Regal Textile Co. v. Feil

• Decision Date: 10 January 1940
• Docket Number: 13005.
• Citation: 6 S.E.2d 908,189 Ga. 581
• Parties: REGAL TEXTILE CO., Inc., et al. v. FEIL.
• Court: Georgia Supreme Court

6 S.E.2d 908

189 Ga. 581

REGAL TEXTILE CO., Inc., et al. v. FEIL.

No. 13005.

Supreme Court of Georgia

January 10, 1940

Syllabus by the Court.

1. A petition which alleges that the plaintiff, through mistake made an overpayment of money to a corporation in the purchase of certain property which constituted the entire capital assets of the corporation, and that the sole owners and directors of the corporation appropriated the entire consideration paid for said property to their own use thereby rendering the corporation insolvent, and prays for a judgment for the amount of the overpayment, against the corporation and said directors, states a cause of action cognizable in a court of equity. This court has jurisdiction of the present writ of error. The judge did not err in refusing to submit to a jury the exceptions to the findings of fact by the auditor.

2. In such case it was not erroneous to render a joint judgment for the amount of the overpayment against the corporation and one of the directors, where it appears that he took from the corporation an amount greater than the amount of the overpayment.

3. When one person buys land from another for a certain amount and makes an initial payment, and gives a purchase-money note for the balance, and by error of calculation the amount of the note is greater than the actual balance due, no overpayment can occur until the vendee has paid so much of the purchase-money note as correctly represents the balance due. Accordingly, the overpayment necessarily occurred on the date of the payment of the note; and the judge did not err in refusing to recommit the case to the auditor on the ground that he failed to make a finding as to when the overpayment was made.

4. This court will not review the action of the judge in overruling exceptions of fact to an auditor's report in an equity case, unless there be no evidence to support the auditor's findings.

Claude Christopher, of Griffin Morgan S. Cantey, of Barnesville, and J. R. Terrell, of Greenville, for plaintiffs in error.

Beck, Goodrich & Beck and Wm. H. Beck, Jr., all of Griffin, for defendant in error.

REID Chief Justice.

Otto F. Feil brought suit in the superior court of Lamar County against Regal Textile Company, Inc. (hereinafter referred to as the defendant company or corporation), J. C. Collier, and D. C. Collier, for $1,000. The plaintiff alleged that on August 27, 1936, he entered into a contract with the defendant company, whereby in consideration of the payment of $500 he was given a thirty-day option to purchase certain real and personal property known as the Eatonton Cotton, Mills, located at Eatonton, Georgia, for the sum of $15,300. It was expressly agreed in the contract that the $500 and any additional sums paid in renewal of the option were to be considered as part payment of the purchase-price, should the option be exercised. It was further expressly agreed that petitioner would have the right to extend the option for thirty days on payment of $500. He renewed the option on each of the following dates, and paid on each renewal an additional sum of $500; September 25, 1936, October 21, 1936, November 21, 1936, December 24, 1936, January 22, 1937, and February 20, 1937. On March 9, 1937, while said option was in force petitioner exercised his right thereunder to purchase said property, and on that date paid to the defendant company an additional sum of $2800. On the same day an additional agreement was executed by the parties, wherein it was recited that the purchase-price of said property was $15,300, and that petitioner had paid $5,300, leaving a balance due of $10,000. The defendant company agreed therein to accept petitioner's note for this balance, due six months from date. On March 10, 1937, the defendant company executed and delivered to petitioner a warranty deed to the property, and at the same time petitioner executed a promissory note in favor of the defendant company for $10,000 in accordance with their agreement. On September 18, 1937, plaintiff paid said note in full. Before March 9, 1937, the date on which the additional agreement was made, petitioner had actually paid to the defendant company $3,500, which, together with the additional payment of $2,800 made on said date, made a total payment of $6,300, instead of $5,300 as recited in the contract. The warranty deed executed by J. C. Collier as secretary and treasurer and D. C. Collier as president of the defendant company recited a consideration of $15,300. The payment of this sum of $6,300, plus the payment of $10,000, amounted to an overpayment on the purchase-price of said property of $1,000, which was the result of a mutual mistake of the parties. When he paid the sum of $2,800 on March 9, 1937, petitioner was under the impression that he had paid only $2,500 instead of $3,500. In view of these facts the defendand company became indebted to plaintiff in the sum of $1,000, which it has failed and refused to pay. The defendant company is insolvent, and had ceased to be a going concern before August 27, 1926 [1936]. J. C. Collier and D. C. Collier were the only stockholders of the defendant company. The property purchased by petitioner constituted the capital assets of the defendant company, and the proceeds derived from the sale thereof constituted a trust fund for the payment of its debts. Nevertheless J. C. Collier and D. C. Collier wrongfully appropriated the proceeds of said sale to their own use, and by reason of said misapplication of said captial assets they are personally liable to petitioner for the debt of the defendant company. The prayers of the petition were: (a) That petitioner have judgment against Regal Textile Company, Inc., J. C. Collier, and D. C. Collier, for $1000 and interest; and (b) for process.

The defendants answered, and by agreement of the parties the judge submitted the case to an auditor, who, after a hearing, filed his report including his findings of fact and law. His findings were in favor of the plaintiff against the Regal Textile Company, Inc., and D. C. Collier, and in favor of J. C. Collier. The losing defendants filed a motion to recommit the case to the auditor, and filed also their exceptions to his findings of fact and law. The judge overruled the motion to recommit, and the defendants assign error. After argument, the judge passed an order holding that the case was one in equity, disallowed the exceptions to the findings of law, and overruled the exceptions to the findings of fact, and refused to submit them to the jury, and entered judgment against the defendant company and D. C. Collier. These defendants excepted.

1. The question of first importance is whether the action is at law or in equity. If the action is not one in equity, this court is without jurisdiction of the writ of error, and it should be transferred to the Court of Appeals. Code, §§ 2-3005 (Const. art. 6, § 2, par. 5), 24-4527, 24-3609. Also if it is not an action in equity, but one at law, the judge erred in not submitting the exceptions of fact to a jury. Section 10-402. A case may begin as an action in equity; but, in its progress the equitable features may become eliminated, so that the final judgment would be such that this court would have no jurisdiction to review the exception to it, but would have to transfer the case to the Court of Appeals for decision. See Bartlett v. Walker, 189 Ga. 154, 5 S.E.2d 373, and cit; Henley v. Colonial Stages South, Inc., 184 Ga. 445, 191 S.E. 445; Frigidice Co. v. Southeastern Fair Ass'n, 186 Ga. 263, 197 S.E. 804; Frazier v. Beasley, 186 Ga. 861, 199 S.E. 194; Fuller v. Calhoun National Bank, 186 Ga. 770, 199 S.E. 116. 'Where an action is brought in a superior court, which may exercise equity jurisdiction, the question whether it is a suit in equity is determined by the allegations and prayers.' Henderson v. Curtis, 185 Ga. 390, 392, 195 S.E. 152, 153; Mulherin v. Neely, 165 Ga. 113, 139 S.E. 820; Griffin v. Securities Investment Co., 181 Ga. 455, 182 S.E. 594. We think that the rule is that in order for an action to be treated as one in equity the pleader must allege or seek to allege such a cause of action as is cognizable only in a court of equity, according to the historical jurisdiction of such courts as modified by statute, as distinguished from those causes of action which are cognizable at law; and the prayers or some of them must be such as are appropriate to equitable relief in the particular situation. Fowler v. Davis, 120 Ga. 442, 47 S.E. 951; Bernstein v. Fagelson, 166 Ga. 281, 287, 142 S.E. 862; Jasper School District v. Gormley, 184 Ga. 756, 193 S.E. 248; Dobbs v. Federal Deposit Insurance Co., 187 Ga. 569, 1 S.E.2d 672; O'Callaghan v. Bank of Eastman, 180 Ga. 812, 817, 180 S.E. 847; Atlanta Coach Co. v. Simmons, 181 Ga. 67, 181 S.E. 762; Buttersworth v. Swint, 181 Ga. 430, 182 S.E. 520; Watkins v. Woodbery, 148 Ga. 249, 96 S.E. 338. While an ordinary cause of action for money had and received, or for money paid by mistake or (as it is now often called) for unjust enrichment, is one now cognizable at law (Jasper School District v. Gormley, supra, and cit.), the allegations of the petition in the present case assert more than a cause of action of this character. The further characterizing features beyond the mere overpayment of the debt and the receipt of the money by the defendant company, as a result of the mistake, are found in the allegations that the property purchased constituted the entire capital assets of the corporation, and that the defendants, who were the sole officers and stockholders of the corporation, appropriated to their own use the consideration paid, thereby rendering the corporation insolvent, and giving to themselves an unlawful preference or advantage. In...