Williams v. Clemons

• Decision Date: 01 March 1934
• Docket Number: 9787.
• Citation: 173 S.E. 718,178 Ga. 619
• Parties: WILLIAMS et al. v. CLEMONS et al.
• Court: Georgia Supreme Court

173 S.E. 718

178 Ga. 619

WILLIAMS et al. v. CLEMONS et al.

No. 9787.

Supreme Court of Georgia

March 1, 1934

Syllabus by the Court.

1. The ground of the special demurrer pointing out that not all the incorporators were joined as party defendants was sufficiently met by amendment.

2. Under the decision in John V. Farwell Co. v. Jackson Stores, 137 Ga. 174, 73 S.E. 13, the case was properly brought in equity.

3. The court did not err in overruling the ground of demurrer based on the contention that the claimants' right of action was barred by the statute of limitations. The statute of limitations did not begin to run until the plaintiffs creditors of the corporation organized by the defendants, had knowledge that the organizers of the corporation began to transact business in its name before the minimum capital stock had been subscribed for.

Error from Superior Court, Bibb County; Louis L. Brown, Judge.

Petition by S.C. Clemons and others against A. H. Hendricks and others, to which defendants F. W. Williams and others demurred generally and specially. To review a judgment overruling a demurrer to the petition, F. W. Williams and others bring error.

Affirmed.

Jones Johnston, Russell & Sparks, of Macon, for plaintiffs in error.

Miller & Lowrey, of Macon, for defendants in error.

BECK Presiding Justice.

On April 18, 1932, S.C. Clemons and others, alleging themselves to be creditors of the Liberty Savings & Real Estate Corporation, filed their petition against A. H. Hendricks and others, alleging that, pursuant to a charter granted by the superior court of Bibb county on May 12, 1919, Hendricks and others as incorporators organized and transacted business in the name of the Liberty Savings & Real Estate Corporation before the minimum capital stock as fixed by the charter had been subscribed for and had thereby, under the Civil Code, § 2220, become liable to creditors to make good the minimum capital stock with interest.

Defendants F. W. Williams, T. R. Epps, Henry Wynn, and the administrator of the estate of R. E. Hartley demurred generally and specially. One ground of the demurrer is that not all of the incorporators were joined as parties defendant. Other grounds were that it appears from the face of the petition that the cause of action is barred by the statute of limitations twelve years having expired between the time of the organization of the corporation and the date of the filing of the petition. The demurrer was overruled, and the defendants excepted.

1. The ground of demurrer pointing out that not all of the incorporators were joined as party defendants was met by amendment.

2. Under the decision in the case of John V. Farwell Co. v. Jackson Stores, 137 Ga. 174, 73 S.E. 13, 14, this case was properly brought in equity.

3. We are of the opinion that the court did not err in overruling the ground of demurrer based on the statute of limitations. We do not base this ruling on the Civil Code (1910), § 4360 which provides that "All suits for the enforcement of rights accruing to individuals under statutes, acts of incorporation, or by operation of law, shall be brought within twenty years after the right of action accrues," for we do not think that the right of action of the plaintiffs accrued under the statute (Civil Code, § 2220) which declares that "Persons who organize a company and transact business in its name, before the minimum capital stock has been subscribed for, are liable to creditors to make good the minimum capital stock with interest." Consequently the twenty-year limitation prescribed in that statute has reference only to rights which arise under the legislative enactment, and which would not exist except for some act of the Legislature. Section 2220 is merely a codification of a legal principle decided in Burns v. Beck, 83 Ga. 471, 10 S.E. 121, and it was law before that decision, and gave to creditors of a corporation, organized at it is alleged the corporation in question was organized, the rights insisted on here. In Harris v. Smith, 68 Ga. 461, this court, discussing the application of section 4360, said: "Looking at the act and the judicial decisions of the times, it would seem that these words were intended to apply to such rights as arise in connection with *** the very words of the statutes or acts of incorporation." In an opinion rendered by Judge Sibley in Anderson v. Anderson (D. C.) 23 F. (2d) 331, 332, it was said: "That applies to cases in which there is a special liability created by a special charter or statute, as instanced in numerous cases in the early Georgia reports. The distinction to be observed is pointed out in Savannah Canal Co. v. Shuman, 98 Ga. 171, 25 S.E. 415, and Bigby v. Douglas, 123 Ga. 635, 51 S.E. 606." And we think this states the correct principle. Counsel for defendants in error quote at length from the decision in John V. Farwell Co. v. Jackson Stores, supra. In so far as that decision lays down a rule as to the statute of limitations, what was said was obiter dictum. The...