Lead Opinion
On January 13, 1933, Alexander C. King filed his petition for equitable relief, the defendants named being A. J. Orme, C. H. Black, Atlanta Trust Company, Citizens and Southern National Bank of Atlanta, First National Bank of Atlanta, Fulton National Bank of Atlanta, and the Federal Reserve Bank of Atlanta, Georgia. The petition was brought by King in his capacity as a minority stockholder of the Atlanta Trust Company,
Briefly stated, the petition sets forth the following facts and contentions: King is the owner and holder of one hundred shares of the capital stock of the Atlanta Trust Company, of the par value of ten thousand dollars. On December 3, 1929, a contract was entered into between the Atlanta Trust Company and the Citizens and Southern National Bank; and on the same day a contract was entered into between the Atlanta Trust Company, the Citizens and Southern National Bank, and the other banking institutions named as parties defendant. Copies of these two contracts are attached to the petition as exhibits. Under the terms of the contract entered into between the Atlanta Trust Company and the Citizens & Southern Bank all the property and assets of every kind and nature owned by the Atlanta Trust Company Avas conveyed to the Citizens & Southern Bank, and this bank on its part assumed and agreed to pay all the debts and obligations of the Atlanta Trust Company, as shown by its statement, except capital stock, surplus funds, undivided profits, and income. The Citizens & Southern Bank was obligated to liquidate the assets of the Atlanta Trust Company as speedily as the same .could be reasonably liquidated, it being specified that such liquidation should be brought to a close on or before the end of three years, unless the Citizens & Southern Bank should extend the period of liquidation in writing. Under the terms of the agreement the Citizens & Southern Bank Avas empowered to extend the period of liquidation if it saw fit to do so. The Citizens & Southern Bank had purchased outright the office building of the Atlanta Trust Company and certain leasehold interests belonging to that institution. The purchase-price thereof, together with the cash which the Atlanta Trust Company had on hand at the time, was to be credited against the amount representing the obligations assumed by the Citizens & Southern Bank. After deducting these items the Citizens & Southern Bank was to receive interest on the obligations assumed by it at the rate of six per cent, per annum. It was also agreed that the Atlanta Trust Company was to be credited with the interest accruing from its interest-bearing assets as the same were collected by the Citizens & Southern Bank. It was further agreed that when the Citizens & Southern Bank
On the date the petition was filed (January 13, 1933) the greater portion of the assets conveyed by the Atlanta Trust Company to the Citizens & Southern Bank had by collection been reduced to cash, and from the proceeds thus derived all obligations due to the depositors of the Atlanta Trust Company had been fully paid and satisfied. It was asserted that from such proceeds practically all other debts and obligations of the Atlanta Trust Company, except such sums as may be due to the banks named as defendants, had been paid and satisfied. There remained in the hands of the Citizens & Southern Bank assets valued by its officials at $394,431, but valued by the officials of the Atlanta Trust Company at $371,431, these assets belonging to the Atlanta Trust Company and having been conveyed to the Citizens & Southern Bank under the terms of said contract. On December 3, 1933, the three-year period of liquidation specified in the contract expired, and the Atlanta Trust Company requested the Citizens & Southern Bank to extend the period of liquidation. This request was refused, and the Citizens & Southern Bank retains in its possession all the remaining unliquidated assets above referred to. The Citizens & Southern Bank contends that the Atlanta Trust Company is still indebted to it, on the debts and abligations paid and assumed, approximately $130,000, and it claims a lien on the remaining unliquidated assets of the Atlanta Trust Company until this indebtedness is paid and satisfied. This contention is disputed by the Atlanta Trust Company, which contends that such indebtedness does not exceed $95,000. The Citizens & Southern
Under the terms of the contract entered into between the Atlanta Trust Company and the Citizens & Southern Bank, the Citizens & Southern Bank is entitled to expenses, attorneys’ fees, and salaries incurred in preserving and managing the assets and properties conveyed to it by the Atlanta Trust Company, but is not authorized to make any charges for its services or for clerical or overhead expenses. Under the terms of said contract all the property and assets conveyed by the Atlanta Trust Company to the Citizens & Southern Bank were conveyed as a trust, and all the proceeds arising from the liquidation of such property and assets, including its trust business, were and are applicable as a credit in
The prayers of the petition are: (1) For process. (2) For restraining order, enjoining Orme, Black, and their associates, from purchasing the unliquidated assets of the Atlanta Trust Company. (3) For appointment of a receiver to take over and administer such assets. (4) For accounting between the Atlanta Trust Company and Citizens and Southern National Bank, to ascertain the true amount due to Citizens & Southern Bank by Atlanta Trust Company. (5) For judgment and decree awarding funds arising from the administration of said assets by the receiver. (6) For general relief. On January 21, 1933, the plaintiffs amended their petition by striking the name of C. H. Black as a party defendant.
On April 27, 1933, the Citizens and Southern National Bank filed its general demurrer on the following grounds: (1) The petition sets forth no cause of action against this defendant. (2) It contains no allegations authorizing the appointment of a receiver. (3) There are no allegations authorizing appointment of a receiver in equity for the assets therein referred to. (4) The petition contains a misjoinder of causes of action. (5) The petition contains aro allegations setting forth a cause of action against this defendant for an accounting.
In addition to the above amounts, the amendment recites that the Atlanta Trust Company procured a loan of $120,000 from the Beeonstruction Finance Corporation, and that this sum was paid to the Citizens & Southern Bank on the balance claimed to be due by the Atlanta Trust Company to the Citizens & Southern Bank; that at the time this sum was paid the Citizens & Southern Bank was in possession of the remaining unliquidated assets of the Atlanta Trust Company, and refused to release the same until such payment was made; that the Citizens & Southern Bank was in illegal possession of said assets and was retaining the same under the illegal and void contract hereinbefore referred to; that it was the duty of the Citizens & Southern Bank to turn over such assets to the Atlanta Trust Company without payment; and that the4 Atlanta Trust Company is entitled to an accounting on said item. The amendment further sets forth that the name of the Atlanta Trust Company was signed to the contracts of December 3, 1929, by A. J. Orme, its president, without the approval and consent of two thirds of the stockholders of that institution; that A. J. Orme and the other officers of the Atlanta Trust Company who were present on that occasion were laboring under a conviction that the affairs of said institution were facing an immediate necessity, and that A. J. Orme was coerced into signing said contract by the conduct of the officials of the Citizens & Southern Bank and those of the other banks who are parties to said contracts; that continuously since the signing of said contract until November, 1933,
The prayers of the amendment were: (1) To strike from the prayers of the original petition paragraphs (b), (c), (d), and (e), and add in lieu thereof. (2) That an accounting be had between the Atlanta Trust Company and the Citizens & Southern National Bank as to the items and claims referred to in the amended petition. (3) That decree be rendered in favor of petitioners and all parties entitled thereto, against the Citizens & Southern National Bank, lor the items referred to in paragraph 82 of this amendment, or so much thereof as is found to be just, equitablé, and proper; and any additional amounts and damages shown on the trial, and in the accounting prayed in this case. (4) That the Citizens & Southern Bank be required to deliver up the books, accounts, files, documents, and papers showing the trust business of the Atlanta Trust Company. (5) For general relief.
On May 1, 1936, the Citizens & Southern National Bank presented its motion to set aside and revoke the order allowing said amendment, on the ground that it set forth a new and distinct cause of action. On May 1, 1936, the Citizens & Southern National Bank filed its demurrer to said amendment, on the grounds that the amendment set up a new, distinct, and different
In this case the only assignment of error requiring consideration is that complaining of the overruling of the general demurrer to the amended petition. It is true that error is assigned upon the order overruling the general demurrer to the original petition, but this order was signed after the amendment to the petition had been allowed, the order reciting the allowance of the amendment. Therefore both demurrers will be considered with reference to the amended petition only. The plaintiff in error likewise assigned error on the judgment denying the prayers of its petition to revoke the order allowing the amendment, but inasmuch as the grounds urged in support of this petition are included in and covered by the demurrers, a separate consideration of this assignment of error is unnecessary. For the purpose of demurrer all allegations in the petition that are well pleaded must be taken as true; and since no special demurrer was filed, all allegations of the petition must be treated as well pleaded, except those which are clearly mere conclusions of the pleader. The first ground'of demurrer is that the petition sets forth no cause of action against the defendant, and a consideration of this ground requires an understanding of the case as a whole from the standpoint of the defendants in error. It is obvious that the case of the plaintiffs is wholly dependent upon their contention that the contract entered into on December 3, 1929, between Atlanta Trust Company and the Citizens & Southern National Bank is a void instrument. Practically all the complaints and all the relief prayed for are predicated upon this assumption. It is clear that if this contract is a valid and binding obligation, the plaintiffs’ case fails.
The plaintiffs contend that this contract, together with the acts of the Citizens & Southern Bank in taking over and administering the property, assets, and affairs of the Atlanta Trust
We are unable to concur in this view of the case; for we can not agree that the execution of this contract and the exercise of the rights and powers granted by the terms thereof constitutes a voluntary liquidation of the Atlanta Trust Company within the intendment of the banking laws of this State. Our statute with reference to voluntary liquidation of banks is incorporated in our Code, §§ 13-1501 et seq. It is provided that “Any bank may go into voluntary liquidation and be closed, and may surrender its charter and franchise as a corporation to the State by the affirmative vote of its stockholders owning two thirds of its stock,” etc. This language clearly negatives the contention that voluntary liquidation of a bank can be effected by a mere failure on its part to conduct the usual and ordinary business incident to the operation of a banking institution. To make such a liquidation effective requires a surrender of its charter and franchise. In other words, there’ must be not only an intention to cease operation, but also a surrender to the State of all right and authority granted the bank to function as a banking institution. In this connection we seriously doubt if it can properly be said that the Atlanta Trust Company had ceased to function as a banking institution. It is true that it had sold the building in which it was located, and ceased to engage in much of the business that is incident to and
Under the terms of the contract the Citizens & Southern Bank advanced to the Atlanta Trust Company sufficient sums of money to pay off and satisfy all its debts and obligations, except capital stock, surplus, undivided profits, and income. The Atlanta Trust Company sold outright to the Citizens & Southern Bank its office building and certain leasehold interests, the purchase-price of the same being entered as a credit on the amounts advanced by the Citizens & Southern Bank. The Atlanta Trust Company also turned over to the Citizens & Southern Bank all the cash which it had on hand on the date the contract was executed, and this was
In Hightower v. American National Bank of Macon, supra, the Supreme Court of the United States had under consideration a contract very similar to the contract now under discussion. The court said: “The rational and necessary conclusion from these
As already stated, practically all of the relief prayed for in the amended petition is predicated upon the legal proposition above discussed. There is however, one item specified in both the original and amended petition which may not be dependent on the contention that the plaintiff in error was occupying the status of a trustee ex maleficio with reference to the liquidation of the assets of the Atlanta .Trust Company. We refer to the allegation that the Citizens & Southern Bank is not entitled to the profits arising from the trust business of the' Atlanta Trust Company. In the original petition it was alleged that these profits approximated the sum of thirty-five thousand dollars. In the amendment it was asserted that these profits had increased since the filing of the petition, and that they approximated seventy-five thousand dollars. A study of the contract entered into between the Atlanta Trust Company and the Citizens & Southern Bank leaves this question a matter of doubt. However, the amendment shows that after the original petition was filed by King, making this contention, at a meeting of the trustees of the Atlanta Trust Company held on May 19, 1933, a resolution was passed approving and accepting a. contract entered into between the Atlanta Trust Company, the Citizens & Southern National Bank, and other banking' institutions named as parties defendant in the petition. This contract stipulated that the trustees were not in accord with the contention of King relatively to the trust business of the Atlanta Trust Com
In the light of what is here said it must be held that the petition as amended did not set out a cause of action against the plaintiff in error, and that the judge erred in overruling this ground of the demurrer. It is not necessary to consider the other grounds of demurrer.
Dissenting Opinion
dissenting. The petition was not assailed by special demurrer for structural defects. It was only attacked by general demurrers. These the, learned trial judge overruled, and the exception here is to that judgment. I can not concur in the opinion of the majority that the judge erred in overruling these demurrers, for under his ruling all issues of‘fact, if any, or disputes between the parties in this case, would properly be submitted to a jury, who are the best doctors of doubtful subjects, as more than once was said by Chief Justice Bleckley. I fail to perceive how, under the allegations and prayers of the petition, the court could have refused an accounting to these undisputed stockholders in the Atlanta Trust Company, which may be described, in language neither technical nor legal, as being at this' time a defunct corporation. I do not believe that stockholders who have invested their money in a bank, and are deprived of it by illegal contracts entered into without their knowledge or consent by their superior officers, should be denied the poor privilege of being told what became of their money. For this reason I shall state at the outset that the learned judge, in my opinion, ruled correctly in overruling the general demurrers; for the principle has often been stated, that if a petition is good for only one of its prayers, the entire petition should not be dismissed. It is my opinion that the contract of December 3, 1929, was ultra vires so far as the Atlanta Trust Company was concerned, and is absolutely void. If it constituted an assignment by the directors of that company, and they had the power without any say so on the part of the stockholders to assign all of its property, it may be said to have been a voluntary assignment. To me it is im
Concurrence Opinion
concurring specially. Whether or not the contract assailed in the petition was valid, as held by the majority, and assuming that the petition and the amendment each stated a cause of action, it is my opinion that the amendment was improper and should have been stricken, for the reason that the plaintiffs attempted thereby to abandon the cause of action, if any, as stated in the original petition, and to substitute a new and distinct cause of action, which was not permissible under the law. Accordingly I concur in the judgment of reversal.