Court Opinion

ID: 3403654
Source: CourtListenerOpinion
Date Created: 2016-07-05 19:16:31.054053+00
Date Added: 2024-06-11T13:40:13.621602
License: Public Domain

Irrespective of whether the negotiable instruments act of 1924 in effect repeals the ruling in Hull v. Myers, 90 Ga. 674 (supra), I think that the allegations of the petition show that a demand was made upon J. T. Adams, the defendant, or his legal guardian, for the payment of the note, and that notice to the indorser, J. T. Adams, of the dishonor of the note by the maker was excused. The Code, § 14-827, is as follows: "Notice of dishonor is not required to be given to an indorser in either of the following cases: . . (2) Where the indorser is the person to whom the instrument is presented for payment." "A petition in an action on a negotiable promissory note against an indorser thereof, which fails to allege that the indorser had been notified of the dishonor of the note or facts excusing the failure to give notice is defective. . . Where an indorser of a promissory note is the chief officer of a corporation which executed the note as maker, and the person upon whom formal presentation by creditors would have to be made of their demands for payment, or if the indorser is the proper person to whom the note may be presented for payment by the corporation, and where it is so presented and dishonored by him for and on behalf of the corporation, it is not necessary that any further or other notice be given to such indorser; but the mere fact that the indorser is the president, secretary, or other principal officer of the corporation is not sufficient to excuse notice of dishonor to such indorser, in the absence of proof that such person was the one to *Page 782 
whom presentment for payment by the corporation was made." Verserv. Sterling Oil c. Co., 89 Okla. 114 (supra). This section (14-827) is identical with the Oklahoma Code section cited in the Verser case, supra, and is the same as section 115, 5 U. L. A. (N. I. L.). The allegations of the petition, in effect, state that J. T. Adams was the indorser on the promissory note. The petition does not merely state that he was the president of the maker corporation and signed the note for the corporation as such, but goes further and states: "`At the time of J. T. Adams' endorsement of the note described . ., he was president of the maker of the note, Adams-Swirles Cotton Mills, a corporation of Bibb County, Georgia. He was the active managing officer of the said business and a majority stockholder of the corporation. He had under his control and management all the assets and business of Adams-Swirles Cotton Mills. It was his duty to see that funds were provided for the payment of the aforesaid note, and the note paid.'" Such allegations certainly include an allegation that said Adams was the person at the time of the execution and endorsement of the note to whom presentment for payment by the corporation was to be made, and if the petition had not shown that the charter of the corporation had not been surrendered prior to the bringing of the suit, the "doctrine of the presumption of continuity of a status" would apply until the contrary is made to appear, and presentment to Adams as president of the corporation, as the person to whom payment by the corporation should have been made, would have excused the failure to give notice to the same person, J. T. Adams, the indorser. The question for consideration is an attack on the declaration by a general demurrer on the ground that the petition does not disclose a cause of action. The "doctrine of continuity of a status," which should be applied in this case, is that a state of things once alleged in the petition to exist at a certain date will be presumed to continue to exist as before until something to the contrary is shown in the petition or otherwise, or until a different presumption is raised from the nature of the subject in question. Childs v. Merrill, 63 Vt. 463 (22 A. 626, 14 L.R.A. 264); 20 Am. Jur. 205, § 207. When considering the general demurrer, all properly pleaded allegations in the petition are admitted to be true. Thus, all properly alleged facts in the petition are to be considered as proven for the *Page 783 
purpose of deciding the general demurrer here. The general demurrer does not admit the legal conclusions drawn by the pleader. I am not seeking to apply the "doctrine of continuity" to merely the ultimate fact but to the evidentiary orpreliminary facts, which the demurrer admits can be legally proved. Lewis v. Amorous, 3 Ga. App. 50, 53 (59 S.E. 338);Bivins v. Tucker, 41 Ga. App. 771, 774 (154 S.E. 820);Story v. Flournoy, 55 Ga. 56, 66. But when, as in the instant case, the corporation was alleged to have been dissolved, the doctrine of the presumption of continuity as to the existence of the corporation ceased to be applicable, and from this time forward the Code, § 14-713, was applicable. It is as follows: "Presentment for payment is dispensed with: (1) Where after the exercise of reasonable diligence presentment as required by this title cannot be made; (2) Where the drawee is a fictitious person; (3) By waiver of presentment, express or implied. (Acts 1924, p. 143.)" If the note was presented to Adams, the indorser, for payment after the time the maker corporation had surrendered its charter, notice of dishonor would be excused for, in the exercise of reasonable diligence, presentment could not be made. The note was signed September 30, 1929, and the petition was filed October 13, 1942. The petition alleged that "J. T. Adams has been properly adjudicated as a person of unsound mind, and R. L. Anderson Sr. has been by proper order of the court of ordinary of Bibb County, Georgia, appointed guardian of his person and property, and is now acting as such." I do not think that this allegation would change the situation, for notice to Adams after he became insane could be given through his guardian in terms of the law, and the doctrine of relationship back does not hold in cases of insanity, but only applies to continuity forward.Humphrey v. State, 46 Ga. App. 720, 722 (169 S.E. 53). The only positive allegation as to insanity is that the plaintiff is "now," on the 13th Day of October, 1942 (the date of the filing of the petition), insane. On the question of failure to give notice of dishonor see Mercer v. Hydrocarbon Converter Co.,205 A.D. 78 (199 N. Y. Supp. 75); Greenwade v. First Nat. Bank of Louisa, 240 Ky. 60 (41 S.W.2d 369); Phipps v. Harding, 70 Fed. 468 (30 L.R.A. 513); Houser v. Fayssoux, 168 N.C. 1
(83 S.E. 692, Ann. Cas. 1917B, 835). See also Code, § 14-714, which states in part: "The instrument is dishonored by *Page 784 
nonpayment when: . . (2) Presentment is excused and the instrument is overdue and unpaid." The case of Phipps v.Harding, supra, disapproves Hull v. Myers, 90 Ga. 674
(supra). However, Houser v. Fayssoux, supra, distinguishes theHull case from such cases as the instant one, thus: "It appears in the declaration of that case [the Hull case], and is admitted by the demurrer: First, `that each of said directors so signing said notes did so as surety for the maker, and it was so understood and agreed between each of them;' and, second, `that the maker [the company] was "utterly insolvent" at the time of the execution of the note.' The court bases its decision upon these facts, and the inference from this opinion is that the court would have decided the case differently if it had not beenunderstood and agreed between the directors, who indorsed theirnames on the notes, that they were `doing so as sureties forthe maker,' or if the company had been solvent. In the case at bar, there was no understanding or agreement that the indorsers were signing the note in controversy as sureties, and there was no evidence tending to prove that the Dallas Cotton Mills was insolvent. The facts in that case distinguish it from this." It might be noted in the instant case that, if after the corporation, the maker of the note, was dissolved the note was not paid, it was dishonored for nonpayment, and thereafter presentment to the maker corporation for payment was dispensed with, for in the exercise of reasonable diligence presentment could not be made. Code, §§ 14-713, 14-715. I therefore think, under all the allegations of the petition, that here the holder of the note was excused for his failure to give notice to the indorser of the dishonor of the note by the maker corporation. For these reasons, I think that the petition was not subject to general demurrer, and I concur in the judgment of reversal.