Opinion
37689.
DECIDED OCTOBER 2, 1959. REHEARING DENIED OCTOBER 26, 1959.
Action on contract. Fulton Civil Court. Before Judge Parker. March 6, 1959.
Elijah A. Brown, for plaintiff in error.
Johnson, Hatcher, Meyerson Irvin, Henry M. Hatcher, Jr., contra.
The petition stated a cause of action, and the trial court erred in sustaining the general demurrer thereto.
DECIDED OCTOBER 2, 1959 — REHEARING DENIED OCTOBER 26, 1959.
This is the fourth appearance in this court of cases involving a consideration of a contract entered into between H. G. Walton, as party of the first part, and Herbert Johnson, as party of the second part. The first of these cases was Broyles v. Kirkwood Court Apartments, Inc., 97 Ga. App. 384 ( 103 S.E.2d 97). The next appearance was Broyles v. Johnson, 99 Ga. App. 69 ( 107 S.E.2d 851), wherein the body of the contract here in question was quoted in full. At the same term of this court at which the latter case appeared, this court had for its consideration a suit for money had and received brought by the plaintiff here against the defendant here, and in which this court reversed the judgment of the trial court overruling the defendant's general demurrer to the petition. See Johnson v. Broyles, 99 Ga. App. 76 ( 107 S.E.2d 853). In the first mentioned case, this court held that the contract here in question was not a contract or undertaking of Kirkwood Court Apartments, Inc., but that it purported to be a contract or undertaking on the part of Johnson individually, if anything, and this court accordingly affirmed the trial court in sustaining the general demurrers and in dismissing the action against Kirkwood Court Apartments, Inc. In the second case, the action was for a breach of Item 3 of the contract, and it was there held that, since that item related to the disposition of corporate profits and since the petition failed to allege that any dividends had been declared by the corporation, there were no profits to be divided between the individuals, and accordingly no breach of Item 3 of the contract had occurred under the allegations of the petition. The instant suit is an action to recover amounts allegedly due the plaintiff's assignor under the provisions of Item 2 of the contract. The trial court sustained a general demurrer to the petition as finally amended, and the exception here is to that judgment.
In so far as is material to a consideration of the question before this court, the petition in this case alleged that Walton, the plaintiff's assignor, and the defendant were each owners of a half interest in the corporation known as Kirkwood Court Apartments, Inc.; that Walton was president, and the defendant was secretary-treasurer and general manager thereof; that the corporation was organized for the sole purpose of building, owning, operating and perhaps selling the 32-unit apartment building constructed on the land owned by the corporation, and that pursuant to said purpose the corporation entered into a contract with an architect and subsequently erected pursuant to plans drawn by said architect a 32-unit apartment house; that at the time the apartment house was completed and the loan was made thereon the proceeds of the permanent loan were insufficient to pay certain indebtednesses incurred by the corporation in the construction of the apartments, and that the plaintiff advanced certain sums for the benefit of the corporation to pay these indebtednesses, and that under the contract sued on the first sums to be collected from the rentals of the apartments were to be applied in repayment of the advances made by Walton and by the defendant; that the defendant subsequently took over complete control of the corporation, having sued Walton on an indebtedness due him by Walton, and having, after recovering a judgment on that indebtedness, and having levied on Walton's stock and thereby taken over complete control of the corporation, proceeded to apply the corporate funds to his own purposes, including the repayment to him of an indebtedness due him by the corporation, and subsequently having sold the corporation and the corporate property to third parties unknown to the plaintiff, failed as corporate officer to repay to the plaintiff's assignor the sums advanced by the said assignor, and by reason of these facts, it is contended that the defendant is personally liable for these sums, including accrued interest in the amount of $4,272.30.
It has been said many times by this court that the essential elements of an alleged cause of action are simply a duty and a breach of it. Bell v. Fitz, 84 Ga. App. 220, 223 ( 66 S.E.2d 108). As against a general demurrer, allegations of facts from which the existence of a duty may be fairly inferred and showing a breach of it are sufficient. In the instant case, the existence of the duty is sufficiently shown by the allegations respecting the execution of the contract sued on together with the allegations showing performance on the part of the plaintiff in advancing money to the corporation thereunder. These allegations when considered with the other allegations of the petition to the effect that the defendant Johnson took over complete control of the corporation and thereafter failed and refused to repay to the plaintiff the sums advanced, are sufficient to show a violation of the contract which is the breach of duty sued upon, since under the ruling in Broyles v. Kirkwood Court Apts., 97 Ga. App. 384 ( 103 S.E.2d 97), the obligation of this contract was the personal undertaking of the defendant, Johnson. Under the facts alleged in the petition in this case, it is controlled by the ruling in this court in the case of Niagara Sprayer Chemical Co. v. Cotton States Fertilizer Co., 48 Ga. App. 779 ( 173 S.E. 460). In that case, the plaintiff and the defendant owned the entire stock in the corporation. In the present case, the plaintiff's assignor and the defendant owned the entire stock in the corporation at the time the contract was signed. In that case, as well as in this case, the corporation was indebted to both parties. In both cases, the parties undertook to see that payment was made on such indebtednesses, in that case out of certain accounts, and, in this case, out of the first rentals from the apartment project. The allegations in the instant case show that the defendant had complete control of the corporation, its finances, books of account, and accounts receivable. The defendant undertook in the contract to see that the plaintiff's assignor was paid out of the corporate funds for the money advanced by him. The petition alleged that the gross rentals collected were in fact sufficient to pay these sums. Whether or not the contract in this case be denominated one of guaranty or surety is immaterial and unnecessary for decision. On its face, it is an original undertaking on the part of the defendant, and under the allegations of the petition, the plaintiff, as assignee of the rights under the contract, is entitled to recover.
Judgment reversed. Felton, C. J., Townsend and Nichols, JJ., concur. Gardner, P. J., and Quillian, J., dissent.
It is to be kept in mind in determining the issues herein involved that this is not a suit ex delicto by the plaintiff, Jack Broyles, as assignee of said Walton for damages claimed as the result of the wrongful conduct of the defendant Johnson relative to said corporation or to the expulsion of Walton therefrom or the "kicking" him out of the same, but this is an action ex contract for money claimed due to Walton by Johnson, as an individual, and which debts were assigned by Walton to the plaintiff, and it affirmatively appears there was no such ex contract debtor.
It plainly appears from the allegations of the petition, as twice amended, that the alleged indebtedness, if any, is on the part of the said Kirkwood Courts Apartments, Inc., in favor of Walton, and not by Johnson individually. The present suit is by Broyles as assignee of said Walton, against Johnson as an individual, purporting to be for money due by Johnson to Walton for breach of a contract, and on the petition, as amended, shows that the indebtedness, if any, arises out of money advanced to and for the benefit of said corporation, and not to Johnson. It is my opinion that the court properly ruled that there was no cause of action alleged in favor of Broyles against Johnson, the individual.
I do not think that the case of Niagara Sprayer Chemical Co. v. Cotton States Fertilizer Co., 48 Ga. App. 779 ( 173 S.E. 460), is in the least applicable here. The plaintiff here is the assignee of a lawsuit in tort and not of any actual ex contractu indebtedness in favor of Walton against Johnson. This liability, if any, would be by the corporation in favor of Broyles, the assignor.
I think it follows that the trial judge did not err in sustaining the general demurrers, as renewed, to the plaintiff's petition, as amended, the same being excepted to by direct bill of exceptions to this court.
I am authorized to state that Quillian, Judge, concurs in this dissent.