Commonwealth Inv. Co. v. Frye, 22117

• Decision Date: 07 November 1963
• Docket Number: No. 22117,22117
• Citation: 219 Ga. 498,134 S.E.2d 39
• Parties: COMMONWEALTH INVESTMENT COMPANY v. Augustus H. FRYE, Jr.
• Court: Georgia Supreme Court

Page 39

134 S.E.2d 39

219 Ga. 498

COMMONWEALTH INVESTMENT COMPANY v. Augustus H. FRYE, Jr.

No. 22117.

Supreme Court of Georgia.

Nov. 7, 1963.

Rehearing Denied Nov. 19, 21, 1963.

Syllabus by the Court

The allegations of the petition, as amended, showing clearly that the petitioner was debarred or deterred from bringing this action until the discovery of the actual fraud, thus tolling the statute of limitation under Code § 3-807, and since the defendant claims under the alleged forger, the lower court erred in sustaining the demurrer raising this question, and the Court of Appeals did not err in reversing the lower court.

This case is before this court by writ of certiorari to the Court of Appeals. It is reported in Frye v. Commonwealth Investment Company, 107 Ga.App. 739, 131 S.E.2d 569, as an action in trover to recover certain stock certificates in the hands of the issuing corporation who had issued the same to the plaintiff as a stockholder and had actual knowledge of his signature, yet it obtained control of the stock certificates by reason of a forgery of his signature on certain stock powers which was without his knowledge. The allegations show that the plaintiff brought this action as soon as such fraud was discovered.

The assignments of error contained in the application for certiorari are, in substance, that the Court of Appeals erred in failing to sustain the lower court in its ruling sustaining a demurrer to the petition because it affirmatively appears on the face of the petition that the action was barred by the statute of limitation.

Alston, Miller & Gaines, Lloyd T. Whitaker, Michael A. Doyle, Atlanta, for plaintiff in error.

W. Dan Greer, Buchanan, Edenfield & Sizemore, Atlanta, for defendant in error.

DUCKWORTH, Chief Justice.

The arguments in this case cause us to feel that an emphatic statement should be made by this court that the legislature, and not the courts, are empowered by the Constitution to decide public policy, and to implement that policy by enacting laws; and the courts are bound to follow such laws if constitutional. With this fundamental principle thus stated, we look to the legislation, Code § 3-807, to see whether the limitation statute of four years to bring this suit applies until the fraud is discovered. This law plainly provides that: 'If the defendant, or those under whom he claims, shall have been guilty of a fraud by which the plaintiff shall have been debarred or deterred from his action, the period of limitation shall run only from the time of the discovery of the fraud.' On demurrer, properly pleaded facts are treated as true. Therefore, the allegations of the petition that Pruett & Company forged the signature of plaintiff to the transfers of the shares of stock and the corporation issuing the stock and accepting the forged transfer, which is the defendant here, had on file a true signature of the petitioner which would have shown the transfer signature to be a forgery, are treated as true. It is trifling with terms to contend that the defendant is not claiming under Pruett & Company, the forger, and hence is not covered by Code § 3-807. Of course, the amended petition shows that Pruett & Company alone fraudulently placed title in the defendant. If so, defendant claims under Pruett & Company. They have no other basis for their claim, certainly not under the petitioner who was the owner and the victim of the forgery, which the defendant in the exercise of reasonable care and in fulfillment of its duty could have discovered by a comparison of signatures.

We regard further discussion here as surplusage in the light of the exhaustive opinion of the Court of Appeals. For the reasons stated above as well as those stated in the opinion of the Court of Appeals, the trial court erred in sustaining the demurrer to the amended petition, and the Court of Appeals did not err in reversing that judgment.

Judgment affirmed.

All the Justices concur, except HEAD, P. J., and MOBLEY and QUILLIAN, JJ., who dissent.

HEAD, Presiding Justice (dissenting).

The plaintiff, Dr. A. H. Frye, Jr., in his trover action to recover from the defendant certain certificates of stock alleged to have been conveyed to the defendant unlawfully and fraudulently by Pruett and Company, alleges facts which show that Pruett and Company was his agent. In paragraph 5 of his amended petition the plaintiff alleges in part: 'Said Pruett and Company, Inc. was plaintiff's stock broker and said stock certificates * * * which was issued to plaintiff as owner, had been entrusted by plaintiff to said Pruett, and Company, Inc. for custodial safekeeping.' Generally a stock broker is a dealer in negotiable securities. The plaintiff, however, did not limit his relationship with Pruett and Company to the buying and selling of negotiable securities, but made Pruett and Company his agent 'for custodial safekeeping' of the plaintiff's stock. As to the relationship of principal and agent the Code provides: 'The principal shall be bound for the care, diligence, and fidelity of his agent in his business, and hence he shall be bound for the neglect and fraud of his agent in the transaction of such business.' Code § 4-311. While neither the opinion of the Court of Appeals, Frye v. Commonwealth Investment Co., 107 Ga.App. 739, 131 S.E.2d 569, nor the opinion of this court, refers to this Code section, I nevertheless think it is applicable here and that the plaintiff having selected his agent and having placed it within...