For the reasons stated in the opinion, infra, the present action, brought twenty-odd years after the acts complained of, is barred by laches.
No. 15414. APRIL 4, 1946. Suit by C. Comolli against B. F. Coggins and Coggins Granite Marble Industries Inc., praying for discovery, for a decree impressing upon the assets of Georgia Granite Corporation in the hands of the defendant corporation a trust in favor of the petitioner to the extent of his holdings in the Georgia Granite Corporation, and that the petitioner had and owned a 1/6 interest in the Georgia Granite Corporation, and for general relief.
The material allegations of the petition were in substance as follows: On April 30, 1919, the petitioner, the defendant Coggins, and E. B. Green entered into a partnership agreement, which was written and attached to the petition as an exhibit, by the terms of which agreement each was to pay $6000 into the partnership. The petitioner paid his $6000 as agreed, and paragraph 5 of the petition alleged that Coggins and Green "duly paid into said partnership the sum of $6000." This paragraph was stricken by an amendment, and in lieu thereof it was alleged that the petitioner believed at the time the formation of the partnership was made that Coggins and Green duly paid into the said partnership the sum of $6000 each, and did not learn otherwise until 1943 when he was informed and now believes that Green failed to become a member of the partnership by paying his $6000 into the treasury thereof, and that, therefore, Green had no interest in and was not a member of the partnership. The partnership was duly formed and entered into under the terms of the written agreement, and each partner assumed his respective position, duties, and responsibilities. The business was conducted as a partnership until it was merged into a corporation, named Georgia Granite Corporation, on June 9, 1919, as provided for in the written partnership agreement. The stock of the corporation was distributed, as the petitioner thought, equally between the three partners. Thereafter, the petitioner is informed and believes, the stock was issued as follows: 333 shares each to the petitioner and Green, and 334 shares to the defendant Coggins, after which the *Page 621 petitioner and Green transferred one share each and Coggins transferred two shares to a Mr. Moon, who was made secretary and treasurer, leaving the three original partners owning 332 shares each. It is stated on information and belief that the shares issued to Green were not paid for by him and automatically reverted to the corporation, giving the petitioner a one-half interest in the corporation exclusive of the four shares held by Moon. Upon the organization of the corporation all the assets of the partnership were transferred to the corporation. While the partnership existed, a life-insurance policy covering each partner in the sum of $10,000 was taken out. Thereafter Green died on or about January 31, 1920. The petitioner and Coggins agreed that Coggins would collect the $10,000 insurance on the life of Green and would turn it over to the treasury of the corporation. Coggins collected the insurance and paid $5000 thereof to the corporation, but, to the best of the petitioner's knowledge and belief, he never paid the other $5000 of the insurance money to the corporation as agreed. All the books, accounts, and records of the corporation were kept by Coggins in Atlanta, and the petitioner was superintendent of the quarries and manufacturing plant. While legally all records were accessible to the petitioner, yet he never had ground for suspecting that Coggins had perpetrated a fraud upon him as a stockholder. The petitioner is an Italian by birth, uneducated, and unaccustomed to the rules and practices of business rules in this country, and this was known to Coggins, while Coggins was an expert on corporations and took advantage of his superior knowledge in the formation of the Georgia Granite Corporation. As president of the corporation, Coggins fraudulently distributed the stock without the knowledge or consent of the petitioner as follows: 664 shares to Coggins, 333 shares to the petitioner, and 4 shares to Moon. This distribution of the stock, the failure of Coggins to pay the $5000 insurance money to the corporation, and the fact that no shares were ever issued to Green were all unknown to the petitioner until 1943, at which time he found them to be true, to the best of his ability. By reason of these facts a trust arose in favor of the petitioner as to the funds and property set forth in the petition, and he is entitled to have his interest therein adjudicated and an accounting in equity. The petitioner purchased two shares of stock from Moon, *Page 622 and Coggins purchased the other two shares held by Moon. The capital stock of Georgia Granite Corporation was by amendment on March 26, 1926, doubled, and as a result 334 additional shares were issued to the petitioner, giving him a total of 668 shares. On January 8, 1936, the petitioner sold all of his stock to the defendant Coggins, not knowing or suspecting the frauds that had been perpetrated upon him, which fraudulent matters were at the time of the sale concealed from the petitioner and have been continuously concealed by the defendant Coggins individually and as president of the corporation. On December 20, 1938, the corporation was merged with other corporations into a new corporation known as Coggins Granite Marble Industries Inc. The petitioner is entitled to a 1/6 interest in the stock of the new corporation or the value of the 1/2 interest in the Georgia Granite Corporation as of the date of the sale of his stock, together with the profits thereof. By amendment it was alleged that the partnership referred to was duly formed and entered into under the terms of the written agreement, as the petitioner was informed by each partner and believed until 1943, and each partner assumed his respective position thereunder, and the partnership operated about 45 days until merged with the corporation. From the date of the formation of the partnership the fact that Green had never qualified as a partner was concealed from the petitioner by Coggins and Green. When the assets of the partnership were transferred to the corporation, the petitioner was unaware that Green had never paid his share. Had the petitioner been informed, he would never have entered into the formation of the corporation with Green having an ostensible one-third interest therein. The sole assets of Georgia Granite Corporation, when chartered, consisted of assets of the partnership in which the petitioner had a one-half interest, and the stock of the corporation should have been divided accordingly. Coggins, when entrusted with the insurance money, failed to disclose to the petitioner that Green had no stock, but instead led the petitioner to believe that Green had an equal interest. The amendment prayed that Coggins be required to surrender to the defendant corporation the shares of stock held by him in the said corporation, and that the defendant corporation be required to cancel the said shares and reissue the same to the petitioner and Coggins in the proportion to which each is entitled, and for general relief. *Page 623
Grounds 1, 2, 3, and 4 of the general demurrer of the defendants asserting that no cause of action was alleged, that the claim was barred by the statute of limitations, and that the suit was barred by laches, were sustained and the petition as amended dismissed, and to this judgment the petitioner excepts. In the view we take of this case it is unnecessary to enter upon a consideration of what might have been the rights of this petitioner if properly asserted in time. The delay in bringing this action is decisive on all questions presented and constitutes an insurmountable obstacle to the grant of any of the relief sought. The two items complained about and constituting the basis upon which recovery is sought are: (1) the alleged failure in 1919 of the partner Green to pay the sum of $6000 into the partnership business as agreed upon and required by the written partnership agreement; and (2) the failure of the defendant Coggins in March, 1920, to pay into the treasury of Georgia Granite Corporation $5000 derived from insurance on the life of the partner Green. As to the first item, it is sufficient to state that by the terms of the partnership agreement an obligation to pay $6000 was imposed upon the partner Green. This constituted a claim of the partnership, and, hence, was an asset transferred to the corporation, according to the averments of the petition to the effect that all the assets of the partnership were transferred to the corporation. Thus it is obvious that Green was a partner, and upon the formation of the corporation was entitled to receive his one-third share of stock of that corporation, and his liability for the $6000 was a claim held by the corporation against him, upon which it was entitled to maintain a suit and to recover. It follows necessarily that, as to that item, this petitioner has no claim whatever, and that part of his petition based thereon was subject to the demurrer.
The other item of $5000 was likewise, under the allegations of the petition, an asset of the corporation, for it was alleged that the insurance was partnership insurance procured during the existence of the partnership, and, hence, it became the property of the corporation upon the transfer to that corporation of all the *Page 624 assets of the partnership. It follows, therefore, that if the defendant Coggins was guilty of conversation of this asset of the corporation, the corporation in the first instance would be the proper party to maintain the suit for this recovery. But the petitioner in a proper case as a minority stock holder might be entitled to prosecute a claim on behalf of the corporation to recover this money. In such an action, however, the corporation would be an indispensable party. Smith v. Coolidge BankingCo., 147 Ga. 7 (a) (92 S.E. 519); Wagner v. Biscoe,190 Ga. 474 (9 S.E.2d 650). Such an action by the petitioner without the corporation as a party, based upon the fraudulent act of Coggins in converting this fund, would have to be brought within a reasonable time. Postponement for an unreasonable time would forfeit all rights to equitable relief. Alexander v.Searcy, 81 Ga. 536 (8 S.E. 630); Smith v. CoolidgeBanking Co., supra; Winter v. Southern Securities Co.,155 Ga. 590 (2) (118 S.E. 214); Graves v. Decatur, 167 Ga. 678,689 (146 S.E. 630). Clearly from 1920, the date of the alleged conversion, to 1944, the date when this suit was filed, a period of 24 years, would be an unreasonable delay and would constitute a bar to this action. It was alleged, however, that the petitioner did not know of this fact until 1943, and that due to a confidential relationship existing between Coggins as an individual and as president of the corporation, and the petitioner as a stockholder in the corporation, the petitioner reposed confidence in Coggins; and although the records of the corporation as a matter of law were available for his inspection, he never had exercised his right to inspect, and it was the duty of Coggins to reveal this fact to, and not to conceal it from, the petitioner, which duty he never performed. Whether or not the confidential relationship claimed by the petitioner did exist, it was the legal right of the petitioner to examine the records of the corporation and ascertain for himself such facts as that record would reveal. He would not be entitled to negligently refuse to acquire knowledge that was open and available to him, and yet excuse his negligence by charging the defendant with a failure to inform him as to what that record would disclose.Crawford v. Crawford, 134 Ga. 114 (3) (67 S.E. 673);Frost v. Arnaud, 144 Ga. 26 (2) (85 S.E. 1028); Winter v. Southern Securities Co., supra; King v. Citizens Southern Nat. Bank, 186 Ga. 336 (198 S.E. 70); *Page 625 Manning v. Wills, 193 Ga. 82 (2) (17 S.E.2d 261). If it be conceded, however, that because of the existence of a confidential relationship the petitioner was entitled to rely upon the defendant to disclose without request the facts here complained of, this fact would in no wise excuse the petitioner from acting and from ascertaining the truth and acquiring knowledge of all that the records would have disclosed in 1936 at the time of his sale of all his stock to the defendant Coggins. Certainly he knew that the value of his shares depended upon the assets of the corporation, and therefore he could have had no opinion as to the value of those shares without first knowing the value and the nature of the assets of the corporation. It is not alleged that he at that time made any inquiry of the defendant Coggins or that he took the trouble to examine the books and records of the corporation. Presumably such an inquiry and examination would have disclosed every fact here complained of; and after that time, from which he is unquestionably chargeable with knowledge of the facts here complained of, until the time when this suit was filed, a period of approximately eight years elapsed, during which period the corporation was merged with a number of other corporations into the defendant corporation in this action. By such merger the assets and records have undoubtedly been mingled, and it has become more difficult to ascertain the precise assets and records of the old corporation. The petitioner's laches is a bar to the prosecution of the present action. Citizens Southern Bank v. Ellis, 171 Ga. 717 (156 S.E. 603); Winter v. Southern Securities Co., supra; King v. Citizens Southern Nat. Bank, supra.
Judgment affirmed. All the Justices concur.