186 Ga. 239 | Ga. | 1938
On January 30, 1935, Mrs. J. T. Green and eleven others filed an equitable petition, in one count, against the Bank of Talbotton, the American Surety Company, and the following individuals who were officers and directors of the bank: J. W. Jordan, A. J. Perryman Jr., D. B. Searcy, and L. W. Smith. The petition as twice amended was attacked by general and special demurrers filed by the several defendants. The general demurrers of the Bank of Talbotton and J. W. Jordan were overj ruled, and no appeal was taken by either of these defendants; .The general demurrers filed by the American Surety Company, A. J. Perryman Jr., D. B. Searcy, and L. W. Smith each not only made the contention that the petition did not state a cause of action, but expressly invoked the statute of limitations. These demurrers were sustained, and the plaintiffs excepted. All of the defendants in the trial court were named as defendants in error in the bill of .exceptions. The Bank of Talbotton moved to dismiss the writ of error as to it, upon the ground that it did not except to the overruling of its demurrer and had no interest in sustaining the judgment to which the plaintiffs excepted.
The plaintiffs instituted the action as depositors of the Bank of Talbotton, and sued as a class for the benefit of themselves and all other depositors similarly situated. They alleged that the Bank of Talbotton was organized as a banking institution on or before August 16, 1906, and that after the banking act of 1919 its operations were subject to that statute and the amendments thereto.
The plaintiffs concede in effect that as to the two alleged causes of action last mentioned, the superintendent of banks would ordinarily be the proper party to bring suit, but they alleged that the superintendent had failed and refused to bring any action to enforce the collection of any of “said just claims,” and that by reason of this fact they as depositors had the right to sue in their own names for the benefit of themselves and others similarly situated. With respect to the relationship of each of the individual defendants to the Bank of Talbotton, the following allegations
Other allegations were as follows: The bank was hopelessly insolvent for about fifteen years before its failure. “During said long period of time said managing officers aforesaid, in conducting the affairs of said bank, fraudulently held the same out to the public as a solvent banking institution, and by its false method of making and publishing statements of the condition of said bank as required by law, and by false personal statements made to the patrons of said bank on direct inquiry made to them as to the solvency thereof, and in various and divers other false ways and means succeeded in deceiving the public as to the solvency of said bank and its real financial condition during all of this time, and did by said method and means deceive your petitioners, and caused them to believe in said published statements and personal state} ments of the officers of said bank as to its financial condition, to their hurt and injury, in depositing their funds in said bank: . : Said bank was rendered insolvent during said long period of time, which caused its failure, as alleged, by the many misapplications, negligences, mismanagements, wrongful and illegal uses, and illegal loans of the assets, moneys, securities, credits, and properties of said bank by its said officers, most of which were consummated by them as follows.” Here the petition gave the details of more than twenty separate transactions classed by the plaintiffs as “negligences, misfeasances, malfeasances, misapplications and misappropriations of the bank’s assets,” from which, it was alleged, the bank sustained losses amounting to more than one hundred thousand dollars. The dates of these transactions ranged from 1916 to 1927. The petition further alleged that all of these transactions “constituted liabilities that should have and could have been collected, for the reasons herein alleged; and that the said E. E. Gormley as superintendent of banks, in charge of saic.
Paragraph 5-1 of the petition was as follows: “It is shown and alleged that during said long period of time before said bank’s failure your petitioners, as patrons of said bank, from time to time made inquiry of the officers of said bank as to the solvency and its general financial condition, when and at which time, and in reply thereto, J. W. Jordan, its cashier, ‘chief executive officer,’ controlling spirit, and principal stockholder, made answer in words substantially as alleged above, to wit, ‘that the Bank of Talbotton was as solid and sound as the Bock of Gibraltar,’ meaning thereby, and intending for your petitioners to believe therefrom, that said bank was wholly solvent and in a sound financial condition, and the said J. W. Jordan intended to convey this idea, and intended for your petitioners to believe the same, and they did so believe, and were deceived thereby. And further, on other occasions when inquiry was made of the said officers of said bank, and of the said J. W. Jordan, its cashier, about the solvency and general financial condition of said bank, reply was made by J. W. Jordan to the effect and purport that said bank was absolutely and perfectly solvent, able to respond to all of its creditors and depositors for any obligation that it had or carried; that banks were made insolvent, and broke, principally from the mismanagements of officers within rather than from outside conditions, meaning and intending to convey this idea to your petitioners, and for them to believe that said bank was perfectly solvent, absolutely responsible, and that other banks failing were failing principally because of the infidelity and illegal acts of the officers having charge of the management thereof, and that the said officers having charge and managing said Bank of Talbotton were absolutely true to its every interest, and loyal to said bank’s interest in every undertaking and transaction, which did convince your petitioners of its solvency, and upon which they relied, all of which statements petitioners show were false and misleading, and by reason of which they were,
The petition further alleged: “It is further shown and alleged to the court that J. W. Jordan, cashier of said Bank of Talbotton during all of the period of time covered from January 1, 1918, to January 1, 1928, consummated all of the contracts and agreements: involved in all of these ‘irregularities/ participated in the nego-| tiations leading up to the consummation of the same, and reapedj a personal benefit in each and all of the same; that the other officers! of said bank during said period either knew the same, and ratified each and all of the same, or could by the exercise of the diligence required of them as such officers have known of the particulars of each and all of them, and failed to register their dissent to any of them. Hence it is shown and alleged that all of said officers are liable to the Bank of Talbotton for the losses accruing to the bank by reason thereof. . . It is further shown and alleged to the court, that, by reason of the fact that J. W. Jordan reaped a personal benefit from each and all of said irregular transactions, the statute of limitations [is] tolled, as to him, and as to all of such: other of the officers as reaped a benefit from said transactions, ok knew of the same or could have known of the same in the exercise of due diligence. . . It is shown and alleged that the numerous ‘irregularities/ negligences, mismanagements, misappli
In the bond signed by the American Surety Company for J. W. Jordan, the liability of the surety was expressly made subject to the following conditions: "1. That loss be discovered during the continuance of this suretyship or within fifteen months next after its termination, and notice thereof delivered to the surety at its home office in the City of New York within ten days after such discovery. 2. That claim, if any, be submitted by the employer in writing, showing the items and dates of the losses, and delivered to the surety at its home office within three months after such discovery, and the surety shall have two months after such claim has been presented in which to verify and to make payment. In the meantime no suit, action, or proceeding shall be brought against the surety by the employer, nor after the expiration of twelve months after the delivery of such statement of claim.”
According to the view which we take of the case, a decision will be required only upon the following questions: (1) Whether the writ of error should be dismissed as to the Bank of Talbotton. (2) Whether the petition stated a cause of action against the individual defendants as for personal fraud and deceit. (3) Whether the plaintiffs, in suing in place of the superintendent of banks for negligence or breach of duty by the officers and directors, are barred by the statute of limitations. (4) Whether a cause of action was stated against the American Surety Company, in view of the special conditions of the bond. These questions will be considered-in the order stated.
There is no merit in the motion to dismiss the writ of error as to the Bank of Talbotton. The bank was a party to the case
Did the petition set forth a cause of action in favor of the plaintiffs as depositors as for fraud and deceit on the part of the individuals who were officers and directors ? Actions of this nature have been upheld by the courts, but in such case it is necessary to show actual fraud on the part of the defendants. Hines v. Wilson, 164 Ga. 888 (139 S. E. 802); Castleberry v. Wells, 183 Ga. 328 (188 S. E. 349); Hill v. Hicks, 44 Ga. App. 817 (163 S. E. 253); Black v. Estes, 47 .Ga. App. 732 (171 S. E. 402). The plaintiffs alleged that the defendants as officers and directors, by
The petition purported to account by specific allegations for the insolvency of the bank. It gave the details of many irregularities, which, it was alleged, resulted in loss and damage to the bank and rendered it insolvent. It was further alleged that all of the contracts and agreements involved in these irregularities were consummated by J. W. Jordan, and “that the other officers of said bank during said period either knew of the same, and ratified each and all of the same, or could by the exercise of the diligence required of them as such officers have known of the particulars of each and all of them, and failed' to register their dissent to any of .them.” The allegations that the officers either knew of the unlawful transactions so executed by J. W. Jordan, and ratified them, or by the exercise of the requisite degree of diligence could have known the particulars of each and all of them, amounted to nothing more than a charge of implied notice, and did not show actual knowledge on the part of the other defendants. Thomas v. Georgia Granite Co., 140 Ga. 459, 460 (79 S. E. 130). Accordingly, when
W.e consider next the question whether the action as based on alleged liability of the individual defendants for a breach of duty which they owed to the bank as officers and directors was barred by the statute of limitations. For any such negligence or breach of duty they would have been liable, not directly to the plaintiffs, but only to the bank itself, and the superintendent of banks would ordinarily have been the proper party to sue. Hinton v. Mobley, 167 Ga. 60 (144 S. E. 738); Jackson v. Stallings, 169 Ga. 176 (149 S. E. 902); Hill v. Hicks, 171 Ga. 192 (154 S. E. 882). The plaintiffs alleged, however, that the superintendent had failed and refused to act, and for this reason they claimed the right to sue for themselves and others. similarly situated. Since it appeared from the petition that all of the alleged irregularities occurred more than four years before the suit was filed, if the action had been brought by the superintendent himself it would have been barred by the statute. Mobley v. Faircloth, 174 Ga. 808 (164 S. E. 195, 82 A. L. R. 1201). The plaintiffs in electing to sue in his stead are necessarily subject to the same limitation. The petition contained nothing to show that the superintendent had been deterred by fraud of the defendants from instituting the action, so as to toll the statute. Code, § 3-807; Anderson v. Foster, 112 Ga. 270 (37 S. E. 426); Maxwell v. Walsh, 117 Ga. 467 (43 S. E. 704). The court did not err in sustaining the general demurrers of Perryman, Searcy, and Smith, in which the statute of limitations was expressly invoked.
1 Since the petition contains no allegation to the contrary, it must be assumed that the board of directors, and the superintendent, within the times of their authority respectively, performed the duty imposed upon them by law to examine the conditions of this bond and its renewals, and approved the same. Connolly v. Atlantic Contracting Co., 120 Ga. 213 (2) (47 S. E. 575); Loudermilk v. Stephens, 126 Ga. 782 (55 S. E. 956); Ponder v. Shumans, 80 Ga. 505 (3) (5 S. E. 502); Scott v. McDaniel, 64 Ga. 780 (3). But, regardless of this, the plaintiffs are suing upon the bond as a contract between the bank and the surety company, and must take it as they find it. They can not choose to rely upon a part of it to the exclusion of the remainder, except as to such terms, if any, as are unlawful and could not have been approved by the proper authority. The bond under consideration contained the following as conditions of liability: “1. That loss be discovered during the continuance of this suretyship or within fifteen months next'after its termination, and notice thereof delivered to the surety at its home office in the City of New York within ten days after such discovery. 2. That claim, if any, be submitted by the employer in writing, showing the items and dates of the losses, and delivered to the surety at its home office within three months after such discovery, and the surety shall have two months after such claim has been presented in which to verify and make payment. In the meantime no suit, action, or proceeding shall be brought against the surety by the- employer, nor after the expiration of twelve months after the delivery of such statement of claim.” From what has been said, these conditions can not be ignored or read out of the contract, but must be treated as valid and given effect according to their terms. As in case of the alleged liability considered in the preceding division, the plaintiffs are
Judgment affirmed.