Mobley v. Hagedorn Const. Co.

• Decision Date: 11 April 1929
• Docket Number: 6998.
• Citation: 147 S.E. 890,168 Ga. 385
• Parties: MOBLEY, Superintendent of Banks, et al. v. HAGEDORN CONST. CO.
• Court: Georgia Supreme Court

147 S.E. 890

168 Ga. 385

MOBLEY, Superintendent of Banks, et al. v. HAGEDORN CONST. CO.

No. 6998.

Supreme Court of Georgia

April 11, 1929

Syllabus by the Court.

Where the Georgia State Bank entered into a written contract with the Bank of Chatsworth, whereby the latter bank sold to the former all of the assets of the Bank of Chatsworth for an agreed amount, and as payment to the Bank of Chatsworth for its assets the Georgia State Bank agreed to assume "all of the liabilities of the Bank of Chatsworth as set out in the settlement with the said bank as shown by its books" on a certain date, and in pursuance of said contract the Georgia State Bank took possession of all the assets of the Bank of Chatsworth, such transaction between the two corporations amounted to a merger; and the general rule is that the corporation resulting therefrom is entitled to the property, and is answerable for all the liabilities of the corporation absorbed. In these circumstances, and though the books of the selling bank do not show a certain liability which has been adjudicated by the courts against the selling corporation, and which has never been satisfied or paid, such buying corporation will be entitled to all the assets of the selling corporation and answerable for all the liabilities of the selling corporation, including the one not listed.

The court did not err in rendering the judgment in favor of the plaintiff.

Error from Superior Court, Fulton County; John D. Humphries, Judge.

Suit by the Hagedorn Construction Company against A. B. Mobley Superintendent of Banks, and others. Judgment for plaintiff and defendants bring error. Affirmed.

Beck P.J., and Atkinson, J., dissenting.

Orville A. Park, of Macon, and C. N. Davie and J. F. Kemp, both of Atlanta, for plaintiffs in error.

Howell Heyman & Bolding, of Atlanta, and C. N. King, of Chatsworth, for defendant in error.

HILL J.

The Hagedorn Construction Company filed suit against the Bank of Chatsworth, for a mandamus to compel the bank to pay a county warrant which it claimed was due it for building a road in Murray county. This court held, in Bank of Chatsworth v. Hagedorn Construction Co., 156 Ga. 348, 119 S.E. 28, that mandamus would lie to compel the payment of a county warrant issued in its favor, and that the trial court did not err in overruling a demurrer to the petition. The case was again before this court in Bank of Chatsworth v. Hagedorn Construction Co., 162 Ga. 488, 134 S.E. 310, where it was held that the bank was liable for the amount of the warrant, and this court affirmed the judgment of the lower court in making the mandamus absolute. While the first case was pending in this court, the Bank of Chatsworth sold its assets to the Georgia State Bank of Atlanta. The consideration for the purchase was the assumption of the liabilities of the bank as shown by its books and by certain itemized schedules attached to the contract. After this sale, the Georgia State Bank opened a branch bank at Chatsworth, and continued the business formerly conducted by the Bank of Chatsworth. It continued its corporate organization and existence, and contested its liability to the construction company. Subsequently the Georgia State Bank surrendered its assets, including the Chatsworth branch bank, to the state superintendent of banks, for liquidation under the provisions of the Georgia Banking Act. The Hagedorn Construction Company filed its claim with the superintendent of banks, insisting that it was entitled to priority of payment, on account of the fact that the deposit with the Bank of Chatsworth was a county deposit. This claim was denied by the superintendent of banks, who rejected the claim. The present suit was brought to establish the liability as provided by the state Banking Act. The case was tried on an agreed statement of facts; and the trial judge, after consideration of the case, passed the following order:

"After argument and consideration it is ordered adjudged and decreed that plaintiff recover from defendants the sum of $17,725 principal, $8,364.72 interest to date, future interest at the rate of 7% per annum until paid, and $-- costs. It is further ordered, adjudged, and decreed that said sums herein found in favor of plaintiff are given priority over all claims against said defendants, except debts due the State of Georgia and debts due any county, district, or municipality of the State, including unpaid taxes, ranking as of equal dignity with debts due any county, district, or municipality of the State, including unpaid taxes. It is further ordered, adjudged, and decreed that defendants pay said amounts herein found in favor of plaintiff out of any property or funds belonging to the defendant, Georgia State Bank, in the possession, custody, or control of said defendant, subject only to prior claims and sharing proportionately with claims of equal rank and dignity as herein specified. It is further ordered, adjudged and decreed that defendants be and they are hereby enjoined from paying out any of the funds or making distribution of the assets of the Georgia State Bank, except as herein decreed, until payment has been made of the sums herein found in favor of said plaintiff." To this judgment the plaintiff in error excepted.

After reciting the resolutions adopted by the stockholders and the board of directors of the Bank of Chatsworth, the contract entered into between the two banks provides:

"First. That this contract and agreement is for the sale of the assets of the said Bank of Chatsworth and the assumption of its liabilities by the Georgia State Bank, and is not a merger of the corporate entities of the said institutions, but on the other hand a corporate existence of the Bank of Chatsworth is hereby continued for the purpose of prosecuting its suits now instituted in its name or which may hereafter be instituted in its name, or defending suits against it, and for the purpose of taking such further corporate action as may be necessary in the premises hereafter from time to time.

"Second. It is hereby specified that the present directors of the Bank of Chatsworth shall be continued in office pending the final disposition of all such suits and business of the Bank of Chatsworth.

"Third. The Georgia State Bank hereby purchases from the Bank of Chatsworth, and Bank of Chatsworth hereby sells, aliens, transfers, sets over, and confirms unto the Georgia State Bank, certain assets of the said Bank of Chatsworth of the face value of $322,221.01, for the agreed amount of $322,221.01, as more specifically set out in Exhibit 'A' and schedules Nos. 1 to 4 inclusive, hereunto attached and made a part hereof, it being specifically stipulated and understood that this includes the assessment of 100% against the stockholders of the said Bank of Chatsworth hereinbefore levied, which said assessment is herein considered as a part and parcel of the assets of the said Bank herein sold to the Georgia State Bank, together with all the rights, powers, and privileges of the said Bank of Chatsworth in and to the said assessment and with full power to enforce the same by the said Georgia State Bank, either in its own name or in the name of the Bank of Chatsworth, in as full and complete a manner as the same could be enforced by the Bank of Chatsworth; it is also further stipulated, understood, and agreed that the sale to the Georgia State Bank of the assets of the Bank of Chatsworth shall include all choses in action and all of its property and rights of every kind and character.

"Fourth. As payment to the Bank of Chatsworth for the assets of the said Bank as aforesaid, the Georgia State Bank does hereby assume all of the liabilities of the Bank of Chatsworth as set out in the settlement with the said bank as shown by its books at the close of business on the 21st day of November, 1922, and also as set out in Exhibit 'B' and schedules Nos. 5 to 10, inclusive, hereunto attached and made a part hereof, the said liabilities so assumed being of an aggregate amount of $322,221.01.

"Provided, however, that a general accounting shall be made on January 1st, 1926, or as of January 1st, 1926, and the actual outcome and proceeds of the assets of the Bank of Chatsworth herein sold and transferred to the Georgia State Bank shall be computed, and if the total amount yielded by the said assets shall exceed the amount of the liabilities herein assumed, then in that event such excess, if any, shall be computed, first, to reimbursing those stockholders paying the assessment herein provided for, in proportion to the actual amounts of such assessment so paid by them."

The contract also provides that the resolutions adopted by the stockholders and board of directors of the Bank of Chatsworth are made a part of the contract. Attached to the contract and made a part thereof was a statement of the assets of the bank, marked Exhibit A, aggregating $322,221.01, with certain Schedules Nos. 1 to 4, listing the items in detail of the assets purchased. There was also a schedule of liabilities of the Bank of Chatsworth, "according to its books at the close of business November 21, 1922, and assumed by Georgia State Bank." These liabilities were separately itemized, and totaled $322,221.01, and were shown in Schedules Nos. 5 to 10, inclusive, each being listed in detail. Schedule 5 was a list of individual demand deposits, the total being $41,423.38. On this list account No. 244 appeared. This was "Murray County Road Account (bond), $89.35." There was also attached to the contract an additional schedule marked No. 11, which was not referred to in the body of the contract or in Exhibits A and B. This purported to be "schedule of slow, doubtful, and worthless assets of the Bank of Chatsworth not...