Plaintiff-appellee, Schultz, entered into the formation of a corporation with defendant-appellant Pelletier and defendant Feldman. Schultz filed this action to recover his investment in the unsuccessful business venture and asked to be held harmless as a co-maker on a promissory note for $9,000. He further requested punitive damages of $100,000 to “deter the defendants from further wrong doing.” In his third Count he prayed for defendants to be enjoined from harassing plaintiff and his family.
A dispute arose over the extent of discovery and the trial court struck the defendant’s answer and counterclaim as a sanction. The action became in default. Following a colloquy between counsel and the court, the trial court indicated if the plaintiff would waive his punitive damages he would sign the judgment. A judgment was prepared which granted plaintiff $3,000 with past interest of $874.08, future interest “at the legal rate” under Count I, and $9,000 “together with interest... of $3,520 with future interest of 10% per annum ...” as to Count II. Defendant Pelletier brings this appeal. Held:
1. “All equity features which this case originally contained having been eliminated before it came to judgment in the trial court, and no ruling upon any question involving equity being presented for review, the Court of Appeals . . . has jurisdiction of the [case].”
Jackson Elec. Membership Corp. v. Echols,
2. Defendant does not contest the right of the plaintiff to bring this action. But see: Code Ann. § 22-714 (Ga. L. 1968, pp. 565, 640);
Greenwood v. Greenblatt,
3. Where the defendant is in default, plaintiff is entitled to judgment “as if every item and paragraph of the petition were supported by proper evidence without the intervention of a jury unless the action is one ex delicto or involves unliquidated damages, in which event the plaintiff shall be required to introduce evidence and establish the amount of damages ...” Code Ann. § 81A-155 (a) (CPA § 55 (a); Ga. L. 1966, pp. 609, 659; 1967, pp. 226, 238). Defendant contends the action in the instant case was ex delicto and plaintiff was required to prove his damages. We agree.
Plaintiffs action alleged formation of a corporation — known as Multi-State Lectures, which conducted Bar review courses to aid persons to pass the State Bar examination. He “advanced” defendants the sum of $1,500 when forming the corporation and $1,500 on other occasions. He also alleged that defendant Pelletier conducted all the business of the Corporation and that plaintiff helped secure a loan from C & S National Bank in the amount of $9,000 “on behalf of Multi-State Lectures, Inc. which was endorsed by Plaintiff and both defendants.” Plaintiff stated that after a disagreement in July of 1976 the two defendants formed a new Bar Review Group, Inc., using the equipment and property of MultiState Lectures, and demanded they be restrained and enjoined from such use of corporate equipment.
It was alleged that unless the defendants were restrained and enjoined they “will continue to use such equipment, etc. and co-mingle the assets of Multi-State Lectures, Inc. with Bar Review Group, Inc. to the extent that all assets of Multi-State Lectures, Inc. will be lost.” Plaintiff further alleged “that the Defendants have committed fraud upon the Plaintiff in that both the Defendants have conspired to convert the assets of Multi-State Lectures, Inc. for their personal benefits and the benefit of Bar Review Group, Inc.... and Plaintiff should have judgment against the defendant in the sum of $100,000.00 and damages and deter the Defendants from further wrong doing.”
a. Such allegations connote conversion of corporate assets. Conversion involves the unauthorized assumption and exercise of right of ownership over personalty of another, contrary to the owner’s rights.
McGlamory v. Marcum,
b. Plaintiffs petition also sounded in dissipation of corporate assets—mismanagement and malfeasance, by a corporate manager. The relationship of a corporate officer or director to the corporation and its stockholders is fiduciary or quasi-fiduciary, which requires that they act in utmost good faith. Kaplan’s Nadler, Ga. Corporation Law 366, § 10-18 (3) supra; see generally 19 CJS 107, Corporations, § 761 (a) (b); 19 AmJur2d 679, Corporations, § 1272. “Directors and officers in the management and use of corporate property in which they act as fiduciaries and are trustees are charged with serving the interests of the corporation as well as those of all the stockholders.”
KingMfg. Co. v. Clay,
In addition to the plaintiff being a one-third holder of the stock in this corporation, he had been induced to part with an additional $1,500 and had signed a note for $9,000 to “pay alleged debts and provide 3,000 dollars for another [Bar review] course which representations were false and wilfully done to induce Plaintiff to hold secure the loan ... [W]hereas the Defendants knew at the time that they intended to form a separate corporation and use the assets of Multi-State Lectures, Inc. for their own personal gain.” Such allegations being admitted by default, an additional contractual relationship arose out of the rights of the parties based upon the co-signing of the promissory note. In addition, plaintiff sought recovery in his own right because to bring suit on behalf of the corporation would have benefited the very persons whose tortious conduct caused him the loss. See
Chalverus v. Wilson,
c. Plaintiff also alleged that “the Defendants have committed fraud upon the Plaintiff in that both the Defendants have conspired to convert the assets of Multi-State Lectures, Inc. for their personal benefits and the benefit of Bar Review Group, Inc., a corporation owned solely by the Defendants . . .” The allegation of fraud being ¿dmitted by default — a suit baséd upon fraud is a tort action. Code Ann. § 105-301 (Code § 105-301).
d. Accordingly, as plaintiffs action sounded in tort, conversion, dissipation of assets of the corporation, mismanagement and malfeasance of the corporate managers, the action was ex delicto.
4. Where the action is ex delicto, plaintiff is required to establish his damages by evidence before a jury by CPA § 55 (a) (Code Ann. § 81A-155 (a); Ga. L. 1966, pp. 609,659; 1967, pp. 226,238). As a jury was not impaneled, the judgment is void.
Gooden v. Blanton,
5. Inasmuch as this case must be returned for a new trial for plaintiff to establish his damages, it should be noted by the trial court that our Code provides that “[a] judgment by default shall not be different in kind from or exceed in amount that prayed for in the demand for judgment.” Code Ann. § 81A-154 (c) (1) (CPA § 54 (c) (1); Ga. L. 1966, pp. 609, 658; 1976, pp. 1047, 1049). No judgment was rendered on the demand to be held harmless on the promissory note, but neither did plaintiff pray for the judgment rendered in the amount of $9,000 because of his contingent liability on the note.
6. The plaintiff-appellee has moved this Court “to supplement
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and certify the Record in the above-styled case and to order the Clerk to send up documents” as requested. This we decline to do. Our Code provides that “[wjhere any party contends that the transcript or record does not truly or fully disclose what transpired in the trial court and the parties are unable to agree thereon, the trial court shall set the matter down for a hearing with notice to both parties, and resolve the differences so as to make the record conform to the truth.” Code Ann. § 6-805 (f) (Ga. L. 1965, pp. 18, 24). Any issue as to the correctness of the record is to be resolved by the trial court
(Patterson v. State,
Case No. 61027
The issue of legality of a supersedeas bond in the instant case is controlled adversely to plaintiff by the decision in Case No. 61005, above.
Judgments reversed.