Court Opinion

ID: 5626138
Source: CourtListenerOpinion
Date Created: 2022-01-11 04:53:50.680066+00
Date Added: 2024-06-11T08:37:37.060004
License: Public Domain

ON MOTION FOR REHEARING.
Sutton, J.
In their motion for rehearing the plaintiffs in error submit that, while headnote 1(a) of the opinion correctly states the law, the effect of headnote 1(c) is that “if the contract was signed contemporaneously with the execution and delivery of the note by the maker, and though Value received' was acknowledged in the writing, it could be shown that the real and substantial benefit is that flowing to the principal." The headnote which is thus questioned stated a principle of law, in connection with the ruling on the demurrer to the petition as elaborated in the first division of the opinion, and was not dependent on parol evidence for the facts it included as premises. To the petition was attached as an exhibit a copy of the note sued on, from which it is apparent that the note was signed in the name of Guaranty Mortgage Com*120pany of Atlanta, by P. C. McDuffie, President; and in the absence of any date to the contrary, the indorsement of McDuffie in his individual capacity is presumed to have been made at the same time. Geiser Co. v. Jones, 90 Ga. 307 (supra). Nothing but an indefinite consideration, “for value received,” was stated in the writing signed by McDuffie; and, as shown in the opinion, guarantyship is not necessarily established even when a consideration does flow to the one claiming to be only a guarantor. Such a consideration is only an “earmark,” which must in many instances yield to more controlling factors in determining the capacity in which one signs a writing on the back of a note. Furthermore, in the petition it was expressly alleged that the indorsement of McDuffie rested on no independent consideration. It follows that the headnote was authorized as a principle of law, in dealing with the demurrer to the petition, and it was not dependent on any consideration beyond the pleadings themselves.
It is also suggested that in holding McDuffie to be a surety this court overlooked the decision in Baggs v. Funderburke, 11 Ga. App. 173 (74 S. E. 937). Such is not the case, and there is nothing in that decision that is contrary to what has been here ruled. It was there shown that an action was brought on a note signed by Deal as maker, and by Baggs as indorser, in the following language: “For value received, we hereby guarantee the payment of the within note at maturity, or at any time thereafter, with interest at the rate of 8 per cent, per annum until paid, waiving demand, notice of non-payment, and protest;” that by demurrer the point was made that the contract of Baggs was one of guaranty; that the averment in the petition that he received no independent consideration was an attempt to vary the contract of guaranty; and that the trial court was without jurisdiction of the case so far as Baggs was concerned. The demurrer was overruled by the trial court. As pointed out by movants, the first headnote in that case is: “A contract on the back of a promissory note, signed by one other than the payee thereof and in the following words, ‘For value received, we hereby guarantee the payment of the within note at maturity, or at any time thereafter, with interest at the rate of 8 per cent, per annum until paid, waiving demand, notice of nom payment and protest,’ prima facie imports a contract of guaranty.” But the petition alleged, as in the present case, that the indorse*121ment rested on no independent consideration, and the judgment of this court was that Baggs, under the allegations of the petition, was a surety for Deal, and as such was suable in the same action against the maker. It was also said: “But if the contract be made at the same time the note is executed, and solely in consideration of the benefit to the principal, or if made afterwards in consideration of an extension of time to the principal, or the like, the obligation will generally be held to be that of a surety, even though words importing a contract of guaranty are employed.” While in that case it was said that parol evidence might be heard to show that the contract was different from what it appeared on its, face to be, it must be borne in mind that that action was between the immediate parties, and was instituted before the adoption of the negotiable-instruments law in this State, which, as construed in Pickett v. Bank of Ellijay, supra, prohibits any showing by parol evidence that, as against a third party, the indorsement was signed in any capacity other than as evidenced by the writing itself. This view is also set forth in the opinion in the present case.
It is submitted by movants that their construction of the writing on the back of the note in the present case has been affirmed and adopted by the Supreme Court of Georgia, in Paris v. Farmers & Merchants Bank, 143 Ga. 324 (85 S. E. 126). We are of the opinion, however, that counsel has construed too broadly the holding in that case. In the first headnote it is apparent that the contract signed by “third persons” was to “guarantee payment . . as against the maker previously liable thereon.” Here was a case of third persons being brought in, not simultaneously with the maker of the note “previously Halle thereon” (italics ours), but subsequently to his undertaking, and, under the language employed, the third persons were making themselves secondarily liable and signing as guarantors; and the contract is distinguishable by its terms. We are also referred to the testimony of McDuffie on the trial, after the court had overruled the demurrer to the defendants’ answer; and it is submitted by movants that he clearly showed that by his dealings with Bayne Gibson Mortgage Company he indicated his intention to be bound only as a guarantor. There is, .however, nothing in his testimony, or elsewhere, that shows that the plaintiff, the transferee of the note in which Bayne Gibson Mortgage Company was named payee, was ever *122put on notice that McDuffie intended to limit his capacity to that of a guarantor; and in the absence of such a showing the court was authorized to direct a verdict, under the evidence, in favor of the plaintiff. But it is contended that the evidence was uncontradicted that Bayne Gibson Mortgage Company was the agent of the plaintiff, and therefore that notice to the alleged agent 'was notice to the plaintiff. We can not agree to that contention. We think that the documentary evidence showed conclusively that Bayne Gibson Mortgage Company was the agent of the Guaranty Mortgage Company of Atlanta, and that McDuffie knew it, because he signed such documents as president of his company. In Clarke v. Havard, 111 Ga. 242 (36 S. E. 837, 51 L. R. A. 499), to which we are cited, the person who was held to be the agent of the one furnishing the money had actually received the money as agent, for the express purpose of lending it out at interest on behalf of the one furnishing it, and had received it, and had it on hand, before the party sued had even asked for a loan. The specific borrower was not in contemplation when the money was sent for lending purposes, but it was furnished for lending to anybody who might qualify as a borrower. The court held that the borrower’s statement, in the application for the loan, that the agent was her agent was overborne by the facts and was merely an inaccurate conclusion on the part of the borrower. Consequently that case is readily distinguishable from the instant one. It is stated by counsel for movants that “the Bayne Gibson Mortgage Company did not lend its own money but that of the insurance company,” but we think that, as stated in their original brief, “here the lender, Bayne Gibson Mortgage Company, was payee, and the fact that it obtained the necessary money from the insurance company is immaterial.” In other words, Bayne Gibson Mortgage Company might, under its contract which did not mention the plaintiff, have obtained the funds from any source to lend to Guaranty Mortgage Company of Atlanta, and have transferred to the one furnishing the money the note it held as payee from Guaranty Mortgage Company of Atlanta. It is clear that it was not the agent of the plaintiff. If it could be said that it was acting as correspondent for a lender already in contemplation, then the decisions in Equitable Life Assurance Society v. Cochran, 170 Ga. 270 (152 S. E. 248), and Harrison v. Bond, 182 Ga. 247 (185 S. E. *123346), are conclusive on the question of agency, and it must accordingly be held that Bayne Gibson Mortgage Company was not agent of the plaintiff in the present case.

Rehearing denied.

Jenkins, P. J., and Stephens, J. concur.