Court Opinion

ID: 5564595
Source: CourtListenerOpinion
Date Created: 2022-01-11 00:57:34.951897+00
Date Added: 2024-06-11T08:35:34.500399
License: Public Domain

*229
Judgment affirmed, with direction.

This petition was answered by Stephen A. Ryan ; and a hearing was had before Judge Gober, whose dedecision, on July 28, 1891, was, in brief, as follows : It appeared that heside the money turned over by Ryan to the temporary receiver, he turned over a book of Atlanta National Bank checks, the stubs of which for checks used began with 461 and ended with 493, dated May 26, 1891; also a book of checks of Eugene Kelly & Company, from which checks had been used to 949, dated' May 24, 1891. The temporary receiver made specific demand for stub-book of cheeks on the Gate City National Bank, American Trust & Banking Company and Atlanta National Bank from December 6, 1890, to May 8, 1891, and all checks cancelled and returned since August, 1890, to which demand Ryan responded that all checks were destroyed when his books were balanced and the cancelled checks returned to him. Afterwards a permanent receiver made another demand on Ryan, who replied that he had surrendered to the temporary receiver all he had to surrender. In answer to the original bill, Ryan stated that often, in the conduct of his business, it became necessary for him to preserve his credit, and to.that end he kept three separate accounts in the banks of Atlanta, and frequently would make deposit of sales for one day in one bank and draw a check upon his deposit in another, and the next day make a deposit in another, drawing his check on one of the other hanks, and on the third day make a deposit in another hank and draw a check upon another, which check or .the amount- of it he deposited with his daily sales. In his answer to the receiver’s petition Ryan said : It is not true that from March 27th, to May 23, 1891, he deposited the real sum of $292,954.09. In his struggles to pull through a crisis in his business he desired to impress the banks with the idea that he had large sums of money, and hence deposited with three, and on making a deposit would either give a check on another or go to another, draw the money, add the check or the money, or part of them, to his deposit, and sometimes add sums from other sources, and thus increase the size of it. In this way the same money would be often deposited, and the real sum of all said deposits would not amount to more than one third of said aggregate sum. He did make a bank deposit on Saturday, May 23d, and paid all the money he had left, after paying debts hereafter stated, to the temporary receiver. On said Saturday, Monday and part of Tuesday, he did not take in $12,000, but took in about $4,500, and this money and all other that he had was paid out to his employees on May 26, 1891, to John F., his brother, for rent and on notes for borrowed money, May 1st or 26th, $30,722.02, to two other brothers early on the morning of May 26th, before the bill was filed or stock levied upon, $20,000 for borrowed money, and on May 25th to Mrs. Austell $10,000 borrowed money. The books of the banks show that his aggregate deposits from March 27th to May 23d, 1891, all amounted to $268,544.97, but this does not evidence the real sum of money had by him at and between said dates, nor furnish any ground for the inference attempted by the receiver to be drawn, that at the time of the demand by the receiver or at the filing of the creditors’ petition, or at any time after that, this respondent had any of said money in his hands or power, possession, custody or control, for at none of said times did he so have any of such money, and he had none at such times from any source whatever, except such as he turned over to the temporary receiver. For a more complete and perfect understanding of his dealings with said banks he attaches a copy of his account with each of said banks for the period between March 27, 1891, to May 23, 1891. Then followed in his answer specific allegations as to dates and amounts, on and in which he drew from funds on one of the banks and deposited in another, etc., making a statement of forty-six “kites,” and alleged that all of the aforesaid sums were redeposited in said banks in connection with and in addition to other sums at the same time deposited and made parts of his deposits. In his decision the judge considers these “kites” and states that there is not in one of them a check, on the deposit tickets, of the amount of the alleged “kite,” the checks being in small amounts, just as a retail merchant would get them, and that it followed that the “kite” was deposited in money or invested in another check, and that no bank officer could tell anything about its being a “kite” or where it came from. The judge had examined each of these “kites” as closely as he could, under the evidence, from every possible standpoint, and stated a few of them as illustrations, among others the following : “The respondent’s answer says that on May 13th, he drew $2,500 from the Atlanta National Bank; on the same day deposited same with the American Trust & Banking Company. There is no check for $2,500 on this day. There is one for $3,500, so here is $1,000 unaccounted for. The other $2,500 could have been ‘kited.’ Respondent in his answer says that on April 1st he drew $2,000 from American Trust & Banking Company, redeposited on same day with Gate City National Bank $1,458.75 of this. Now the total deposit for that day was $1,458.75. Of this there was coin $498, and five small checks aggregating $49.75, and currency $941. To allow this ‘kite’ would still leave $541.25 unaccounted for; besides there is no room for the ‘kite.’ Respondent in his answer says that on May 18th, he drew $2,500 from the American Trust & Banking Company and ‘kited’ it into the Gate City National Bank. Now this amount, the respondent sets up, was drawn from three different banks—the Atlanta National Bank, the American Trust & Banking Company and the Gate City National Bank. On this one item he claims three ‘kites,’ making $7,500. $5,000 of it is certainly wrong. Respondent in his answer sets up that on April 30th he drew $3,500 from the Gate City National Bank and deposited in the Atlanta National Bank. It turns out that there was no deposit in the Atlanta National Bank on that day, and by amendment he claims that this $3,500 was redeposited in the Gate City National Bank. Taken with another $5,500 that he alleges was ‘kited’ into the Gate City National Bank on that day, it would make the total ‘kite’ for that day into that bank $9,000. By going to deposit slips we find that the total deposit for that day was $5,728.23. This is made up of currency, $4,535 ; twenty-two small checks aggregating $472.72, and the balance in com. These two ‘kites’ certainly have many infirmities.” After considering and studying respondent’s answer the judge was impressed with the belief that respondent had gotten up this bill of particulars by simply taking the records of deposits and amounts drawn from bank, and where opportunity offered and amounts suited, claimed the “kite.” Respondent had been required to turn over all his books. He answered he had none of the kind required to make out such a statement, that the checks were destroyed when returned cancelled; and he had either made it out as indicated, or is in contempt for failing to turn over papers demanded. The judge then considered the evidence as to amount of daily sales, character of the business done by respondent, amount of custom he had and his enormous purchases of goods, and said: “I am impressed with the conviction that respondent’s answer cannot be wholly trusted. There is an affidavit in the record, put there as I remember by respondent, showing that about one hundred and ten salesmen were employed; besides these there were numerous helpers. Outside of those who have figured throughout this matter we have but six affidavits as to the amount of daily sales from this respondent, and three of these are from young girls. It would seem that, if all appearances were - deceptive, this is a matter that was in the power of the respondent to put beyond controversy.” His conclusion was, that the sales were more than twice the amount set up by respondent; that the entire scheme was to get money; that the case was a plain one, and that there was not, amid all the waste of facts or figures; a single act on the part of respondent which showed that it was born of an impulse to treat all of his creditors fairly. It was adjudged that the amount of money which respondent withheld, and which was in his hauds at the time of the demand by the receiver, was $120,490.79, and that respondent should stand committed to jail until he purged himself of this contempt and until he complied with the former order for the delivery of his assets to the receiver, the amount of such assets being expressed in this order.
A bill of exceptions was taken, and the judgment was affirmed. 88 Ga. 361.
On December 11, 1891, Stephen A. Ryan filed his petition, in substance as follows: Under the order of July 28, 1891, he was committed to jail and there remained until released on bond by order of the court on August 1, 1891. On November 28, 1891, he appeared and surrendered his body to be imprisoned, and since that time has been and still is imprisoned under said order. He prays to be allowed opportunity to purge himself from said order that he is or has been in any contempt of the court; and prays to be discharged on the following grounds : It is impossible for him to pay the sum of $120,490.79, because he has not that sum or any part of it in his possession, power, custody or control. He has no money and has no means of ever getting any money, except by earning it without capital of his own. He did not have or control said sum or any part of it, or withhold said sum or any part of it from the receiver when the same was demanded of him by the receiver. In support of these grounds he relates the following facts additional to the evidence adduced by him at the former hearing, and avers that by the exercise of the utmost diligence he could not have adduced the same before said oi'der was passed. One of the grounds on which said order was founded was, that although there were so many salesmen employed by petitioner in the conduct of his business, outside of those who had figured throughout the matter there were but six affidavits as to the amount of daily sales, three of which were from young girls, and that it would seem that this was a matter which was in the power of respondent to put beyond controversy. As to this petitioner now says : His store had been closed and he had no longer control of his former employees. They had been discharged, paid off and were scattered. It was impossible for him to locate them all; some had removed. He could not, for the want of time, do more in this respect than he did do at the former hearing. Since the coming in of said order he has succeeded m getting the evidence of a lai'ge number, about forty of these employees whose business gave them opportunity of observation and opinion upon said subject, and herewith presents it, to the effect that the sales made by him during the time in controversy did not amount to more than was set forth in his answer, and could not have produced the sum claimed by the receiver to have been so produced and deposited in the banks in the time stated, but would produce only about the amount shown by him in the former hearing to have been paid out to creditors. Since the rendition of said order he has carefully, with all the memoranda obtainable and with the same desire to be perfectly candid and truthful which he exercised in his answer to the receivers petition, reviewed the hastily prepared statement he made in his said answer and amendments, as to the sum of money deposited in the banks in Atlanta by him between March 16 and May 23, 1891. He was unable at the time of making the answer and amendments to be more accurate than he was. The transactions -which were held by the presiding judge to be the burden of the petition, were vast in aggregate and numerous in detail, and petitioner felt he could not comply with the rulings of the court as to pleading to them in detail in the limited time granted him, and so asked for more time, not in any spirit of delay as obstruction, but purely in order to present the matters accurately. Such time was not granted. Petitioner appends a statement of the moneys drawn from each of the banks and redeposited in the other banks, which is accurate in detail. With it he presents evidence of reputable bookkeepers and others which he prays may be considered, showing that redeposits did exist to the extent claimed by him, which fact he most solemnly and absolutely reaffirms. As the said order was grounded on the finding of the judge presiding against the existence of said redeposits, as appears on the face of tlie order, he prays that this additional evidence maybe considered. It was utterly impossible for him to get the evidence before the rendition of said judgment, for the want of necessary time. In addition to the above, he prays consideration of the evidence of the many witnesses by whom he has established the existence of said system of checks and redeposits, which evidence he has obtained since the rendition of said judgment. Said order was improvidently granted, as appears from the face of the proceedings and from the written evidence, in the following grounds and particulars: The presiding judge, as a reason and ground for the judgment, stated therein that on May 13 petitioner drew $2,500 from the Atlanta National Bank and deposited the same with the American Trust & Banking Company, and that there was no check of $2,500 on that day. By reference to the bank statement of said day it will be found that there was a check for said $2,500 on that day, and petitioner also submits an affidavit from the paying-teller of the bank to confirm the same; and there was on said date no check for $3,500 as improvidently stated in said judgment. Regarding the check for $2,000 of April 1, from the American Trust & Banking Company, the judge overlooked the fact that the claim that it was a redeposit or “kite” had been withdrawn by an amendment upon the mistake being discovered. He also improvidently found that petitioner set up that $2,500 of May 18 was drawn from three banks, making $7,500, and that $5,000 from the above amount was certainly wrong. It was not so set up by petitioner. The order was granted improvidently on the further reason set forth therein, that on April 30 petitioner alleged that he redeposited $9,000 in the Gate City National Bank ; by amendment then of record said mistake had been corrected. Petitioner further shows that since the rendition of said judgment the Ryan Company, a corporation, has bought the stock of goods sold by the receiver; that said company opened the store on October 5, 1891; that it has fully and promptly replenished said stock, and has had large crowds to flock to said store; that in addition to all the floor room occupied by petitioner, the company has the additional floor room of two stories and a basement of an adjoining store which had been connected with or opened into the store; tjiat the season for such trade is greatly better in October and November than in March, April and May; that in said period the Piedmont Exposition was held and drew a large crowd; and that the sales of the company for two months, under all such favorable circumstances, he is informed and believes, by the affidavit of its president annexed, amounted to $116,333.38. He submits this as the best comparison possible as to the amount of his sales, and positively reaffirms that his sales from March 27 to May 26, inclusive of collections from credit sales, were as stated in his answer to the receiver’s petition, and did not produce the money requisite to deposit said sums in the banks as claimed by the receiver, and did produce only the money shown by petitioner to have been expended as aforesaid. He most earnestly and positively reaffirms that he did not at the time of the filing of the bill have, own or control any money or other assets, except such as he delivered to the temporary receiver ; that he did not at the time the receiver made demand on him have, own or control the money demanded or any part of it; and that since then and up to the present time he has not owned or controlled said money or. any part thereof, or any of said money, and has not now any, and is utterly unable to comply with said order or to pay the sum of $120,490.79 or any part thereof.
Attached to this petition are affidavits of Moore and Sullivan, principals of business colleges, to the effect that they are practical book-keepers of many years experience ; that they have made thorough examinations of the bank statements embracing deposits and checks by Stephen A. Ryan (the results of which examinations are given in detail); that they believe from such examinations that he kept up a regular system of withdrawal from one bank and redeposit in one of the other two, from March 26 to May 28, 1891; that this system of “kiting” would indicate that the purpose was to swell the apparent sums in the banks ; that there is nothing to indicate that the system did not exist, and from the inspection and examination made by affiants they are of opinion that it did exist; and that the fact that some of the deposit-tickets did not show the amount “ kited” would not disprove that the “kite” existed, as Ryan could, in the regular course of business, cash checks when purchases were made and get change when the check amounted to more than the purchase, and the amount drawn from bank for redepositing in another bank could thus be locked up in the checks so cashed, Avhich could stand for so much of the money intended to be “ kited ”; etc. There were various other affidavits tending to show that the system of withdrawal and redeposit was carried on by Ryan for many months before his failure ; that the sum usually “kited” was $2,-500 ; that during the period in question probably over $100,000 Avas in this way transferred from bank to bank; that on May 13, 1891, only three checks Avere paid by the Atlanta National Bank for Ryan, and these were for $2,500, $1,000 and $9.79; and that in the opinion of forty-one of Ryan’s salesmen, his average daily sales for both cash and credit Avere between $1,000 and $1,200 from March 26, 1891, to the day of the failure. There was also an affidavit by C. I. Ryan, president of the Ryan Company, sustaining the allegations. of the petition of S. A. Ryan as to the amount of business done by that company. Also, an affidavit by 8. A. Ryan, that he was not aware of the evidence of Moore and Sullivan, nor that he could obtain the same as set forth in their affidavits before the order was passed in said case, nor could he have submitted the books to them before said order was passed, because there was not any. information he had to suggest that he could get the evidence in said affidavits stated, and because in the immense mass of matter involved he liad not the timo in which to have the books examined by said experts. The affidavit of his counsel was, that they had no knowledge of the existence of the evidence above stated1,, or that it could be obtained, until the order was passed' in said cause.
The receiver demurred to the petition, on the grounds that it does not set forth sufficient facts necessary to require answer, and shows no fact transpiring since the final order, entitling Ryan to have the same modified, and no facts save such as were fully inquired into on the hearing as to his contempt; that the judgment on that hearing is res adjudicatei; and that the petition shows no facts sufficient to warrant the discharge of Ryan.The demurrer was sustained and,the petition dismissed, and Ryan excepted.
John L. Iíopkíns & Son, Albert H. Cox, Walter R. Brown and Julius L. Brown, for plaintiff in error.
Calhoun, King & Spalding, N. J. & T. A. Hammond, Rosser & Carter, Alex. W. Smith et al, contra.