Case Name: ATLANTA & LOWRY NATIONAL BANK v. MAUGHON et al.
Court: Court of Appeals of Georgia
Jurisdiction: Georgia
Decision Date: 1926-02-13
Citations: 35 Ga. App. 25
Docket Number: 16404
Parties: ATLANTA & LOWRY NATIONAL BANK v. MAUGHON et al.
Judges: Jenlcvns, P. J., and Bell, J., concur.
Reporter: Georgia Appeals Reports
Volume: 35
Pages: 25–29

Head Matter:
16404.
ATLANTA & LOWRY NATIONAL BANK v. MAUGHON et al.
Decided February 13, 1926.
King, Spalding, MacDougald & Sibley, Neufville & Neufville, for plaintiff.
Jones, Evins, Moore & Powers, L. 8. Clamp, for defendants. '

Opinion:
Stephens, J.
(After stating the foregoing facts.)
Does the evidence as a matter of law establish the surety's release, and therefore was the verdict for the administrator of the estate of the surety properly directed? The bank's acceptance on November 37, 1930, of the new note, which was in the same amount, namely, $3500, as the original note sued on, and which contained "the original amount expressed in the old note payable on January 15, 1931," can be regarded only as a cumulative promise to pay at a deferred date the then-existing indebtedness of $3500 represented by the note sued on, which was at the time past due. The "interest in advance on this new note until the 15th of January," which was collected and accepted by the bank from the maker contemporaneously with the execution of the new note of November 37, 1930, must necessarily have been interest upon some indebtedness due the bank by the maker. Since the only indebtedness due the bank was $3500, which was not created by the new note, the interest accepted by the bank must necessarily have been paid and accepted upon the pre-existing indebtedness represented by the original note. To hold otherwise would impute to the bank the acceptance of interest in advance upon nothing, and the extension of time for the pajunent of nothing. The new note, which was executed by the maker of the original note, and which provided for the payment of $3500 at a deferred date, for which interest in advance was charged and collected, necessarily constituted a contract between the bank and the maker of the original note, whereby the time of payment of the existing indebtedness of $3500 represented by the original note was extended to January 15th following. Since such extension was made without the consent of the surety, the surety was thereby released. Civil Code (1910), § 3544.
The contract of extension as evidenced in the new note being in writing, no parol agreements or understandings to the contrary, if there were any, made by the parties contemporaneously with its execution constitute any part of the contract. There is evidence that there was no agreement to extend the time of payment, and that it was not the intention of the parties to extend the time of payment, but it does not appear that there was any agreement by which the time of payment was not extended. Where interest on a past- clue indebtedness is accepted in advance, it constitutes an extension of the time of payment, unless there is an agreement to the contrary. This agreement must be an affirmative one to the effect that the time of payment is not thereby extended. A negative agreement to the effect that it was not agreed that the time of payment was extended will not suffice. Randolph v. Fleming, 59 Ga. 777 (3); Scott v. Saffold, 37 Ga. 384. There is evidence, however, to the effect that the new note was "accepted with the understanding that the indorser would not be released." Such an agreement manifestly can not defeat the legal effect of a contract extending the time of payment without the surety's consent. Such a contract entered into with the maker operates as a matter of law to release the surety, despite any agreement to the contrary with the maker.
It is immaterial that the twelve-month period within which the estate was exempt from suit had not expired,and that no suit at the time could have been filed against the estate. Irrespective of this bar to an immediate collection from the surety's estate, the surety, or those succeeding to his rights, had the right to a preservation of the contract with the principal as originally made. But for the agreement with the maker extending the time of payment without the surety's consent, the administrator of the surety could have paid the note immediately, or at any time during the period of extension, and brought suit thereon against the maker. During this period of extension the surety might have been able to collect the amount of the debt out of the principal by garnishment or otherwise, whereas such opportunity might have passed before the expiration of the period of extension.
The maker of the two notes, who testified on the trial, was at the time of the execution of the second note and some time thereafter the administrator of the estate of the surety. A statement by him, made after the execution of the second note, contained in his individual petition for bankruptcy, to the effect that the estate of the surety, who was his intestate, would have to pay the note sued on, amounted to no more than an expression of an opinion by him as to a legal conclusion, or a prophecy of fact. 33 C. J. 398, § 335; Solomon v. Solomon, 3 Ga. 18 (5). It has no probative force as against the legal effect of the contract actually made, releasing the surety. The maker's testimony, to the effect that, when he made his return as administrator upon his relinquishment of the administration of the estate to his successor, he considered the note sued on as an indebtedness of the estate, is subject to the same criticism.
Under the undisputed evidence a verdict was properly directed for the defendant administrator representing the estate of the surety. The maker's discharge in bankruptcy was established without issue, and the verdict as to him was properly directed.
Judgment affirmed,.
Jenlcvns, P. J., and Bell, J., concur.