Hightower v. Thornton

• Decision Date: 30 June 1850
• Docket Number: No. 80.,80.
• Citation: 8 Ga. 486
• Parties: Daniel Hightower, plaintiff in error. vs. Dozier Thornton and others, defendants.
• Court: Georgia Supreme Court

8 Ga. 486

Daniel Hightower, plaintiff in error. vs. Dozier Thornton and others, defendants.

No. 80.

Supreme Court of the State of Georgia

JUNE TERM, 1850.

In Equity, in Muscogee Superior Court. Decision by Judge Alexander, May Term, 1850.

The bill in this case was filed by Daniel Hightower, alleging that he was a judgment creditor of the Planters & Mechanics' Bank of Columbus, and that his fi fa. had been returned by the Sheriff", with the entry of nulla bona" thereon; that the original stock subscribed was one million of dollars in shares of $100 each; that only $25 on the share had ever been paid in by the stockholders, the directors being stockholders and fraudulently refusing to call in any further payments on the stock, and in fact rescinding orders previously passed, requiring an assessment on the stock to be paid in. The bill alleged, that the bank was totally insolvent, and that under the decree of the Superior Court of Muscogee County, the charter had been forfeited. The prayer was, that the stockholders of the bank should be decreed to pay into Court such sums as should be sufficient to discharge the demand of complainant.

When the cause was called for trial at May Term, 1850, both parties having announced themselves ready, the defendants' counsel moved to dismiss the bill for want of equity.

The Court granted the motion, and this decision is the error assigned in this case.

W. Dougherty, for plaintiff in error, contended—

1. That the capital stock of a bank is a trust fund for the payment of its debts, and may be pursued into the hands of any one who is not a bona fide purchaser. 2 Story's Eq. §1252; Angel &Ames, 540 to 546. Wood vs. Dummer, 3 Mason, 308. 1 Kid on Corp. 273. Briggs vs. Penniman, 8 Cowen, 387. Sice vs. Bloom, 19 John. 456. Haslet vs. Witherspoon, 2 Richardson's Eq Rep. 395. Allen vs. Montgomery and West Point Rail Road, 11 Ala. 437. J. Caldwell vs. Montgomery and Wife, 106 Talbotton Pamphlet—Statute Limitations. Thomas vs. Brinefield, 7 Ga. Rep. 154.

2. That the capital stock of a bank, and the value thereof, is regulated by charter, and that subscribed for and agreed to be paid, is the capital stock. Prince's Digest, 125. Angel & Ames, 562. Briggs vs. Penniman, 8 Cowen, 395. Opinion of Spencer Senator, Allen vs. Montgomery and West Point Rail Road, 11 Ala. 437. 1 Vide, Sanford's Ch. Rep. 305. Vose vs. Grant, 16 Mass. 476. That in Equity, the contracts of a corporation are not extinguished by dissolution, but survive, and the creditor may pursue the property of the corporation wherever found. 2 Story's Eq. §1252. Wood vs. Dummer, 3 Mason, 308. Nevitt vs. Bank of Port Gibson, 6 Smede & Marshall, 557. Mumma vs. Potomac Company, 8 Peters, 281. Vose vs. Grant, 15 Mass. 505, 517 and 522. Spear vs. Grant, 16 Mass. 9 and 15. Bleakney vs. Farm. & Mechanics\' Bank of Greencastle, 17 Serg. & Rawle, 65. dell vs. Benton & Kenedy, 6 Miss. 364. That when the rights of a party plaintiff depend upon the facts, that an assignment was made by a bank, he must prove them, notwithstanding they are recited in a public Act of the Legislature. Dougherty vs. Bethune, 7 Ga. Rep. 90.

H. Holt and Sturges, for defendant in error, insisted—

1st. That the complainant shows by his own bill, that at the time he dealt with said bank and became one of its depositors, its charter had been violated, and proceedings had been sued out and were pending for the forfeiture thereof. Of this, he had notice both by lis pendens and public law.

The principle is without controversy, that if one deal with an agent, himself having knowledge of his want of authority, or that he is maladministering the affairs of his principal or transcending the limits of his authority, the principal is not thereby bound. Paley on Agency, 200. Story on Agency, page 546, 622, §§442, 482. 1 Esp. Reps. 290. Cowen and others vs. Simpson, 14 Mass. R. 58, Wyman vs. Hallowell and Augusta Bank. 2 Mason's R. 3. Bellows vs. the same. 4 Smede & Marsh. 312, Lake et al. vs. Mumford. 1 Speer's R. 433, State vs. Bank of South Carolina. 17 Mass. 28, Salon Bank vs. Gloucester Bank. 1 Kelly, 27. 13 Ohio, 12, 269. 1 Sup. to U. S. D. 436. 7 Ga. S. C. 80. 10 Metcalf, 325, 369. 2 Sup. to U. S. D. 91.

2d. Said bill is defective, for the want of proper parties.

1. It is a creditor's bill, and by an individual creditor, showing upon its face that there are other creditors, without showing who they are or the amount of their claims.

2. It shows that there are other parties (stockholders,) alike liable with the defendants sued, and alleges no sufficient reasons and excuses why they are not made parties.

3. If the complainant can be excused from making other parties complainants and defendants, then we insist that the names of the omitted parties, the amount of their claims and the extent of

their liability, &c. should have been set forth. 2 Story\'s Eq. §1526. 2 Mason\'s Reps. 190, 6, West vs. Randall et al. 4 Ga. Sup. Ct. 586, Rice vs. Tarver et al. 5 Ga. Sup. Ct. 28, Wells et al. vs. Strange. 6 Ga. Sup. Ct. 468, Smith &Shorter vs. Mitchell. 7 Ga. Sup. Ct. 98, Carter et al. vs. McDougald et al.

3d. The demand of the complainant had its origin in a certificate of deposition, and now exists in a judgment rendered thereon. The stockholders (as such) are not and never were liable for either of such demands. Prince's Dig. 127, '8. 1 Kelly, 435, Collins vs. Central Bank et al. 1 Kelly, 461, Bullard vs. Central Bank. Angel & Ames on Cor. 546. 14 Mass. 58, supra. 4 Sm. Sf Marsh, 312, supra.

4th. Admitting the existence and legal effect of the Act of incorporation at the filing of the complainant's bill, then we insist— 1st. That none but the board of directors had authority to call for instalments upon stock.

2d. That they could only make such calls in terms of and in the manner pointed out in the Act of incorporation.

3d. If the complainant, or any other than the board of directors, could make such calls, it could only be done in the manner and according to the form provided and fixed in the charter. Prince's Dig. 125. 8 Cowen, 387, Briggs vs. Pennyman, Spencer, J. 5 Mass. 491, Gilmore vs. Pope. See also, 10 Mass. 334. 14 J. R. 238, Dutchess Cot. Man. vs. Davis. 3 Ala. Rep. 666. 5 Ala. Rep. 403. 11 Ala. Rep. 472.

5th. A judgment of forfeiture, without condition or saving, is alleged to have been rendered. Then, no demand remains to the complainant, and no liability rests upon the defendants. Angel &Ames on Cor. 750. 2 Kent's Com. 305 to 315. 3 Burrows' R. 1866, Colchular Cor. vs. Seaber. 3 T. R. 199, The King vs. Passmore. 3 Smede &Marsh. 791, Bank of Miss. vs. Wren. 8 Pet. Rep. 281, Mumma vs. The Potomac Co. 10 Paige's Ch. R. 541, W. & J. James vs. Woodruff et al. Angel & Ames on Cor. 482, §8, 493, §14. 7 Ga. S. C. 80. 13 Ohio. 10 Met. 6 S. & M. sup.

6th. The fifth proposition assumes, as the bill alleges, that the judgment of forfeiture is absolute and without condition or saving, and it is in fact so rendered. It may, however, enter into the consideration of this Court to enquire how far the consequences of the forfeiture are saved by the Acts of the Legislature, pro-viding for its rendition and fixing the rights, liabilities and remedies of debtors, creditors and stockhofders. We insist—

1st. That by their provisions and savings, no right remains or is saved to the complainant to sue.

2d. That no duty or obligation rests on the defendants in this or any proceeding, either in a Court of Law or Chancery, to answer his demand. Prince's Dig. 125, '6, '7. Pamphlet Acts, 1840 —27, 1841—29, 1842—29, 1843—21. 5 Ga. Sup. Ct. Reps. 239, Hall et al. vs. Cary, assignee. 2 McMullen, 439, State vs. Bank of Charleston. 6 Ala. Reps. 289, Crawford vs. Planters & Mech. Bank..8 Peters, 281, supra. 1 Kelly, 27. 7 Ga. S. C. 80, supra.

7th. We insist upon the Statute of Limitations, as a bar to the complainant's rights, if any otherwise would remain to him. Is it replied that it is a trust fund in the hands of the defendants, which the complainant is seeking to pursue? When did the relation of trustee and cestui que trust happen, and when did it cease to exist 1 When did their interest become adverse? Angel & Ames on Cor. 556. 19 J. R. 477, Slee vs. Bloom. 8 Cowen, 391, Briggs vs. Perryman. 2 Story's Eq. §1521 a, page 989. 5 Ga. Sup. Ct. 486, Dickman vs. McCamy. 8 Ga. Sup. Ct. 1, Pendergrast et al. vs. Foley, adm'r. Ibid, 97, Keaton vs. Greenwood. 2 McMullen, 439, supra. 1 Speers, 433, supra. 1 Kelly, 27. 7 Ga. S. C. 80, supra.

8th. If the defendants are liable, it is upon a promise or contract to pay, express or implied. To pay whom and when? As between them and the complainant, no promise or consideration has passed. 5 Mass. R. 491, Gilmore vs. Pope. 10 Ibid, 334, supra. 14 J. R. 238, supra.

9th. The complainant is seeking the recovery of a demand against an insolvent corporation, and taking his own allegations most strongly against himself, it was so when he acquired his demand. He should, therefore, have shown by his bill, to entitle him to any relief, when, how and at what cost he acquired his demand, as he is only entitled to recover so much as, and no more than it cost him. 1 Kelly, 435, 461. 6 Paige's Ch. R. 486.

By the Court. —Lumpkin, J. delivering the opinion.

The case made by this record is simply this: A judgment creditor of the late Planters & Mechanics' Bank of Columbus, havingprosecuted his claim against the corporation to insolvency, filed his bill, alleging that the corporation was dissolved, both in fact and in form, and praying that the stockholders of the bank, who, it was averred, had paid only twenty-five dollars on the share—the capital stock being one million, in shares of one hundred dollars each—might be decreed to pay into Court such sums on their unpaid stock as should be sufficient to discharge the complainant\'s demand.

Are these unpaid subscriptions corporate property, and can they be reached by the creditors in a Court of Equity?

Upon the threshhold of this...