Simmons v. Camp

Jackson, Chief Justice.

We agree with the judge in his adjudication of the first, second, third, fourth, fifth and sixth grounds of the motion, overruling said motion on those grounds.

With his grant of the new trial on the seventh ground, so far as it grants it as contrary to evidence, we do not see clearly how we may legally, according to repeated rulings of this court, interfere. He presided on the trial of the case; heard all the testimony; is not satisfied with the verdict, and it is, therefore, right, in view of the repeated rulings of this court, that the case be tried again, especially as it is not clear from the record what relation the complainant bore to the Gwinnett Manufacturing Company during the transactions which resulted in the misapplication of the proceeds of a sufficiency of the property to have paid the Maltbie debt. Was he still a member of that company ? Was he its president or its legal adviser? And to what extent, if at all, is he implicated in any misapplication of its assets, acting as president, or director, or counsel ?

The law of the case, we think, is that if Camp, oeing a corporator and director, individually or in connection with others, got possession of enough of the assets of the company to pay the Maltbie debt, he became a trustee and *58custodian of that fund to pay the debts of the company; and if, instead of paying those debts, he appropriated those funds, alone or in connection with others, to make money for himself and the others, instead of paying the Maltbie debt, then he cannot make Simmons, his co-surety, contribute to its payment by reimbursing him, unless Simmons participated in its misapplication also in the character of a corporator and director, and thus also a trustee, or advised the misapplication as counsel. ' The corporators had a perfect right to sell the property of the company; but when they bought it themselves, or when they got the money for it, they were bound — all being directors as well as corporators — to apply the proceeds, first, to the payment of the debts, this debt of Maltbie among the rest, if there were others outstanding and not barred.

It is immaterial whether the sale was fair or fraudulent; as trustees of a fund which should go first to the extinguishment of the debts of the corporation, when they did not apply it to those debts, but put it to use for their individual use, they became legally responsible for the debt; and if Camp was such trustee and did so misappty enough of the fund to pay the Maltbie debt, he cannot make Simmons contribute, because the debt was paid out of money in his hands of the company, which the law made it his duty to apply to the debts, and was not paid with his own money. But if Simmons was also a corporator and director, and participated in the misapplication, he, of course, cannot set up this defence, because he too, in such a case, would be using the money of his cestui que trust. It does not matter what part of the profit went into Camp’s hands, and what into the pockets of others acting with him, he would be responsible for all; because, as trustee, he would have misapplied all, or assisted others in so doing. Aird so in regard to Simmons, if he were director or president and participator in the misapplication. Code, §3151. If, as counsel, Simmons merely advised the sale, but did not participate by his advice in the misapplication of *59the fund arising from the sale, then, as counsel, he would not be within the principle ruled in Jones vs. Hawkins, 60 Ga., 52. But if his advice extended legitimately to that extent, then he would be, and could not set off the fruits borne by his own advice given for fees as counsel. We mean to say that if Simmons advised them that the sale would be good in the sense that debts of the company could not be collected from them as purchasers, then he could not profit by that advice, but would be estopped. The same principle in substance, was also recognized in Kennedy vs. Redwine, 59 Ga., 327.

So, if Simmons advised Camp, as his counsel, or Stead-man, as his, and Camp bought from Steadman, that the title to the property the Gwinnett Company sold would be good against this debt, or the debts of the company generally, so as to embrace this, then Simmons would be estopped from setting off the fund, acquired by that advice as to title, against Camp’s claim for contribution; but if the advice of Simmons as such counsel extended merely to the fact that the sale itself would convey title out of the company into Camp and Steadman, and not to the other fact that the sale would be good against this debt, or the debts generally so as to embrace this, then Simmons would not be estopped by such advice. Were the debts generally, or this debt, in contemplation when the advice was given, if given at all ? Or was the counsel consulted merely in regard to the power to sell and convey in the manner done ? It seems to us these would be pertinent inquiries.

Further, it seems to us, that the profits which the respective parties realized out of the investment of the Gwinnett company into the other company of partnership, might well enter into the consideration of the case in equity; because, if Camp were trustee for the creditors of the Gwinnett company, he was for Maltbie, and Maltbie had a right to make him account for profits made as trustee, and when he came upon Simmons for contribution as co-surety, Simmons would also have the right *60to the like account for the purpose of setting those profits off in equity against the demand for contribution, unless his legal advice to Camp or Steadman induced the Newton county venture as one safe and free from liability for outstanding debts of the Gwinnett company. "We use the expression u advice to Steadman,” because it •'seems that Camp bought from Steadman, and not directly •from the company ; if Camp bought from the company, r-Simmons’ advice to Steadman could not affect him in a -.contest with Camp. Code, §2332; 60 Ga., 228.

The foregoing points, we think, are clearly deducible •from the authorities: Morawetz on Corp., p. 339; Field on Corp., §§172, 403; 8 Peters, 286 ; 21 Wallace, 616; 7 Wallace, 392; 15 Howard, 307; 15 Mass., 522; 16 Ib., 14; 17 Barb., 397 ; 29 Ib., 359; Story’s Eq. Jur., 1252, 9 Wis., 194; 43 Ib., 433; 16 Md., 456; 43 N. H., 263 ; Thomp son’s Li. Off. and Agts. of Corp., p. 397 8 Ga., 531 24 Ib., 590, 607; 59 Ib., 327; 60 Ib., 52, 228.

By putting to the jury questions which will elicit tho facts on the points indicated, and applying the law thereon, we presume that the case can be fully and finally adjudicated.

We add that, while exception to a decree is no good ground of itself for new trial on the facts, it may strengthen • the grant of it, if well founded, but we put this grant not ■ on this exception at all, but on the well settled rule that • this court does not interfere in the first grant of it by the presiding judge.

Exceptions outside of the motion for a new trial are -not ruled, because, not being excepted to pendente lite, .they are not here intime.

We are not prepared, however, to say that if Camp -realized as a stockholder from the money borrowed from Maltbie enough to pay the Maltbie debt in dividends, it being invested at once in the factory, and Simmons realized nothing, because he retired at once from the factory, im:such.a case that there is no equity in this fact, if a fact, *61in bar of tbe claim of contribution. But it is not before us properly, and we bold it an open question.

Judgment affirmed.