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HUFF, Executrix, v. PORTER.
34857.
Suit on dormant judgment. Before Judge West. Oconee Superior Court. July 27, 1953.
SUTTON, C. J.
The evidence showed that the liability on which the dormant judgment on was based was for a wilful and malicious injury to the property of the plaintiff's testator, within the meaning of the provision of the Bankruptcy Act that such a liability is not released by a discharge in bankruptcy and the court erred in sustaining the defendant's plea of discharge in bankruptcy and in rendering judgment for the defendant.
Mrs. Annie Lou Huff, as executrix of the will of Mary Frances Thomas, deceased, and as executrix ex officio of the will of H. E. Thomas, deceased, brought suit in the Superior Court of Oconee County on May 15, 1952, on a dormant judgment against Sell B. Porter, alleging that a judgment had been rendered in Oconee Superior Court on July 29, 1925, in favor of H. E. Thomas against Porter and one J. W. Smith, for $1,137.12 principal, $404.59 interest to the date of the judgment, and $30.30 costs. It was alleged that the plaintiff was the executrix of the will of Mary Frances Thomas, deceased, who had been the executrix of the will of H. E. Thomas, deceased, and that the plaintiff was therefore entitled to sue upon said dormant judgment; and it was alleged that an execution had issued upon the judgment and had been duly entered on the execution docket, and that various entries of nulla bona had been made upon the execution and the docket, the last entry having been made on March 19, 1944, so that the execution was dormant. J. W. Smith died insolvent, with no administration on his estate, prior to the filing of the suit on the dormant judgment, and this allegation was admitted on the trial of the case. The record of the case in which the judgment sued on was rendered was attached to the petition.
Porter, the defendant, filed a plea setting up his adjudication as a bankrupt on July 26, 1952, and later amended his plea to show his discharge in bankruptcy on October 28, 1952. A certified copy of the discharge was filed.
The case was tried before the Judge of Oconee Superior Court, without a jury. The plaintiff introduced documentary evidence showing her right to bring the suit and that the judgment had become dormant, and she also submitted the pleadings, verdict, and judgment in the case in which the judgment now sued on was rendered. In the petition filed in July, 1924, it was alleged that the defendants, Smith and Porter, were indebted to the plaintiff in the sum of $1,669.50, with interest from June 15, 1920, by reason of the facts therein alleged; that in 1919 the defendants as partners were in business as cotton merchants; that in 1919 the plaintiff, H. E. Thomas, placed in the defendants' custody eleven bales of cotton and, in January, 1920, one bale of cotton, or a total of 6,560 pounds of cotton (the numbers and weights of each bale being set out); that the plaintiff borrowed $715.10 from the defendants upon said cotton in 1919, and in June, 1920, demanded of the defendants that said cotton be sold for his account at the then prevailing market price of 44 cents which the defendants refused to do, that prior to that time the defendants had sold said cotton without the plaintiffs consent and had received 46 cents per pound therefor; that on September 16, 1922, the plaintiff demanded that the defendants show him the cotton, and the defendants represented that the cotton was still in their possession but would not exhibit it to the plaintiff; that on September 30, 1922, the defendants admitted that said cotton had been sold, and represented to the plaintiff that it had been taken away from them by a foreclosure or lien sale and had been sold for from 14 to 17 cents per pound, and the defendants paid the plaintiff 25 cents per pound for said cotton, which the plaintiff accepted, relying upon the defendants' statement as to the price for which the cotton had been sold; that by reason of such fraud, the statute of limitations did not run against the plaintiff until September 29, 1922; that, under the settlement of September 30, 1922, the defendants paid the plaintiff $633 after deducting the loan of $715.10 and storage charges, which were not proper because the cotton had been previously sold and such charges could not have accrued; that the defendants received $3,017.60 for said cotton, from which is to be deducted the loan of $715.10 and the sum of $633 paid to the plaintiff on September 30, 1922, leaving due the amount sued for, $1,669.50; and that the plaintiff, after discovering the fraud practiced upon him by the defendants on July 29, 1924, tendered to the defendants the money received by him in the alleged settlement, which was refused.
The defendants in their answer admitted that they had bought and sold cotton, that they received twelve bales of cotton from the plaintiff, that they paid to the plaintiff's tenants their one-half interest in said cotton when the cotton was received, and that they had paid the plaintiff $633 after deducting the loan of $715.10. The other allegations of the petition were denied, and it was further alleged in the answer: that the plaintiff placed the cotton with them on call, i.e., the defendants would receive the cotton, ship it, sell it, or do otherwise as they saw fit, and the plaintiff would call the price as he saw fit; that the price of cotton went as low as 12 cents per pound, but the plaintiff held on until cotton reached 25 cents per pound, at which time the plaintiff called the price on the defendants, and the defendants paid to the plaintiff 25 cents per pound for all of his cotton; that this is a common custom in the cotton trade, well known to the plaintiff, and was done to facilitate the handling of cotton for the farmers and to save them storage, insurance, and other charges against their cotton. The verdict was for the plaintiff in the sum of $1,137.12 principal, with $404.59 interest to July 29, 1925, the date of the verdict and judgment, and costs; and judgment was entered accordingly.
On this evidence in the suit on the dormant judgment, the court rendered judgment for the defendant, and the plaintiff excepted.
"A prima facie defense to a suit against a bankrupt on a debt existing at the time of filing the petition in bankruptcy is made out by the introduction in evidence of the order of discharge in bankruptcy, the burden being then cast upon the plaintiff to show that because of the nature of the claim, failure to give notice, or other statutory reason, the debt sued upon was by law excepted from the operation of the discharge. Kreitlein v. Ferger, 238 U. S. 21 (1) (35 S. Ct. 685, 59 L. ed. 1184, 1186)." Bell v. Georgia Chemical Works, 33 Ga. App. 286 (125 S. E. 871); Coppedge v. Aycock Mortgage & Bond Corp., 51 Ga. App. 248 (179 S. E. 909); Tyler v. Jones County Bank, 78 Ga. App. 741 (52 S. E. 2d 547). The plaintiff contends that the debt as evidenced by the dormant judgment sued on was not affected by the defendant's discharge in bankruptcy, under a provision of the Bankruptcy Act, 11 U. S. C. A. 35 (a) (2), which is as follows: "A discharge in bankruptcy shall release a bankrupt from all of his provable debts, whether allowable in full or in part, except much as . . . (2) are liabilities . . . for willful and malicious injuries to the person or property of another . . . "
In McIntyre v. Kavanaugh, 242 U. S. 138 (37 Sup. Ct. 38, 61 L. ed. 205, 38 Am. Bankr. Rep. 165), it was held that the unauthorized sale by brokers of stock certificates held by them as collateral, and the appropriation of the avails to their own use without the knowledge of the owner, was a wilful and malicious injury to property within the meaning of the above-quoted provision of the Bankruptcy Act. The court quoted with approval from Tinker v. Colwell, 193 U. S. 473, 487 (24 Sup. Ct. 505, 48 L. ed. 754) as follows: "A wilful disregard of what one knows to be his duty, an act which is against good morals, and wrongful in and of itself, and which necessarily causes injury and is done intentionally, may be said to be done wilfully and maliciously, so as to come within the exception." In Davis v. Aetna Acceptance Co., 293 U. S. 328, 332 (55 Sup. Ct. 151, 79 L. ed. 393, 397), in which there was a finding of fact made in the lower court that the defendant was not "actuated by wilful, malicious or criminal intent in disposing of the [mortgaged] car in question," the ruling of the McIntyre case was somewhat limited by the following statement: "But a wilful and malicious injury does not follow as of course from every act of conversion, without reference to the circumstances. There may be a conversion which is innocent or technical, an unauthorized assumption of dominion without wilfulness or malice. [Citations.] There may be an honest, but mistaken belief, engendered by a course of dealing, that powers have been enlarged or incapacities removed. In these and like cases, what is done is a tort, but not a wilful and malicious one. Turning to the findings here, we see that wilfulness and malice have been unmistakably excluded." And in Mason v. Sault, 93 Vt. 412 (108 Atl. 267, 18 A. L. R. 1426, 44 Am. Bankr. Rep. 504), it was stated that the rule fairly deducible from the McIntyre case is "that the disposal of another's property without his knowledge or consent, done intentionally in disregard of what one knows to be his duty, to the other's injury, is a wilful and malicious injury to property within the meaning of the Bankruptcy Act," and it was further stated: "It may properly be noticed in passing that a conversion of property may be committed in such circumstances as to be barred by a discharge in bankruptcy. But a simple conversion and a conversion which shows design or willingness to inflict a wrong upon another, or the reckless disregard of the other's rights, are entirely different in character."
In Covington v. Rosenbusch, 148 Ga. 459 (97 S. E. 78, 42 Am. Bankr. Rep. 400), it was held that the collection of salary due after assignment thereof was a wilful and malicious injury to the property of the assignee within the meaning of the bankruptcy act, as a disposition of property without the authority of its owner. Also see Citizens Bank v. Mullis, 161 Ga. 371 (131 S. E. 44); Hammond v. King, 53 Ga. App 877 (187 S. E. 413), Shabaz v. Henn, 48 Ga. App. 441 (173 S. E. 249). The cases of White v. Morris Fertilizer Co., 31 Ga. App. 710 (121 S. E. 704, 4 Am. Bankr. Rep. (N. S.) 787), cited by the defendant in error as controlling, and Walker Bros. Co. v. Capital City Grocery Co., 28 Ga. App. 531 (112 S. E: 157, 48 Am. Bankr. Rep. 424), which was cited as authority for the ruling in the White case, supra, seem to be instances of conversion without aggravating circumstances, and in such respect follow the principle of Davis v. Aetna Acceptance Co., 293 U. S. 328, supra. But the authority of the Walker Bros. case was questioned in Hammond v. King, 53 Ga. App. 877, supra.
In the present case, the plaintiff relied upon the record of the 1924 suit to show the character of the liability on which the judgment sued on was based, and contends that the liability was in trover for a wilful conversion, for which a money judgment was rendered. The defendant contends that the action was for damages arising ex contractu, under a form of transaction known as selling cotton on call.
The petition filed in 1924 alleged: that the plaintiff had placed 12 bales of cotton weighing 6,560 pounds in the custody of the defendant cotton merchants in 1919, and had then borrowed $715.10 from the defendants upon this cotton; that the plaintiff demanded in June, 1920, that the cotton be sold for his account at the then prevailing market price of 44 cents, but the defendants refused to do so; that prior to that time the defendants had sold said cotton without the plaintiff's consent and had received 46 cents per pound therefor; that, on September 16, 1922, the plaintiff demanded that the defendants show him the cotton, and the defendants represented that the cotton was still in their possession but would not exhibit it to the plaintiff; that, on September 30, 1922, the defendants admitted that said cotton had been sold, and represented to the plaintiff that it had been taken away from them by a foreclosure or lien sale and had been sold for from 14 to 17 cents per pound, and the defendants paid the plaintiff 25 cents per pound for said cotton, which the plaintiff accepted, relying upon the defendants' statement as to the price for which the cotton had been sold; that, by reason of such fraud, the statute of limitations did not run against the plaintiff until September 29, 1922; that, under the settlement of September 30, 1922, the defendants paid the plaintiff $633 after deducting the loan of $715.10 and storage charges, which were not proper because the cotton had been previously sold and such charges could not have accrued; that the defendants received $3,017.60 for said cotton, from which is to be deducted the loan of $715.10 and the sum of $633 paid to the plaintiff on September 30,1922, leaving due the amount sued for, $1,669.50; and that the plaintiff, immediately after discovering the fraud practiced upon him by the defendants, on July 29, 1924, tendered to the defendants the money received by him in the alleged settlement, which was refused.
The answer admits that the defendants received the number of bales as alleged, but it was alleged that the defendants received the cotton under a customary arrangement in which the defendants were to receive the cotton and ship it or sell it as they saw fit, while the plaintiff could require payment for the cotton at the market price whenever he saw fit to do so. It was further alleged in the answer that there were conversations between the parties in regard to calling the cotton in question, while the price of cotton fell to 12 cents per pound, but that the plaintiff waited until the price of cotton had reached 25 cents per pound before calling it, and that the defendants then paid 25 cents per pound for all of the plaintiff's cotton. The answer does not set out any dates for this transaction.
Although for an amount less than that sued for, the verdict and judgment were for the plaintiff, and it is presumed that such a judgment, unexcepted to, was sustained by sufficient evidence in support of the allegations of the petition. A significant fact is that the verdict was for $404.59 as interest to July 29, 1925, the date of the verdict and judgment, which was interest on the principal sum awarded by the verdict at the legal rate for five years and one month, or from July 1, 1920, when it was alleged by the plaintiff that interest began to run. This was more than four years prior to the filing of the suit; and the jury, under proper instructions, must have sustained the plaintiff's alleged reasons as to why his suit was not barred by the statute of limitations, although the facts alleged to show that the statute did not run were denied by the defendants. Likewise, the jury must have rejected the other contentions of the defendants which were inconsistent with the case alleged in the petition. The petition claimed that the cotton was not sold to the defendants but was to be sold by them for the plaintiff's account; the answer, to the contrary, alleges that the defendants received the cotton to dispose of as they saw fit. The petition shows that the defendants sold the cotton unknown to and without the consent of the plaintiff, and refused to sell it for him when demanded to do so in June, 1920; the answer is silent as to what the defendants did with the cotton. The petition alleges a settlement at 25 cents per pound in 1922 upon the defendants' representations that the cotton had been sold at a foreclosure sale, while the defendants contended that this was when the plaintiff had called the price of the cotton to be paid. We think that the alleged circumstances of fraudulent concealment of the true nature of the transaction for a period of four years, and of the false representation that the cotton had been taken from the defendants by a foreclosure, are sufficient by way of aggravation to show that the defendants' interference with the rights of the plaintiff in his cotton was not an innocent, mistaken, or technical conversion only, but was a wilful and malicious injury to the plaintiff's property, and so was within the provision of the Bankruptcy Act that the liability for such a wrong is not released by a discharge in bankruptcy.
The court erred in sustaining the defendant's plea of discharge in bankruptcy, and in rendering judgment for the defendant.
Judgment reversed. Felton and Quillian, JJ., concur.
Abit Nix, Vane G. Hawkins, contra.
O. J. Tolnas, for plaintiff in error.
DECIDED DECEMBER 2, 1953.
Saturday May 23 04:14 EDT


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