Opinion
17128.
JULY 12, 1950.
Equitable petition. Before Judge Boykin. Meriwether Superior Court. January 4, 1950.
Clifford Walker, J. Benton Evans, J. Ellis Mundy, U.S. Attorney, F. Douglas King, Drennan Brannon, and Smith, Partridge, Field, Doremus Ringel, for plaintiffs in error.
Matthews Long, Lovejoy Mayer, Young Hollis, Foley Chappell, Cleveland Rees, J. R. Sparks, Ben R. Freeman, G. A. Huddleston, and E. O. Dobbs, contra.
1. The auditor properly sustained the demurrers to the cross-action of the defendants for damages by reason of the alleged loss of anticipated profits.
2. Where an exception of law to an auditor's report complains of the rejection of certain testimony, and does not set out the evidence which was rejected, but refers the court to all the testimony of two witnesses contained in an exhibit to the exception, which exhibit contains all the evidence, oral and documentary, that was taken before the auditor, such exception is not complete in itself, and this court is not required to determine such exception.
3. Where a bill of exceptions assigns error upon the judgment of the court overruling exceptions to findings of law and of fact by the auditor, in an equity case, and a consideration of the evidence is necessary in passing upon each exception of law, and does not set forth in such exception the evidence necessary to be considered with such exception, but refers the court to all the evidence, oral and documentary, consisting of 175 pages of unbriefed testimony and 24 documents, in an exhibit attached to the exceptions, such failure to so set forth the evidence is a sufficient reason to overrule such exceptions.
4. This court will not consider questions raised by a bill of exceptions assigning error on a provision of a decree entered in accordance with findings of fact and of law to an auditor's report, when it appears that no exceptions were filed to the particular provision of the auditor's report.
No. 17128. JULY 12, 1950.
J. R. and A. M. Legum, non-residents of this State, filed an equitable petition in the Superior Court of Meriwether County against Tovell Construction Company, alleged to be a partnership composed of C. Eugene Tovell as general partner and Harry S. Legum as a limited partner. It was alleged: that the defendants were non-residents of the State of Georgia, but that the defendant Tovell "is within the jurisdiction of this court and said partnership may be served by perfecting service upon the said" Tovell, and that the defendant Legum was a resident of the State of Maryland; that the defendants were indebted to the plaintiffs in the sum of $60,000 together with interest, represented by a note dated March 22, 1948, a copy of which was attached to the petition; that, at the time the note was executed, the defendants executed an agreement, as shown by an exhibit attached to the petition, whereby they agreed to assign, transfer, and convey to the plaintiffs all the accounts receivable, inventory, plant and equipment belonging to the defendant partnership; that, after the money had been advanced, the defendants refused to execute the mortgage described in the agreement, and the partnership had virtually ceased to do business, that of operating a prefabricating plant located in Greenville, Georgia; and that the partnership was insolvent. The petition alleged that it was necessary that the assets be marshaled and a receiver appointed. Upon presentation of the petition a temporary receiver was appointed.
The defendants Tovell and Levy, and the partnership, filed an answer and cross-action and plea of recoupment, which denied the material allegations of the petition, but admitted the execution and delivery of the note in the partnership name; and asserted that the partnership was a general partnership composed of the plaintiffs and C. Eugene Tovell, Walter J. Levy, and Harry S. Legum, and that the plaintiffs, being general partners, could not advance money to the partnership and become creditors, especially preferred creditors. The answer and cross-action alleged that the plaintiffs had taken over the partnership business when they advanced the money on the note, and that the three Legum brothers had conspired together to wreck the partnership by discontinuing operation of its business, notwithstanding the fact that contracts had already been made for the erection of houses that would have made a net profit for the partnership of $416,669.49. The cross-action alleged that the plaintiffs are non-residents, and sought a judgment for damages to be set off against the indebtedness.
By amendment, the plaintiffs prayed for a judgment and decree of specific performance, requiring the defendants to execute the mortgage referred to in the agreement, or in lieu thereof that the plaintiffs have an equitable lien set up against the property of the partnership. They also filed demurrers and objections to the cross-action and plea of recoupment and damages.
The case was referred to an auditor, with authority to pass on all questions of law and fact, and to pass on all demurrers. The auditor heard evidence and made certain rulings relative to the admission of evidence, and also made a ruling sustaining the demurrer to the cross-action for damages. He found as a matter of fact and law: (a) that Tovell Construction Company was composed of C. Eugene Tovell and Walter J. Levy as general partners and Harry S. Legum as a limited partner, and that the plaintiffs were not general partners in Tovell Construction Company; (b) that the note sued upon was validly executed, and that the plaintiffs, not being general partners in the defendant company, are creditors of such company and were entitled to a judgment on their note; (c) that the refusal of the defendants to execute the mortgage was unwarranted, and the plaintiffs were entitled to a specific performance of the contract, and were entitled to have the same foreclosed as an equitable lien and mortgage upon the assets specified in the contract, said lien to date back to the date of the note and agreement; (d) that the defendants had failed to show by a preponderance of the evidence the amount of damages sustained, if any, and were not entitled to recover on the cross-action; and (e) that the tax claims of the United States and the State of Georgia as intervenors were allowed for the amounts claimed by the respective sovereigns, but that these claims be subordinated to the equitable lien of the plaintiffs on the assets of the partnership set out in the agreement to mortgage.
Tovell Construction Company, C. Eugene Tovell, and Walter J. Levy filed exceptions of fact and of law to rulings numbers 1, 2, 3, 4, 5, 11, and 12 of the auditor. Ruling 8, which was a finding of fact and of law on the intervention of the United States on its tax claim, and ruling 9, which was a finding of fact and of law on the claim of the State of Georgia on its claim for taxes, were not excepted to either by the defendants, or by the United States or the State of Georgia.
The exceptions of fact and law were overruled on each and every ground, and a final decree was entered in accordance with the finding of the auditor. The defendants, Tovell Construction Company, C. Eugene Tovell, and Walter J. Levy filed their bill of exceptions, and assign error on the overruling of their exceptions and on the final decree. No other party filed any exceptions to the decree.
1. In their cross-action, the defendants alleged: that immediately following the execution of the note sued upon, the plaintiffs got control of the defendants' business and refused to allow the partnership to continue; that such action was pursuant to a fraudulent conspiracy entered into by the plaintiffs "to wreck and destroy the business and bring about a condition that would compel a liquidation and discontinuance" of the business carried on by the partnership; that the plaintiffs refused to allow the partnership to manufacture and deliver 375 houses, from which the partnership would have derived a net profit of $416,669.49; and that the partnership was entitled to recover such amount. It was alleged that the damages claimed resulted "from the difference between the cost of construction and erection of the 375 houses . . and the contract price for which the same had been sold"; and the defendants listed the price for which the same were to be sold, and enumerated several different projects, wherein are set out the places where the projects were located and the amount of total anticipated profits on each job. The plaintiffs demurred to the cross-action seeking damages, on the grounds that the allegations therein made were mere conclusions, that the damages claimed were too speculative and conjectural, and that the defendants did not allege any contracts that they had with anyone. The auditor sustained these demurrers and struck the cross-action.
There was no error in thus disposing of the cross-bill. The damages claimed were in the nature of anticipated profits which the defendants claimed would have been realized if they had been allowed to go forward with the business, by the construction of 375 houses. There is no allegation that there were binding contracts on the part of the defendants as to the construction of these houses, or any information as to how the amount of profits alleged would be arrived at. This claim for damages by reason of loss of anticipated profits was too remote, conjectural, and speculative to afford the basis for a cause of action. See Code, § 105-2008; Clay v. Western Union Telegraph Co., 81 Ga. 285 ( 6 S.E. 813); Wappoo Mills v. Commercial Guano Co., 91 Ga. 396 (1) ( 18 S.E. 308); Palmer v. Atlantic Ice Coal Corp., 178 Ga. 405 (2) ( 173 S.E. 424). Compare Red v. City Council of Augusta, 25 Ga. 386.
2. Exception 2 complains of the ruling of the auditor excluding all testimony relative to acts or declarations made by one of the plaintiffs, J. R. Legum, who was deceased at the time of the trial. In their exceptions, the defendants assert that the "material portions of the record necessary to a clear understanding of the exceptions made herein is the complete testimony of C. Eugene Tovell and Walter J. Levy; which testimony is incorporated and made a part of Exhibit A, which is attached to these exceptions by designation to be hereinafter made, and the testimony of said two witnesses, as shown by Exhibit A, is incorporated herein and made a part of these exceptions by reference thereto." It is asserted that the ruling excluding the evidence was contrary to law.
In an equity case, where evidence is alleged to have been erroneously admitted or excluded by the auditor, it should be literally or in substance set forth in the exceptions or as a part thereof. Hilton v. Haynes, 147 Ga. 725 (5) ( 95 S.E. 220). So, where an exception of law complains of error in the admission of certain testimony and does not set forth the evidence complained of, but refers the court to the entire evidence in the record bearing on the subject, such exception is not complete within itself, and the court on review is not required to determine such exception. Faucett v. Rogers, 152 Ga. 168 (3) ( 108 S.E. 798). The exception here does not set out what evidence was excluded, but refers the court to the complete testimony of two witnesses, which is made a part of Exhibit A. Exhibit A, which is attached to the exceptions, consists of a question and answer transcript of the evidence of four witnesses, containing 175 pages. This exception is not complete within itself, and there was no error in the overruling of this exception.
3. In an equity case, where exceptions to an auditor's report involve a consideration of the evidence, the exceptor must set forth in connection with such exceptions the evidence necessary to be considered, or attach it as an exhibit, or at least point out definitely where the evidence is to be found. Butler, Stevens Co. v. Georgia and Ala. Ry., 119 Ga. 959 (1) ( 47 S.E. 320). Such requirement is not satisfied by merely giving the names of the witnesses or specifying the pages of the brief of evidence where their testimony may be found. Such evidence must be embodied in the exception, or attached thereto as an exhibit. Hudson v. Hudson, 119 Ga. 637 (10) ( 46 S.E. 874). In the last-cited case this court said: "The rule seems to be universal that in this class of cases the exception should be so framed as to relieve the superior court and this court of the burden of going over the entire case, or of performing duties which properly belong to the master and counsel."
The rule as to what exceptions of fact in an equity case should contain applies as well to exceptions of law when they involve a consideration of the evidence on which the auditor based his findings ( Perkins v. Castleberry, 122 Ga. 294, 50 S.E. 107), and failure to comply with this rule is sufficient reason for overruling exceptions of law. Butler, Stevens Co. v. Georgia and Ala. Ry., supra; Linder v. Whitehead, 125 Ga. 115 ( 53 S.E. 588); Fuqua v. Hadden, 192 Ga. 654 (2) ( 16 S.E.2d 728). In Smith v. Wilkinson, 143 Ga. 741 (2a) ( 85 S.E. 875), it was held that the court did not err in refusing to approve exceptions of law where the exceptions depended for their determination upon the evidence, and the exceptions of fact referred to the evidence only in the following manner: "Plaintiff attaches hereto a brief of all the testimony material to his exceptions, which brief is referred to as a part of each exception as if the testimony was included in the exception." See also O'Rear v. Lamb, 194 Ga. 455 ( 22 S.E.2d 74), where, in an exception to a finding of fact which was dependent upon a consideration of the evidence, the exception recited that it was necessary to have "all the evidence produced from both sides of the case, and every fact and circumstance involved in the transaction of the plaintiff and defendant," and referred to a brief of the evidence filed by the auditor; and this court held that such exception was properly disapproved by the trial court.
The defendants' exceptions Nos. 3, 4, and 5 complain of findings of fact and law in the auditor's report, set out in findings Nos. 3, 4, and 5. Exception No. 6 is to ruling No. 11, which is a summary of the findings of fact and of law by the auditor. In all these exceptions, error is assigned on the findings of fact as being contrary to the evidence, and without evidence to support such findings; and error is assigned on the findings of law as being contrary to law and contrary to the evidence. Exception No. 3 makes no attempt to set out any evidence. The other exceptions assert that the evidence necessary for consideration of each one of the remaining exceptions "is all of the evidence adduced at the trial of the case before the auditor, oral, documentary, and by depositions," as shown by Exhibit "A" "incorporated herein and made a part of the exceptions." Exhibit "A" consists of 175 pages of testimony unbriefed, and 24 separate documents.
In order to determine whether or not any of the exceptions enumerated above had any substantial merit, it would be necessary for the reviewing court to consider the evidence. The defendants have in none of these exceptions complied with the rules that are set out in the authorities heretofore cited; and in order to determine whether or not these exceptions of fact and of law are meritorious, the court would have to read the entire record of both the oral testimony and documentary evidence in connection with each exception. There was no error in overruling the exceptions enumerated above. In addition to the authorities cited above, see Fricker v. Americus Manufacturing c. Co., 124 Ga. 165 (4) ( 52 S.E. 65); Woodward v. Williams Bros. Lumber Co., 176 Ga. 107 ( 167 S.E. 169).
4. Conclusions of fact and law set forth in an auditor's report, to which no exceptions are taken by either party, are binding upon all parties to the litigation. Carter Woolfolk v. Jackson, 115 Ga. 676 (1) ( 42 S.E. 46); Wiley v. City of Sparta, 154 Ga. 1 ( 114 S.E. 45); Laramore v. Jones, 157 Ga. 366 (1) ( 121 S.E. 411); Lefkoff v. Sicro, 193 Ga. 292 (1) ( 18 S.E.2d 464). This court will not consider questions raised by a bill of exceptions assigning error on a provision of a decree entered in accordance with the findings of fact of an auditor, where it appears that no exception was filed to the particular provision of the auditor's report. Merchants National Bank of Rome v. Armstrong, 107 Ga. 479 (1) ( 33 S.E. 473).
The auditor in his report sustained the claims for taxes of the United States and the State of Georgia in their respective interventions, but subordinated these claims to the equitable lien of the plaintiffs upon the assets of Tovell Construction Company in the receiver's possession, and recommended that, in the distribution of funds by the receiver, the claim of the plaintiffs be paid out of these assets ahead of the claims of the United States and the State of Georgia. Neither the defendants, nor the United States, nor the State of Georgia, filed exceptions either of fact or of law to these findings. The court entered a decree based upon these findings of fact and of law in this regard, and the defendants attempt for the first time in the bill of exceptions to assign error on that part of the decree which orders the payment of the plaintiffs' lien prior to the tax claims of the United States and the State of Georgia. Under the above authorities, the findings of fact and of law of the auditor, unexcepted to, became conclusive on all parties, and the defendants cannot be heard now to assert for the first time the invalidity of these particular findings by assigning error on the decree.
Under the preceding rulings, the trial court did not err in treating the adverse findings of the auditor, unexcepted to, as conclusive against the defendants, and in approving the auditor's report and entering a decree in favor of the plaintiffs, which decree is in accord with the auditor's report. Lefkoff v. Sicro, 193 Ga. 292 (supra).
Judgment affirmed. All the Justices concur.