Case Name: Randolph L. Mott, plaintiff in error, vs. Paul J. Semmes, garnishee, defendant in error
Court: Supreme Court of Georgia
Jurisdiction: Georgia
Decision Date: 1858-01
Citations: 24 Ga. 540
Docket Number: 
Parties: Randolph L. Mott, plaintiff in error, vs. Paul J. Semmes, garnishee, defendant in error.
Judges: 
Reporter: Georgia Reports
Volume: 24
Pages: 540–558

Head Matter:
Randolph L. Mott, plaintiff in error, vs. Paul J. Semmes, garnishee, defendant in error.
A. was indebted, by stock note, to the M. & M. Bank of Columbus. By contract with B., the slock was transferred from A. to B., and A’s note delivered, up to him by the Cashier of the hank, upon the verbal undertaking ofB., to pay the amount of the subscription to the hank. The hank subsequently ratified this transaction, B. having been elected a director upon the faith of this stock.
IMd, That A. could not be made chargeable, as a debtor to the bank, upon n liability incurred by the bank some years thereafter; and if responsible at all, it could only be in equity, for fraudulently abstracting the assets of the corporation.
' Garnishment, from Muscogee county. Decided by Judge Woruill, November Term, 1857.
An action of trover was brought by the plaintiff in error' against the Manufactures and Mechanics Bank of Columbus, to recover deposits he had made with the bank. Upon this action the plaintiff obtained a judgment in his favor, against the bank, and upon this judgment a summons of garnishment was issued against the defendant in error, as garnishee of the bank.
Upon the hearing of this summons, the plaintiff introduced (among others,) E. S'. Greenwood, who testified, that he was a director of the bank in 1853 and 1854; and that when ho went into the board of directors, there was a change of ofE ccrs — the original ones having sold out or transferred their stock. Plaintiff’s counsel asked what amount the purchasers paid for the stock. The defendant’s counsel objected to the witness answering this question. The Court sustained the objection, and plaintiff’s counsel excepted.
Plaintiff’s counsel offered in evidence an instrument, (of which they proved the execution, and stated their readiness A show the authority of Grimes, the attorney, to execute it,) purporting to be an agreement for the transfer of 2,440 shares in the bank from Thornton and Kyle, two of the stockholders, executed by Grimes, their attorney, for $2,000, to J. T. Foster and I). K. Colburn, for which they were to make and endorse a promissory note for the amount, at 30 days from November 5th, 185.3, audit was thereby agreed thatthe transfer and promissory note were to be deposited in the hands of Win. Patrick, to be delivered up to Foster and Colburn, on their paying the said promissory notes at their maturity, otherwise, they should be returned to Thornton and Kyle, and the agreement for sale and transfer to be void.
Defendant’s counsel objected to the introduction of this instrument. The Court sustained the objection, and plaintiff’s counsel excepted.
The plaintiff’s counsel offered in evidence the minute-book of the directors of tho bank. From the entries in this hook, it appeared that Semines became a subscriber for 1,500 shares in the bank, oil the 5th of April, 1852. There was also an entry stating that #25,000 had been paid into the bank by Semines and other subscribers, as a payment of 10 per cent on their shares, according to the charter. That on May the 8th, 1S52, a meeting was held for the election of a President and Directors of the bank, when Semmes was elected President, and Kyle elected Cashier. It was then ordered that certificates of stock should be issued to the stockholders, and upon motion of one of the directors, D. Thornton, it was ordered, that tlie notes of the stockholders for the amount of their subscriptions actually paid in, should be discounted, the motes to be payable 30 days after demand by the President.
Three transfers of shares were in evidence. One dated the 8th of May, 1852, for 550 shares in the bank, from Semmes to D. Thornton. The 2d dated the 12th of July, 1853, for 950 shares in the bank, from Semmes "to Smith, and the 3d dated the Hth day of October, 1853, for 950 shares in the bank,from Smith to Kyle.
At a meeting of the directors of the bank, on tbe 12th July, 1853, Semmes resigned his office as President, which resignation was received, and Smith appointed his successor-
Robert Kyle, introduced asa witness by the defendant, testified, that he was the first Cashier of the bank, and continued as such till sometime in 1853; that he was Cashier when the notes were given for the capital stock paid in, as authorized by the order in the minute book. That Semmes only gave his note for $9,500, as he had transferred 450 of his shares to Thornton. Kept the note of Semmes till he transferred his 950 shares to Smith, which was done in the presence of witness, who, as Cashier, took from Smith his recognizance or verbal promise to pay the $9,500 ; gave up to Semmes his note; that the transaction was known to all the officers of the bank, and approved by them. That at the date of the transfer of the stock from Semmes to Smith, the latter, in consideration of the stock, assumed the debt of Semmes to the bank; that the bank accepted Smith’s promise to pay, in lieu of the note of Semines, and that he (witness) then delivered the note to Semmes, who then ceased to have any connection with the bank, orto owe it anything.
After the argument of counsel, thp Court charged the jury as follows:
“ It is conceded that the garnishee was one of the original stockholders in this bank, and subscribed for 1,500 shares of its stock, and subsequently, transferred 450 of his sitares to' D. Thornton, and that he paid in 10 per cent, upon tbe amount of his subscription, and that in pursuance of an order of the directors óf the bank, the money thus paid into the bank by Semmes was returned to him, and his promissory note amounting to $9,500, taken for the same, to be paid its 30 days after demand by the President of the bank. And no w the question for you to determine is, wheth er Sem mes is sti 11 indebted to the bank upon that note, or whether he has paid it off The plaintiff insists that he is still indebted to the bankupoBt that note, and the garnishee that he has paid it. This, yon perceive, is the question upon which the parties are mainly ait issue. Now if, from the evidence, you should believe after this, that Semmes transferred the balance of his stock to II, S. Smith, and thereupon Smith promised the bank to pay this indebtedness of Semmes, and the bank then delivered the note to Semmes, and took Smith’s verbal promise to pay it, in lieu of the note, then the debt is satisfied, the note is can-celled, and you will find the issue for the garnishee, otherwise, you will find for the plaintiff;” and if they found for the plaintiff, the Court gave the jury directions as to the form of their verdict.
Plaintiff’s counsel requested the Court to give the jury the following charges:
“That if they believed from the evidence that the sum of $25,000, or any other sum, was actually paid to the commissioner by the persons subscribing for stock in the Manufacturers and Mechanics Bank of Columbus, and it was so paid as capital stock, and that the same was afterwards paid over by said commissioners, to the directors of said bank, that the mo* ney so paid became the property of said bank.”
“ That if the jury should believe from the evidence that the directors, after the money was so paid to them, permitted or authorized the stockholders to give their notes'in lieu of the money so paid in, and receive the same back, no matter tin. der what color or pretence done, and this was done to evade or get round the’provisions of the charter requiring $25.000 in specie, or bills ofspecie paying banks, such arrangement and transaction is void; and ifyou should believe that the garnishee was a director at the time, ox a party to that arrangement, and under it received back the amount paid in by him or any portion of it, the money so received by him is still the property of the bank.”
“ That if they should be of the opinion from the evidence, that the transaction of returning to the stockholders the money paid by them, by discounting their notes for the a mount, was not to evade the provisions of the charter, and was done in good faith, and that the garnishee gave his note for the amount of the money paid in by him under that arrangement, then the note became the property of the bank, and the garnishee its debtor, and that the Cashier had no authority to give up that note to t.he garnishee upon the verbal promise of Smith or any other person to pay the bank the a mount; and if they believe from the evidence that it was so given up to the garnishee, without any order of the jroard of directors or their assent thereto, acting in the capacity of directors, that that transaction is void, and that Semmes still owes the bank the amount, unless paid in some other way.”
“ That if they believed from the evidence that the directors, on receiving the $25,000 from the commissioners, returned the same to the stockholders and received their notes in lieu thereof, with the view to make them the capital stock, and that these notes so received have never been paid in specie, or the bills of specie paying banks, that such an arrangement is an evasion of the charter of the bank, and void, and the persons so taking back the money so paid, are indebted to the amount so received, unless paid or discharged in some other way.”
“ That if the jury believed from the evidence that the directors, on receiving the $25,000 from the commissioners, returned the same to the stockholders, or permitted them to receive back the money paid in, and placed in the bank their notes in lieu thereof, with a view to make the notes so given the cap ital stock so paid in, or to represent it, that would bean evasion of the charter, illegal and void, and the money so received is still the property of the bank.”
“ The Cashier of a bank has the implied power to negotiate the securities and manage the funds cf the bank, but he has no right to discount notes, or to deliver up the capital of the bank to any original stockholder, on the promise of a third party to pay the same : there is no such power implied by virtue of his office as Cashier.”
“ Neither the Cashier of the Manufacturers and Mechanics Bank, nor its board of directors, had the right to substitute the notes of the directors for the specie capital paid in. -Directors loaning to themselves the capital, payable 30 days after the demand of the Prebident, is not a discount of notes, but is a substitution of the notes of the directors for the specie capital paid in, and such substitution is illegal.”
The Court refused to give all. these charges as requested,, •except the first; and to this refusal of the Court to charge as requested, and to the charges so given by the Court, except ■the first requested charge, plaintiff’s counsel excepted.

Opinion:
Lumpkin J.,
By the Court. delivering the opinion.
We are quite clear, that whether Semmes can be made liable to creditors of the bank in another proceeding or not, he cannot by process of garnishment. The record shows, that he transferred his stockto Smith — Smith agreeing to pay the amount due thereon to the bank. And- thereupon, the Cashier surrendered up to Setnmeshis note. Noattempt hasever been made by the bank, to charge him as a debtor to the bank, or to hold him responsible in any -way, upon his original subscription for stock,
It is conceded, that if this substitution of liability had been-made by the bank, it would have discharged Semmes. It was done by the Cashier; and we are authorized to assume, that the act was ratified by the bank. We infer this, not only from its acquiescence, but from the further fact, that upon the faith of this transaction — constituting Smith a stockholder in the place of Semmes — he was made a director of the bank, which he could not be unless a stockholder, and he was no stockholder, unless this contract or arrangement between the Cashier, Semmes and himself.made him one.
This is not all. This very stock was subsequently transferred by Smith, for no other or further assignment of the stock was ever made by Semmes. So that those who controlled the bank, at the time Mott, the plaintiff, made his deposit — to recover which this suit is brought — must necessarily have derived their right and authority through Smith, and upon the faith of this transfer by Semmes. So that the-proof, as to the ratification of this act, on the part of the bank,, is conclusive.
In Phillips vs. Wesson et al., 16 Ga. Rep. 137, this Court say, "But there is a technical difficulty which cannot be well overcome, as to this remedy by garnishment. Admitting all the facts charged in the bill to be true, Phillips, perhaps, could safely swear, that he owed Stephens nothing, and that he had nothing of his in his hands. For, this being a fraudulent arrangement between them to defeat the creditors, Phillips is not liable to account to Stephens, although he may be-to the creditors. And notwithstanding the transfer by Stephens may be a nullity, as to his creditors, still, it will be perceived, that the process of garnishment does not make and meet the issue fairly. At any rate, this legal remedy is not complete. Phillips may swear, in answer to the garnishment,, that he owed Stephens nothing; yet, if he admitted the facts charged in the bill, he would subject himself, undoubtedly, not to a prosecution for perjury on his former oath, but to a decree in favor of the creditors of Stephens, to account for the goods or their value."
If the Court reasoned rightly, in respect to a case confessedly fraudulent, what ought to be its opinion in the case before us, where not a debt had been contracted by the bank, when Semmes' note was delivered up to be cancelled. And when Mott's debt had no existence for years afterwards. And especially when it appears, that Semmes had washed his hands of this charter, long before it went into the possession of its foreign purchasers. Perhaps for the very reason that he would not lend his sanction to such a transfer.
Let the creditors then go into equity, and, if they can, subject Semmes for aiding and abetting in the fraudulent • abstraction of the effects of this bank. But he cannot be reached by process of garnishment, if he has been discharged by the bank. The witness, Kyle, swears positively that the money was paid to the bank upon this transferred stock. I put no stress upon this proof in this opinion.
Judgment affirmed.