Knight v. Jeff Davis Banking Co.

Jenkins, P. J. Both under the laws of this State prior to the present banking law of August 16, 1919 (Ga. L. 1919, p. 135), and under that act, banking corporations, their presidents and directors, were and are prohibited from using and applying any part of the capital stock of a bank to the purchase of shares of its own stock. Civil Code (1910), §2348; Penal Code, § 209; act of 1919, supra, p. 218, art. XX, §24; Fitzpatrick v. McGregor, 133 Ga. 332 (2), 337-342 (65 S. E. 859, 25 L. R. A. (N. S.) 50); Crawford v. Roney, 126 Ga. 763, 766 (55 S. E. 499). In this action upon a promissory note given by the defendant to cover his original subscriptions for shares of stock in the plaintiff bank and another banking corporation merged with it, the plea and testimony of the defendant to the effect that the president of the banking corporations had agreed to cancel all of the note sued on except $125, in consideration of the defendant’s transfer and surrender of his stock to the plaintiff bank, showed an unauthorized and illegal consideration and constituted no legal defense. In this transaction (before the present banking law) no question is presented by the record as to whether the plaintiff bank and its president could have become the purchaser [441] or holder of the defendant’s shares, if “necessary to prevent loss upon a debt previously contracted in good faith,” as permitted by the present law, since there is no proof as to the existence of such a contingency. See, in this connection, article XIX, § 21, of the act of 1919, supra. The court, therefore, properly directed a verdict for the plaintiff and overruled the defendant’s motion for new trial. Decided December 10, 1923. 8. D. Dell, for plaintiff in error. Newton Gaskins, contra. Judgment affirmed. Stephens and Bell, JJ., concur.