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Lawskills.com Georgia Caselaw
GEORGIA ELECTRIC COMPANY, INC. et al. v. MALONE et al.
45840.
Action for damages. Dougherty Superior Court. Before Judge Kelley.
DEEN, Judge.
In an action involving the sale of a one-half interest in a corporation from one co-owner to the other, where the plaintiff corporation sought damages based on a conspiracy between the seller and various employees to defraud the corporation, and the seller sought damages based on a conspiracy between the corporation, the buyer, and others to purchase not for the benefit of the co-owner but as agent of another in violation of their agreement, and to conceal such act by false entries on the corporate minutes, there are evidence conflicts requiring resolution by jury trial.
James Hall and J. L. Malone organized and for several years conducted the business of appellant Georgia Electric Co., Inc. as equal stockholders with equal executive authority. Various persons, including defendants Williams and Buchanan, were employed as project managers, first on a salary basis and later, under arrangements made by Malone, on a profit-sharing plan. On June 27, 1969, Malone by letter "confirming our conversation of this date" made a buy-or-sell offer of his 50% interest in the corporation to Hall, to be acted on within ten days, and calling for a $50,000 payment at time of acceptance. On the morning of July 3, Hall met with Wade, attorney for Richards & Associates, Inc., a competing concern, and others, and entered into a memorandum agreement for Wade to purchase the one-half interest in Georgia Electric Company, at a price apparently higher than the selling price of the same stock from Malone to Hall with a $50,000 payment at time of execution. The parties then went to the bank. Some of the evidence in the depositions indicates that Wade obtained the money and gave it to Hall. Hall then went to the Georgia Electric Company office where he accepted Malone's option to purchase and gave him the $50,000 down payment in cash. Shortly thereafter Malone set up a competing business in which a number of persons formerly employed by Georgia Electric, including Buchanan and Williams, were employed. Wade assigned the contract between himself and Hall to Richards & Associates. The stock transfer from Hall to this latter company appears on the Georgia Electric Company minutes as occurring on December 5.
Meanwhile, and shortly prior to July 3, there were discussions apparently unknown to Hall in which Williams and Buchanan indicated a desire to go with Malone but were concerned over amounts due or to be due them under the profit-sharing plan. Malone, acting for Georgia Electric, came to an agreement with them on settlement figures and they were paid on that basis. Georgia Electric's contention is that the assets of the corporation were stripped by this action, unknown to Hall, and that the sums paid were not due or owing. The following month Georgia Electric Company filed suit against Buchanan and Williams to recover the sums so paid them on Malone's authorization. Williams countersued on the basis that the amount paid him was less than that which he had earned. Georgia Electric Company, after taking various depositions, filed an amendment to its complaint adding Malone as a party defendant, alleging a conspiracy among Malone, Williams and Buchanan to wrongfully deplete the assets of the corporation, pay out unauthorized large sums to Williams and Buchanan, "raid" the company by enticing many of its key employees away into a competing business, and that these acts were carried on while defendants were still employed by the plaintiff company. Malone then countersued the corporation and brought in additional defendants in counterclaim, Hall, Richards & Associates, and its executive officer, Gibson. Malone's position in the countersuit is that he and Hall, as joint owners of Georgia Electric Company, were bound by a previous buy-or-sell agreement in the case either wanted to dissolve the association; that Hall knew the offer made to him was personal, fiduciary, and nonassignable; that Hall nevertheless fraudulently agreed to act as broker in procuring the stock for Richards & Associates at a profit and concealing this fact from Malone, who would not have sold had he known the purchaser was in fact Richards & Associates, and that he has sustained certain enumerated damages as a result.
The defendants in counterclaim, Georgia Electric, Hall, Gibson and Richards & Associates, each filed motions for summary judgment against Malone, and this appeal is from the judgment overruling these motions.
1. It is first contended that Malone has not shown, even if it be conceded that there was any wrongful act resulting from any conspiracy on the part of Gibson, Hall and Richards & Associates, that Georgia Electric was a party thereto or had any interest in who bought the stock and that, this being so, the attempt to bring the other defendants into this case must meet with failure. Code Ann. 109A-8--403 is cited as to the limited duty of an issuer to inquire into the transfer of stock registrations on its books. The section is pertinent only as to the acts of the corporate entity itself; the gist of the complaint here is the agreement of Hall, representing Georgia Electric, with Wade, representing Richards. A corporation can act only through its agents, and since Malone was in the act of relinquishing his corporate interest, this left Hall as the only agent in charge of the affairs of Georgia Electric, and his knowledge within the scope of the corporate business was necessarily the knowledge of the corporation. To all intents and purposes, Hall was Georgia Electric at the time of the stock transfer, whether it occurred in fact on July 3 or December 5 as shown by the minutes, and therefore the affidavit of Georgia Electric, signed by Hall, that Georgia Electric had no knowledge of facts to the contrary cannot in and of itself insulate the plaintiff from the countercharges of conspiracy made by Malone in such manner as to avoid a jury trial on the issues. Liberty Lumber Co. v. Silas, 181 Ga. 774, 776 (184 SE 286); 3 Fletcher, Cyclopedia of the Law of Private Corporations, 830. The minutes of a meeting of Georgia Electric dated December 6 state that the "purpose of the meeting was the announcement of James H. Hall that he had sold 225 shares of his stock to Richards & Associates, Carrollton, Ga. on December 5, 1969." They were signed by James H. Hall, President. Hall, the president, was the alter ego of the corporation and had the same knowledge as Hall, the stockholder. The minutes themselves were a corporate act. Therefore, the contention that the corporation as original defendant in counterclaim could not be a part of an alleged conspiracy with the new defendants sought to be added by the counterclaim cannot be used as a reason for dismissing the latter or rendering summary judgment in their favor. While it is true as stated in King Mfg. Co. v. Clay, 216 Ga. 581, 586 (118 SE2d 581) that it is no concern of the corporation who purchases its stock, this does not exactly hit the question posed, which is whether there was a conspiracy to enable Hall to dispose of the stock prior to its purchase in such manner as to frustrate the contractual rights of Malone.
2. But it is further contended that the depositions unequivocally establish that Malone made an outright sale to Hall, who had the unfettered right to dispose of the stock as his personal property in whatever way he saw fit. This may well be true, but under all the facts of the case, it is not a matter to be decided on summary judgment. True, Malone's buy-or-sell offer to Hall makes no mention of future competition so as to keep it between the parties rather than between one of them and a larger and more difficult competitor. The letter of Malone indicates that it is in confirmation of a telephone conversation, and does not demand the conclusion that the whole of the agreement is contained therein. The rule is that all attendant and surrounding circumstances may be proved, and that if it is manifest that the writing was not in-tended to speak the whole contract parol evidence is admissible. Code Ann. 20-704 (1). Malone swears positively that both parties understood, in accordance with a previous agreement, that the buy-or-sell offer was personal in nature and could not be brokered to another. From the record before us we can make no decision as to whether or to what extent parol evidence is to be held admissible in regard to the present contract nor what its effect may be on the trial of the case. The trial court properly denied the motion for summary judgment of each of the defendants in counterclaim.
Judgment affirmed. Bell, C. J., and Pannell, J., concur.
Smith, Gardner, Wiggins, Geer & Brimberry, B. C. Gardner, Jr., for appellees.
Gambrell, Russell, Killorin, Wade & Forbes, David A. Hondley, John D. Saunders, for appellants.
ARGUED JANUARY 4, 1971 -- DECIDED FEBRUARY 4, 1971 -- REHEARING DENIED MARCH 9, 1971.
Friday May 22 15:49 EDT


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