Case Name: PRINCE HALL MASONIC BUILDING ASSOCIATION v. HOWARD et al.
Court: Court of Appeals of Georgia
Jurisdiction: Georgia
Decision Date: 1926-12-14
Citations: 36 Ga. App. 169
Docket Number: 17450
Parties: PRINCE HALL MASONIC BUILDING ASSOCIATION v. HOWARD et al.
Judges: Broyles, C. J., and Luke, J., concur. Bloodworth, J., absent on account of illness.
Reporter: Georgia Appeals Reports
Volume: 36
Pages: 169–172

Head Matter:
17450.
PRINCE HALL MASONIC BUILDING ASSOCIATION v. HOWARD et al.
Decided December 14, 1926.
Anderson, Rountree & Crenshaw, Jerome Jones Jr., for plaintiff.
Branch & Howard, Bond Almond, A. T. Walden, for defendants.

Opinion:
Per Curiam.
The Prince Hall Masonic Building Association brought suit against David T. Howard and W. S. Cannon on a promissory note, a copy of which was attached to the petition. The defendants denied liability and pleaded that the note was executed by them without any consideration whatever. On the trial, after the evidence was introduced, the judge directed a verdict for the defendants. A motion for a new trial, based on the general grounds, was overruled, and the plaintiff excepted.
The facts as disclosed by the record are in substance as follows: The Prince Hall Masonic Building Association had $11,641.96 on deposit, subject to check, in the savings department of the Atlanta State Savings Bank. The drawing out of this amount at-one time and at the particular time in question would have proved detrimental and probably disastrous to the bank. To induce the plaintiff to leave the money in the bank J. O. Ross, W. S. Cannon, and David T. Howard, stockholders of the bank (and the latter two also directors of the bank), entered into a written agreement with the plaintiff on September 30, 1931, under which the plaintiff was to leave all of the said money in the said bank for a specified time, after which time it was to be drawn out in specified installments; and Ross, Cannon, and Howard, for considerations stated in the agreement, agreed to be personally liable, as original and independent obligors, to the plaintiff for the said money in the event the bank should break or should for any reason fail to pay the specified amounts at the times designated. The written agreement began as follows: "Georgia, Fulton County. This agreement made and entered into this 30th day of September, 1931, by and between Prince Hall Masonic «Building- Association, a corporation, party of the first part, and Atlanta State Savings Bank and the undersigned officers, directors, and stockholders thereof, parties of the second part, witnesseth:" The agreement was signed as follows: "Prince Hall Masonic Building Association, party of the first part, Thos. H. Slater, Pres. J. O. Ross, W. S. Cannon, David T. Howard, parties of the second part." The agreement was not signed by the Atlanta State Savings Bank. Before the first payment under this contract became due the bank failed. After the failure the plaintiff, through its representative, approached the defendants for the purpose of collecting the amount which they guaranteed under this contract. The defendants contended that they "ought not to pay it, because we had no compensation out of it, no benefit." This dispute extended over a period of several weeks, and finally, in consideration of an extension of time, a decrease in the rate of interest, and the settlement of the disputed claim, the defendants, on July 18, 1922, executed the note sued on.
Under the original contract a benefit flowed to the defendants because they were stockholders and directors in the bank and it was to their pecuniary interest for the bank to remain open and do business. And a detriment flowed to the plaintiff, because it had a perfect right to draw out all its money before the failure of the bank, and refrained from doing so because of the written promise of the defendants to indemnify it against loss, and, as a result of so refraining, the plaintiff lost all of its said money so far as payment by the bank was concerned. The defendants contend, however, that the failure of the bank to sign the written agreement made it void and unenforceable, and that the. note sued on was executed merely as a renewal of that contract, and not as a compromise of the plaintiff's claim against them. Conceding, but not deciding, that the failure of the bank to sign the agreement rendered it unenforceable, the evidence upon, the trial fairly demanded a finding that the note sued on was not a mere renewal of the original contract, but that it was executed as a compromise and settlement of a bona fide dispute arising out of that contract. "Where a disputed claim, dependent upon a legal question, is settled and adjudicated by the parties, and a contract between them is accordingly made whereby one promises to pay to the other a sum of money, the promisor is bound thereby, though such question be really free from doubt, and properly resolved would have absolved him from' all liability." City Electric Railway Co. v. Floyd County, 115 Ga. 655 (42 S. E. 45). See also Glenn v. Zenovitch, 128 Ga. 596 (3) (58 S. E. 26); Johnson v. Redwine, 98 Ga. 112 (1) (25 S. E. 924); Belt v. Lazenby, 126 Ga. 767 (2) (56 S. E. 81); Preston v. Ham, 156 Ga. 224 (1 b, d) (119 S. E. 658).
The evidence adduced on the trial demanded a verdict for the plaintiff, and the court erred in overruling its motion for a new trial.
Judgment reversed.
Broyles, C. J., and Luke, J., concur. Bloodworth, J., absent on account of illness.