American National Bank v. Armstrong

89 S.E. 691, 145 Ga. 618, 1916 Ga. LEXIS 423

• Court: Supreme Court of Georgia
• Decided: August 16, 1916
• Status: Published

Opinion

Evans, P. J.

(After stating the foregoing facts.) After overruling the demurrers, on a consideration of the sw.orn pleadings the court refused to enjoin the suit in the city court of Macon; and that judgment was affirmed by this court. Armstrong v. American National Bank, 144 Ga. 245 (86 S. E. 1087). The refusal of that injunction was based on the discretion of the trial judge upon disputed facts presented on the interlocutory hearing. The present judgment is upon demurrer; and the allegations of the petition must be taken as true, for the decision of the questions made in this writ of error. The plaintiff’s case is, that the Commercial National Bank, an insolvent institution, for the purpose of concealing its true condition and avoiding liquidation through insolvency proceedings, issued and put on the market an increase of capital stock. The bank sold 20 shares of that stock to the plaintiff through the solicitation of two of its directors, one of whom made false statements as to its value in the presence of and with the approval of the other. The Commercial National Bank never delivered the certificate of stock to the plaintiff, but did. pay him four semi-annual dividends of three per cent., which dividends were never earned, and within one month from the payment of the last dividend the Commercial National Bank delivered its assets, including a $1,500 note of the plaintiff given to the Commercial National Bank in part payment of the purchase of the shares of stock (which note was not indorsed or transferred by the Commercial National Bank), and the certificate of stock, to the American National Bank as its liquidating agent. Where a person is induced to subscribe for stock on the fraudulent representation of the directors of a bank that it is in a prosperous condition, he may go into equity for the cancellation of the contract of purchase, and for a recovery of the purchase-money paid, and a restoration of the status. The bank and its officers who participated in the alleged fraudulent scheme are proper parties. 2 Cook on Corp. 1120; Tyler v. Savage, 143 U. S. 79 (12 Sup. Ct. 340, 36 L. ed. 82). The joinder of the American National Bank does not render the petition multifarious, for the reason that it is alleged that it is in possession of the stock certificate and note only as a liquidating agent, and had notice of. the transaction at the time it volunteered to act as such. If the plaintiff is entitled to have his subscription contract canceled, he is entitled to have his note surrendered; and the custodian of that note, who holds it merely as agent of the alleged fraudulent contracting party, is a proper party in order to give effect to the court’s decree, should the plaintiff prevail. Although the plaintiff may not be able to obtain all the relief for which he prays, he will not be denied proper relief because of his excessive prayers.

Judgment affirmed.

All the Justices concur.