Guarantee Trust & Banking Co. v. Flannery

Stockbridge, J., delivered the opinion of the Court. In October, 1909, the appellee purchased from an agent of the appellant a “bond,” which was expressed in the following terms: “United States oe America. Ho. 50199. $2500. $2500. Guarantee Trust & Banking Company.

In consideration of the written and printed subscription for this coupon bond, hereby made a part of this contract, and in consideration of the payment of one hundred dollars and the further payment thereafter ⁵⁸⁸ of a monthly premium of twenty dollars on or before the fifteenth day of each succeeding month until one hundred and twenty monthly premiums have' been paid; whereupon all payment of premiums shall cease, the Guarantee Trust & Banking' Company as trustee hereby promises and guarantees that there shall be paid to the registered holder of this bond at the home •office of the Company in Atlanta, Ga., the sum of Two Thousand Five Hundred Dollars .and this bond’s equitable proportion of the surplus accrued from interest, delinquencies, investments and fees, from similar bonds which will'be apportioned to all such bonds sold the same calendar year. It is further expressly provided and agreed that this bond and •coupons attached hereto-are-issued and accepted subject to the terms and conditions of the application here-for and the terms and conditions hereto attached, which are made a part of this contract as if printed on the face hereof. Issued at the home office, Atlanta, Ga., this the eleventh day of October, 1909. S. E. Smith, H. S. Miles, President.

Secretary.” Attached to the bond were “terms and conditions,” eleven in number to which reference will be made later. There were also attached fourteen coupons, each for the sum of .$31.25, falling due serially on the first days of January and July, the last of them maturing January 1, 1920. A year later the appellee purchased a second of the same general description of “bond,” which differed somewhat in phraseology from the first, in that the coupons were specially referred to, the matured value was stipulated to be paid in gold, and the proportion of accrued surplus was to' be determined as of the first day of March, 1921. There were still more marked differences in the - conditions attached to the bond.

A stipulation for.the retirement of the bond when the ⁵⁸⁹ accumulated profits to its credit should amount to $2,500 was omitted, the loan value which was 70% of the credit of the reserve in the first bond was increased to 80%, and some other minor variations. These differences are, however, of little or no importance in this case. In June, 1918, the Guarantee Trust & Banking Co. was. found to be insolvent, and receivers were appointed for it in Georgia, the State of its domicil. At the time when the adjudication of insolvency was made Mr. Flannery had paid $940, on account of the “bond” first agreed to be taken by him, and $700 on the second.

Learning of some funds in the City of Baltimore belonging to the Guarantee Trust & Banking Co., in October of 1913 he sued out a non-resident, attachment under which he sought to recover the $1,640, so-paid by him. To- this suit the Trust Company voluntarily appeared and contested the short note case. It is from the judgment rendered against it in that case that the present appeal is taken. The case, therefore, in no way involves any question of the right of a foreign receiver to maintain a suit in our Courts, but only the contractual rights of the parties, under the “bonds,” so called.

If the appellee was not a creditor of the defendant he could not maintain a suit against it, and the case should have been withdrawn from the consideration of the jury. Whether he was or was not a creditor is the sole question in the case. It is proper, in limine, to have clearly in mind certain matters. The purchase, so called, of the bonds was not a purchase in the true sense of that term, it was rather a subscription to' be paid in certain regular instalments, with rights to accrue when all of