Opinion
16914.
JANUARY 12, 1950. REHEARING DENIED FEBRUARY 17, 1950.
Equitable petition. Before Judge Thomas. Coffee Superior Court. September 23, 1949.
Blalock Blalock, Gibson Maddox, and Memory Memory, for plaintiffs.
Hitch, Morris, Harrison Smith, R. Basil Morris, G. H. Mingledorff, and E. O. Blalock, for defendants.
Under the facts alleged, the petition shows that the petitioners have chosen to pursue a prior inconsistent remedy. The petition was therefore properly dismissed on general demurrer.
No. 16914. JANUARY 12, 1950. REHEARING DENIED FEBRUARY 17, 1950.
This petition was filed by Rowan B. Evans, Evelyn Evans Souther, and Jean Evans Morgan, children of Rowan B. Evans, deceased, and beneficiaries under the will of Rowan B. Evans, against Citizens and Southern National Bank of Savannah, individually, and as executor and trustee under the will of Rowan B. Evans, H. L. Shannon, Mrs. H. L. Shannon, and Coffee County Bank. The petition seeks the cancellation of the sale of 61 shares of the stock of Coffee County Bank, which were a part of the estate of Rowan B. Evans, by Citizens and Southern National Bank to H. L. Shannon, on the ground that the sale was fraudulent. The only relief sought against Coffee County Bank is an injunction restraining it from canceling or transferring certain shares of stock of Coffee County Bank on the books of the said bank. Coffee County Bank interposed no defense, and took no part in the defense of the action. Mrs. H. L. Shannon was made a party defendant because it is alleged that H. L. Shannon gave 10 shares of the stock in question to his wife, Mrs. H. L. Shannon. The defendants filed both general and special demurrers to the petition as amended, which were sustained in the court below.
Prior to the institution of the present action, Citizens and Southern National Bank filed a petition in the Court of Ordinary of Coffee County for discharge as executor of the will of Rowan B. Evans, deceased. The present petitioners filed a caveat thereto, a copy of which is attached to, and made a part of, the petition, objecting to the discharge of the executor because: "The said Citizens and Southern National Bank is indebted to said objectors, . . in the sum of Sixty-one Hundred and no/100 ($6100.00) Dollars, or other large sum, in that at the time of the death of the said Rowan B. Evans, on January 22d 1932, he was the owner of sixty-one (61) shares of the capital stock in the Coffee County Bank, at Douglas, Georgia, and that said The Citizens and Southern National Bank, as executor of the last will and testament of the said Rowan B. Evans, deceased, negligently, carelessly, and fraudulently sold and disposed of said stock . . for the sum of One Hundred No/100 ($100.00) Dollars per share, or a total amount of Sixty-one [?] and no/100 ($6100.00) Dollars, when said stock had a reasonable market value, and was worth at that time, the sum of Twelve Thousand Two Hundred No/100 ($12,200.00) Dollars, or Two Hundred and no/100 ($200.00) Dollars per share." The caveat then prays that Citizens and Southern National Bank, as executor of the will of Rowan B. Evans, account to the objectors for the sum of Sixty-one Hundred ($6100.00) Dollars, and that the application for discharge be denied.
While the caveat was still pending in the court of ordinary, and without dismissing that action, the petitioners filed the present suit in the Superior Court of Coffee County, seeking to cancel the sale of the 61 shares of stock of Coffee County Bank.
The original petition alleges in substance that in 1931 Rowan B. Evans participated in the organization of Coffee County Bank; that in order to provide additional capital and financial support for the proposed bank, Rowan B. Evans, and others, contacted officers of Citizens and Southern National Bank of Savannah for the purpose of enlisting the aid of the Savannah bank in establishing and operating Coffee County Bank; that, as a result of these negotiations, the officers of the Savannah bank agreed that they would subscribe to capital stock in Coffee County Bank, and that Citizens and Southern National Bank would assist Coffee County Bank in making loans and in other respects; provided, however, that Citizens and Southern National Bank should have the right to select the manager of Coffee County Bank, who should also be the executive vice-president of the said bank and be in charge of the operations of the bank and be under the supervision and direction of the comptroller of Citizens and Southern National Bank.
Pursuant to the above agreement, the officers of Citizens and Southern National Bank subscribed to "nearly one-half of the original capital stock in Coffee County Bank." H. L. Shannon, one of the defendants in the instant case, was named manager and executive vice-president of Coffee County Bank, and has remained in that capacity ever since. The petition does not allege when the organization of Coffee County Bank was completed, nor when it began its operations. It does appear, however, that the organization was completed prior to January 22, 1932, the date of the death of Rowan B. Evans. It is alleged that Rowan B. Evans owned 61 shares of the stock of Coffee County Bank at the time of his death.
The will of Rowan B. Evans, which is attached to, and made a part of, the petition, was probated on March 9, 1932. The will, after leaving certain items of personal property to the wife, Evelyn Shelton Evans, outright, and the residence to the wife during her life or widowhood, devised the rest and residue of the estate to Citizens and Southern National Bank as trustee, to the use of the wife during her life or widowhood, and to the use of the minor children. The will provided various alternative uses, not material here, and then provided: "That upon the death or remarriage of my wife, if all my children are over the age of 21 years, or at the time my youngest child attains 21 years, after the death or remarriage of my wife, such trust estate shall go in fee simple and be delivered to my children." All the children of Rowan B. Evans, the petitioners in the instant case, are over the age of 21 years. The wife, Evelyn Shelton Evans, remarried on November 15, 1936, and has no further interest in the estate under the terms of the will.
Citizens and Southern National Bank was appointed executor of the will and given full power and authority to sell and convey the whole or any part of the estate at private sale and without the order or decree of any court.
The trustee under the will was given broad powers of management with regard to the trust estate. In addition the trustee was given power to sell and convey the whole or any part of the trust estate at private sale without the order or decree of any court.
The original petition in the instant case then alleges that Citizens and Southern National Bank as executor of the will of Rowan B. Evans, deceased, sold at private sale the 61 shares of stock in Coffee County Bank, evidenced by a certificate issued to Citizens and Southern National Bank as executor of the will of Rowan B. Evans, deceased, to H. L. Shannon. The transfer was signed by Citizens and Southern National Bank as executor of the will of Rowan B. Evans, deceased. It is alleged that this sale was fraudulent, in that the stock was sold at a price of $100 per share, when it actual book value was $143 and its actual market value was $200 per share, which was well known to both defendants, and that the sale was effected as part of a plan on the part of Citizens and Southern National Bank, its officers, and H. L. Shannon to gain control of Coffee County Bank.
The prayers of the original petition are for temporary injunctions restraining all defendants from transferring or in any way changing the legal status of the 61 shares of stock in question; for an order restraining Citizens and Southern National Bank from further prosecuting the petition filed by it in the Court of Ordinary of Coffee County for discharge as executor of the will of Rowan B. Evans, deceased, pending final determination of the instant case. It is also prayed that the sale of stock by Citizens and Southern National Bank to H. L. Shannon, and the gift of stock by H. L. Shannon to Mrs. H. L. Shannon, be declared void; that the defendants Mr. and Mrs. H. L. Shannon be required to deliver up the certificates; that an accounting be had between the petitioners and Mr. and Mrs. H. L. Shannon; and that the petitioners have judgment against them for whatever further amounts may be due. The judge of the superior court granted restraining orders as prayed for, and scheduled hearings on the temporary injunctions. The defendants, Citizens and Southern National Bank, and Mr. and Mrs. H. L. Shannon, filed general and special demurrers to the petition.
Prior to the hearings on the prayers for temporary injunctions, counsel for the petitioners and counsel for Citizens and Southern National Bank entered into the following stipulation: "It is hereby stipulated between counsel for plaintiffs and counsel for The Citizens and Southern National Bank, that said bank will not proceed with its application for discharge as executor of the will of Rowan B. Evans, deceased, until there has been a final disposition of the pending proceeding in this court in the instant case between plaintiffs and defendants; that plaintiffs will make no objection to such discharge nor urge their present caveat, nor make other objection to such discharge, if the final outcome of the present proceeding should be adverse to them, it being understood that the discharge of The Citizens and Southern National Bank as executor as aforesaid is to be postponed solely for the purpose of canceling the transfer of the stock by The Citizens and Southern National Bank as executor of the will of Rowan B. Evans, deceased, involved in the present proceeding, that is, the transfer, to H. L. Shannon of stock in the Coffee County Bank owned by Rowan B. Evans at the time of his death, if the final judgment in the case is favorable to plaintiffs. It is admitted by counsel for The Citizens and Southern National Bank that the sale by said bank of the stock in the Coffee County Bank to H. L. Shannon involved in the instant case was made by The Citizens and Southern National Bank as trustee under the will of Rowan B. Evans, deceased." The court then dissolved the restraining order in so far as it affected The Citizens and Southern National Bank. The defendants Mr. and Mrs. H. L. Shannon were not, and never did become, parties to the above stipulation.
The petitioners then filed an amendment to their original petition, which was allowed, subject to demurrer. The amendment, in substance, struck all allegations in the original petition to the effect that the sale of the stock in Coffee County Bank, and the other wrongful conduct complained of, by Citizens and Southern National Bank were as executor of the will of Rowan B. Evans; and substituted therefor allegations to the effect that such sale and wrongful conduct was by Citizens and Southern National Bank as trustee under the will of Rowan B. Evans.
The amendment further alleges that, "notwithstanding the said The Citizens and Southern National Bank in transferring the aforesaid 61 shares of stock in the Coffee County Bank to the defendant, H. L. Shannon, purported to act as executor of the will of Rowan B. Evans, deceased, it was at the time in fact acting as trustee for plaintiffs and their mother under the will of the said Rowan B. Evans, deceased, . .
"That the acts complained of by plaintiffs were those of a trustee by appointment in the will of Rowan B. Evans, deceased, and not as the executor named in said will, and involve wrongful conduct on the part of such trustee, and therefore are not within the jurisdiction of the Court of Ordinary of Coffee County, and said court of ordinary is without the power to afford plaintiffs any relief as against said trustee."
The plaintiffs then allege that,. at the time their caveat was filed on March 7, 1949, in the Court of Ordinary of Coffee County, they were without actual knowledge of substantial facts, in that they did not know the facts with regard to the sale; they did not know "that said stock was sold for $6100, and were advised that the price was very much less its actual value." They also allege that they did not know that, "While the transfer of the said stock to H. L. Shannon was signed by The Citizens and Southern National Bank as executor of the will of Rowan B. Evans, deceased, it was sold by said bank as trustee under said will for plaintiffs and their mother, and said bank was acting as trustee in making the sale, and these facts were not known by plaintiffs at the time said caveat was filed by them. Shortly after the bank qualified as executor, the stock certificate for the 61 shares of stock owned by Rowan B. Evans at the time of his death was canceled and a new certificate for said stock issued to said bank as executor, and this had not been changed when the sale took place, and plaintiffs did not know this to be true when their caveat was filed." There are additional allegations to the effect that the plaintiffs did not know at the time they filed the caveat that no effort was made to sell the stock to any other person than H. L. Shannon; that they did not know the number of shares held by Citizens and Southern National Bank, its officers, and H. L. Shannon; and that they did not know that the 61 shares would give Citizens and Southern National Bank, its officers, and H. L. Shannon a majority of the stock of Coffee County Bank.
Citizens and Southern National Bank renewed its demurrers to the petition as amended, and the defendants Mr. and Mrs. H. L. Shannon filed general and special demurrers to the petition as amended. All demurrers as to all grounds thereof, both general and special, were sustained by the judge of the superior court. The exception is to this ruling.
1. Under the facts appearing from the foregoing statement of facts, the first question presented is, whether or not the plaintiffs in error are barred from maintaining the instant suit by reason of their election to pursue an inconsistent remedy prior to the filing of this suit.
"The caveat filed by these plaintiffs in the court of ordinary was finally dismissed for want of prosecution, without a hearing on the merits. This court has more than once ruled that there need be no adjudication of the plaintiff's rights in the prior proceeding in order to make available the defense of election of remedies. If he chooses the position he will occupy, and appeals to the courts on one theory, that is an election of such remedy, and he can not thereafter maintain a suit to enforce the alternative remedy. Board of Education v. Day, 128 Ga. 167 (supra), and authorities there cited; McClellan v. McClellan, 135 Ga. 95 ( 68 S.E. 1025); Warner v. Hill, 153 Ga. 510, 513 ( 112 S.E. 478); Chapple v. Hight, 161 Ga. 629 ( 131 S.E. 505). See also Hardeman v. Ellis, 162 Ga. 664 ( 135 S.E. 195); Johnson v. Epting, 185 Ga. 667 ( 196 S.E. 413)." Beard v. Beard, 197 Ga. 487-491 ( 29 S.E.2d 595). "Where one is in a situation in which he may elect between two inconsistent positions or proceedings, the choice of his position or proceeding must be made before bringing suit. He can not bring either action without selecting and determining to accept and occupy a position consistent with that action or position and inconsistent with the other. If with knowledge he chooses the position he will occupy, it would be trifling with the court to allow a change. Since the choice is made and one of the alternative positions or proceedings has been adopted, the act operates at once as a bar to the other and the bar is final and absolute." Hardeman v. Ellis, 162 Ga. 664-685 (135 S.E. 195).
"A petition by the sole heirs at law of the maker of a deed to cancel the deed, is properly dismissed where it appears therefrom that the grantor left a will devising the same land, which will has been offered for probate, and a caveat thereto filed by the heirs at law, and the issue thereby made is still pending and undetermined in the court of ordinary." Murray v. McGuire, 129 Ga. 269 ( 58 S.E. 841). "Whether or not there has been an election of remedies is determined by the commencement, not by the result of the action." Board of Education v. Day, 128 Ga. 165.
The doctrine of election of remedies, as appears from the authorities cited above, has been definitely adopted as a rule of law in this State. It is also well established that when the suit is filed, the election is then made, and thereafter an inconsistent remedy can not be pursued; provided, the action first taken was with knowledge of all essential facts. The caveat filed in the court of ordinary by the plaintiffs in error to the application of Citizens and Southern National Bank for discharge as executor sought to prevent the discharge because the bank stock in question had been fraudulently sold for less than its value until and unless the executor had accounted to the plaintiffs in error for the difference in the sale price of the stock and its real value. The instant case seeks to declare the sale of the stock void for fraud, and to cancel and set aside the sale. These two remedies are, of course, inconsistent. The plaintiffs in error can not affirm the sale and require an accounting by the executor based on the actual value of the stock, as is sought to be done in the court of ordinary, which proceeding is now pending, and also set the sale aside and recover the stock itself, as is sought to be done in the instant case.
The executor was also trustee of a trust estate under the terms of the will, and in both capacities was authorized to sell the property belonging to the estate at private sale without any order of court. The instant suit, as originally filed, alleged that the stock was sold by Citizens and Southern National Bank as executor. By amendment it is alleged that, while the bank purported to sell the stock as executor, and signed the transfer of the stock as executor, in fact the bank sold the stock as trustee. The amendment alleges that, when the caveat was filed in the ordinary's court, the plaintiffs in error did not know that the stock was sold by the bank as trustee, and also alleges that the plaintiffs in error did not know of the fraud practiced. A mere reading of the caveat, a copy of which was attached to the petition in the instant case, reveals that the fraud was alleged in the caveat. This being true, the one substantial fact alleged by way of amendment as being unknown to the plaintiffs in error when the caveat was filed is the allegation that the plaintiffs in error did not know that the sale was made by the bank as trustee instead of in the capacity of executor.
It is contended that the doctrine of election of remedies is not applicable for the reason that the plaintiffs in error, when the caveat was filed, acted without knowledge of substantial facts, and that the court of ordinary does not have jurisdiction to require an accounting of the bank as trustee. As above stated, the caveat itself discloses that the plaintiffs in error knew all the substantial facts when the caveat was filed except the allegation to the effect that the stock was sold by the bank as trustee and not as executor.
The question is presented under these allegations: Does the court of ordinary have jurisdiction? "While any such liability of the defendant must be predicated upon its duties as executor, and not as trustee, even if the language of the will could be construed as impliedly making the defendant a trustee and as creating in it a devise in trust, still the allegations of the petition were insufficient to charge the defendant as such a trustee. `All property, both real and personal, being assets to pay debts, no devise or legacy passes the title until the assent of the executor is given to such devise or legacy.' Code, § 113-801. Even where the same person is expressly or by implication made trustee as well as executor, the administration of the executor does not end until there is a delivery, express or implied, to the trustee, upon assent of the executor, express or implied, to the legacy in trust." Robinson v. Georgia Savings Bank and Trust Co., 185 Ga. 688, 693 ( 196 S.E. 395). "`While a person may occupy the dual status of executor and trustee, where it becomes important to ascertain whether he was acting in the one or the other capacity, it will ordinarily be held that an executor does not change his status to that of trustee until completion of administration as executor, or until legal ascertainment and separation of the trust funds from the general funds of the estate, although after lapse of a reasonable time for settlement of an estate an executor may be regarded as a trustee.' 65 C. J. 641, § 511 (e). `One who is a testamentary trustee as well as executor holds the funds as executor until his final account as such is settled, and he can not properly assume the rights and duties of trustee until the court has approved his accounts . . and ordered a distribution of the estate.' 24 C. J. 935, § 2319 (e). `If one is executor or administrator and also guardian of a beneficiary he holds the estate first of all as executor or administrator, and does not hold anything as guardian which is not separated from the assets of the estate or placed properly to his account as guardian. So too if an executor is also the designated trustee under a will he comes into possession as executor, and his election afterward to hold as trustee must be manifested by some plain and unequivocal act.' 24 C. J. 52, § 470." Perdue v. McKenzie, 194 Ga. 356, 362 ( 21 S.E.2d 705).
In the instant case, the sale of stock in question was made long before there could have been any distribution under the terms of the trust provisions of the will. The administration of the estate could not have been, and was not, at that time completed. The petition shows that the transfer of the stock was signed by the bank as executor and not as trustee. Construing the petition most strongly against the plaintiffs in error, as must be done, the petition shows that the stock was sold by the bank as executor. We do not hesitate to say that, when called upon for an accounting in the court of ordinary, the bank as executor, under the facts here alleged, can not be heard to say, "the fraud charged against me was what I did in the capacity as trustee and not as executor. It follows that the court of ordinary does have jurisdiction under the facts alleged in the instant case, and the plaintiffs in error having elected to pursue the remedy of an accounting as against the executor for the alleged fraud, could not later proceed to set the sale aside for the same alleged fraud. For a good discussion of this question and a collection of authorities, see the note to Lindburg v. Engster, 116 A.L.R. 601.
Nothing said in Deas v. Jackson, 204 Ga. 134 ( 48 S.E.2d 878), is in conflict with the ruling here made. In that case the petition for accounting filed in the ordinary's court was withdrawn before the petition in equity was filed. It also appears in that case that the petitioners in the equitable suit were entirely ignorant of all the alleged fraud when the petition for accounting was filed in the ordinary's court. In the instant case, the petition itself discloses that the petitioners were not ignorant of the alleged actions of fraud when the caveat was filed in the ordinary's court.
The stipulation appearing in the statement of facts can not alter what has been said above in so far as the instant case is concerned, for the reason the purchaser of the stock did not stipulate, and, of course, is not bound by the stipulation. Whether or not the other parties to this cause of action, in view of the above-stated rules of law, would or would not be bound by this stipulation is not necessary to decide, and we do not decide.
It follows from what has been said above that the petition was properly dismissed on general demurrer. In this view of the case, it is not necessary to pass upon the questions raised by the special demurrers, or any other question raised.
Judgment affirmed. All the Justices concur.