Court Opinion

ID: 9591076
Source: CourtListenerOpinion
Date Created: 2023-08-22 00:01:58.214777+00
Date Added: 2024-06-11T17:54:52.579224
License: Public Domain

Beasley, Judge,
concurring specially.
The pivotal issue is whether the transaction whereby Pearson obtained the Dal-Tile check in consideration for the two-party Blake check, which was issued on the basis of forged Dal-Tile invoices, constituted an illegal transaction. If it did, then Dal-Tile had a defense against Cash N’ Go, Inc. as a holder in due course which cashed the Dal-Tile check. Former OCGA § 11-3-305 (2) (b) (1994 version) provides such a defense in that it recognizes that such a transaction “renders the obligation of the party a nullity.” Dal-Tile was the maker of the check but urges that, under those facts which were either undisputed or were found to be fact by the judge as factfinder, the transaction between it and GSC/Pearson was void ab initio. This is so, it reasons, because the Blake check, given in consideration for the Dal-Tile check which is the subject of the dispute between Dal-Tile and Cash N’ Go, represented stolen money in that it was issued in exchange for fraudulent invoices.
This basis for the transaction did not render it illegal, that is void and not merely voidable. The common law distinctions apply to this OCGA § 11-3-305 (2) (b) (1994 version) defense, as recognized in Milligan v. Gilmore Meyer, Inc., 775 FSupp. 400, 408 (S.D. Ga. 1991): “Black’s Law Dictionary defines ‘void’ as ‘Null; ineffectual; nugatory; having no legal force or binding effect; unable to support the purpose *812for which it was intended.’ Black’s Law Dictionary 1411 (5th ed. 1979). The term ‘voidable’ is defined as ‘That which may be avoided, or declared void; not absolutely void, or void in itself. That which operates to accomplish the thing sought to be accomplished, until the fatal vice in the transaction has been judicially ascertained and declared.’ Id.” Dal-Tile does not show that the transaction in which it issued its check in return for the larger Blake check which incorporated payment for tile supplied by Dal-Tile for the Butner job was illegal and void. Cf. Unified School Dist. No. 207 v. Northland Nat. Bank, 887 P2d 1138, 1146 (Kan. App. 1994), and our recent case of Union Planters Nat. Bank v. Crook, 225 Ga. App. 578 (1) (484 SE2d 327) (1997) (sufficient evidence of illegality in the transaction to go to jury on this defense against holder in due course).
Decided June 12, 1997
Before Judge Lane.
Austin & Sparks, John T. Sparks, for appellant.
Carl H. Hodges, for appellee.
I note that Dal-Tile did not claim fraud in factum, a defense under OCGA § 11-3-305 (2) (c) (1994 version), and on appeal expressly states that it “asserted the defense of illegality, not fraud.” It did not prove illegality as a matter of law, and we are bound by the findings of fact made by the trial court and supported by evidence.