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SOUTHERN FEED STORES v. SANDERS

Supreme Court of Georgia1942-05-21No. No. 14056
193 Ga. 884

Summary

Holding. The judgment is affirmed. The court upheld the auditor's findings that Sanders was entitled to an accounting for half of improperly deducted rents, rejected all legal exceptions including challenges to the petition's sufficiency, the contract interpretation, and the statute of limitations defense, and confirmed the interest calculation.

Southern Feed Stores brought an equity action against Sanders seeking an accounting of profits from a business operated under a partnership or similar agreement. Sanders was to receive half of net profits after expenses, excluding rent deductions. The case proceeded before an auditor who found that Sanders was entitled to compensation calculated without deducting rents, and that Sanders was owed half of the improperly retained rental amounts. Southern Feed Stores challenged the auditor's factual findings and raised several legal objections, including arguments that the petition failed to state a cause of action, that the parties had mutually modified the original contract terms, that portions of the claim were time-barred, and that interest calculations were improperly specified.

The court upheld the auditor's findings across all disputed matters. The petition adequately alleged an accounting claim without requiring itemized amounts, particularly where the defendant controlled the books and records. The auditor's determination that the original contract terms remained unchanged was supported by evidence and properly resolved as a factual question. The statute of limitations did not bar the claim because Sanders had been prevented from discovering the deductions through the defendant's control of company records, constituting legal fraud that tolled the limitation period. The interest award was valid because the auditor identified specific rental amounts from particular years and applied the statutory interest rate.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

  • Whether an equity petition for accounting must allege itemized amounts or specific sums due
  • Whether parties mutually modified an original contract through conduct to change compensation terms
  • Whether a statute of limitations defense applies when a contracting party's control of records prevented discovery of deductions
  • Whether an auditor's factual findings regarding conflicting evidence are reviewable for legal error

Procedural posture

Southern Feed Stores appealed from an auditor's decision awarding Sanders half of improperly retained rental amounts, raising exceptions of fact and exceptions of law regarding the petition's sufficiency, contract interpretation, statute of limitations, and interest calculations.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion

majority opinion

Reid, Chief Justice.

The exceptions of fact attack each and all of the auditor’s findings of fact. These findings related to the contract, whether it was changed bj mutual consent, the operation of the store thereunder, and finally a determination of whether the rents had been improperly charged and retained by the defendant; all of which sustained the contentions of the plaintiff and found against those of the defendant, resulting in a finding for Sanders of half of the rents. On most of the questions involved there was conflicting evidence, but sufficient evidence was adduced to authorize the auditor to find as he did. Accordingly, the exceptions of fact-and assignments of error on the disapproval thereof are without merit. Peyton v. McMillan, 145 Ga. 179 (7), 180 (88 S. E. 937); Cowart v. Singletary, 140 Ga. 435 (2) (79 S. E. 196, 47 L. R. A. (N. S.) 621, Ann. Cas. 1915A, 1116).

Exception 1 of the exceptions of law complains of the overruling of the demurrers to the petition. The demurrers were that the allegations were insufficient to constitute a cause of action; that no amounts were set out; and that the allegations were too vague to be the basis of a recovery. If a petition alleges a cause of action good either at law or equity, it will not be dismissed on the ground that it sets forth no cause of action. Smith v. Hancock, 163 Ga. 222, 229 (136 S. E. 52); Smith v. Manning, 155 Ga. 209 (116 S. E. 813); Gibson v. Gibson, 180 Ga. 457, 461 (179 S. E. 354). In the instant case injunction was prayed, and the court granted a restraining order. The plaintiff resorted to equity to preserve the records of the business, which were in the possession of the defendant. In an equitable petition for an accounting it is not required that the plaintiff allege an itemized statement or aver how much is due, provided he alleges facts sufficient to indicate that something is due him. Calbeck v. Herrington, 169 Ga. 869 (152 S. E. 53); Bowman v. Chapman, 179 Ga. 49 (2) (175 S. E. 241); Gould v. Barrow, 117 Ga. 458 (43 S. E. 762); Smith v. Hancock, supra; Luther P. Stephens Investment Co. v. Berry Schools, 188 Ga. 132 (2) (3 S. E. 2d, 68); Atlanta Trust Co. v. National Bondholders Corporation, 188 Ga. 761, 770 (4 S. E. 2d, 644). Where it appears from the petition that the defendant was to keep the books, and the plaintiff was refused access to them, no bill of particulars is required. Newcomb v. Wagoner, 35 Ga. App. 29 (132 S. E. 117); Hogan v. Walsh, 122 Ga. 283 (50 S. E. 84). Applying the foregoing rules to the present petition, there was no error in overruling the demurrers, and the exception is without merit.

Exceptions of law numbered 2 and 3 complain of the findings that under the contract Sanders’ compensation was to consist of one half of the net profits, after deducting expenses, except rents, and that Sanders was entitled to an accounting therefor, the ground of exception being that the original contract was changed by mutual consent, under which the rents should have been deducted. Under certain circumstances there may be a mutual disregard of an executory contract between parties. Code, § 20-116. However, in Bearden Mercantile Co. v. Madison Oil Co., 128 Ga. 695 (4), 704 (58 S. E. 200), the court said: "While a distinct stipulation in a contract may be waived by the conduct •of the parties, it must appear that it was the intention of the parties to treat such stipulations as no longer binding. The mere fact that one party so intended would not bring about this result. It must appear that it was the mutual intention; that is, the circumstances must be such as, in law, to make practically a new agreement as to the stipulations in the original contract.” Whether or not there was such a mutual disregard of the original contract is a question for a jury, or as in this case for the auditor. Mauldin v. Gainey, 15 Ga. App. 353 (7) (83 S. E. 276). The auditor having found against the contentions of the plaintiff in error and the findings of fact, being supported by evidence, there was no error in disapproving the exceptions, and they are without merit.

The question is made in the fourth and last exception of law, that a part of the amount found against the Southern Feed stores was barred by the statute of limitations, such part, as contended, having accrued more than six years before the institution of the suit, and the contract not being one under seal. Although the suit was not filed until October, 1935, it was alleged in the petition and supported by evidence that the store had been operated under the contract from December, 1927, to February, 1935, during which period the books and records had been in the possession of the defendant, it had not apprised the plaintiff of the deductions, nor had he discovered them, despite his inquiry for detailed statements. If the defendant, or those under whom he claims, shall have been guilty of a fraud by which the plaintiff shall have been debarred or deterred from his action, the period of limitation shall run only from the time of the discovery of the fraud. Code, § 3-807. In Hoyle v. Jones, 35 Ga. 40 (89 Am. D. 273), it was held: "The concealment of a right, by one whose duty it is to disclose it, prevents the running of the statute of limitations in favor of the party in default. It is a legal fraud.” We hold that the ground based on the statute of limitations is without merit. In the same exception it is complained that the finding of interest was vague, indefinite, and uncertain, in that the rate thereof was not stated. In his findings the auditor specified particular amounts of rents on annual periods which had been improperly deducted, and on these amounts from the respective annual dates he allowed interest. The statute fixes the legal rate of interest. Code, § 57-101. We find no merit in this ground of exception, and there was no error in its disapproval by the court.

Judgment affirmed.

All the Justices concur.