Kohlruss v. Zachery

• Decision Date: 13 March 1913
• Citation: 77 S.E. 812,139 Ga. 625
• Parties: KOHLRUSS v. ZACHERY et al.
• Court: Georgia Supreme Court

77 S.E. 812

139 Ga. 625

KOHLRUSS v. ZACHERY et al.

Supreme Court of Georgia

March 13, 1913

Syllabus by the Court.

The general rule is that, where a corporation has acquired possession and title to property, its right to hold it cannot be questioned by a private citizen, but in such a case the state alone can make the question.

But where a state statute provides that corporations "shall make no contract or purchase or hold any property of any kind, except such as is necessary in legitimately carrying into effect" the declared purposes of the corporation the courts will not aid the corporation to compel specific performance of a contract for the purchase of land which it has no power under its charter to acquire and hold.

The evidence was conflicting on material questions of fact, and it does not so clearly appear that the contract sought to be enforced by the corporation was ultra vires as to require it to be so declared as matter of law, and to cause the reversal of the judgment refusing to grant an interlocutory injunction to restrain the corporation from proceeding under such contract.

(Additional Syllabus by Editorial Staff.)

As used in Civ. Code 1910, § 2216, authorizing corporations to acquire the property and do the acts necessary to the purpose of their organization, and in section 2823 authorizing corporations to exercise all corporate powers necessary to the purpose of their organization, and to legitimately carry into effect such purposes, the word "necessary" must be given a reasonable construction and not be so construed as to hamper and obstruct, or practically prevent the profitable and reasonable exercise of corporate powers and the conduct of corporate business.

Error from Superior Court, Columbia County; H. C. Hammond, Judge.

Equitable petition by C. F. Kohlruss against Julian J. Zachery and another. The court suspended a restraining order previously granted, and refused the injunction applied for, and plaintiff brings error. Affirmed.

Hill J., dissenting.

C. F. Kohlruss filed his equitable petition against Julian J. Zachery and the Harlem Oil & Fertilizer Company; and alleged substantially as follows: Petitioner is the owner of a certain 404 3/4 acres of land in Columbia county, near the town of Harlem, and is in possession of the land, which is worth $15,000. Petitioner borrowed on said land $2,300 of Mrs. J. B. Wright, of Augusta, Ga., and gave as security for the debt a deed to the land, under the provisions of section 3306 of the Code of Georgia, and received a bond for titles from her to reconvey the land to petitioner when the debt was paid. During the month of September, 1912, petitioner borrowed from the Harlem Oil & Fertilizer Company, of which Julian J. Zachery was president, the sum of $300, and gave his note therefor, payable 60 days thereafter. As security for the debt, he assigned the bond for titles received from Mrs. J. B. Wright, and at the same time he was requested by Zachery to sign some other paper, the nature of which he cannot state, as at the time he signed the paper it was in the town of Harlem, and he was trying to catch a train then approaching to return to Augusta. A copy of the paper was not given him. Petitioner had previously borrowed from Zachery $300, and gave his note therefor, and he was then required to assign his bond for title and to sign another paper which was in the nature of a conditional sale of the land to Zachery, providing, if the note was not promptly paid when due, Zachery was to have the right to purchase the land for the sum of $7,500, and to deduct therefrom an incumbrance due Mrs. Julia A. Hull, then holding the legal title to the land, but this debt was subsequently taken up by Mrs. J. B. Wright. The paper further provided that, in case the $300 first borrowed from Zachery was not paid when due, the land should be surrendered to Zachery, together with all debts due Kohlruss at that time. Zachery importuned petitioner to sell him the land, which he refused to do. On the 19th of November, 1912, the day on which the last $300 fell due, petitioner tried to reach Zachery at his office in Augusta upon two occasions to pay the note, but failed to find him; his stenographer reporting that he was not in. Later in the day Zachery came to petitioner's place of business and said: "How about that note? I suppose I ought to have notified you, but I came around instead." Petitioner was ready then and there to pay the money, but did not have it in his pocket at the moment, but could get it at once and pay it immediately, and asked Zachery where he could find him that day so he could bring him the money. Zachery replied: "I don't know where I'll be. I don't want this money anyway. I want that land. I have told you that the amount (specified in the transfer, $7,500) was all the land was worth." Petitioner replied: "I never will sell it." Zachery told petitioner that he did not know where he would be later in the day or at night. Petitioner told Zachery, if he could not find him that night, he would bring the money the first thing next morning. This petitioner repeated twice, and understood Zachery to reply, "All right." The next day petitioner called again at the office of Zachery to pay the note, but Zachery was not in. Being unable to find him in his office, petitioner, on the 22d day of November, 1912, went to the town of Harlem, where Zachery had a place of business, and tendered the money due on the note, which Zachery refused to accept. He again tendered the money on the 23d, which was also refused. After making the last tender, on the same day one of petitioner's tenants on the land came from Harlem and informed petitioner that Zachery had gone upon the land of petitioner and informed the tenant that he was the "boss and owner of said land," and said, "I have long wanted to get this land, and now I've got it." He added, if petitioner owed the tenant anything, he (Zachery) would pay it; that he proposed very soon to sow oats upon the land.

Petitioner charges that Zachery deliberately absented himself on the day the note fell due in order to prevent petitioner from seeing and paying him the note, and to defraud petitioner out of his land. When petitioner signed the last note for $300, he had full confidence in Zachery that he would not wrong or take advantage of him, and for this reason he did not take the precaution to read over the paper above mentioned, and before signing there was nothing said about a conditional sale of the land in the event the note was not paid when due. There was no agreement as to what Zachery should pay for the land, and he had no thought of selling the land to Zachery. There was no mutuality of contract in reference to the sale of land, etc. If Zachery should present the bond for titles assigned to him, and demand of Mrs. J. B. Wright a title to said land, which he threatens to do, he would acquire the title to the land, of the value of $15,000, for $2,300, and thus defraud petitioner out of many thousand dollars, and thus cause petitioner irreparable damage, etc., if an immediate remedy is not afforded. Petitioner prays: (1) That Zachery and the Harlem Oil & Fertilizer Company be enjoined from entering upon the land of petitioner or exercising any acts of ownership over it; (2) from paying the debt due by petitioner to Mrs. J. B. Wright and acquiring a conveyance from her to the land; (3) that defendants be required to accept the money tendered in settlement of the note, and to cancel the same, and to reassign the bond for titles held by defendants as security for the debt, and to compel defendants to produce and cancel any alleged conditional contract of sale of the land from petitioner.

Defendants, by their cross-answer, deny most of the main allegations in plaintiff's petition, and answer each paragraph separately, and among other things aver specially that on September 20, 1912, in Harlem, Ga., the defendant Harlem Oil & Fertilizer Company advanced to plaintiff the sum of $300 as part payment on the purchase price of $7,500 of the land in controversy, and the plaintiff then and there conveyed all his interest in the land by written instrument, a copy of which is attached to defendant's answer, and that plaintiff and defendant entered into a written agreement, copy also attached, wherein it was also mutually agreed that, if plaintiff failed to repay the defendant the sum so advanced in 60 days after the date of the contract, the plaintiff should sell to the defendant Harlem Oil & Fertilizer Company the land in controversy at the agreed price of $7,500. It is averred that plaintiff failed to repay or tender to the Harlem Oil & Fertilizer Company the sum of $300 within the time named in the contract, "whereby all interest and equity of the plaintiff in the land was divested and vested in said corporation." And further that plaintiff having already conveyed to the defendant his interest in the land, and having failed to comply with the terms of the contract, whereby a sale thereof might have been avoided and conveyance of such interest defeated, the defendant is now the owner and holder of the interest, and entitled to the possession of the uncultivated part of the land, under the terms of the contract, and on January 1, 1913, will be entitled to the possession of the remainder of the land in controversy. Wherefore defendant prays: (1) That it be declared the owner and holder of the bond for titles and all interest of the plaintiff thereunder; (2) that, in case the court should hold that the defendant is not already vested with the title to the land, plaintiff be required to specifically perform the contract embodied in the instruments above referred to.

In response to the answer and cross-bill filed by the defendants, ...