Equitable Bldg. & Loan Ass'n v. Brady

• Decision Date: 11 December 1930
• Docket Number: 7964,7965.
• Citation: 156 S.E. 222,171 Ga. 576
• Parties: EQUITABLE BUILDING & LOAN ASS'N v. BRADY. SAME v. LOVETT.
• Court: Georgia Supreme Court

156 S.E. 222

171 Ga. 576

EQUITABLE BUILDING & LOAN ASS'N v. BRADY.

SAME v. LOVETT.

Nos. 7964, 7965.

Supreme Court of Georgia

December 11, 1930

Syllabus by the Court.

Petition to rescind parol contract to purchase stock, induced by fraudulent representation as to nature of certificates stated cause of action (Civ. Code 1910, § § 4621, 4254).

The court did not err in overruling the demurrers to the petition.

Word "promptly," within Code, requiring prompt action to rescind, means within reasonable time; petitioners demanding return of purchase money for stock year after purchase, when fraud was discovered, held not estopped fro rescinding as matter of law because of laches (Civ. Code 1910, § 4305).

Under the facts alleged, it cannot be said as a matter of law that complainants were estopped because of laches.

Petition to rescind parol contract to purchase stock certificates held not demurrable as seeking reformation of certificates.

Complainants do not undertake to reform the written certificate; and for that reason the principle cited from Weaver v Roberson, 134 Ga. 149, 67 S.E. 662, is not applicable.

Overruling demurrer to petition to rescind contract to purchase stock for failure to attach certificates held not reversible error, where certificates were not relied on and court could require their production.

If good pleading required complainants to attach the certificates to the petition in response to a special demurrer, the judgment overruling that demurrer is not cause for reversing the judgment. These certificates are not relied upon as constituting the contract as to which the action is founded. On the trial, should it become material to ascertain the contents of the certificates, the trial court possesses ample power to require their production.

Petition to rescind parol contract to purchase stock held not demurrable because not showing certificates, not relied on were not assigned to petitioner.

The court did not err in overruling the special demurrer based upon the ground that the petitions do not show that some of the certificates described were in the names of others and had not been assigned to petitioner. These demurrers were properly overruled because the suit is not based on these certificates. They were incidents showing that the oral contract agreed upon had not been carried out.

The foregoing rulings are controlling; and it is not necessary to mention other questions which could not change the result nor is it necessary to expressly mention or to discuss all of the authorities cited in the brief of counsel.

Error from Superior Court, Chatham County; Peter W. Meldrim, Judge.

Suit by C. R. Brady against the Equitable Building & Loan Association and by R. F. Lovett against defendant named. Judgment for plaintiff in each case, and defendant separately brings error.

Affirmed.

Word "promptly," within Code, requiring prompt action to rescind, means within reasonable time (Civ.Code 1910, § 4305).

The exception in each of these cases is to the overruling of demurrers to an equitable petition. The two records present practically the same questions, and decision of one of the cases will necessarily control the other. The case made by the petition and demurrers in the suit of Brady will be stated, and the differences between that and the suit of Lovett will be noted.

Brady sued Equitable Building & Loan Association, a Georgia corporation having its principal office at Savannah, for recovery of the principal sum of $1,000, with interest at 7 per cent. from June 8, 1928, and for the principal sum of $250, with interest at 7 per cent. from October 26, 1928. For the principal amounts mentioned, on the dates named, petitioner drew his checks payable to the defendant on a named banking house, and the checks were delivered to one Wilson, an agent of the defendant, at the place of business of petitioner located at Isle of Hope, an unincorporated settlement in Chatham county. In return, petitioner was to receive certificates for 250 shares of the capital stock of the defendant corporation of the par value of $5 per share. Petitioner alleges that the investment of the $1,000 was solicited "on or about" June 7, 1928, by one Wilson and one White; that the solicitation of the $250 was made on October 26, 1928, by one Reinhardt, who were selling agents of the corporation, authorized by it to sell stock shares and certificates, acting for the benefit of the defendant; that, in pursuance of a scheme of the defendant corporation to induce petitioner to part with his money, the said agents falsely and fraudulently, and solely for the purpose of deceiving and defrauding petitioner, stated and represented to him that said shares of stock would pay to the investor interest at the rate of 7 per cent. per annum, and that the investor would have the privilege of depositing other money with the defendant corporation at an interest rate of 7 per cent. per annum, which could not be done unless the stock was bought, as those who were not stockholders could receive only 5 per cent. on money so deposited, that petitioner could, at any time he desired, sell the stock back to the defendant corporation, that said certificates of stock had the same force and general characteristics as demand certificates issued by the several banking institutions of this state; that petitioner is by vocation a grocer, conducting a small store, and is in no wise familiar with the customs of the banking business or any other custom of financial and banking usage; that he knew nothing whatsoever of the phraseology of demand certificates, stock certificates, or any other kind of certificates, and because of his lack of knowledge he accepted as true the fraudulent and deceitful representations of the defendant's agents, and, relying solely upon them, agreed to invest his money and to accept as evidence thereof "stock certificates for the full value of the amount so invested, with a specific understanding given to him by the representatives and agents of the said defendant corporation that the said certificates delivered to him would be stock certificates *** which the defendant would cash at any time that petitioner desired, and that they would, upon demand, pay to petitioner in full, together with interest at the rate of 7 per cent. per annum from the date of issuance to the date of their payment"; that petitioner wished to present to his wife one of the certificates in the amount of $500, and, of the first money invested, instructed the defendant to issue a certificate for that amount in the name of Mrs. C. R. Brady.

As to the first investment, the solicitation of which was made "on or about" June 7, 1928, it is alleged that petitioner "then paid over to the *** defendant, the sum of $1,000.00, *** that on the next day the defendant delivered to petitioner two (2) certificates, one of which was *** dated June 8, 1928, *** and the other dated June 12, 1928," the one issued to himself and the other to Mrs. Brady. As to the second investment, the solicitation of which was made on "October 26th, 1928," it is alleged that "the defendant corporation did issue" to petitioner "what was fraudulently represented by" Reinhardt "to be a certificate of stock *** dated October 26th, 1928." It is further alleged that, "having received the said three certificates, he put them away in a safe place, and did not present the certificate *** to his wife as he had proposed to do; that the certificates so delivered to him are not certificates of stock, and are nothing but membership certificates" of no value whatever; that petitioner "first discovered the fraud on or about the 15th day of June, 1929," when he made demand upon an officer of the defendant at its office, "as rescission of the contract, presenting and offering to return the said certificates and demanding a return of his money," which was refused; that "the delay on his part in discovering the fraud and deceit perpetrated upon him by the defendant corporation was due to the fact that he had been lulled into full and complete security by the statements of the defendant's agents, having had complete faith in the representations so made to him"; that, at a meeting of the board of directors of the defendants, held on or about August 14, 1929, he again made demand for rescission of the contract and return of his money, which was likewise refused; that he received nothing of value for the money paid the defendant; and that what he did receive, "as far as petitioner knows, never will have any value." The prayers are "that the oral contract that petitioner had been fraudulently induced to enter be rescinded," for judgment for the principal amounts mentioned, with interest from the dates of payment, and for general relief and process.

The petition was demurred to generally on the grounds that it does not set out a cause of action; that it does not appear that petitioner has the legal interest in both of the membership certificates referred to; that the allegations are insufficient to set out a case of fraud against defendant; it shows that petitioner was guilty of laches and negligence such as will deprive petitioner of any and all right of recovery; it appears that petitioner is a man of education can read and write, did sign a written contract with defendant, and had full opportunity to examine the status of said membership certificates before the contracts alleged to have been made with the agents of defendant were concluded; it does not appear from the allegations that any such fraud or artifice was practiced by defendant's alleged agents as would have prevented petitioner from making such inquiry as would have developed the truth or falsity of such representations as are alleged to have been...