Court Opinion

ID: 5625425
Source: CourtListenerOpinion
Date Created: 2022-01-11 04:51:20.541245+00
Date Added: 2024-06-11T08:37:35.590803
License: Public Domain

Broyles, C. J.,
dissenting. The decision of this case depends upon the answer to one question: Did the fact that the note was indorsed by the Jones Auto Company “with recourse” entitle the defendant to the set-off pleaded ? There was no issue of fact raised by the evidence in the case, and, as stated in the brief of counsel for the plaintiff in error, “under the pleadings and the evidence, the only theory upon which the set-off could be sustained would be upon the assumption that the credit of Jones Auto Company was pledged as security for the payment of the Cochran note. This assumption must rest upon the special endorsement 'with recourse/ if at all. It follows that if the Jones Company’s endorsement is so defective as to be of no legal force or effect, the defendant’s set-off must fail.” An endorsement on a promissory note is a contract, “and, like other contracts, must be supported by a consideration.” Knight v. Calhoun, 33 Ga. App. 313 (135 S. E. 790), and cit. And while the endorsement in the instant case must be presumed to have been made for a consideration, that presumption was rebutted' by the undisputed evidence. While, under the provisions of the “reserve agreement,” the defendant company was not obliged to purchase the note in question, or any other note offered by the auto company, *800even if the note were acceptable, it was obligated by the terms of the agreement, when it did elect to buy a note from the auto company, to buy it when endorsed by the auto company “without recourse,” if the note were acceptable to it (the defendant); and the undisputed evidence was that the note in question was acceptable to the defendant, and the endorsement “with recourse” was not made at the defendant’s request. This being true, the endorsement “with recourse,” written by the auto company on the note, was made without any consideration, and, therefore, was null and void. The endorsement could not be treated as a new agreement, or as a novation of the original contract, since the first contract (the reserve agreement) was in full force and effect when the endorsement was made and the note purchased by the defendant, and there had been no new consideration or change in the parties. Code (1933), § 20-115; Mitchell v. LaFayette Investment &c. Co., 30 Ga. App. 696 (118 S. E. 777); Phelps v. Belle Isle, 29 Ga. App. 571 (3) (116 S. E. 217). It follows from what has been said that the endorsement “with recourse” on the note was void for want of a consideration, and the defendant’s plea of a set-off could not legally be sustained; and the judgment for the defendant was contrary to law and the evidence.