116 Ga. 820 | Ga. | 1902
The Exchange Bank of Macon presented to the superior court of Talbot county a petition in which were set forth the following allegations of fact: “ On the 10th day of January, 1896» G. H. Estes, who was then and was for some time thereafter the president of ” the Peoples Bank of Talbotton, “ made and executed to petitioner his two notes for the sum of eight hundred-and three and 37/100 dollars, and eight hundred and six and 25/100 dollars, respectively, . . and, for the purpose of securing the payment of the said notes, deposited with petitioner fifteen shares of the capital stock of said defendant bank, after having transferred and assigned said shares to petitioner and giving the necessary power of attorney to have the same transferred upon the books of said defendant bank.” Estes subsequently made default in the payment of these notes, and petitioner “demanded of the proper officers of
The Peoples Bank filed an answer in which it admitted that its
By way of amendment to its petition, the Exchange Bank replied to this answer by alleging, among other things, the following : The Peoples Bank “ violated its charter in loaning to said G. H. Estes a larger sum than ten per cent, of its capital stock,” permitted him to make large overdrafts, “accepted bills of exchange not drawn in good faith ” by him, and discounted commercial paper which was not actually owned by him. A large amount of usurious interest is included in the indebtedness of Estes to that bank, and “upon á just accounting of all money loaned by said defendant to said Estes at the legal rate of interest, the payments and credits made by and allowed to said G. H. Estes for money and property received by it would fully pay off and discharge the principal debt and all legal interest thereon.” In this amendment the Exchange Bank prayed that “a just and true accounting be had and taken between said G. H. Estes and said defendant, and an examination into said pretended indebtedness of said Estes and said defendant be made, and that the usurious interest charged or taken be deducted and purged therefrom, and that the true and legal principal and interest be ascertained and the credits made by said Estes be applied thereto and the true balance, if any, be found.” Upon motion of the plaintiff’s counsel, the case was referred to an auditor, who rendered a finding in favor of the defendant bank. To his report the plaintiff filed numerous exceptions of both law and fact, which were sustained by the judge of the superior court, who by consent heard and-disposed of the case without the intervention of a jury, and who entered up a judgment in favor of the plaintiff. To this judgment the Peoples Bank duly excepted and brought the case to this court for review.
1. The Peoples Bank of Talbotton was incorporated by an act of the General Assembly approved December 3, 1890. See Acts of 1890 — 91, vol. 2, pp. 42 — 46. Section 4 of that act declares that “ the total liabilities to said bank of any person, or of any company, corporation or firm, for money borrowed . . shall at no time ex
It appears from the record before us that on January 10, 1896, the date upon which Estes made a transfer of his stock to the Exchange Bank, he owed the Peoples Bank, for money borrowed prior to that time, $2,996. While this amount was in excess of that which, under the charter of that bank, its officers were authorized to loan him, we nevertheless hold, for the reasons above stated, that the Peoples Bank could successfully assert,as against the Exchange Bank, had it on January 10 demanded a transfer of the stock on the books of the defendant bank, that it had a valid lien thereon to the amount of $2,900. On the argument of the case before this court, counsel for the defendant in error abandoned their contention that the Exchange Bank occupied the position of an innocent purchaser of the stock without notice, saying in a brief filed in its behalf: “ We concede that the Exchange Bank must be held to have had actual notice of the provisions of the charter of the Peoples Bank, and that when on January 10th, 1896, it loaned Estes the $1,-600.00 on his stock, it was put on inquiry as to his existing indebtedness to the Peoples Bank, and is bound by the knowledge of all that inquiry would have disclosed.” Counsel further stated: “We frankly concede, that, as between Estes and the Peoples Bank, Estes could not set up, as a defense to the bank’s claim, that his indebtedness was illegally contracted and its loan to him ultra vires and void; for Estes would be bound to pay back even though he had borrowed the entire capital of the bank, and so all the courts have decided.”
2. So we will pass to a consideration of the contention urged before us by counsel for the defendant in error, that it had a right to assume, granting that it knew or ought to have known the amount of Estes’ indebtedness to the Peoples Bank on January 10,that this bank would not thereafter violate its charter by allowing him to further increase his liabilities to it for money borrowed, and that therefore the Exchange Bank “ could safely lend him $1,600.00 on his fifteen shares of stock.” From a purely business standpoint, this proposition would seem to be far from sound. The face value of these fifteen shares of stock was only $100 per share, and there is nothing in the record to indicate that on the day last mentioned
The proposition upon which counsel for the defendant in error insist is equally unsound from a legal standpoint. They admit that their client “ made no formal demand on'the Peoples Bank for a transfer on its books of the fifteen shares of stock until just prior to filing its suit in September, 1898,” more than two years after it procured from Estes an assignment of this stock. The evidence introduced upon the hearing before the auditor showed conclusively that none of the officers of the Peoples Bank (save Estes himself, its president) had any knowledge of this assignment, or of the fact that the Exchange Bank claimed to have any interest in the shares of stock issued to him, until November 20, 1896. On that day his indebtedness to the Peoples Bank on notes held by it amounted to nearly $9,000, and to secure the payment of the same he gave to that bank a mortgage' on his stock of merchandise, and trans-, ferred to it all of his notes and accounts. Then, for the first time, did the other officers of the bank become informed that the Exchange Bank held an assignment by him of his fifteen shares of stock. This assignment did not operate to pass to it the legal title to the stock, which could be acquired only in the way pointed out in the charter of the Peoples Bank, viz., by a formal transfer of the stock upon its books. Hammond v. Hastings, 134 U. S. 401; 1 Cook, Stock & Stockholders, § 412 et seq. Nor was it the right of the Exchange Bank to demand that such a transfer should be made, unless it offered to discharge the lien upon the stock held by the
3. The principles of law above announced control the case at bar. Before undertaking to apply them to the facts disclosed by the record, it is necessary, however, to dispose of still another point relied on by counsel for the prevailing party below. It was insisted that as Estes was the president of the Peoples Bank at the time he assigned his stock, it was chargeable with notice of the fact that he had made a pledge of this stock to the Exchange Bank; and the following cases were cited in support of this contention: Brobston v. Penniman, 97 Ga. 527; Morris v. Georgia Loan Co., 109 Ga. 12; Fouché v. Merchants National Bank, 110 Ga. 827; Singleton v. Bank of Monticello, 113 Ga. 528. The decision in each of these cases was based upon the proposition that a corporation which, seeks to enforce for its benefit a contract made in its behalf by one of its officers is in law chargeable with notice of whatever he knew at the time the contract was entered into. None of these cases, therefore, have any bearing upon the case in hand.
4. It was the privilege of the Exchange Bank, on the day.last mentioned, or at any other time it might have seen fit, to assert, as against the Peoples Bank, that it did not have a valid lien for more than $2,900 on the stock issued by it to Estes, and accordingly was bound to release the stock upon payment of that amount by his assignee. But the Exchange Bank seems unwilling to pay
It appeared on the hearing before the auditor that Estes was also indebted to the bank in the sum of $1,601.73 on an overdraft which, the plaintiff below contended, he-had been allowed to make after the Peoples Bank received notice of the equities claimed by the Exchange Bank. The auditor was of the opinion that the plaintiff’s contention was not sufficiently supported by proof; yet as. his honor of the court below evidently entertained a different view, it may, for the purposes of this discussion,'be granted that this charge against Estes of $1,601.73 should not be considered as forming a portion of the indebtedness contracted by him before the date last mentioned. We would not, indeed, deem it necessary to refer at all to this item of indebtedness, were it not for the fact that it appeared on the hearing that the Peoples Bank became the purchaser at the mortgage sale of Estes’ stock of goods, subsequently disposed of them at a profit of $747.38, and credited him with that amount on his general account, which, of course, included the charge of $1,601.73 against him. Counsel for the defendant in error assumed, on the argument here, that this credit of $747.38
When, on November 20, Estes executed this mortgage and turned over to the Peoples Bank all of his choses in action as security for the payment of notes to the amount of $8,768.40, which it held against him, he did so upon the express understanding that two of these notes should first be satisfied out of the proceeds realized from the securities thus given to the bank. These two notes were ' signed by Estes and one Wilkerson, ostensibly as joint makers, though Wilkerson’s true relation to the notes was that of an accommodation indorser, which fact was known to the bank when it received them. Counsel for the defendant in error insisted here that the Peoples Bank had no right, as against the Exchange Bank, to comply with its obligation to Estes to apply to the payment of these notes the proceeds first arising from the assets he had turned over to it as security for the payment of these and other notes. The point is not well taken. Estes had a right, when he voluntarily turned over his assets to the Peoples Bank, to direct it how to apply the proceeds thereof, and it was bound to keep faith with him, or else be placed in the awkward situation of releasing Wilkerson from liability on the notes by declining payment of them by Estes, the only real principal thereon. The Exchange Bank would accordingly gain no benefit from a violation by the Peoples Bank of its agreement with Estes; and moreover, it is not the pól
It was developed on the hearing before the auditor that the Peoples Bank still hoped to realize from the choses in action turned over to it by Estes between five and six hundred dollars. But this is a matter of no significance, so far as the present case is concerned ; for, as has been seen, the plaintiff based its right to the relief sought solely on the ground that Estes had fully discharged all of his indebtedness to the Peoples Bank as to which it could assert a lien on his stock. As this seems not to have been true in point of fact, the plaintiff was not entitled to an immediate transfer of the stock, and therefore its action was prematurely brought. It is to be noted that the plaintiff’s petition contained no offer on its part to pay such indebtedness to the Peoples Bank as might not have been discharged by the payments made by Estes, in the event the court might decree that bank had a right to assert its 'lien in regard thereto; so the auditor was not called upon to determine precisely what amount it was necessary for the Exchange Bank to pay to the Peoples Bank in order to free the stock from its lien. In support of his conclusion that the Exchange Bank had failed to show that the defendant bank had been paid in full, he submitted a calculation as to how accounts stood between Estes and that bank. It is really immaterial whether this calculation was or was not in all respects accurate, or based upon correct findings as to the items of account wMch should be taken into consideration, since, as we have shown above, the unpaid balance of Estes’ indebtedness to the Peoples Bank which had been contracted before it received notice of the equities of the Exchange Bank amounted to at least $2,000 principal, exclusive of interest and other items which the defendant bank claimed should be taken into account. Possibly the time may come when the Exchange Bank will be entitled to a transfer of the stock which is the subject-matter of the present controversy, without paying anything to the Peoples Bank in order to discharge its lien. Or, it may be, the Exchange Bank will be desirous hereafter of acquiring the legal tide to the stock, even though to do so will involve the expenditure by it of some money. If so, it can institute another proceeding with a view to securing a de
Judgment reversed.