Crayton v. Spullock

• Decision Date: 27 May 1891
• Citation: 87 Ga. 326,13 S.E. 561
• Parties: Crayton et al. v. Spullock et al.
• Court: Georgia Supreme Court

13 S.E. 561

87 Ga. 326

Crayton et al.

v.Spullock et al.

Supreme Court of Georgia.

May 27, 1891.

Attorney and Client—Duties and Liabilities.

An attorney who brings an equitable petition to marshal and administer the assets of a corporation, and who, by a consent decree, is paid for his services by the corporation, so far represents it that he cannot purchase its property for himself at a receiver's sale at a grossly inadequate price.

(Syllabus by the Court.)

Error from superior court, Floyd county; John W. Maddox, Judge.

Action by J. R. Crayton and another against James H. Spullock, receiver, and another, to set aside a receiver's sale. Judgment for defendants. Plaintiffs bring error. Reversed.

Nunnally & Neel, for plaintiffs in error.

Wright & Harris, for defendants in error.

Lumpkin, J. Messrs. Wright & Harris, as attorneys for one Lattner, for the use of Kohn et al., filed an equitable petition against the Rome Nail Manufacturing Company, praying for a judgment against the corporation, and also for the appointment of a receiver to take charge of and sell its assets. No resistance was made to the appointment of a receiver, and afterwards a consent decree was rendered in the case, directing the sale of the property of the corporation by the receiver, and also providing that the firm of Wright & Harris be paid out of the proceeds of the sale $150 for their services in bringing the petition, etc. Afterwards the receiver sold the property in gross, including all its real and personal assets, to H. M. Wright, one of the firm, for $250, his being the only bid. The evidence is somewhat conflicting as to the actual value of the property, but it was undoubtedly worth at least $1,500, and probably much more. After the sale, Crayton, as president of the company, and others, directors and stockholders therein, filed their motion to set aside the sale made by the receiver, alleging, among other things, that they understood that the proceedings instituted by Wright & Harris were intended for the benefit of all parties interested, and that these attorneys really represented therein the corporation and all others concerned; that for these reasons no objection had been made to the appointment of a receiver or the sale of the property; and that they failed to attend the sale, fullybelieving that their rights would be protected in all respects by Messrs. Wright & Harris. In their answer respondents denied that Wright & Harris were attorneys for movants or the corporation,...