Morris v. Courts

• Citation: 1 S.E.2d 687,59 Ga.App. 666
• Decision Date: 01 March 1939
• Docket Number: 27337.
• Parties: MORRIS v. COURTS et al.
• Court: Georgia Court of Appeals

1 S.E.2d 687

59 Ga.App. 666

MORRIS v. COURTS et al.

No. 27337.

Court of Appeals of Georgia, Division No. 2.

March 1, 1939

Rehearing Denied March 17, 1939.

Syllabus by the Court.

Charles F. Morris brought suit against R. W. Courts and others for damages on account of the alleged conversion of fifty shares of Georgia Power Company $6 preferred stock of the value of $60 per share, evidenced by a certain certificate numbered A O. 29451. The defendants denied liability, setting up that Morris executed in blank the transfer on the back of the certificate and delivered custody and possession thereof to American Bond &amp Share Corporation, which corporation thereafter delivered custody and possession of the certificate to B. R. Bradley, who brought it to defendants and offered it for sale, and that they purchased the same, paying full value therefor, and without any knowledge or notice whatsoever of any defect in the title, and that by reason of the conduct of Morris, as aforesaid, he is estopped from asserting any claim or title to the said certificate or to the fifty shares of stock evidenced thereby.

The case made by the record is as follows. The American Bond & Share Corporation, originally chartered and organized in Georgia, was engaged in the business of investing funds of its customers in stocks, bonds, and other securities. The defendants, R. W. Courts, R. W. Courts, Jr., Malon C. Courts and W. F. Broadwell, were at the times herein mentioned, and are now, members of a partnership operating as stock brokers under the name of Courts & Company in the City of Atlanta, and are now and were then members of the New York Stock Exchange. In 1933 B. R. Bradley was president of the corporation, and opened a series of trading accounts with Courts & Company. Among them was an account in the name of the corporation, one listed as B. R. Bradley special account, and one entered as "Atlanta Number 9." Under the latter account, which was opened on June 19, 1933 personal transactions with Bradley were entered. The evidence showed that both the corporation and Bradley enjoyed good reputations, and Courts & Company had made its own investigation and learned that Bradley was worth in the neighborhood of $1000,000. His reputation in the community was that he had been successful in his dealings in the market, and Courts & Company's experience with him had been entirely satisfactory. In July, 1934, the American Bond & Share Corporation of Delaware was chartered and organized and Bradley was made its president. The offices of both the Delaware and the Georgia corporations were on the eleventh floor of the William-Oliver building in Atlanta, and consisted of eight or nine rooms, the offices of Courts & Company being on the ground floor of the same building. The American Bond & Share Corporation of Delaware, in addition to its main office in Atlanta, and its home office in Wilmington, Delaware, maintained an office in Washington, District of Columbia, as well as branch establishments in New Orleans, Louisiana, and Albany, Georgia. In its Atlanta office it employed from ten to eighteen salesmen, whose duties were to secure funds from customers for investment by the corporation. Among these was E. H. Steele. In 1934 C. F. Morris was the owner of fifty shares of Georgia Power Company $6 preferred stock in the form of a certificate. On October 18, 1934, Morris turned this certificate over to Steele as agent for the American Bond & Share Corporation for sale in the open market at a price of $60 or better per share, the proceeds to be remitted to Morris, an accommodation sales transaction in which no commission was to be charged Morris. Morris signed the blank power of attorney on the certificate, and at the time of the delivery to Steele, acting for the corporation, signed a sales authorization, directed to the corporation and referring to the particular shares of stock, although his signature was not witnessed or guaranteed and the blanks in the assignment and power of attorney on the certificate not filled in. After receiving the certificate for the corporation for the purpose of sale, as aforesaid, Steele delivered it to the salesmanager of the corporation. The price demanded by Morris could not be obtained, and Steele suggested to Morris that there was no assurance that it could be obtained at an early date, and that Morris could be realizing something from the stock by allowing the corporation to collateralize it at the Fulton National Bank, the proceeds to be applied in a trading account with the corporation, giving as one reason why the stock should be collateralized by the corporation instead of by Morris that the corporation was able to obtain money at a rate of interest not exceeding three per cent. whereas he would have to pay not less than six per cent. Thereupon it was agreed that the corporation should collateralize fifty shares of stock belonging to Morris and twenty-five shares belonging to his wife, Morris signing an authorization which provided accordingly. At the same time Morris signed a form of "service agreement," which provided, in part: "I hereby engage and employ you to manage, and hand you herewith, the sum of twenty-one hundred fifty and no/100 dollars, or in lieu thereof, in whole or in part, the property described on separate authorization of same date [which referred to the shares above mentioned], which you are authorized to sell in the open market, or by private purchase, so as to realize the sum of money herein above set forth, or as near thereto as possible; this contract of employment be be in force for five (5) years, unless otherwise cancelled by virtue of the covenants herein." The agreement then authorized the American Bond & Share Corporation to buy, sell and deal in securities and commodities on margin or otherwise for Morris and agreed that he should be paid eight per cent. of the gross profits realized from such trading, and there was a specific power of attorney, "I hereby irrevocably employ, make and constitute American Bond & Share Corporation, a corporation organized and existing under the laws of Delaware, having its principal office in Washington, District of Columbia, its officers, directors, attorneys, and their nominees or substitutes, when acting officially under this power, my true and lawful agents and attorneys in fact, granting unto them, and each of them, full power to do and perform all and singular every act and thing necessary or desirable in their absolute discretion, to be done in and about the premises, as fully, to all intents and purposes, as I might or could do, if personally present at the doing thereof," etc. It was further provided: "I understand that this agreement shall not be binding nor complete, until the same shall have been approved and accepted by an officer of the corporation at its main office in the District of Columbia." This agreement was witnessed by E. H. Steele, who also receipted as "representative" for "check, cash or property above set forth." This agreement and the authorization were signed in duplicate, one copy being left with Morris and the other taken by the salesman. To the copy taken by the salesman was attached a printed form of acceptance. No transfer tax was affixed to the stock certificate. The evidence does not show whether or not a bill of sale was in the possession of Bradley, but shows that none was in the possession of Courts & Company. During Steele's interviews with Morris he exhibited testimonials showing the nature and extent of the business operations of the corporation. On November 7, 1934, Bradley sold the twenty-five shares of the Georgia Power Company stock of Mrs. Nettie Morris to Courts & Company as his own property and took a check for the purchase price, approximately $58 per share, which he deposited in his personal account at the Fulton National Bank. On the following day, November 8, 1934, he sold the defendants the fifty shares of Morris' stock at the same price and deposited the proceeds to his personal account at the Fulton National Bank. At the time Morris' certificate was presented by Bradley for sale, the signatures of E. H. Steele and W. A. Smith were affixed to the power of attorney as witnesses of Morris' signature, and it had been guaranteed by the Citizens & Southern National Bank. The blanks of the power of attorney had not been filled in. At the time of these transactions Morris had not met B. R. Bradley, but was introduced to him by Steele later at the offices of the corporation. In the meantime, since July, 1933, Bradley had been carrying two personal accounts with defendants, one of them a marginal account and the other a special account, and there was a third account in the name of the American Bond & Share Corporation. Bradley executed to the defendants a marginal agreement for his personal account, a copy of which is shown in the brief of evidence. Morris never received any of the proceeds of the sale of stock to the defendants. One of counsel for the plaintiff testified that he had spent several months in examining the books of the corporation and was thoroughly familiar with them, that the books did not show a sale of the stock by the corporation but did show what had apparently been done with the stock but failed to state what had been done and what the records showed in that respect. Checks purporting to be for earnings on Morris' investment with the corporation were received from month to month by him, and a check from the corporation, purporting to be for the quarterly dividend of the Georgia Power...