38 Ga. App. 313 | Ga. Ct. App. | 1928
On July 15, 1926, T. R. Bennett, superintendent of banks, took possession of the Farmers & Merchants Bank of Sylvester, Georgia, for liquidation under the banking act of August 16, 1919 (Ga. L. 1919, p. 135). On October 7, 1926, an execution was issued by the superintendent, by W. J. Davis, general agent, against Mrs. Mollie Deariso, one of the stockholders, for the purpose of enforcing her statutory liability as such, in pursuance of an assessment made against the stockholders for the benefit of the depositors. To a levy of this execution upon her property Mrs. Deariso filed an affidavit of illegality, and, the issues formed thereby having been submitted for trial in the superior court upon an agreed statement of facts, before the presiding judge without a jury, and the trial having resulted in favor of the plaintiff in fi. fa., Mrs.
The first question is whether Mrs. Deariso owned six shares of stock or only three shares at the time the bank failed on July 15, 1926. The bank’s original capital stock was $2-5,000. By a first amendment to its charter, this amount was increased to $50,-000. Only $17,000 of the additional stock, however, was actually paid in, and on January 13, 1926, the bank was operating on a paid-in capital of $4-2,000. At a meeting of the stockholders held on that date a resolution was adopted reciting the fact that the capital stock had become impaired more than 10 per cent., and that it was necessary to assess the various stockholders in an amount sufficient to raise the value of the stock to par. This resolution provided that the assessment upon the stock should be made by diminishing the holdings of each shareholder by 50 per cent., each shareholder to surrender the certificates representing the stock then owned by him, and to receive new certificates in one half the amount. By this plan, the then outstanding capital stock would be reduced from $42,000 to $21,000. The resolution proposed also an application for a second amendment to the charter, reducing the capital stock to $25,000, and provided for the sale of 40 shares of
The copy of the application was advertised once a week for four weeks prior to its filing, as required by law. Before this publication had been completed, and thus before the application for the amendment had been acted upon and granted by the secretary of State, all the stockholders surrendered their certificates to the cashier, in pursuance of the resolution of the stockholders adopted on January 13, 1926, and in the expectation that new stock would be issued to them in the amount of 50 per cent, of that surrendered as provided by the resolution. And, to quote from the agreed statement, “before receiving the certificate of amendment the officers of said bank had obtained an agreement with parties to sell them the 40 shares of new stock in said bank at the par value of $100 per share; and checks were issued to said bank by certain of said parties agreeing to buy same, aggregating $3900, and were delivered to said bank with the understanding with these subscribers that when checks had been obtained for the full amount of $4000 that all of said checks be cashed and certificates of stock be issued to each purchaser of said stock according to his subscription. The one share of $100 shortage in the $4000 of the checks is explained as follows: G. L. Warren, the cashier of this bank at the time, who handled the matter of selling this stock, agreed to take and pay for this share, but accepted a position at Waycross and moved there a month before the bank closed, and never put up his check or paid his subscription. At the time the bank closed, the cheeks, aggregating $3900 on this stock, were in hand by said bank. Said checks were never cashed by said bank or in any way used by it as an asset. No new certificates of stock were ever issued in consideration of said checks. At the time the bank closed, all of said checks were
The six shares of stock owned by Mrs. Deariso were evidenced by certificate number 218, and this, like the certificates of all the other stockholders, wa's surrendered to the officers of the bank in accordance with the resolution of January 13, 1926, and remained of file with the cashier until the bank was closed on July 15 following. I-Ier name continued upon the books as one of the stockholders, and there was no entry of any sort purporting to cancel her stock or the certificate thereof, nor was any new certificate ever issued to her as was contemplated by the resolution referred to.
In discussing the matter of the number of shares owned by Mrs. Deariso at the time the bank failed, that is, of whether the plan for the reduction of the amount of stock owned by each of the shareholders had become effective, the counsel have given considerable attention in their briefs to the question of whether the amendment to the charter, as granted by the secretary of State on May 12, 1926, had become operative. It is contended by counsel for the plaintiff in error that in view of what had been done previous^, the number of shares owned by each of the stockholders was cut in half instantly on the granting of this amendment, and that no acceptance of the amendment by the stockholders or the corporation
It seems to be the general rule that in order for a material amendment to the charter of a corporation to become effective, it must be accepted formally by the stockholders, or else must be acted upon by the doing of the things which it contemplates or the transaction of business thereunder. Chattanooga &c. R. Co. v. Warthen, 98 Ga. 599 (7) (25 S. E. 988); 14 C. J. 184. But irrespective of what may ordinarily be necessary to put into effect an amendment to the charter of a bank, we think, in the particular case, that it was never contemplated that the amendment should become effective until the bank was recapitalized in the sum of $25,000. It may be true that, in view of the fact that all of the old stock had been surrendered with the intention on the part of the individual stockholders and of the bank that new stock would be issued in half the amounts, the issuance of certificates for the new stock might not have been necessary in effectuating the change in the amount to be owned by each shareholder; but, from all the facts appearing, construed in the light of the law, we are of the opinion that until some person or persons became the owners of the full amount of the new stock to be issued, the original status was not altered. All that was done toward procuring an amendment to the charter preceded the certificate issued by the secretary of State; nothing whatsoever was done afterwards. The bank continued to operate as upon a capital of $42,000, and never at any time acted upon the subscriptions for the new stock. Unless ownership of the new stock by some person or persons other than the bank had become effectuated, the amount of the stock of Mrs. Deariso and of others in like situation could not have been diminished as contended without reducing the entire capital stock to an amount materially less than that prescribed in the amendment and below the minimum required by law for such an institution. We are therefore of the opinion that the principal question for determination is whether the proposed new stock had been disposed of in such manner that the subscribers became stockholders, and were thus subject to assessment on the basis of such
Checks are not payment until they themselves are paid, and no acceptance of the subscriptions or of the checks appears to have been made in this case. By the very terms of the subscriptions here involved, there could be no effective acceptance “until checks had been obtained for the full amount of $4000.” This provision was a condition precedent in the subscriptions and was never complied with, the aggregate of all checks posted amounting to only $3900. So we think there were never, in fact, any effective contracts for the purchase of the new stock. Furthermore, it is our opinion that the particular charter amendment contemplated that the new stock should not only be contracted for, but actually paid for, before the old stock could be considered as having been reduced.
We advance two propositions: (1) that the sale of the new stock for cash was a condition precedent to the reduction of the old stock; and (2) that no such sale was ever consummated. In the further discussion we will examine certain provisions of the banking act which we deem to be relevant in the support of each of these- conclusions. A capital stock of $25,000 was not only exacted by the amendment to the charter, but the banking act, in article 8, section 1, subsection 3 (Ga. L. 1919, p. 164), requires a capital not less than this amount for any bank organized in a city, town, or village of a population of more than 1,000, according to the last preceding Federal census; and for the purposes of this case this court will take judicial cognizance of the fact that the city of Sylvester, by the census of 1920, had a population of more than 1,000. Fidelity &
The amendment must also be construed in view of the application, the basis of which was the resolution of the stockholders of January 13,. 1936. If there were no enforceable contracts for the sale of the new stock, it would be unnecessary to determine whether the resolution contemplated that the same should be paid for in cash as a condition precedent to the effectuation of such amendment
We come next to the question of whether the execution could
The proper discharge of the duties of the office of superintendent of banks requires ripe experience and extraordinary skill and judgment in the business of banking, and the law creating the office necessarily contemplates that any one appointed to this high position should be possessed of these qualifications. Considering the responsible duties which are placed by the law upon this officer, and the capacity and wisdom requisite in a person holding such position, we think there is great reason in the present case for adhering
“Liquidation,” in its general sense, means the act or operation of winding up the affairs of a firm or company by getting in the assets, settling with its debtors and creditors, and appropriating the amount of profit or loss. 5 Words & Phrases, 4180; 3 Words & Phrases (2d series), 153. The word is used in a very comprehensive sense in the banking act of this State, as a reading of that statute will readily demonstrate. Section 7 of article 7 is in part as follows.: “TTpon taking possession of the assets and business of any bank, the superintendent is authorized to collect all moneys due to such bank, and to do such other acts as are necessary to conserve its assets and business, and shall proceed to liquidate the affairs thereof, as hereinafter provided.” “Assets” would ordinarily mean the property owned by the bank as a corporate entity, and would not include the statutory liability of stockholders (Runner v. Dwiggens, 147 Ind. 238, 46 N. E. 580, 36 L. R. A. 645; Minn. Mfg. Co. v. Langdon, 44 Minn. 37, 46 N. W. 310); and while the word appears to have been used with this meaning in several places in the banking act, it is nevertheless given a larger signification in section 7 of article 18, for it is there provided that the individual liability of stockholders shall be an asset of the bank to be enforced only by and through the superintendent.
There was a similar provision in a prior statute (Ga. L. 1894, p. 76; Civil Code (1910), § 2249), with reference to which the Supreme Court, in the case of Moore v. Ripley, 106 Ga. 556 (2) (32 S. E. 647), said: “Further, by the act of 1894 (Civil Code, § 1890), which is above cited, this liability of stockholders is placed among the assets of the insolvent corporation, and it is declared that the receiver is the proper person to sue and enforce the liability, thus making that officer the statutory plaintiff. We know of no reason why there should be any other defendant than those liable under the provisions of the statute. The receiver represents all the parties at interest; he represents the bank as well as all the creditors,” See also Wheatley v. Glover, 125 Ga. 710 (13) (54 S.
If the assets must be taken to include the liability of the stockholders, and if the issuing of executions for the enforcement of such liability, where necessary, and the payment of the resulting fund to depositors, are a part of the liquidation and distribution of the assets of the bank, and if, as expressly provided in the banking act, the superintendent may authorize an agent “to perform such duties connected with such liquidation and distribution as the superintendent himself could in person do and perform,” it seems to follow, as a necessary conclusion, that he may empower such agent to issue the executions. Whether he might also confer authority upon an agent to make the assessment against the stockholders on the basis of their stock is a question not made in this case and that question is not decided. See in re Giles, 21 Fed. (2d) 536. Among other powers conferred upon the superintendent is the authority to bring suit, and this is in addition to his duty in regard to the issuing of executions against the stockholders. See article 7, section 7 of the banking act, and also Ga. L. 1922, p. 65. It could hardly be doubted by any one that the “getting in” of the assets, including the making of collections on any liability, would be a matter which the superintendent could entrust to an agent. In fact, when we consider what may be the multitude of his duties, the necessity of acting through others in such matters would appear to be absolute. A general authority to collect will, in the absence of an agreement to the contrary, usually include the power to bring suit to enforce payment, provided the agent may resort to only the ordinary and legitimate processes for that purpose. Strong v. West, 110 Ga. 382 (35 S. E. 693); 2 C. J. 633. The execution which was issued in this case was only a mode of suit, and by the special provisions of the banking act is made the usual and common method, if not the only method, of proceeding against stockholders where they fail to
The question next arises, was the appointment under which Mr. Davis purported to act in issuing the particular execution effectual as empowering him to issue it ? The power of attorney or commission under which he acted and the only authority claimed for him was as follows: “Georgia, Fulton County: Under and by virtue of the power and authority granted in sections 9 and 10 of article seven of the banking act, and amendments thereto, originally approved August 16, 1919, I hereby appoint W. J. Davis, General Agent to supervise the liquidation of all banks now or which hereafter may be placed in liquidation, and to make distribution of their assets as is provided by law, and until and unless this power and appointment be revoked. He is authorized to do and perform such duties in connection therewith as I may and could in person do or perform. This power shall specifically include and bestow upon the said W. J. Davis right to execute and deliver in the name of any bank in liquidation any and all conveyances, bills of sale, transfers or assignments of real and personal property, or choses in action, as fully and as completely as said bank or the undersigned on behalf of the said bank could or might do in its or his own name. And shall also include the right to collect all funds due said banks, convert their assets into cash,'and to deposit all funds and check out the same. This appointment to be effective upon the giving of a bond in the full penal sum of fifty thousand dollars, conditioned upon the faithful performance of his duties as such agent. This 23rd day of July, 1926. T. B. Bennett, Superintendent of Banks (seal). Executed in the presence of Luther Roberts, J. F. Kemp, N. P. Ga., State at large.”
If the person who issued the execution in this case was authorized to issue it at all, it was proper for him to do so in the name of the superintendent by himself as agent. Where an officer is authorized by law to appoint a deputy, it is generally the case that the deputy, .on receiving the appointment, derives his authority from the law and not from the officer appointing him; and, therefore, acts requiring official signature, when done by a deputy, should be executed in his own official right and not in the name of the principal officer. Ballard v. Orr, 105 Ga. 191 (31 S. E. 554); Biggers v. Winkles, 124 Ga. 990 (53 S. E. 397). A different form of execution, however, would seem to be proper where the act is performed through an agent. In that case the power exercised is derived from the person or official from whom the agent received his appointment, and the accepted form of signature is that which was adopted in issuing the instant fi. fa. See Ballard v. Orr, supra; 2 C. J. 671. Under the agreed statement of facts, the trial court was right in rendering judgment in favor of the plaintiff in fi. fa. on each ground of the affidavit of illegality.
Judgment affirmed.