Boyd v. Robinson

104 Ga. 793 | Ga. | 1898

Simmons, C. J.

It will be seen from the official report, that the Southern Mutual Building & Loan Association became insolvent, and that certain of its stockholders filed in the superior court of Fulton county, the county of the residence of the corporation, an equitable petition which alleged various acts of fraud and collusion between some of the officers of the corporation and certain other parties, and prayed an injunction and the appointment of a receiver. These prayers were granted by the court, and receivers were appointed to collect and to take charge of the assets of the corporation. The original petitioners and the receivers then filed an amendment, in the nature of a supplemental bill or a petition ancillary to the original petition, making various allegations and setting out the reasons why it was necessary to make all the members of the association parties to the action, naming as parties both those members who had received advances and those who had not, and alleging that there were 290 of the former class. Among those named as having received advances was Boyd, the plaintiff in error here. He in his own behalf demurred to the amendment, on the grounds, that there was a misjoinder of parties plaintiff, misjoinder of parties defendant, multifariousness, want of jurisdiction in the court over defendant Boyd, and that the amendment set out no cause of action against him.

1. While we think it was not necessary for the original petitioners to have joined as parties plaintiff in this amendment in order to collect the assets of the association, still, as they were the original parties plaintiff to the petition and interested in the collection of the assets, they may properly have been parties plaintiff to the amendment. When the assets of the corporation were placed in the hands of receivers, these receivers represented the corporation, and, under the order of the court, could have filed this ancillary petition without joining as parties plaintiff therein the original plaintiffs. If the receivers had a cause of action, the court did not err in refusing to dismiss the petition on the ground that these other parties plaintiff had j oined therein. Under the facts alleged in the amended petition, there was no error in overruling the demurrer setting up a misjoinder of parties defendant. The association was a corporation having many members. While the liability of the members may have been different as to amounts and degree, yet all the members were mutually interested in the final decree to be had under the original petition. The amendment shows that there were five classes of stockholders in the association, some of whom had received advances and some who had not. In order to do exact and complete justice to each member, it was necessary to have all made parties to the proceeding so that all would be bound by the final decree to be taken at the termination of the litigation. “A court of equity has jurisdiction at the suit of shareholders of unredeemed shares in a building association to call the redeemed shareholders to account, enforce payment of what they respectively owe, distribute the fund among the unredeemed shareholders, and wind up the concern; and where suit is brought to wind up the affairs of such an association, all the shareholders should be made parties, and if any have been illegally released, their liabilities should be enforced.” 2 Lawson’s Rights, Rem. & Pr. § 593. “All persons who are directly or consequentially interested in the event of the suit are properly made parties to a bill in equity, so as to prevent a multiplicity of suits by or against parties at once or successively affected by the original case.” Blaisdell v. Bohr, 68 Ga. 56. See also Goodrich v. City Loan Association, 54 Ga. 98, 101. It is contended by counsel for plaintiff in error, that several distinct and independent matters were joined in the petition against several defendants, and that the court should have sustained the demurrer because of multifariousness. In our opinion, the court committed no error in overruling the demurrer on this ground. The subject-matter of the petition was the winding up of the affairs of the association so as to do exact and complete justice among its many members. The decree finally to be rendered may subject some of the members and release others. “To sustain a bill against the charge of multifariousness, it is not indispensable that all the parties should have an interest in all matters contained in the suit. It is sufficient if each party has an interest in some matter in the suit, which is common to all, and they are connected with others.” Worthy v. Johnson, 8 Ga. 236, quoted with approval in Blaisdell v. Bohr, supra. In the proceeding now under consideration, all the members of the association can be heard, all of their rights and liabilities can be determined, and the whole matter fully and finally adjudicated. Bowden v. Achor, 95 Ga. 243.

2. The plaintiff in error contended, that if the foregoing is true it does not apply to the facts of this case, because when he secured the advance' and assigned his stock absolutely to the association, he ceased to be a member of the association, and that therefore the plaintiffs in the court below had no right to join him as one of the defendants; that if he owed the association anything, it was upon a separate and independent contract, and there was no community of interest between him and the association or its members. He relied upon White v. Mech. Ass’n, 22 Grattan, 233, Pabst v. Ass’n, 1 McArthur (D. C.), 385, and other cases from the same courts. These cases seem to sustain his contention; but, as far as we can ascertain, they have not been followed by any other courts. The great preponderance of authority is to the effect that a member .who borrows from the association, and hypothecates his stock as collateral for the-debt, does not on that account cease to be a member of the association. Mr. Endlich, in his treatise on Building Associations (2d ed.), § 121 et seq., combats the views of the Supreme Court of Virginia as expressed in White v, Mech. Ass’n, and as to that case says, in a footnote: “Observe the inconsistency: he has lost his membership, but is bound, as a member, to the duties of membership, and has even put himself under bonds to be a good member.” In section 122, after discussing the only method by which a member can cease to be a member, he says: “But upon any other plan, the borrower, undertaking to continue his payments until, having gone into the general fund, they, with the other contributories, have swelled it to a certain magnitude, distinctly retains his interest in, his right to benefit by, his privilege to participate in, the profits derived from all those various sources. It can not, therefore, upon any logical principle be said, that he has one particle less interest in the common fund of the association than before he became a borrower; that the whole scheme is in the slightest degree less mutual, as to him, than it was before; that the management of the society’s business, and the proper administration of its affairs, are of any less moment to him as a borrower, than they were to him as an investor. In the latter character he was anxious to see it prosper for the sake of speedily realizing the prospective cash value of his share; in the former, having anticipated that cash value, subject to a heavy discount, he is equally, nay, more concerned to hasten the period of his discharge; for, in addition to his stock-payments, which he has obligated himself to make equally as if he were an investor only, and as to which he has surrendered the right of withdrawal, he is obliged to pay interest upon the money he has received. Now, if he retains all the interests of membership in the building association, which are, at all times, the basis of its rights, he certainly retains all of the latter. In other words, a borrower continues, in every sense of the word, a member of the association.” After citing decisions from various courts to sustain this doctrine, and among them those of this court, he says: “ And it may be safely stated that the doctrine has forced its own recognition upon the courts of nearly every State in the Union, as well as England.” This doctrine was adopted by this court in the case of Parker v. Fulton Loan Ass'n, 46 Ga. 166, and in that of Pattison v. Albany Big. Ass’n, 63 Ga. 373. In both of these cases, and indeed, so far as we know, in every Georgia case which has dealt with the winding up of these associations where borrowers’ rights were in issue, this court has treated borrowers as being members of the association. In Thompson on Building Associations, p. 71, § 19, the same principle is recognized, and various authorities cited to sustain it.

3. Having shown that Boyd was still a member of the association, and that he was consequently interested in the distribution of the assets and the payment of the losses, it necessarily follows that he was a necessary party in order that his rights and liabilities may be adjusted in winding up the affairs of the association. A court of equity, having jurisdiction of the subject-matter and having seized the assets of the corporation, has power to make all necessary parties and to bring them within its jurisdiction whether they reside in the county where the petition was filed or in another. Unless this could be done, it would be folly for any court to undertake to wind up the affairs of an association of this character. The 290 advanced members of the association may reside in fifty different counties of the State. To bring suits against them separately, each in the county of his residence, would be a source of great expense and litigation and needlessly exhaust the assets of the association. Such a course would give rise to a multiplicity of suits in which, perhaps, a jury in one county would find one way as to the liability of a member and a jury in another county in a different way as to a member whose liability should be the same. One trial judge might take one view of a member’s liability, and another judge quite a different view. It is far preferable to have all the claims and all the litigation brought before one court and decided, and a final decree made adjudicating the rights and liabilities of all parties. In the case of Dalton & M. R. Co. v. McDaniel, 56 Ga. 191, this very question was decided by this court. The railroad company, it seems, had become insolvent. McDaniel had obtained judgment against it, on which an execution had been issued, and a return of nulla bona made on the execution. McDaniel filed a bill against the subscribers to the stock of the company, to compel them to pay in a sufficient amount to satisfy his claims. The subscribers lived in different counties. A demurrer was filed to the bill, upon the ground that it did not appear that any of the defendants resided in Whitfield county, where the bill was filed, nor in what county they did reside. The demurrer was overruled, and on a writ of error to this court this, with other rulings of the trial judge, was affirmed. Jackson, J., in delivering the opinion of the court, said: “ The remedy by bill in equity is easier and more complete. With its powrer to appoint an auditor or master in chancery to audit the amount of the debts of the corporation in gross and the debt due to each creditor, to ascertain the number of stockholders solvent and' insolvent, the per cent, necessary to be paid by each stockholder in proportion to his stock, it is perfectly clear that complete justice can be better administered to every creditor and to each solvent stockholder by a court of equity than by any other form of procedure. It will prevent a multiplicity of suits, save costs, and give speedy and effectual relief. Principle, therefore, and sound reason accord with authority that equity will grant relief in all such cases.” In the case of Lavender v. Thomas, 18 Ga. 668, Benning, J., in discussing this question said (p. 678): “There may, however, be equity cases in which it will be impossible to observe the maxim — as cases in which more parties than one are necessary to any decree, and those parties some of whom reside in one county and some in another. And this case is such a one; for in this case no decree, disposing of the fund in the hands of the sheriff, can be rendered, unless the case in which it shall be rendered shall be such a case as shall bring some one or more of the persons interested in the fund out of his county, into the county of some other of the persons interested in it. That being so, the best county in which to bring this .suit was the county in which the suit was brought. In that county resided the person who had the funds in his hands, and who was sheriff of the county, and who, as sheriff of the county, held the fund.” In Brobston v. Downing, 95 Ga. 505, certain depositors .and creditors of a bank brought suit against the stockholders of the bank. One of these stockholders resided in Chatham, county, while the suit was brought in the county of Glynn. This court held that “where the corporation is insolvent and has no assets applicable to the payment of its unsecured creditors, one or more of these creditors may bring suit, in behalf of themselves and all others who may choose to come in and be made parties, against all of the stockholders, to enforce their statutory liability and apportion the amount which each should contribute to discharge the claims of the various creditors.” In the case now under consideration, the home of the corporation was in Fulton county, a large part of the assets were seized by the court in Fulton county, and quite a number of the defendants against whom substantial relief was prayed resided in Fulton county. The court, therefore, had jurisdiction of this plaintiff in error, and did not err in overruling his demurrer on this ground.

Judgment affirmed.

All the Justices concurring, except Cobb, J.r who was disqualified.