Citizens Bank v. Valdosta Mill & Elevator Co.

Jenkins, P. J.

1. No officer, or set of officers, of a corporation is authorized to divert its property or pledge its credit for the payment or securing of the individual debt of an officer; and, except in cases where the rights of innocent third persons may have become involved, any such attempted misapplication will be annulled or avoided in any appropriate proceeding; and this is true without regard to the form or method which may have been pursued in such illegal undertaking. Accordingly, a bank with knowledge that an officer of a corporation is using the company’s funds on deposit with it to discharge his individual debt to the bank is liable in a suit in indebitatus assumpsit for the amount of the property so misapplied.

2. Where there has been no ratification or laches on the part of the stockholders of the injured corporation, the fact that one of the directors of the company subsequently acquired knowledge of such illegal procedure does not estop it from asserting its right to reimbursement. Accordingly, the corporation itself is not estopped from asserting its rights even though the offending hank sought by its pleadings to set up such a defense. Walker v. Kingston Supply Co., 18 Ga. App. 447 (89 S. E. 533) ; Spinks v. Athens Savings Bank, 108 Ga. 376, 378, 379 (33 S. E. 1003); 14 Corpus Juris, 377, 378.

3. “A plaintiff must recover upon the cause of action as laid in the petition; and a verdict in his favor is illegal when the evidence fails to support the cause declared on, even though a different cause of action may appear from testimony admitted without objection. But evidence, admitted without objection, which supports what is in fact the same cause of action, although it might have been excluded on objection, may be sufficient to authorize a recovery, if, under the facts of the case, the petition could by amendment have been so conformed to the proof as to render such testimony relevant.” Napier v. Strong, 19 Ga. App. 401 (2) (91 S. E. 579). Accordingly, the verdict is not illegal on the ground that the allegata and probata do not correspond because the petition may have charged that the bank knowingly accepted payment of a personal note made to it by one of plaintiff’s officers by means of a check drawn by him on the funds on deposit to the credit of the company, while the evidence introduced, including that of the defendant, showed that the note in question was made by the company’s officer to the company and indorsed by the company through that officer to the bank, it otherwise satisfactorily appearing that the note was a renewal or substitution of his prior individual obligation to the bank.

3. The evidence authorized the verdict on every essential element of proof. The court did not err in permitting the plaintiff to introduce a portion of its regular books of account for the purpose of corroborating its other testimony on the question whether the indorsed note was a substitution or renewal of a direct personal obligation of the plaintiff’s officer. Shields v. Carter, 22 Ga. App. 507, 509 (96 S. E. 330). On this point the evidence for the defendant is at least vague, equivocal, and indefinite, if not in fact itself indicating that such was the truth of the case. The ground of special demurrer not abandoned is without merit.

Decided December 21, 1925.

Judgment affirmed.

Stephens cmd Bell, JJ., concur. Franklin & Langdale, for plaintiff in error. Whitaker & Dukes, contra.