An order of the judge of the superior court, granted on application of the State superintendent of banks, authorizing a settlement of bad or doubtful claims, is conclusive on all parties to the proceeding, including the bank, until set aside in the manner prescribed by law for setting aside judgments. A petition by stockholders, seeking to set aside such orders and settlements made pursuant thereto upon alleged fraud consisting of misrepresentation as to the amount of such debts and the value of the securities therefor, is subject to general demurrer, where, as here, it contains no allegation of fact showing a want of knowledge and the exercise of diligence upon the part of the petitioners.
No. 15169. JUNE 6, 1945. REHEARING DENIED JULY 6, 1945.
W. D. Rucker, S. A. Willbanks, and G. B. Walker, as stockholders in the Milton County Bank, brought an action against George T., J. T., and C. A. Upshaw, formerly debtors of the bank, and the legal representatives of the estate of W. T. Upshaw, deceased, Ruth Upshaw, Jessie Williams, and May Findley, returnable to the January term, 1938, of the superior court of Fulton County. The petition, together with a number of amendments and exhibits, comprising more than 100 pages of this record, is
too voluminous to be set out here, but we think it is sufficient to state that it seeks cancellation of a number of settlements of claims owing the bank by some of the defendants pursuant to orders of the judge of the superior court. The petition shows that the superintendent of banks completed the liquidation, paid all depositors and creditors, and that, upon the election by the stockholders of an agent for the purpose of liquidating the remaining assets on behalf of the stockholders, and such agent having qualified as required by law, the superintendent of banks surrendered to the agent the remaining assets of the bank. In minute and voluminous detail the petition describes the various debts owing to the bank which were settled, showing that most of them were secured by the defendants Upshaw by a conveyance of their respective one-seventh undivided interests in the estate of W. T. Upshaw, deceased. In like manner the petition shows the various assets of the estate, and by attaching a final return in the estate shows that it was sufficient in value to amount to more than $2500 per one-seventh share. It shows that the settlements complained of were made upon the false representation to the superintendent as to the correct amounts thereof and as to the true value of the interests in the W. T. Upshaw estate and the financial worth of the debtors. It is alleged that the settlements were made as a result of a conspiracy between the superintendent of banks and the respective debtors; that the orders of the judge of the superior court were obtained by false representations in these respects; and that the superintendent, having all the records of the bank in his custody, knew or ought to have known of the falsity of such representations. It is alleged further that the petitioners did not know the true facts, and could not have ascertained them by the exercise of diligence until immediately before this suit was filed. It is further alleged that a Mr. Manning, president of the bank, was given notice of each application to the judge of the superior court for the various orders complained of. By intervention, a Mr. Manning was made a party plaintiff, and he adopted the entire petition as amended. By amendment it was alleged that the bank now owns a one-fifth undivided interest in a described tract of land, and it was prayed that it be partitioned. The prayers of the original petition consisted of thirty-odd paragraphs, and sought various cancellations and decrees, including the cancellation of all
the settlements and the orders of the judge authorizing the same. To the petition as finally amended the defendants filed general and special demurrers, and R. E. Gormley, superintendent of banks, filed a motion that he be stricken as a party. On January 24, 1945, Honorable A. L. Etheridge, judge of the trial court, entered the following order: "1. That the motion by R. E. Gormley that his name be stricken as a party to the case be and the same is hereby sustained, and he is eliminated either personally or in a representative capacity as a party to this case. 2. That the general demurrers filed by the various defendants to the plaintiff's petition as amended be and the same are hereby sustained and the plaintiffs' petition is dismissed." To this judgment the petitioners excepted.
Assuming but not deciding that the allegations of fact are true, and that each debt was more than it was stated to be by the debtor in his offer of settlement to the superintendent of banks, and that the interests in the W. T. Upshaw estate were of a greater value than such offers placed upon them, and that the defendants owned more property than they represented, and that the superintendent's application for the orders contained the same representation in regard to the settlements, would the petitioners be authorized under the law to the relief sought, based upon the allegations of the petition? Although the petition, together with its numerous exhibits and amendments, comprised more than 100 pages of the record, yet it makes no effort to state any fact showing that the petitioners did not know and by the exercise of diligence required of them by law could not have ascertained the truth concerning all of the matters complained of. It is content to leave this question standing upon the bare conclusions of the pleader. Each settlement sought to be set aside conforms exactly to the order of the judge of the superior court authorizing the same. As ruled by the Court of Appeals in
State of Georgia v.
Gormley,
58 Ga. App. 186 (
198 S.E. 271), these orders, so long as they are allowed to stand, are conclusive authority for the settlements made pursuant thereto. The
banking law (Code, § 13-807), prescribes as a condition precedent to the sale, compromise, or compounding of any bad or doubtful claim that the superintendent must apply to the superior court, or to the judge thereof if the court is not in session, for an order authorizing such; and states that, "but on any such court proceedings the bank shall be made a party by a proper notice issued from the court." It is further provided that an order on such an application may be had after the bank has had five days' notice of the same. Is the bank authorized by this section to file objections to such an application? What is the purpose in expressly making the bank a party thereto? Why is the order postponed for five days after the bank has had notice? Manifestly the bank has an interest in the assets administered by the superintendent, because after the payment of the depositors and creditors all the remaining assets belong to the bank. It is interested in seeing that the assets are not sacrificed, that the greatest amount possible be realized therefrom, and as a party to such proceeding it has a right to be heard on these questions, and it is the clear import of the statute that it be heard. If the bank possesses information, or if in the exercise of diligence it could acquire information that would constitute a reason for denying the application, it has the duty to disclose this information to the judge hearing the application to aid him in passing upon the merits of the same. Whether or not such orders may be classified as ordinary judgments, nevertheless they are judgments of the judge considering the applications on their merits. They may not be treated as mere empty words to be disregarded at will. They can be set aside only in the manner in which ordinary judgments are set aside in equity. The judgments of a court of competent jurisdiction may be set aside in equity for fraud or acts of the adverse party unmixed with the negligence or fault of the petitioner. Code, § 37-219. Equity will set aside such a judgment only where the party has a good defense of which he was entirely ignorant, or where he is prevented from making it by the fraud or the act of the adverse party "unmixed with fraud or negligence on his part." § 37-220. The grounds upon which it is sought to set aside the judgments or orders of the judge of the superior court would have constituted defenses to the application for such orders. Will the petitioners be heard to say that they were ignorant of such defenses or that they were
prevented from presenting them by the fraud or acts of the adverse party? On the question as to the correct amounts of the various debts settled, these petitioners, as stockholders of the bank, knew or by the exercise of proper diligence could have known the correct amounts of such debts as well as the securities therefor.
Manning v.
Wills,
193 Ga. 82 (2) (
17 S.E.2d 261). In the case last cited this court (page 89) quoted with approval from
Oliver v.
Oliver,
118 Ga. 362 (
45 S.E. 232), as follows: "If the market or contract price of the stock should be different from the book value, he would be under no legal obligation to call special attention to that fact; for the stockholder is entitled to examine the books, and this source of information, at least theoretically, is equally accessible to both." No reason is alleged in the present amended petition why the records disclosing these debts and securities therefor were not available to the petitioners as well as the superintendent. It must be held that it was due entirely to the fault of the petitioners that this portion of the case was not presented in opposition to the application for the orders to settle. There is no allegation in the petition to rebut the presumption that in compliance with the law an appraisal of the assets of the Upshaw estate was filed, and that this disclosed fully the value of that estate, and hence the value of the shares in that estate pledged as security for the debts settled. If the petitioners did not know what the record there would disclose, it was due to their negligence, and hence this negligence is inseparably mixed with the alleged fraud of the debtors and the superintendent of banks. Nor do the petitioners deny that they knew of other properties owned by the debtors. The petition does not allege grounds upon which equity may set aside the orders or judgments complained of. See
Kenan v.
Miller,
2 Ga. 325;
Graham v.
Graham,
137 Ga. 668 (
74 S.E. 426);
Hightower v.
Williams,
104 Ga. 608
(
30 S.E. 862);
Beddingfield v.
Old National Bank c. Co.,
175 Ga. 172 (
165 S.E. 61);
Huson Ice Coal Co. v.
Covington,
178 Ga. 6 (
172 S.E. 56);
Rawleigh Co. v.
Seagraves,
178 Ga. 459 (
173 S.E. 167). Therefore the amendment allowed subject to demurrer, in which it was sought to partition described land, meets the same fate as the petition, since, as ruled, there was nothing to amend by. Code, §§ 81-1301, 81-1302;
Davis v.
Muscogee Manufacturing Co.,
106 Ga. 126
(
32 S.E. 30);
Gunn v.
Head,
116 Ga. 325 (
42 S.E. 343);
Shepherd v.
Southern Pine Co.,
118 Ga. 292 (
45 S.E. 220);
Owens v.
Owens,
190 Ga. 191,
193 (
8 S.E.2d 644).
Judgment affirmed. Bell, C. J., Jenkins, P. J., Atkinson andWyatt, JJ., concur.