Mobley v. Faircloth *

• Decision Date: 12 May 1932
• Docket Number: No. 8926.,8926.
• Citation: 164 S.E. 195,174 Ga. 808
• Parties: MOBLEY, Superintendent of Banks. v. FAIRCLOTH et al.*
• Court: Georgia Supreme Court

174 Ga. 808

164 S.E. 195

MOBLEY, Superintendent of Banks.

v.FAIRCLOTH et al.^*

No. 8926.

Supreme Court of Georgia.

May 12, 1932.

Syllabus by the Court.

1. Where directors of a bank of this state made excessive loans in violation of the provisions of section 13 of article 19 of the Banking Act (Ga. Laws 1919, pp. 135, 196) as amended by the act of August 21, 1922 (Ga. Laws 1922, p. 63), as a result of which the bank sustained loss and was rendered insolvent, and where the superintendent of banks of this state, after having taken possession of the particular bank as an insolvent institution, brought a suit against such directors to recover damages solely for their breach of duty in making such excessive loans, the suit was subject to demurrer upon the ground that it appeared that the cause of action was barred by the statute of limitations, where the allegations of the petition affirmatively disclosed that the loans were made more than four years before the suit was filed, but that the failure of the bank and its surrender to the superintendent of banks occurred less than four years before the commencement of the action, and that the directors served in that capacity and were in control of the bank continuously from the time of the making of such loans until the failure of the bank and its seizure by the superintendent of banks for the purpose of liquidation; no other facts appearing which could be pertinent upon the question of limitation.

2. Under the facts stated above, the period of limitation is to be calculated from the date of the making of such excessive loan. The statute is not tolled or suspended because of the fact that the directors making such loan remain continuously in control of the bank's affairs until liquidation.

Certified Question from Court of Appeals.

Suit by A. B. Mobley, Superintendent, etc., against W. H. Faircloth and others. To review the judgment, plaintiff brings error to the Court of Appeals, and the Court of Appeals certifies a question.

Question answered.

C. N. Davie and J. F. Kemp, both of Atlanta, for plaintiff in error.

Hal Lawson, of Abbeville, for defendants in error.

GILBERT, J.

The ruling made in the headnotes is in response to a question certified by the Court of Appeals. In Shannon v. Mobley, 166 Ga. 430 (10), 143 S. E. 582, 583, this court dealt with substantially the same question. The superintendent of banks brought suit against the officers and directors of a bank, alleging violation of the banking laws in making worthless loans. There was a demurrer to the petition, on the ground that more than four years had elapsed from the making of the loan to the filing of the suit, and therefore the suit was barred by the statute of limitation. In that case it appeared that the loans were originally made more than four years prior to the riling of the suit, but that they were renewed from time to time. The court held that such suits "are not barred by the statute of limitations, when, as alleged in this petition, such loans were renewed from time to time under circumstances authorizing a finding of fact that such renewal was a neglect of duty imposed by law, and when suit is filed within the period of lim-itation, as computed from the date of renewal."

In Council v. Brown, 151 Ga. 564 (4), 107 S. E. 867, this court dealt with a case brought by a receiver of an insolvent bank against Brown and others, as directors of the bank, to recover damages because of alleged negligence on the part of the directors in making excessive and unlawful loans. The demurrer to the petition contained several grounds, among them one asserting that the suit was barred by the statute of limitations. The court held: "In so far as the petition alleges a cause of action because of loans made by directors in violation of the law and the express terms of the charter, the date of the acts alleged as a basis of recovery was more than four years before the bringing of the suit, and is barred by the statute of limitations." In Frost v. Arnaud, 144 Ga. 31, 85 S. E. 1028, 1030, this court said: "The relation of an officer to a corporation has been held not to be such a technical trust relationship as came within section 3782 of the Civil Code, declaring that subsisting trusts, cognizable only in a court of equity, are not within the ordinary statutes of limitation."

In Knowles v. Rome Tribune Co., 127 Ga. 90, 56 S. E. 109, the Tribune Company brought suit against Knowles, alleging that the defendant was a director and general manager of that company; that he had full control of its business, collecting all moneys, and making all disbursements, and being intrusted with each...