Hambaugh v. Lookout Mountain Dev. Co, (No. 6753.)

• Decision Date: 20 September 1929
• Docket Number: (No. 6753.)
• Parties: HAMBAUGH. v. LOOKOUT MOUNTAIN DEVELOPMENT CO.
• Court: Georgia Supreme Court

169 Ga. 90

149 S.E. 781

HAMBAUGH.
v.
LOOKOUT MOUNTAIN DEVELOPMENT CO.

(No. 6753.)

Supreme Court of Georgia.

Sept 20, 1929.

(Syllabus by Editorial Staff.)

Error from Superior Court, Chattooga County; Jas. Maddox, Judge.

Petition by Lookout Mountain Development Company against Nisbet Hambaugh. Judgment for plaintiff, and defendant brings error. Affirmed.

The Lookout Mountain Development Company, a corporation chartered by the superior court of Chattooga county, Ga., as plaintiff, filed a petition against Nisbet Hambaugh, alleged to be a resident of Birmingham, Ala., and alleged substantially the following: On October 13, 1925, H. H. Pounds as president, and G. M. Carden as secretary, of said company, assuming to act for said company, executed and delivered to A. A. Chapman and J. N. Cheney a certain instrument purporting to be a mortgage deed or deed of trust, "by which they undertook to convey to said Chapman and Cheney the lands as therein described, * * * located in said Chattooga County, Georgia, and Cherokee and De Kalb Counties, Alabama, to secure an alleged indebtedness of $27,000 as therein recited, and to mature on or about October 13, 1929, and in which instrument certain harsh and drastic powers and privileges were incorporated, providing that upon failure to pay any in-

[149 S.E. 782]

stallment of principal, interest, or taxes as the same accrued, that the holder of said instrument should have the option of declaring all of said indebtedness due and collectible, and foreclose said instrument by advertising the property once a week for four weeks, and selling the same at public outcry in said Chattooga County, Georgia." A copy of said instrument is attached to the petition as Exhibit No. 1. It is alleged that said instrument is not the legal and duly authorized act or obligation of petitioner as a corporation and is not binding upon it, that the harsh and drastic powers and privileges granted by said instrument were not granted or authorized by petitioner as a corporation, and that the execution of same by the officers aforesaid was an ultra vires act and not binding upon petitioner for the reasons, (a) That petitioner as a corporation was organized for the purpose and has been doing business of buying, selling, renting, leasing, and developing the real estate located on Lookout Mountain and its sole assets and property consist of said lands and improvements and betterments placed thereon, (b) That under the by-laws of the company the entire management and control of its affairs is vested in its stockholders and board of directors, (c) That the giving of the said instrument was never submitted to or authorized by either the stockholders of said corporation or the directors thereof, and the execution and delivery of same was never authorized by either the stockholders or directors, (d) That the charter of the corporation and the general laws of the state do not authorize its president and secretary to incumber and convey its assets, and especially its real estate, without authority given them by the stockholders and directors, (e) That the charter of the corporation and the general laws of the state do not empower the president and secretary to execute an instrument in the name of the corporation, creating in the creditor as holder of the instrument a right to declare the indebtedness secured due and collectible upon default in payment of any interest, etc., or a power of selling said property after advertisement for four weeks, and thus divesting the corporation of its assets without the process of law. (f) That the president and secretary of said corporation executed and delivered said instrument without the knowledge or consent of either...