180 Ga. 4 | Ga. | 1934
The Liberty National Bank and Trust Company, of Savannah, Georgia, “as guardian of the person and property of George H. Haslam, a person non compos mentis, -and as next friend of said George II. TTaslam,” brought suit against the Georgia Bailroad Bank and Trust Company, of Bichmond County, and J. Harold Mulherin, of Chatham County, to recover the sum of $21°000, and for such other relief as the plaintiff might be entitled to in equity. The company first named will be designated herein as the plaintiff bank or as the trust company, and the other company will be referred to as the defendant bank or the defendant banking company. The petition was based upon an alleged misapplication of funds by Mulherin while acting as guardian for Haslam during his minority, it being averred that the defendant banking company participated in such misapplication. The petition was in two counts. The first count proceeded upon the theory that Mulherin, as guardian, used the funds of his ward in making an unauthorized investment by purchasing from the defendant banking company certain bonds of a private corporation, while the second count alleged the use of such funds to pay in part a debt owed to the defendant banking company by the same private corporation, in which Mulherin was interested. The allegations of fact were the same in each count, with the exception of some variation to meet the possible proof as to the intent of the parties at the time of the transactions in question. The defendant banking company demurred to each count both generally and specially. The plaintiff offered an amendment covering several matters, which amendment the court allowed subject to demurrer. The defendant renewed all grounds of its original demurrer, and advanced additional grounds. The court overruled the demurrers as to all grounds, and the banking company excepted.
The petition alleged facts to show that in the particular case the person claimed,to bo insane was actually served with notice of the lunacy proceeding, and the demurrer does not go to the sufficiency 'of the notice, but, as to this matter, is confined to an attack upon the validity of the statute. We can not agree that this statute is unconstitutional for the reason that it fails to provide for any notice to the person alleged to be insane. This statute 'was construed in Morton v. Sims, 64 Ga. 298. Certain amendments have been added since the date of that decision, but the amendments do not affect the question presented in the instant case. In that decision it was said, that, “to comply with the spirit of the statute, as well as the general law, it would be better for the ordinary to require the notice to be given to the alleged imbecile himself, or else designate by order a guardian ad litem to receive notice for him.” In Yeomans v. Williams, 117 Ga. 800 (45 S. E. 73), it was said: “In this country, as a general rule, it has been held that the lunatic is entitled to reasonable notice of the time and place of the inquisition, and has a right to be present and contest the proceedings ; and it has been said that even where the statute does not provide for notice to the lunatic, it will be presumed that reasonable notice was intended to be given.” See also Allen v. Barnwell, 120 Ga. 537, 539 (48 S. E. 176). In Coker v. Gay, 154 Ga. 337, 343 (114 S. E. 217), it was said: “Under our law original, general, and exclusive jurisdiction is conferred upon the courts of ordinary over the appointment of guardians for lunatics, and these courts now have the power formerly exercised by the courts of chancery in this matter.” Upon a comparison of this statement with the decision in re Blewitt, 131 N. Y. 541 (30 N. E. 587), it is ap
The fatal defect in the proceeding considered in Morton v. Sims, supra, was the failure to give any notice to relatives within the purview of the statute. This omission was jurisdictional, and could not be waived by the alleged lunatic. The facts of the caso did not require a decision as to the necessity of giving notice to the alleged imbecile before- the appointment of a commission. Accordingly, the statement in that decision as to the necessity of such notice was a mere dictum, and does not control the case at bar. Our present opinion is that due process does not necessitate such notice, but is satisfied by a formal personal inspection by commissioners named. We conclude that the statute is not unconstitutional for the reason urged by the defendant banking company.
The demurrer of the defendant banking company made a further attack upon the appointment of the plaintiff bank as
As stated above, the suit was originally brought by the trust company “as guardian- of the person and property of George JB. Haslam, a person non compos mentis, and as next friend of said George H. Haslam.” By amendment the petition as to designation of parties was so changed as to make it a suit by the trust company as guardian of the person and property of Haslam, a person non compos mentis, and also by Haslam through the trust company “as his next friend.”- The defendant bank demurred to so much of the amendment as sought to add the insane person as a party suing by the trust company as next friend, one ground of the demurrer being that the guardian and ward both could not sue, and consequently there was a misjoinder of parties. Another ground of the demurrer was that the trust company has no authority, under the law of Georgia or of the United States, to act as next friend in a suit by a person non compos mentis. These grounds of demurrer were special in nature, and were appropriately taken. The plaintiff trust company as guardian and the ward'by next friend could not both sue, over proper objection. LaGrange Mills v. Kener, 121 Ga. 429 (3) (49 S. E. 300); Stanley v. Stanley, 123 Ga. 122 (51 S. E. 287); Civil Code (1910), §§ 5416, 3047, 6307. Nor do the Federal laws relating to national banks or the State law defining the powers of banks and trust companies authorize any of such corporations to appear as next friend. U. S. C. A. title 12, §§ 24, 248 (k); Michie’s Code, § 2817. The laws here cited may tend in that direction, but they do not quite confer such authority. The term proeliein ami, or next friend, imports a natural person; and while the term “person” will ordinarily include a corporation (Civil Code (1910), § 5), the question of the authority of a bank or trust company to appear as next friend involves a consideration of charter power, as well as the general law. “A corporation is an artificial person created by law for specific purposes, the limit of whose existence, powers, and liabilities, is fixed
The authority of the plaintiff trust company to sue as guardian for the person non compos mentis has been questioned by the defendant bank only upon the grounds stated above; and since we are of the opinion that, as against these objections, the plaintiff could sue in such capacity, it becomes necessary to determine whether the petition was sufficient to show liability on the part of the defendant banking company. This question is, of course, raised by the general grounds of demurrer, and after passing upon these grounds we will consider certain additional grounds of special demurrer. The petition alleged the following: For many years prior to 1927, the Perkins Manufacturing Company, a private corporation, had had business dealings with the defendant bank and had borrowed large sums of money from it. To secure the loans, the manufacturing company had pledged to the bank certain bonds issued by it on deeds of trust. In January, 1927, and May, 1928, the defendant Mulherin delivered to the defendant banking company checks aggregating the sum of $21,000, drawn upon Realty Savings & Trust Company, Augusta, Georgia, and payable to the order of the defendant bank. These checks were signed “ George Harold Haslam, by J. Harold Mulherin, Gdn.,” and were drawn upon funds belonging to Haslam, the minor. The defendant bank cashed the checks and applied the proceeds to the reduction of the indebtedness owing to it by the Perkins Manufacturing Company, and delivered to Mulherin bonds of that company in the amount of $21,000, which had been theretofore pledged as collateral security
The allegations of the second count were substantially the same,
As to the second of these theories, the only question which would seem to require discussion is whether the defendant bank should have inquired as to the granting of an order by the superior court authorizing such investment. Since a guardian is in effect a special agent of the law to manage the estate of a person non sui juris, it is incumbent upon all persons dealing with him to examine his authority. Civil Code (1910), § 3595. “Notice sufficient to excite attention and put a party on inquiry is notice of everything to which it is afterwards found such inquiry might have led. Ignorance of a fact, due to negligence, is equivalent to knowledge, in fixing the rights of parties.” § 4530. A guardian is a trustee, and, as shown above, the purchaser from a trustee with notice, either actual or constructive, of the trust holds as trustee for the beneficiaries. Clearly, one selling to a trustee would be subject to the same principle. If Mulherin as guardian undertook to invest the funds in his charge in bonds of a private corporation without an order of the superior court, he was acting without authority of law, and a subsequent guardian will not be limited to an action for such damages as the ward may have sustained; but in such case the latter guardian would be authorized, if not bound, to repudiate the transaction en toto and to sue for the amount so unwarrantably invested. One who aids and assists a guardian in misapplying assets may be held liable upon proof that he actually knew of such misapplication, or upon proof of such facts as would have excited the attention of an ordinarily prudent person and put him on inquiry. In the latter circumstances, ignorance would be attributable to negligence and equivalent to knowledge. Whether or not the allegations in the present case were sufficient to show actual
In view of the similarity of a guardian to one authorized to act only as a special agent, the present case should be readily distinguished from Georgia Casualty Co. v. McRitchie, 45 Ga. App. 697 (166 S. E. 49), which involved a sale of corporate stock by a wife to her husband without an order of court, and presented the question whether under the facts of the case the corporation could assume that the transaction was based upon a proper court order, in absence of knowledge to the contrary. Under the allegations made in the present case, the defendant bank was the actual opposite party in the transactions with the former guardian, and, having actual or constructive knowledge of the trust, accepted checks drawn by the minor through the guardian, either in part payment of a debt due by a third person, or for the purchase-money of securities which the guardian was not authorized to buy, the bank being in its own right the payee and the final recipient of the funds. The case might perhaps be different if the bank had handled the checks merely as a collecting agent or in some other relation than what is shown by the petition. But this is not a matter for deter
He who would have equity must do equity, and give effect to all equitable rights in the other party respecting the subject-matter of the suit. Civil Code (1910), § 4531. Does the petition show that the plaintiff trust company has complied with this rule? This question is raised by one ground of general demurrer, the contention being that the plaintiff trust company has not made a sufficient offer to restore the fruits of the unauthorized transactions. It appears from the allegations that the former guardian received interest on the bonds for a certain period which antedated the appointment 'of the plaintiff as guardian. It may be -inferred from the petition that the plaintiff received the amount of such interest, but it did not accept from the former guardian any of the securities obtained by the latter from the defendant banking company. The bonds were exchanged by the former guardian for preferred stock in the Perkins Manufacturing Company, which stock is now worthless. By its amendment the plaintiff alleged that “other than the interest, . . neither the petitioner nor any one else on behalf of George H. Haslam has received or been tendered anything of value because of or resulting from the cash expended or the bonds delivered, as set forth in . . the original petition. No tender of such interest is made, as such amount would be at once due petitioner. Petitioner hereby consents to the delivery by defendant Mulherin to defendant bank of the [preferred] stock referred to, . ; and renounces and disclaims any and all interest in such stock.” “A party is not obliged to return that which he will be entitled to retain, as a condition precedent” to a recovery in equity. Collier v. Collier, 137 Ga. 658 (3) (74 S. E. 275, Ann. Cas. 1913A, 1110). If the allegations be true, the plaintiff is entitled to recover many times the amount which it may have received as interest, and equity will not require the useless procedure of returning a part which should be included in the larger sum which it seeks to recover. Farnell v. Brady, 159 Ga. 209 (125 S. E. 57); Ellis v. Ellis, 161 Ga. 360 (3) (130 S. E. 681). Nor, under the facts stated, was the plaintiff under a duty to recover the bonds or to accept the preferred stock in lieu thereof for the purpose of tendering the same to the plaintiff. The petition does not show that the plaintiff has failed to do equity.
The petition did not give the names of the officers or representative of the bank through which it dealt with the former guardian in the transactions in question. The petition alleged that the name of such representative of the bank “lies peculiarly within the knowledge” of the bank and “is not known by petitioner.” The petition was not subject to special demurrer upon the ground that it did not designate the particular person who represented the bank in the transactions under consideration. In Georgia Engineering Co. v. Horton, 135 Ga. 58 (2) (68 S. E. 794), it was held: “Where a petition alleged that the plaintiffs sold lumber to a corporation of the county where the suit was brought, at a certain price and to
The petition contained numerous allegations whereby it was sought to show knowledge on the part of the defendant bank. From what has been said, many of these averments were unnecessary, the petition being highly redundant in this respect. None of such allegations were subject to demurrer, however, as being conclusions of the pleader, or for lack of specification, since there was a sufficient statement of fact to show a duty on the part of the bank to make investigation. But the amendment contained the following allegation which was too vague and indefinite to meet the requirements of good pleading: “Petitioner further avers, on information and belief, that said bank, through said representatives, in the exercise of proper diligence, either knew, or should have known, in 1927 and 1928, not only the facts set forth herein, but many and numerous other facts and circumstances unknown to petitioner, which either did or should have convinced said bank of at least two things: first, that no trust funds of any kind or description should have been invested in bonds of Perkins Manufacturing Company; and, second, that it was most desirable from its own viewpoint for the defendant bank to secure pajnnent to itself of the debts due it by Perkins Manufacturing Company as promptly as practicable, although it might be wise from time to time to increase such debt in order to obtain additional collateral for itself.” This part of the amendment was demurred to upon the ground that the “many and numerous other facts and circumstances were not set out, and that the allegations with respect thereto were too general and uncertain to present an issuable defense, and for this reason should be stricken.” This ground of demurrer was good and should have been sustained.
The petition as amended alleged the following: “Whether by coincidence, or by the insistence of said defendant bank, petitioner does not know; but petitioner alleges that the trustees for the second issue of bonds of Perkins Manufacturing Company were in fact H. D. Beman and J. Lee Etheredge, said Beman being the executive vice-president of defendant bank, and said Etheredge a
The petition as amended alleged that in February, 1934, before the filing of the present suit, the superior court of Chat-ham County entered the following decree, in a suit in favor of the plaintiff as guardian of George H. Haslam against the former guardian and United States Fidelity & Guaranty Company: “That the United States Fidelity & Guaranty Company shall transfer, s?t over, assign and convey to the Liberty National Bank & Trust Company of Savannah, as guardian of the person and property of George Harold Haslam, all rights which it has or may hereafter have against the Georgia Railroad Bank & Trust Company by reason of any matter or thing connected with or growing out of the facts set fortli in the suit of the Liberty National Bank & Trust Company of Savannah, as guardian of the person and property of George Harold Haslam, against J. Harold Mulherin and the Georgia Railroad Bank & Trust Company, which suit is now pending in this superior court, and that the entire recovery which the Liberty National Bank & Trust Company of Savannah, as guardian of the person and property of George Harold Haslam, may make from the
Each count of the petition was sufficient to state a cause of action, and the grounds of general demurrer were properly overruled. The court erred, however, in not sustaining certain grounds of special demurrer, as indicated in the foregoing opinion. Since we have held that stated grounds of special demurrer were good, it is unnecessary to mention or pass upon other special grounds aimed at the same allegations.
Judgment reversed.