Morgan v. Brower ( 1886 )

Blandford, Justice.

Brower and one Ogden owned all the stock in the Bank of Rome. Brower bought Ogden’s stock and became the sole owner of the shares of stock in the bank, in all one thousand shares. There were no debts due by the bank, and Brower determined to cease to do a banking business. Frost, Samuel & Oo. purchased from Brower the bank building, safe and other furniture of the bank, and knowing that Brower had determined to close the bank, they solicited him to transfer the charter to them. He expressed a willingness to do so if the same could be done so as not to involve him in liability. Counsel was consulted by both parties, and they advised it could be done by Brower’s transferring all the shares of stock to Frost, Samuel & Co.; and at the same time the bank was to transfer to Brower all the property and assets of the bank, amounting in value to forty thousand dollars. This arrangement Avas consummated, Brower receiving nothing for the shares transferred by him to Frost, Samuel & Co. The bank was reorganized by the election of a president and other officers of the bank. Brower gave notice under section 1496 of his transfer of this stock. Frost, Samuel & Co. placed in said bank fifty thousand dollars in money, stock, notes and collaterals, and the shares were issued:

To E. E. Frost.............................................................. $22,500 00

To Frost, Samuel & Co................................................. 12,500 00

To C. G. Samuel........................................................... 10,000 00

To M. F. Deason.......................................................... 5,000 00

Total........................................................................ $50,000 00

" A notice was published by the new officers, stating that the business of Frost and Panchen had been merged in the bank, and that they had purchased the entire franchise and the property of the Bank of Rome. This notice was signed by C. G. Samuel, and dated February 20th, 1879. After this time, to-wit, on the 18th November, 1879, the bank was made a State depository, and in October, 1879, Samuel Morgan became one of the sureties for the bank to the State. In March, 1881, the bank failed and made an assignment. Morgan had paid to the State 25,000 dollars as surety for the bank upon an execution issued by the governor. Laidley & Co. Avere creditors of the bank at the time of its failure, and so was the Bank of North America. The indebtedness of the bank accrued to the plaintiffs after the transfer of the stock by Brower to Frost, Samuel & Co., and the reorganization of the bank under such transfer, and after the lapse of six months after BroAVer’s notice of his transfer of stock to Frost, Samuel & Co. These are the main facts upon which the plaintiffs in errer seek to hold Brower liable to them to the amount of the assets of the bank at the time he made the transfer of shaies of stock to Frost, Samuel & Co. (For a more full and particular statement of facts, see the case of Fouche, assignee, vs. Brower, reported in 74 Ga. page 251). The case came on for a hearing, and the jury found the facts in favor of Brower. Thereupon, the plaintiffs moved the court for a new trial, which motion the court refused. Plaintiffs excepted, and this is the error assigned.

It is insisted that the fact that Brower transferred all the shares of the Bank of Rome to Frost, Samuel & Co., ipso facto transferred all the property and assets of the bank at the same time; and the reconveyance of the same to Brower by Frost, Samuel & Co. was a fraud on the public and rendered Brower’s title void. Our code, §3634, declares that “ fraud may exist from misrepresentation by either party made with design to deceive, or which does actually deceive, the other party......A misrepresentation not acted on is no ground for annulling a contract.” It was held by this court, 20 6a. 517, that a misrepresentation not acted on was no ground for a suit in equity. It is admitted by both parties that Brower acted in good faith; that the transfer of the shares of stock was made merely to invest Frost, Samuel & Co. with the charter of the Bank of Rome; that Brower received nothing for the same; that at the time Brower was the only stockholder in the bank and the bank owed nothing; and that Brower had notified the Governor that, on the 20th February, 1879, the bank would cease to do business; so that at the time of the transfer Brower owned all the property of the bank. Hence if Brower could be made liable at all, it would be for transferring this stock, thereby representing that his successors in the bank had the capital stock of the bank, fifty thousand dollars, when, in fact, he had withdrawn the entire property and assets of the bank; and that this conduct of Brower ahiounted to a misrepresentation of the solvency of the bank. But the evidence in the record fails to show that the plaintiffs knew or acted upon anything which Brower did ; but, on the contrary, that they give credit to the bank and reposed confidence in it after its reorganization by Frost, Samuel & Co., and at a time when, by the notice of Brower, they were charged with notice that Brower had nothing to do with the bank. The case of Wright vs. Zeigler Bros. 70 Ga. 503, contains an able review of this subject, and shows conclusively that, notwithstanding any act or whatever may have been done by Brower, yet as the same was not acted on by the plaintiffs, there is no liability on the part of Brower to them; and that they can maintain no suit in equity against him. This would seem to be sufficient that the decree in favor of Brower was right. That Brower obtained the title to the property and assets of the bank - as against the bank itself, was decided in the case of Fouohé, assignee, vs. Brower, 71 Ga. 251, and that as to subsequent creditors they cannot be heard to complain. In the case of Graham vs. Railroad Company, 102 U. S.- 148, the court held, “ where a corporation has waived or omitted to institute proceedings to recover property of which it had been defrauded, such right does not inure to the benefit of subsequent creditors,” certainly a much stronger case than the present, in which there is no fraud; and the title to Brower in the property and assets of the bank was obtained in good faith by him. See also the case, of Lloyd vs. Fulton, 91 U. S. 485. There are many assignments of error as to the admission of evidence by the court, but when they are examined it will be found that the evidence admitted was for the purpose of showing the real character of the transaction,.its lonafides, and what really occurred and the circumstances surrounding- the same, which was entirely proper. 2 Whar. Ev. §§920, 923; 55 N. Y. 222. The court committed no error in thé admission of the evidence. "We see no material error. in the several rulings of the court complained of, and even if there was, it would take a strong case to reverse a judgment which is right upon the main facts of the case.

Judgment affirméd.