Commercial Credit Co. v. Gatlin-McDonald Motor Co.

7 La. App. 249, 1927 La. App. LEXIS 587

• Court: Louisiana Court of Appeal
• Decided: December 21, 1927
• Docket: No. 3137
• Status: Published

Opinion

REYNOLDS, J.

OPINION

The first question for decision is whether defendants were released from liability in warranty under the agreement between plaintiff and them. This agreement reads as follows:

“I, we, hereby agree that if, after your payment of the amount stated hereon, for your purchase of the transaction covered by the papers herein, your subsequent investigations of the credit of the buyer are unsatisfactory to you, I, we, will repurchase the same and will honor your draft with such enclosure attached, for the amount you have paid for the same, provided you exercise this privilege within twenty days from the date of payment of this draft.”

We do not think this instrument had the effect claimed for it by defendants. In our opinion its purpose was to enlarge and not to contract the rights of plaintiff. It cannot reasonably be construed to mean that plaintiff thereby waived its right to reclaim the price paid for a note that was worthless ab initio not because of the maker’s debt-paying character but because of his want of capacity to execute and deliver it.

The next question for decision is whether the maker paid the note or not, and this is disposed of adversely to defendants by the testimony of the witness E. J. Hoffman and the witness E. L. Chesney, the former being the assistant treasurer and the latter the vice-president of the plaintiff, who testified, in answer to the questions:

(8) Has this H. A. Howell note, herein sued on, ever been paid to you by anybody?

(9) Is it now due and owing to your company, in the amount as sued on?

To which they made identical answers, as. follows:

To question (8), No.

To question (9), Yes.

The next question for determination is the admissibility in evidence of the record in suit No. 5665 on the docket of the Dis-' trict Court of Winn Parish, entitled Commercial Credit Company, Inc., versus H. A. Howell, and whether defendants are concluded thereby on the question of the minority of H. A. Howell at the time of the execution and delivery of the note. The record was admitted in evidence over the objection of defendants. If that record was properly admitted in evidence then defendants’ defenses that H. A. Howell was in fact of the age of majority when he made the note, then the other defenses set up by defendants cannot avail them anything.

We think the record was properly admitted and that defendants are concluded thereby on the question of Howell’s minority.

In Fidelity & Deposit Co. vs. Hardman, 132 La. 525, the syllabus, prepared by the court, reads as follows:

“Defendants were indemnitors of plaintiff as surety on a building contractor’s bond, and, when suit was instituted by a subcontractor on the bond, the defendants were called in warranty, but excepted to the call as premature, and the exception was sustained. Two of the defendants testified on the trial of the merits, and their counsel participated in the examination of witnesses. Judgment was rendered against the contractor and the surety and was affirmed on appeal by the latter. The surety paid the judgment and then sued the indemnitors. Held, that the indemnitors could have intervened in the suit and were concluded by the judgment.”

In the course of its opinion in that case the court said:

“It is well settled in other jurisdictions that:

“ ‘One who is notified of the pendency of an action and is given an opportunity to defend is concluded as to all questions determined therein which are material to a recovery against him, in an action of indemnity brought by the defendant in the original suit. 22 Cyc. 106.’

“In Washington Gas Co. vs. Dist. of Columbia, 161 U. S. 316, 16 Sup. Ct. 564, 40 L. Ed. 712, the court through White, J., said:

“ ‘As a deduction from the right to recover over, it is settled that, where one having such right is sued, the judgment rendered against him is conclusive upon the person liable, provided • notice be given to the latter, and full opportunity be afforded him to defend the action.’

“In the same opinion the court cited the Oceanic Steam Navigation Co. case, 144 N. Y. 663, 665, 39 N. E. 360, 361, in which the rule is thus stated:

“ ‘It is sufficient that the party against whom ultimate liability is claimed is fully and fairly informed of the claim, and that the action is pending, with full opportunity to defend or to participate in the defense". If he then neglects or refuses to make any defense he may have, the judgment will bind him in the same way and to the same extent as if he had been made a party to the record.’

“In Costa vs. Joachim, 104 La. 170, 28 South. 992, judgment was rendered against the master for damages for an injury caused by the negligence of his servant, and the master having paid the judgment, sued the servant to recover the amount so paid. The court held that the judgment, not attacked as fraudulent or shown to be erroneous, was binding on the employee. In that case the court cited Robbins vs. Chicago City, 4 Wall. 674, 18 L. Ed. 427, as follows:

“ ‘Persons notified of the pending of a suit in which they are directly interested must exercise reasonable diligence in protecting their interest, and, if instead of do? ing so, they wilfully shut their eyes to the means of knowledge which they know are at hand to enable them to act efficiently, they cannot subsequently be allowed to turn around and evade the consequences which their own conduct and negligence have superinduced.’ ”

Fidelity & Deposit Co. vs. Hardman, 132 La. 525, 61 South. 559, was cited with approval and quoted from by our Supreme Court in New Orleans Great Northern R. Co. vs. Alcus, 159 La. 36, 105 South. 91, from which we quote:

“Defendant company’s defense in this case comes too late. The damages and expense of attorney’s fees and costs for which plaintiff sues come clearly within the terms of the contract of indemnity. Defendant company was notified timely of the pendency of the action by Langston against plaintiff company in the Circuit Court of Lawrence County, Mississippi, and was given full and fair opportunity to defend the suit. Defendant company is therefore concluded as to all questions determined therein which are material to a recovery against it. Fidelity & Deposit Co. vs. Hardman, et al. 132 La. 525, 61 South. 559.”

Defendants in this case were timely notified by plaintiffs of the pendency of plaintiff’s suit against H. A. Howell in the District Court of Winn Parish and of Howell’s defense thereto and were given full and fair opportunity to establish their capacity to execute and deliver the note therein sued on, but elected not to avail themselves of it. Defendant H. M. Gatlin, asked about the letter from plaintiff’s attorney notifying defendants of the plaintiff’s suit against Howell and of his plea of minority therein copied above, testified:

“Q. You did receive such a letter?

“A. Yes, sir, but I didn’t pay any attention to it, because I didn’t figure it was to the best of my interest to go down there.”

The judgment appealed from is erroneous and must be reversed. It should have been in favor of the plaintiff.

It is, therefore, ordered, adjudged and decreed that the judgment appealed from be annulled, avoided and reversed, and it is now ordered, adjudged, and decreed that plaintiff, Commercial Credit Company, Inc., do have of and recover from defendants, Gatlin-McDonald Motor Company and H. M. Gatlin and Wilbur C. McDonald in solido, judgment for the sum of one hundred and forty-one dollars with 8% per annum interest thereon from November 5, 1925, until paid, and the further sum of 25 per cent on the amount of principal and interest as attorney’s fees; less a credit of fifteen and 85/100 dollars as of date October 5, 1925. It is further ordered, adjudged and decreed that defendants pay the costs of this suit in both courts.