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EQUITABLE LOAN AND SECURITY COMPANY v.

WARING.

[117 Ga. 599, 44 8. E. 320.1 CONTRACT Opposed to Public Policy.-The Power of Courts to declare a contract void for being in contravention of public policy ig

Very delicate and undefined, and should be exercised only in cases tree from doubt. (p. 190.)

CONTRACT—Supervision by Courts.-Courts should be extremely cautious in supervising private contracts, when the law. making power has not declared them unlawful. (p. 191.)

CONTRACT –Whether Fraudulent Because Impossible.-It is only in an extreme case that a court should hold a contract of such a character that its performance is impossible or improbable, and therefore that those who entered into it must have done so with a fraudulent intent. (p. 191.)

FORFEITURES — Interpretation and Enforcement of.–Forfeitures are not favored, and a contract, if ambiguous, will be so construed as to avoid them; but wben it is clear that the parties have agreed to a forfeiture, a court of law or of equity will enforce it. (p. 192.)

FORFEITURES—When not Relieved Against.—The Time of Payment specified in a contract may be material, and by its terms a failure to pay within that time may involve an absolute forfeiture; and if it does, the forfeiture will not be relieved against even in a court of equity. (p. 192.)

FORFEITURES AND LAPSES —Business Dependent on.--The mere facts that the success of a business or scheme is dependent, to some extent, upon lapses and forfeitures, even many lapses, is not sufficient to render it illegal. (pp. 193, 194.)

CONTRACT-Construction in favor of Legality.-It is not presumed that people intend to violate the law, and the language of their undertakings must be construed, if possible, so as to make the obligation one which the law recognizes as valid. (p. 196.)

CONTRACT-Construction by Party in Favor of Legality.A construction in favor of the legality of a contract may be strength. ened by the fact that one of the parties thereto has always placed that construction upon it. (p. 196.)

LOTTERY.~The Three Essential Ingredients of a lottery are consideration, prize, and chance; chance alone, or coupled with conrideration, will not make a lottery. (pp. 195, 199.)

LOTTERY--Multiple Table.—Where Certificates of Investment are issued by a company, the fact that those to be called for redemption are determined by reference to a table of numbers arranged acm cording to multiples of the figure 3, instead of in their numerical order, thereby making it possible in some cases for certificates to be redeemed before others of older date, does not make the scheme a lottery. (pp. 197, 198.)

LOTTERY-Chance and Prize.- When a Number of Persons are entitled in any event each to a given amount, though it may not be the same amount, and all cannot be paid at one time, the deter

Am. St. Rep. Vol. 97-12

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mination by lot, or chance, or drawing of what portion of that number shall be paid at different times, does not give to the transaction the characteristics of a lottery. It is when the amount to be paid, or the value of the article to be delivered, is itself determined, either in whole or in part, by lot, drawing, or chance, that the elements of a Jottery are present. (p. 199.)

LOTTERY--Investment Certificates--Absence of Prize.--A scheme for the issuance and redemption of investment certificates or bonds, which involves the elements of consideration and chance, but not the element of prize, is not a lottery. (pp. 185, 199, 202.)

CORPORATIONS.—If any Statement in the Literature of a corporation is at variance with the contract which it finally makes with the holder of its certificates, what is stated in the certificate must control until the contract is reformed or rescinded. (p. 203.)

APPEAI-Right to Hearing by Full Court.--Even if, under any circumstances, a litigant has a right to ask that his case be heard before a full bench of judges in the supreme court, the apo plication must be made before the case is heard. It is too late to urge the right as a ground for a rehearing. (p. 210.)

JOINT TENANCY with Survivorship.--In Georgia the mere creation of an estate in two or more persons never draws to it survivorship as an incident, and the presumption is that survivorship is not intended; but if it is provided for by express terms or necessary implication, the law allows it to exist. (p. 212.)

Hoke Smith, H. C. Peebles, Candler & Thompson, Rosser & Brandon, H. E. W. Palmer and E. W. Butler, for the plaintiffs in error.

John L. Hopkins & Sons, Brown & Randolph, and G. T. and J. F. Cann, for the defendant in error.

642 COBB, J. This case is here upon a bill of exceptions of the Equitable Loan and Security Company, assigning error upon an order of the judge of the superior court of the Atlanta circuit, placing its entire assets in the hands of a receiver for administration. The reasons for appointing the receiver were, that the scheme of the company, if not a lottery, was, to

say the least of it, in the nature of a lottery, and was therefore, illegal; that the contracts evidenced by its certificates were impossible of performance by legal methods; and that such contracts were contrary to public policy. The court did not base its judgment upon the ground that the officers of the company had been guilty of malfeasance, misfeasance, or breach of trust. The court found that the officers of the company had not been guilty of any personal dishonesty or peculation in dealing with the assets of the company, but held that the scheme was illegal. The court also found that, if the scheme of the company was legal and its

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contracts valid, any deception which may have been practiced upon any of the certificate holders was not of such a character as to require the appointment of a receiver; that while such certificate holders might have their remedy by a rescission of the contract, there was nothing in the evidence authorizing the appointment of a receiver on this ground. The court did not appoint a receiver on the ground of the insolvency of the company, and did not make any finding in terms on the question as to its solvency 643 or insolvency. The court also found that the company, under its charter, was authorized to make investments in Teal estate, and that the certificate holders had no right to complain that the charter had been so amended as to authorize the company to engage in this business. It will thus be seen that the first question to be determined is whether the scheme of the company was illegal. In order to fairly pass upon the question of the legality of the scheme, it is necessary to take into consideration the origin and history of the company. The original charter of the company was granted on January 30, 1894, under an order of Fulton superior court. It authorized the company to carry on the business of dealing in stocks, bonds, notes, and securities of every description, with a right to negotiate loans, charge commissions, and loan money upon collaterals, mortgages, or other security. It is also authorized the company to issue investment bonds and certificates, to be paid for by the investor in monthly installments, or otherwise, the plan to be fully set forth in the certificates or bonds. The amount of the capital to be employed was fixed at two thousand five hundred dollars, with the privilege of increasing it to one hundred thousand dollars. By an amendment to the charter, granted March 26, 1896, the company was authorized to purchase, improve, lease, sell, and dispose of or use in any way it might see fit, property of any description, real or personal; to execute notes, bonds, and other obligations, and to secure the same by deed of trust, or other form of security, including the right to guarantee the payment of obligations of other persons, datural or artificial; to pursue the plan of national or other building and loan associations, should its directors see fit to adopt such plan of operation in whole or in part. This amendment to the charter was accepted by the company on March 31, 1896. Shortly after its incorporation, the company issued an investment certificate, which is styled “Class 'A.'The following is a copy of one of such certificates :

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“The Equitable Loan and Security Company, of Atlanta, Georgia, promises to pay to of

or order, at its home office in Atlanta, Ga., five hundred and five dollars and fifty-four cents ($505.54), upon the following express terms and conditions:

"1st. That there shall be paid by the holder to the maker hereof, at its home office in Atlanta, Ga., without any other or further notice, an installment of one dollar and twenty-five cents ($1.25) on the fifth day of each and every succeeding month hereafter until 644 one hundred and thirty installments shall have been thus paid, time being of the essence of this contract.

“2nd. That the holder hereof shall surrender for cancellation this certificate, whenever the same shall be called, upon the payment to him of its then redemption value; the maker reserving the right to call and pay the same before maturity; under the following rules and regulations. Certificates paid before maturity shall be paid in the following order, to wit: The first paid shall be number one, the second paid shall be number three, the third paid shall be number nine, the fourth paid shall be number two, the fifth paid shall be number six, the sixth paid shall be number eighteen, the seventh paid shall be number twenty-seven, the eighth paid shall be number four, the ninth paid shall be number twelve, the tenth paid shall be number thirty-six, and so on, according to the table which is printed on the back hereof, and which table is hereby referred to and made a part of this contract.

“3rd. That the redemption value of this certificate, if paid prior to its maturity, shall be fifteen dollars if paid one month after date, eighteen and 5-100 dollars if paid two months after date, twenty-one and 11-100 dollars if paid three months after date, twenty-four and 18-100 dollars if paid four months after date, twenty-seven and 26-100 dollars if paid five months after date, and thirty and 35-100 dollars if paid six months after date, and so on, the redemption value increasing three dollars with each installment paid, besides interest at the rate of four per cent. per annum on the redemption value of said certificate for the month next preceding the date of redemption hereof.

“4th. That of each and every installment paid as aforesaid the maker hereof shall place twenty-five cents to a reserve fund, which shall be used and held for the protection of all live cutstanding certificates issued by this company; and seventy

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five cents to a redemption fund, which may be used as follows: (a) For paying certificates issued by this company in the order and manner that they shall mature. (b) For paying off and retiring certificates prior to their maturity, according to the terms hereinbefore stated. (c) For paying the heirs, exccutors, or administrators of any deceased holder hereof the sum that installments paid by such deceased may have contributed to the redemption and reserve funds, provided said certificate is in full force at death of holder and satisfactory proof of 045 such death is furnished the maker hereof within sixty days after death accurs; and the remaining twenty-five cents, and all transfer fees

, shall be used for the expenses of said Company. “5th. That a failure to pay any one of said installments when due subjects the holder hereof to a fine of fifty cents, which, together with the omitted installment, must be paid by the fifth day of the next succeeding month; and if said installment and fine are not paid within the said time, then this certificate shall be null and void, and of no value, and the holder hereof for. feits all payments and fines; provided, however, that this company will reinstate said certificate at any time within three months after such forfeiture, upon the holder hereof first paying all dues hereon, together with fines assessed at the rate of fifty cents for each payment in default. If this certificate shall

, according to the plan of redemption herein stated, become payable after it shall have been forfeited, and before its reinstatement, then it shall be entitled to payment the next month after its reinstatement. And provided further, that after sixty monthly installments shall have been paid in the manner herein provided, and all other stipulations herein shall have been fully complied with by the holder hereof, and such holder shall thereafter default in any subsequent installment, the maker agrees to issue to such defaulting holder a new certificate which shall bear the next unsold number, for an amount equal to the payments made on such defaulted certificate, less the amount deducted for expenses, which new certificate thus issued shall be non-assessable and shall bear interest at the rate of four per cent. per annum, and shall be payable in its regular order as

per plan of redemption herein stated; provided application for 3 such new certificate shall be made to the home office of the E } Company and the old or defaulted certificate surrendered within

three months after such defaulted certificate shall be cancelled on the books of the Company.

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