Bainbridge Farm Co. v. Bower

1. In a suit involving a lost bond, indemnity from the obligee to the maker will not be required as a condition for a recovery or other relief in favor of the obligee, where the bond does not contain any words of negotiability or where it has not been assigned. Under the averments, which as against demurrer must be taken as true, and which showed that the bond was not negotiable and was still owned by the plaintiff, the petition was not subject to demurrer for failure to allege the tender of an indemnifying bond to the defendant corporation as maker.

2. The ground of demurrer attacking the constitutionality of the act of 1856 (Code, § 63-203 et seq.), which provides for the establishment of certain lost instruments, on the ground that the act affords to the maker no protection from bona fide purchasers, will not be considered, since, under the averments of the petition and as against demurrer, there is no such purchaser.

3. The act of 1910 (Code, § 63-211 et seq.), being expressly limited to a lost or destroyed "certificate or other evidence" of corporate "stock," did not repeal or supersede the act of 1856 (Code, § 63-203 et seq.), providing for the establishment of a lost bond.

4. There is no merit in the ground of demurrer that this is a suit for specific performance relating to personalty, and that in the absence of some recognized exception such relief will not be granted. This is true, since specific performance is not sought either expressly or by implication.

5. No legal tender or offer by the plaintiff to pay an alleged indebtedness to one of the defendants, other than the offer alleged, was necessary as a condition for the grant of the relief prayed with respect to the lost bond and related instrument of security, since, as alleged, all indebtedness covered by these instruments has been paid, and the indebtedness mentioned had no connection therewith.

6. Neither the action at law to establish the lost bond nor the equitable petition in the same court, which were consolidated on motion of the defendants, was actually or in effect a suit on the bond. Therefore, even though the bond was dated and the indebtedness mentioned therein matured more than twenty years before the suits, the petitions were not barred by the statute of limitations. Even if the bond were barred by the statute, so as to preclude its establishment under the petition at law, this would not preclude the grant of relief under the equitable petition.

7. Both the petition at law and the equitable petition stated a cause of action, and the equitable petition was not without equity for any reason assigned.

No. 13992. JUNE 17, 1942. REHEARING DENIED JULY 16, 1942. J. D. Bower sued Bainbridge Farm Company under the Code, § 63-203 et seq., to establish a lost "bond for title," executed in 1909 by the defendant corporation to the plaintiff, conditioned to retransfer to him certain stock in the corporation upon the payment by the plaintiff of two obligations which the stock had been assigned to secure, one in favor of the defendant, and the other in favor of plaintiff's sister, Miss E. V. Bower. A copy of the alleged lost bond for title was attached, showing that it was executed to the plaintiff, and contained no provision in favor of his assigns. On the next day the plaintiff filed in the same superior court an equitable petition against the defendant corporation and Miss E. V. Bower. In this petition as amended it was alleged, that both of the obligations above referred to had been satisfied in full by the plaintiff; that the defendant refused to transfer the stock back to him, because he was unable to surrender the bond; that the plaintiff has never assigned or transferred said bond nor any interest therein, and he is the sole owner thereof; that said bond has been lost or destroyed, and the plaintiff is unable to find the same after diligent effort and exhaustive search; that, in addition to the two obligations above mentioned, which were paid and which alone formed the basis of the "bond for title" to reconvey the stock, plaintiff had made a new lien on the stock referred to in favor of his sister; and that plaintiff is ready and able to discharge this new obligation in favor of his sister. He prayed, that a copy of the lost bond be established, and surrendered over to the defendant corporation; that a receiver be appointed to take charge of the stock; that on payment of the debt of his sister to such receiver, or into court, the certificate of stock be delivered to plaintiff; that thereupon the recorded instrument, transferring the stock to the defendant corporation, be surrendered by the corporation; and that such instrument be canceled of record.

On motion of the defendants the two cases were consolidated. On motion of the plaintiff the court granted an order for the issuance of citation, directed "To whom it may concern, and to all assignees, transferees, and creditors" of the plaintiff, giving notice of the case, and requiring them to show cause why any interest they might have in the bond should not be extinguished by grant of the relief sought; and provided for the publication of such citation.

Demurrers to the two petitions were on grounds in substance as follows: (1) that the plaintiff's case is wanting in equity, in that the defendant corporation would not be protected against any holder of the bond taking it in due course, and that plaintiff had not offered to the corporation any bond or indemnity to protect it from loss, if the lost bond should later appear;' (2) that the act of 1856, incorporated in the Code, §§ 63-203 et seq., providing for the establishment of lost instruments, is unconstitutional, in that it affords no protection to the maker of such an instrument as against claims of innocent purchasers or assignees; (3) that said act was repealed and superseded by the act of 1910 (Ga. L. 1910, pp. 103-105; Code, § 63-211 et seq.), relating to lost certificates or other evidences of stock in a bank or private corporation; (4) that the case is without equity, because the equitable petition is in effect a suit for specific performance relating to personalty, which will not be granted in the absence of any of the recognized exceptions; (5) that the case is without equity, because the plaintiff fails to allege a legal tender of the indebtedness owing to his sister; (6) that the petitions show a bar by the statute of limitations, in that the obligations executed in connection with the bond matured in 1913, and the suit was filed in 1941; (7) that the equitable petition shows no equity, and the plaintiff has an adequate remedy at law; (8) and that the petitions state no cause of action. The defendants excepted to the overruling of their demurrers. 1. Although, in a suit to enforce payment or satisfaction of a lost note, bond, or other negotiable security, the court will require suitable and adequate indemnity as a condition to such relief, in the absence of a showing that it has not been indorsed (Code, § 37-214; Ross v. Wright, 12 Ga. 507,508), yet no indemnity will be required either where the instrument is non-negotiable, or where, even if negotiable, it "has not been duly indorsed," since such an unindorsed and unassigned obligation "stands on the basis of a non-negotiable instrument." Sulunias v. Poolos, 148 Ga. 409 (96 S.E. 866). A lost bond, which was executed by a corporation to a debtor in connection with an instrument executed by the debtor to the corporation, assigning the debtor's certificates of corporate stock as security for his debt, and which bond was conditioned upon retransfer of the debtor's stock back to him on payment of his debt, is not negotiable within the rule requiring indemnity to the maker of a lost negotiable obligation, if the bond makes no reference to assigns of the debtor and contains no other words of negotiability. See Trust Co. of Ga. v. Finsterwald,188 Ga. 794 (4 S.E.2d 808, 125 A.L.R. 992). Likewise, under the preceding rule, the bond would occupy the status of a non-negotiable instrument, if the obligee has not assigned or transferred any interest in the bond before its loss. As against demurrer, averments of a petition must be accounted true. Accordingly, no indemnifying bond or other security to the defendant corporation, as maker of the lost instrument, was required from the plaintiff obligee, where the petition sets forth a copy of the instrument, showing no language of negotiability, and where it is alleged that the obligee has made no assignment or transfer, but remains the sole owner of the bond.

2. Since under the preceding holding, and under the plaintiff's averments as against demurrer, the defendant maker of the alleged lost bond could not be exposed to a double liability to the plaintiff obligee and any bona fide holder of the instrument, it is unnecessary to consider the ground of demurrer attacking the act of 1856 (Code, § 63-203 et seq.), relating to the establishment of lost instruments, as violative of the 14th Federal amendment and other provisions of the Federal and State constitutions, in that the act exposes the maker of a lost instrument to such double liability without affording protection to his rights. See Mayor c. of Savannah v. Burroughs,36 Ga. 212, 216 Mayor c. of Savannah v. Cohen, 36 Ga. 219,222.

3. There is no merit in the ground of demurrer that the plaintiff could not establish the alleged lost bond under the act of 1856 (Code, § 63-203 et seq.), upon the contention that this act was repealed or superseded by the act of 1910 (Ga. L. 1910, p. 103; Code, § 63-211 et seq.), since the later act by specific terms is limited to the establishment of any lost or destroyed "certificate or other evidence of the stock of any bank or private corporation," and since this petition seeks to establish a lost bond given in connection with an instrument assigning certificates of stock, and alleges the continued existence of the certificates themselves.

4. In the instant consolidated suit at law, brought under the Code, § 63-203 et seq., to establish a copy of the lost bond, and an equitable petition, which prayed for cancellation of record of the instrument of indebtedness executed by the plaintiff to the defendant corporation in connection with the lost bond, and which equitable petition prayed for other relief, there is no prayer that expressly or in effect asks for specific performance. Accordingly, there is no merit in the ground of demurrer that such a remedy will not lie as to personalty, in the absence of any alleged exception to that rule.

5. Nor is there merit in the ground of demurrer that the plaintiff's case is without equity, in that his equitable petition shows a present indebtedness and lien on the stock involved in favor of his sister, who is made a defendant with the corporate maker of the lost bond; but does not allege any legal tender or sufficient offer of payment. The prayers are to establish a copy of the bond, cancel the recorded security instrument executed by plaintiff to the corporation in connection therewith, and return to plaintiff the stock transferred by the security instrument. Plaintiff alleges that, before this relief is granted, he will pay into court or to a receiver or directly to his sister her indebtedness and lien. This averment was sufficient, since it is alleged that all of the indebtedness due to both defendants, which was covered by the lost bond and the security instrument in connection therewith, has been paid; and that the present indebtedness to the sister had no connection with the transaction as to which equitable relief is sought, as it arose long after the execution of the instruments in question and was not covered thereby.

6. The petitions are not subject to demurrer as barred by the statute of limitations, in that they are suits on a bond more than twenty years old. They do not seek to recover on the bond, but merely to establish a copy of that instrument, because, as alleged, the defendant corporation itself has insisted on a surrender of such original instrument or the giving of indemnity if lost, as a condition for satisfying the recorded security instrument executed by plaintiff in connection with the bond, and for returning his stock. Accordingly, the fact that the bond was dated and the indebtedness described therein matured more than twenty years before the suits would not debar them, since it is alleged that the acts of the defendant corporation, necessitating the filing of the suits, did not occur until just before the suits were filed. In so far as equitable relief is sought, additional to the establishment of a copy of the lost bond, the bar of the bond by the statute of limitations would not preclude such equitable relief. If the bond were debarred, the defendant maker could not insist upon its surrender or the delivery of indemnity, if lost, as a condition for canceling its security instrument executed by the plaintiff and for returning his stock, since, irrespective of the legal correctness of its position, the pleading of the statute would afford it full protection against any bona fide purchaser.

7. Where equity has and takes jurisdiction, it is empowered "to decree full and perfect relief to all the parties touching the subject-matter involved." Since equity has jurisdiction for the cancellation of instruments, the allegations and prayers as to the recorded instrument of security, with allegations as to the avoidance of a multiplicity of suits, and other equitable allegations and prayers, were sufficient to give the court jurisdiction of the equitable petition. Accordingly, where, on motion of the defendants themselves, this petition was consolidated with the petition at law in the same court for the establishment of the lost bond, the fact that law and equity have a concurrent jurisdiction in the establishment of lost instruments would not defeat the equitable jurisdiction of the court, or preclude it from granting all necessary and proper relief to each of the parties, as the pleadings and evidence may authorize. See Fulgham v. Pate, 77 Ga. 454, 456, and cit.;Miller v. Watson, 139 Ga. 29 (3), 33 (76 S.E. 585);Osborn v. Ordinary of Harris County, 17 Ga. 123, 124 (63 Am. D. 230); Newton Mfg. Co. v. White, 47 Ga. 400, 403. The petition at law, conforming to the requirements of the Code, § 63-203 et seq., stated a cause of action. The equitable petition sufficiently stated the loss of the bond and diligence in searching for it. See Trust Co. of Ga. v. Finsterwald, supra. The equitable petition was not without equity, as showing an adequate remedy at law against the corporation by an action for damages.

8. The court did not err in overruling the demurrers to the petitions as amended in the consolidated cases.

Judgment affirmed. All the Justices concur.