Williams v. Bennett

123 S.E. 683, 158 Ga. 488, 1924 Ga. LEXIS 285
CourtSupreme Court of Georgia
DecidedJune 16, 1924
DocketNo. 4124
StatusPublished
Cited by12 cases

This text of 123 S.E. 683 (Williams v. Bennett) is published on Counsel Stack Legal Research, covering Supreme Court of Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Williams v. Bennett, 123 S.E. 683, 158 Ga. 488, 1924 Ga. LEXIS 285 (Ga. 1924).

Opinion

■Gilbert, J.

Receivers were appointed -by Richmond superior court to take charge of the Georgia & Florida Railway Company, [489]*489by order dated March 27, 1915. In the course of the receivership receivers’ certificates in the amount of $700,000 were issued. 'The lines of the railway were'operated by the U. S. Government during the period of Federal control. Upon return of the property to the receivers they found it necessary to borrow money, and were authorized by order of Richmond superior court, January 25th, 1921, to issue $1,600,000 of receivers’ certificates. One half of the amount was to be deposited with the Government to secure a loan of $800,000; the other half to be sold to the public for cash at par. This order provided that $728,000 of the amount loaned by the Government should be used to retire the receivers’ certificates then outstanding, with interest, and that the remaining $72,000 should be used for a portion of the revision of the railroad from Augusta to Keysville, and shortly beyond, and for the purchase of heavier rail to be laid along said line of road, representing additions and betterments. The order further provided that, of the amount received from the sale of receivers’ certificates to the public, $328,000 should be applied to the revision of the line between Augusta and Keysville and shortly beyond, and the purchase and laying down of heavier rail; $200,000 to “payment pro rata on account of the uncertifieated indebtedness of the receivers, incurred prior to January 1, 1921;” $272,000 “to provide a working capital which shall not be available for the payment of any debt or liability incurred or existing prior to January 1, 1921, except by specific order of this court.” The matter was concluded by payment, to the holders of the issue of $700,000 of receivers’ certificates first referred to, of twenty per cent, of their holdings in cash and delivering to them eighty per cent, thereof in certificates of the new issue. Otherwise the arrangement provided for in the order was carried out. This order further recites, in part: “The receivers have agreed, in an instrument in writing dated the-day of January 1921, filed with the Interstate Commerce Commission, to the following conditions: ‘2. The expenditures made from the loan for additions and betterments shall be confined to such expenditures as may be chargeable to. accounts for- investments in road and equipment,’ etc. ‘3. The entire loan for additions and betterments shall have been expended or definitely obligated for purposes for which loaned or the entire loan for additions and betterments shall be repaid to the United States on or before January 1, [490]*4901922. 4. The receivers, within ninety (90) days after the certification to the Secretary of the Treasury of the aforesaid loan, shall have sold or otherwise disposed of or shall have entered into contracts for the sale or other disposition of eight hundred thousand dollars ($800,000) of receivers’ certificates hereto authorized by decree of the superior court of Richmond County, Georgia, dated January 25, 1921, entered of record in the case entitled Baltimore Trust Company (Richmond Trust Company, successor), and within said ninety (90) days shall cause the Merchants Bank in the city of Augusta, Georgia, as the receivers’ depository and clearing agent, to certify to the Interstate Commerce Commission that said receivers’ certificates have been sold or otherwise disposed of or •validly subscribed for as follows: (a) Through the acceptance of an amount of said certificates not exceeding $200,000, by creditors of the receivers, in discharge of claims payable by the .receivers prior to January 3Í, 1921; such claims not being represented by certificates heretofore issued, (b) Through subscriptions by the holders of certificates of the receivers, dated January 31, 1920, and matured January 31, 1921, accompanied by deposit with said Merchants Bank for payment of said matured certificates, (c) Through subscriptions paid in cash, or by negotiable instruments accepted by said Merchants Bank as cash.’”

The facts stated above appear from a petition, as amended, with its exhibits, filed by J. S. Williams, receiver, against Merchants Bank and T. R. Bennett, superintendent of banks, seeking to establish the trust character of a certain balance which stood to the plaintiff’s credit on the books of Merchants Bank of Augusta when the same was taken over by the superintendent of banks. The petition also recites “That the money so advanced by the Government, some $792,000, for the uses aforesaid, was by the directions of the said agent, the Merchants Bank, duly collected and received by the Commercial National Bank of Washington, and by it duly remitted to said Merchants Bank, or disbursed in part by it as directed by the said Merchants Bank, all for the said special trust administration of said certificate and improvement purposes of said receivership as authorized by said commission and the court and undertaken by said Merchants Bank. Remittances in case to the Merchants Bank commenced June 18, 1921, and said money — not subject to the check of the .Receivers, and for which [491]*491no deposit or pass-book or other certificates were ever issued by said Merchants Bank — was specially received for said receivership by said Merchants Bank, and was so used for the certificate-holders and the receivership and managed in part by said bank as trustee and agent as aforesaid, in the furtherance of said loan and improvement project under said act of Congress, until on the 22nd day of July, 1921, there remained a balance of said fund in the possession of said Merchants Bank amounting to $337,749.75, Government money, appearing in what said bank called for its convenience, the f Certificate Account’ of said Receivership.” The' orders of the court under which Merchants Bank received the funds will presently be set forth. The prayers of the petition were, that petitioner’s right to priority in payment be adjudged and declared; and that at such time as it may be necessary to fully protect petitioner in the payment of said moneys under said priority, the superintendent of banks be restrained from paying out any more moneys. The exception is to the dismissal of the petition on demurrer, the grounds of which, so far as necessary, are hereinafter indicated.

The demurrer raised several issues, but the controlling question is whether, under the allegations of the petition, the receiver was an ordinary general creditor of the defendant bank, or whether, because of fiduciary relations between the parties, the funds of the petitioner held by the bank constituted a trust fund, embraced' within the terms of paragraph 5 of section 19 of article 7 of the banking act of Georgia (Georgia Laws 1919, p. 159), and as such entitled to a priority in payment over debts due to depositors, as contemplated in par. 7 of sec. 19 of art. 7 of that act. The paragraph first cited "is as follows: “The order of paying off the debts of an insolvent bank shall be as follows: . . Debts due by the bank as trustee or other fiduciary and other claims of like character.” Paragraph 7 is as follows: “Debts due to depositors and other contractual liabilities pro rata.” The petition, as amended, sets out court orders defining the rights and duties and the course of dealings between the parties. We deem it necessary to refer only in a general way to the facts alleged. At the time of the original appointment of receivers of the Georgia & Florida Railway, namely, March 27, 1915, the order of appointment contained the following provision: That said receivers “shall deposit all moneys that [492]

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Cite This Page — Counsel Stack

Bluebook (online)
123 S.E. 683, 158 Ga. 488, 1924 Ga. LEXIS 285, Counsel Stack Legal Research, https://law.counselstack.com/opinion/williams-v-bennett-ga-1924.