Murray v. Anderson

38 S.E.2d 131, 73 Ga. App. 771, 1946 Ga. App. LEXIS 411

• Court: Court of Appeals of Georgia
• Decided: April 11, 1946
• Docket: 31172.
• Status: Published

Opinions

Sutton, P. J.

(After stating the above facts.) The note sued on in the present case is made payable to the order of E. B. Murray, and is signed “Adams-Swirles Cotton Mills, by J. T. Adams, Pres.” on the front of the note, and the name “J. T. Adams” is written across the back of the note. Under the negotiable instruments law (Code, § 14-604), “A person placing his signature upon an instrument other than as maker, drawer, or acceptor is deemed to be an indorser, unless he clearly indicates by appropriate words his intention to be bound in some other capacity.” J. T. Adams in signing his name across the back of the note did not indicate by appropriate words his intention to be bound thereon in some other capacity than as indorser; and, under the law and the facts appearing from the petition, the defendant Adams is to be deemed an indorser and will be dealt with as such in determining this case.

The Code, § 14-605, provides: “Where a person, not otherwise a party to an instrument, places thereon his signature in blank before delivering, he is liable as indorser, in accordance with the following rules: (1) If the instrument is payable to the order of a third person, he is liable to the payee and to all subsequent parties.” It appears from the petition that E. B. Murray, the payee of the note, is dead, and the suit is by the administratrix of his estate against the guardian of J. T. Adams. Adams-Swirles Cotton Mills, a corporation, had been dissolved and its charter surrendered to the State more than three years before the filing of the petition, and that is the reason alleged in the petition for not making the corporation a party defendant. “Presentment for payment is not necessary in order to charge the person primarily liable on the instrument; but if the instrument is, by its terms, payable at a special place, and he is able and willing to pay it there at maturity, such ability and willingness are equivalent to a tender of payment upon his part. Except as herein otherwise provided, presentment for payment is necessary in order to charge the drawer and indorsers.” Section 14-701. The note sued on is due on demand, and § 14-702 provides: “Where it is payable on demand, presentment must be made within a reasonable time after its issue, except that in case of a bill of exchange, presentment for payment will be sufficient if made within a reasonable time after the last negotiation thereof.” Sections 14-703— 14-706 provide by whom, when, where, and how presentment must be made. Section 14-801, declares: “Except as herein otherwise provided, when a negotiable instrument has been dishonored by nonaceeptance or nonpayment, notice of dishonor must be given to the drawer and to each indorser, and any drawer or indorser to whom such notice is not given is discharged.”

The defendant in error contends that it does not appear anywhere in the plaintiff’s petition, that the note was presented for payment to Adams-Swirles Cotton Mills, the maker of the same, that payment was refused, and that notice of dishonor of the note was given to the defendant’s ward, as required by law, in order to bind him as indorser thereon; and therefore his demurrer to the petition to this effect was properly sustained by the court. The defendant’s contention in this respect, under the general rules set forth in the negotiable instruments law relative thereto, is sound and the judgment sustaining the' demurrer and dismissing the action should be affirmed, unless the facts alleged in the petition and what appears therefrom take the case without these general rules.

The plaintiff in error contends that her petition shows that presentment and notice of dishonor were waived by the defendant, and that the ease made by her petition comes squarely within the principle ruled by the Supreme Court in Hull v. Myers, 90 Ga. 674 (16 S. E. 653), and within the provisions of the negotiable instruments law, wherein presentment and notice of dishonor of negotiable instruments are dispensed with under certain conditions. Let us first look to the provisions of the negotiable instruments law as embodied in our Code, where presentment and notice of dishonor are dispensed with or not required in order to charge an indorser. The Code, § 14-711, states: “Presentment for payment is not required in order to charge an indorser, where the instrument was made or accepted for his accommodation and he has no reason to expect that the instrument will be paid if presented;” and § 14-713: '■“Presentment for1 payment is dispensed with: . . (3) By waiver of presentment, expressed or implied;” and § 14-714: “The instrument is dishonored by nonpayment when: (1) It is duly presented for payment and payment is refused or cannot be obtained; or (2) Presentment is excused and the instrument is overdue and unpaid;” and § 14-821: “Notice of dishonor may be waived, either before the time of giving notice has arrived, or after the omission to give due notice, and the waiver may be express or implied;” and § 14-827: '“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; (3) Where the instrument was made or accepted for his accommodation.” So it will be observed that presentment and notice of dishonor may be dispensed with or waived under certain conditions, under the provisions of the negotiable instruments law, adopted in this State, and the waiver may be expressed or implied.

There is no express waiver in the note sued on, but the plaintiff contends that the case made by the amended petition shows an implied waiver of presentment and notice of dishonor. The petition as amended shows that, at the time J. T. Adams indorsed the note sued on, he was the president of Adams-Swirles Cotton Mills, the maker of the note, and as such president executed the note for the maker; that he was the acting managing officer of the business of said corporation; that he was the majority stockholder of the corporation, and had under his own control and management all the assets and business of Adams-Swirles Cotton Mills; and that it was his duty to see that funds were provided for the payment of the note and that the note was paid. Under these allegations, Adams knew everything about this note that the corporation knew. If it was presented for payment, the reasonable inference is that it was presented to him, because he was in complete control of the management, assets, and business of the corporation, and it was his duty to see that funds were provided for the payment of this note and that the note was paid. The note was for the principal sum of $15,000, with interest from date at 8 percent per annum, was dated September 30, 1929, and was payable on demand. Where a note is payable on demand, presentment must be made within a reasonable time after its issue. Code, § 14-702. It evidently was presented for payment, for the following payments are credited on the note: January 9, 1930, $7000; April 7, 1930, $134.23; June 3, 1930, $1000. No further payments were made, and the balance of the note remained unpaid.

From the allegations of the petition and the legal inferences to be drawn therefrom, we think that it can be properly said that the note was due, that it had been presented for payment, and that it was not paid. It was dishonored by nonpayment. Who knew about these things? According to the facts appearing from the petition, J. T. Adams was the person who necessarily had knowledge of all of these matters. “The instrument is dishonored by nonpayment when: (1) It is duly presented for payment and payment is refused or cannot be obtained; or (2) Presentment is excused and the instrument is overdue and unpaid” (Code, § 14-714); and notice of dishonor is not required to be given to an indorser where the indorser is the person to whom the instrument is presented for payment. This last statement is the second division of Code, § 14-827, above referred to. In Whitney v. Chadsey, 216 Mich. 604 (185 N. W. 826), in dealing with the. identical provision of the negotiable instruments law adopted in that State, in a case similar to the one at bar the Supreme Court of Michigan said, among other things: “As president of the company, with sole power to draw checks for the company in payment of the note, he was in effect the person to whom the instrument was to be presented for payment. The note could not be paid until -he acted. Occupying this position, he. already had the knowledge which the notice is supposed to have furnished him. . . His commanding position in the affairs of the company and his sole power to make payment of the note made the notice to him useless and brought him within the second exception to the rule.-” And the Michigan court quoted approvingly from the case of Ee Swift, 106 Fed. 65, as follows: “By section 115 notice of dishonor is not required ‘where the indorser is the person to” whom the instrument is presented for payment.5 . . It is no straining of language to hold that the term ‘person to whom the instrument is presented for payment5 includes a person to whom the instrument would have to be presented if he had not both as maker and as indorser waived such presentment.55 The- second headnote in the Whitney case is as follows: “Where the indorser of a note sued .on was the president of the company giving the note, and payment could only be ■ made through ■ him because he only was authorized to sign checks, he was in effect the person to whom the instrument was to be presented for payment, and under 2 Comp. Laws 1915, § 6156, subd. 2, he was not entitled to notice of dishonor to hold him liable as an indorser, since he already had the knowledge which the notice is supposed to furnish him.55 In Verser v. Sterling Oil &c. Co., 89 Okla. 114 (213 Pac. 863), the Supreme Court of Oklahoma, in dealing with the same provision of the negotiable instruments law, said: “At any rate, this court is of the opinion that the doctrine announced by the Missouri case should be followed, and where the indorser of a promissory note is the chief officer of the corporation, which executed the note as the maker and the person upon whom formal presentation by creditors of the corporation would have to be made of their demands for payment, in such cases notice of dishonor is not required to be given to such indorser and is excused by the second subdivision of section 7785, Comp. Stat. 1921.”

We think that the petition as amended shows sufficient facts to excuse the giving of notice of dishonor of the note in order to charge the indorser with liability thereon. The amended petition brings the plaintiff’s case within the exceptions contained in the negotiable instruments law enacted in this State, with respect to presentment and notice of dishonor, that is, the facts disclosed by the petition show an implied waiver of presentment and notice of dishonor on the part of the indorser, so as to charge him with liability on the note in question.

The plaintiff in error also relies strongly on the decision of the Supreme Court in Hull v. Myers, supra, as controlling in this case. But the defendant in error contends, among other things, that the adoption of the negotiable instruments law in this State, in 1924, superseded the ruling in the Hull case, and that it is no longer the law and is without application in the present case. When that decision was rendered in 1892, the Code of 1882, § 2781, was in effect and required that notice of nonpayment, etc., of certain negotiable instruments be given to an indorser within a reasonable time in order to render him liable on the instrument. The present case is not distinguishable on its facts from the Hull ease. It was there held, among other things, that “accommodation indorsers who represent their insolvent principal in procuring a loan of money for the principal’s use, upon a promissory note which they cause to be made in his name and which they indorse in their own names, they having at the time full control of .his business and all his assets, and their relation to him being such as to make it their duty to see that the note is provided for and paid at maturity, are not entitled to notice of its dishonor.” It was stated in that case that a single director, or a minority of directors, indorsing a note for the corporation might be entitled to notice of its dishonor, for they might have a right to suppose that the note would be paid or attended to at maturity. This statement was carried forward and referred to by the court in Ennis v. Reynolds, 127 Ga. 112 (56 S. E. 104), but the latter case is not at all like Hull v. Myers, supra, and a statement to this effect was made by the court in the Ennis case.

The defendant in error cites and relies on Massell v. Prudential Ins. Co., 57 Ga. App. 460 (196 S. E. 115). That case is distinguishable on its facts from the case at bar, as well as from the Hull case. The suit there was on a note signed by Massell Investment Company and indorsed by B. J. Massell, L. I. Massell, and S. A. Massell. No pleadings were filed by the investment company and B. J. Massell, and the case was adjudged in default as to them. L. I. and S. A. Massell demurred to the petition on the ground that it did not appear from the petition that the note had been presented for payment or that notice of dishonor of the instrument had been given to the indorsers or that notice of dishonor had been dispensed with. The petition was amended to the effect that the indorsers on the note were “officers, stockholders, and/or directors” of the Massell Investment Company, and through the corporation received all of the consideration of the note. The demurrer was renewed; and this court held that the statement as to receiving the proceeds of the note by reason of the corporation receiving the same was a mere conclusion and unauthorized, because title to that fund was in the corporation, and it was not alleged that the money was paid over to the indorsers; and further held that this allegation was in conflict with another allegation in, which it appeared that the indorsers received nothing of value from the transaction. The court then held that: “The allegation that they were ‘officers, stockholders, and/or directors’ of Massell Investment Company, apparently made for the purpose of contending that no necessity existed for notice of dishonor, is without avail, as it is not shown that they comprise the entire membership or a majority thereof, and, without that being true, they were entitled to notice;” and cited Ennis v. Reynolds, supra, as authority for the ruling. The case at bar is different on its facts from the Massell case and is not controlled by the ruling there made with respect to notice of dishonor, but comes within the principle ruled in Hull v. Myers, supra. At the time the decision in the Hull case was rendered, the statute dealt with contained no exceptions dispensing with notice of protest and dishonor of negotiable instruments; but it was then held that, where an indorser occupies and has a similar position and relationship to the principal maker of the note as the indorser in the present case does, he is bound to know everything that the principal could or would know, and that notice to him of dishonor of the note was not necessary to bind him. The facts of that ease took it out of the general rule of the then-existing statute as to notice of dishonor; and, in effect, the principle there ruled, dispensing with such notice, is now contained in the provisions of the negotiable instruments law and has been adopted as statute law in this State.

The law did not then, and does not now require, that notice of presentment and dishonor of a negotiable instrument be given to an indorser in order to charge him with liability, where he already has knowledge of such matters. Where the reason for the rule, under the facts, no longer exists, it is not necessary to comply with the requirements of such rule. The law does not require a useless thing, and it certainly would serve no uséful purpose to give an indorser notice of something of which he already has knowledge.

The petition as amended shows an implied waiver of presentment and notice of dishonor of the note in question on the part of J. T. Adams, and the court erred in sustaining the demurrer and dismissing the petition.

Pursuant to the act of the General Assembly, approved March 8, 1945 (Ga. L. 1945, p. 232), requiring that the full court consider any case in which one of the judges of a division may dissent, this case was considered and decided by the court as a whole.

Judgment reversed.

Broyles, G. J., and Parker, J., concur. MacIntyre and Gardner, JJ., concur specially. Felton, J., dissents.