremated in the bank of the trustee, and at the time of the cremation written certificates were entered into in reference thereto, the first being as follows: 'We, the undersigned, hereby certify that the foregoing first mortgage 7% bonds of the Attlanta Biltmore Hotel Company, aggregating seven hundred thousand ($700,000.00) dollars, were this day cremated in our presence, being burned to ashes.' These certificates were signed by William Candler and L. O. Langston for the company and by L. H. Parris and W. H. Johnson for the trustee. The next certificate was in substantially the same form, and was signed by the same parties; and the other certificates were substantially the same as the first, and each was signed by four witnesses, two for the hotel company and two for the trustee. Before the cremation of the bonds so purchased, bonds aggregating $225,000 had been paid off by the hotel company and had been marked canceled, and were cremated by the trustee, which left outstanding $1,008,200 of the original $3,000,000 of bonds issued. On April 10, 1935, the hotel company reissued to Callan Court Company bonds aggregating $1,766,800, of the same serial number and maturity dates as the bonds of the original issue of $3,000,000 which were cremated.

Before the commencement of the suit the Callan Court Company, financed by William Candler, advanced at various times to the hotel company $174,241.52, or other large sum, to be used by the hotel company to pay off and discharge items of taxes and insurance against the properties covered by the trust deed, which moneys appeared from the books of the hotel company to have been advanced by Callan Court Company, and were used by it to discharge such liens. On February 26, 1932, the trustee filed an equitable petition against the hotel company, to foreclose the trust deed for the benefit of the holders of the outstanding bonds aggregating $1,008,200. To this suit the hotel company made no defense, but William Candler intervened. On November 8, 1934, the case was referred to an auditor, and while the case was pending before him, the Callan Court Company also intervened. The auditor found against the interventions, and in favor of the trustee. Candler filed no exception. The Callan Court Company moved to recommit the case to the auditor, and excepted to his findings. The court, after hearing, refused to recomit the case, disapproved the exceptions of Callan Court Company, and entered judgment on the finding of the auditor in favor of the plaintiff. To this judgment the Callan Court Company excepted. The trustee also excepted to certain rulings of the auditor, which were disapproved by the court. To this ruling the trustee excepted by cross-bill.

The trust deed contained many stipulations, of which the following are material to a consideration of the issues:

'Section 2 (of article IV). The company further covenants that it will punctually pay the principal and interest of every bond issued hereunder, in good coin of the United States of America, of not less than the present standard of weight and fineness, or its equivalent in lawful money of the United States, at the time and place and in the manner herein, and in said bonds, and in the coupons thereto belonging, specified, according to the true intent and meaning hereof and thereof. The company further covenants to pay Federal income tax or taxes not to exceed the sum of two per cent. (2%) of the interest paid on said bonds. Said Company covenants that in case default shall be made in the payment of the principal of any of the bonds secured hereby, when the same shall become payable, whether upon the maturity of such bonds or upon a declaration of maturity, as authorized by any of the terms of this indenture, then upon the demand of the trustee the company will pay to the trustee, for the benefit of the holders of the bonds and coupons then outstanding, the whole amount which then shall become due and payable on all the bonds and coupons then outstanding for interest or principal, or both, as the case may be, with interest upon the overdue principal and on the overdue installments of interest as provided by this indenture, and the bonds secured thereby; and in case said company shall fail to pay the same therewith upon such demand, the trustee in its own name and as trustee for an express trust, shall be entitled to recover judgment for the whole amount so due and unpaid. The trustee shall be entitled to recover judgment as aforesaid either before or after or during the pendency of any proceedings, judicial or otherwise, for the enforcement of the lien of this indenture; and the right of the trustee to recover such judgment shall not be affected by any sale hereunder or by the exercise of any other right, power, or remedy for the enforcement of the provisions of this indenture or for the foreclosure of the lien thereof; and in case of a sale of the property subject to this indenture and of the application of the proceeds of sale to the payment of the indebtedness hereby secured, the trustee in its own name and as trustee of an express trust, shall be entitled to enforce payment of and to receive all amounts then remaining due and unpaid upon any and all of the bonds then outstanding for the benefit of the holders thereof and shall be entitled to recover judgment for any portion of the debt remaining unpaid with interest, and this right to recover judgment for any portion of the debt remaining unpaid with interest shall include the right to recover a deficiency judgment against said company, whether the deficiency results upon a sale under any of the remedies provided in this indenture or through judicial procedure at law or in equity. No recovery of any such judgment by the trustee, and no levy of any execution upon any such judgment upon property subject to this indenture or upon any other property, shall in any manner or to any extent affect the lien of this indenture upon

...