Continental Nut Co. v. Savannah Bank & Trust Co. of Savannah

• Decision Date: 17 May 1977
• Docket Number: No. 3,No. 53708,53708,3
• Parties: CONTINENTAL NUT COMPANY v. SAVANNAH BANK AND TRUST COMPANY OF SAVANNAH et al
• Court: Georgia Court of Appeals

Page 501

236 S.E.2d 501

142 Ga.App. 509

CONTINENTAL NUT COMPANY v. SAVANNAH BANK AND TRUST COMPANY OF SAVANNAH et al.

No. 53708.

Court of Appeals of Georgia, Division No. 3.

May 17, 1977.

Rehearing Denied June 9, 1977.

Burt, Burt & Rentz, H. P. Burt, Albany, for appellant.

Perry, Walters, Lippitt & Custer, Jesse W. Walters, Divine, Wilkin, Deriso & Raulerson, Edgar B. Wilkin, Jr., Albany, for appellees.

MARSHALL, Judge.

The appellant, Continental Nut Company, brings this appeal from the orders of the court below, first in denying all the prayers of intervention, and then in dismissing the intervention.

This litigation has followed a long and tortuous course. As early as 1948, Consolidated Pecan Sales Company was engaged in financial dealings with The Florida National Bank of Jacksonville and The Savannah Bank and Trust Company. Over the years, Consolidated Pecan obtained cash loans from both banks as well as from other financial institutions and individuals. As far as the record shows, during the period from 1958 through 1962, Consolidated Pecan was indebted to the two banks above named in a sum in excess of $400,000. Consolidated Pecan was a family-owned business. The same brothers were the owners of a corporation named 110 West Street Building, Inc., a real estate business, they owning 520 shares of that corporation and Consolidated Pecan owning the other 500 shares. In 1958, 110 West Street Building, Inc., borrowed $3,000 for an undisclosed purpose. As security, the corporation pledged the building it owned at 110 West Street, not only for the $3,000, but also to secure any other indebtedness then or thereafter owing by 110 West Street Building, Inc., as well as any indebtedness owing by Consolidated Pecan then or in the future. The security deed was also to secure a line of credit to Consolidated Pecan. The security instrument recited that the brothers and Consolidated Pecan were the sole stockholders of the real estate corporation. There was other evidence that Consolidated Pecan maintained its corporate offices in the building at 110 West Street. As additional security for its indebtedness, Consolidated Pecan and its officers pledged with the banks certain life insurance policies, trade acceptances, equipment and supplies owned by the Pecan Corporation in the operation of its business, certain trust receipts and warehouse receipts (most of which proved to be fictitious or non-collectible), as well as quantities of pecans possessed as stock in trade.

In September, 1963, the two banks sought the appointment of a temporary receiver to marshal and protect the assets of the debtor, Consolidated Pecan, as well as seeking to obtain a judgment against the corporation and the two brothers, who were guarantors. A temporary receiver was appointed. On December 30, 1963 (upon the payment of almost $130,000 and the transfer of other property with the knowledge and consent of all the parties then concerned), one of the brothers was given a covenant not to sue, and both brothers were voluntarily dismissed as parties defendant. Thereafter, on January 4, 1964, the intervenor, Continental Nut Co., was allowed to intervene. Continental Nut obtained a court order establishing a superior lien (based upon an earlier judgment obtained in a federal district court) over and above all other creditors of Consolidated Pecan, except those creditors who held securities. The receiver was required to hold all funds realized from the sale of all unsecured assets, funds realized from a tax refund or claim from other parties, and all funds received from other sources, and to disburse such funds as might be received, upon order of the court, to pay costs of court, to pay the receiver fee, attorney fees, and a sufficient amount to cover the fieri facias from the federal court, with the remainder to be paid to the debtor.

Over the next several years, the banks successfully pursued suits seeking to recover amounts due on the trade acceptances. None of the cash or other assets derived from the sale of the secured assets was ever paid into the hands of the receiver. Certain other items were paid into his hands, such as the income tax refund. Most of this amount was disbursed by court order.

During the progress of these proceedings, the intervenor, Continental Nut, sought and obtained information by way of interrogatories, as to the actual assets liquidated and the amounts of money obtained by the banks from the sales of the security. This amounted to something over $300,000.

In 1966, the intervenor filed an equitable pleading seeking the trial court to direct the two banks to pay all funds collected, whether from secured assets or unsecured assets, over to the receiver, and that the receiver hold the funds pending determination of the priority of liens. Subsequently, in 1969, the intervenor again filed such a petition, seeking the payment of all monies collected into the hands of the receiver, requiring the banks to pay their pro rata shares of costs, and to establish priority of liens. Prior to 1974, no hearing was held on either of these petitions.

In 1970, the banks sought summary judgment on the indebtedness owed them by Consolidated Pecan. After considering all evidence presented until that time, the trial court entered summary judgment for both banks, ratifying all previous sales and collections of assets, and affirming a deficiency due as to each bank. Consolidated Pecan brought an appeal to the grant of summary judgment. Intervenor, Continental Nut, filed a brief as amicus curiae. This court affirmed the grant of summary judgment as to each bank in Consolidated Pecan Sales Co. v. Savannah Bank etc. Co., 122 Ga.App. 536, 177 S.E.2d 808 (1970).

Finally, in November, 1973, the intervenor moved the trial court for a hearing on its petition of 1969. There is no indication that such a hearing resulted. Subsequently, the intervenor moved the court a second time in December, 1974, for a hearing on its petition of 1969, as amended. In December, 1976, the trial court first denied the prayers of the petition and then dismissed the petition of intervention. It is from these final rulings that the intervenor brings its appeal. Held :

1. The appellant, Continental Nut, contends that the banks themselves sought the appointment of the receiver, therefore the banks should not be heard to complain of the routing of all funds received through the receiver nor the payment of their fair and pro rata shares of the costs resulting from the use of the receiver. There is evidence that the receiver obtained $10,000 as a tax refund plus some other small items of cash. Costs are said to be approximately $6,000. These costs have been paid out of the tax refund. The intervenor seeks to have the banks pay their pro rata shares and not rely on the tax refund for payment of costs.

Secondly, the intervenor contends that all monies collected by the banks should have been paid to the receiver and then paid out to the creditors upon order of court. The intervenor does not contend that the secured debts did not have a higher priority than its own judgment, provided that the security predated the appellant's own judgment.

We conclude that the intervenor...