Smith v. Pennington
| Citation | 15 S.E.2d 727,192 Ga. 478 |
| Decision Date | 16 June 1941 |
| Docket Number | 13623. |
| Parties | SMITH v. PENNINGTON. |
| Court | Supreme Court of Georgia |
Rehearing Denied July 9, 1941.
Syllabus by the Court.
The allegations of the petition failing to charge any act of fraud in the transaction complained of, and failing to show any fiduciary relation between the parties in reference thereto, the plaintiff failed to state a case which would entitle him to have a trust established in reference to the money paid by him to the defendant in satisfaction of promissory note previously executed by him. The action was properly dismissed on demurrer.
Francis Fuller, W. L. Bryan, and John E. Feagin, all of Atlanta, for plaintiff in error.
Jones Jones & Sparks and John M. Hancock, all of Macon, for defendant in error.
The plaintiff sued in equity to recover from the defendant a sum of money as for the breach of an implied or constructive trust, which he asked the court to declare and decree. The money sought was received by the defendant on March 12, 1935. This action was filed on April 5, 1940. According to the allegations of the petition this money was paid to the defendant in satisfaction of a promissory note executed by the plaintiff on February 3, 1935, payable to the defendant. The petition describes a series of transactions which it is contended gave rise to, or at least should be considered in determining, the claim of plaintiff as now asserted. The story as alleged is substantially as follows: Smith, the plaintiff, was a farmer unacquainted with corporate affairs or laws, and unfamiliar with marketing, bookkeeping, or borrowing money. Pennington, the defendant, was the owner of all the capital stock of a corporation, Dixie Farms, Inc. which held title to a large farm and certain live stock and farming equipment. In January, 1932, Pennington 'persuaded' Smith that it would be to his interest to purchase the farm and stock and equipment, stating that he (Pennington) would continue to handle the bookkeeping, marketing and business affairs of the farm if the purchase was made, and that he would arrange a loan with the Federal Land Bank for Smith to provide the purchse money, and would negotiate for him loans to provide operating capital. No terms seem to have been agreed on at the time, but Smith went into possession and so remained until the fall of 1933, when it was agreed that application would be made to the Federal Land Bank for a loan of $47,500. The application was approved for a loan of $24,400, and it was determined that from the operations of the farm there had been up to the time a profit of $7,500, which should be credited to Smith on the purchase price. Thereupon the price was agreed on at $31,900. The corporation conveyed the farm to Smith. It is not clear whether this conveyance included the live stock and equipment. Smith executed deeds to the Federal Land Bank, and received and turned over to the corporation the proceeds of the loan as the 'balance of the purchase price.' Operation of the farm was continued as before, but in a short time Pennington 'persuaded' Smith that it would be to his interest to convey to the corporation the property so acquired, that he could thereby avoid personal liability for debts, and have the benefit of the corporate machinery, etc. This was done.
Operations continued as before. In February, 1935, Pennington persuaded Smith that it would be to his interest to acquire the capital stock of the corporation, the only assets of which consisted of the farm, it not being clear again as to the ownership of the live stock and equipment. On this date Smith executed to Pennington his note for $10,000 in payment for the stock which was duly transferred to him, this being the note first referred to above. It seems also that before the execution of this note Pennington had negotiated for the corporation a loan from Macon Production Credit Corporation for $6,000 out of which there still remained on hand in the corporation, $4,576.16. Then on March 7, 1935, Pennington negotiated an arrangement between Smith, Dixie Farms, Inc., and Bateman Company, under which Bateman paid to Smith $5,423.84 for fifty shares (one-half) of the capital stock of Dixie Farms, Inc., with an option to Smith to repurchase under certain conditions, the Bateman Company also agreeing to supply capital for current farming operations. From these sources the plaintiff then paid...
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