Summary
In Bill Heard Chevrolet Co. v. G. M. A. C., 120 Ga. App. 328, 330, supra this law is discussed, and the third-party defendant was dismissed because there was no secondary or other liability shown against said defendant.
Summary of this case from Thigpen v. KochOpinion
44755.
ARGUED SEPTEMBER 3, 1969.
DECIDED SEPTEMBER 19, 1969.
Third party complaint. Schley Superior Court. Before Judge Marshall.
Hatcher, Stubbs, Land Rothschild, Richard Y. Bradley, for appellant.
Gerald S. Mullis, Byrd, Groover Buford, Garland T. Byrd, for appellees.
Code Ann. § 81A-114 sanctions the defendant's use of a third-party complaint only in cases where the third-party defendant is or may be liable over to him for all or a part of the plaintiff's claim against him. A holder in due course of a promissory note who takes it free of the maker's defenses against the original payee has no interest in the rights and liabilities of the original parties to the instrument inter sense, and in such an action the maker has no right to implead the payee-assignor.
ARGUED SEPTEMBER 3, 1969 — DECIDED SEPTEMBER 19, 1969.
General Motors Acceptance Corp. sued Yarbrough on a purchase money note as to which it was a holder in due course for value with limited recourse. Yarbrough filed a third-party complaint against Bill Heard Chevrolet Co., the payee-assignor, of the note, alleging that he had purchased the automobile which was the subject matter of the sale from this company based on the representations of a salesman that it was a 6-cylinder car when in fact it was 8 cylinders; that it was further represented as having a new car warranty (although in fact a used car) and that it had never been wrecked, when in fact it had been wrecked and had various defects and that this "amounted to a fraud upon the defendant Yarbrough as the misrepresentation materially impaired and affected the value of said auto" and, had defendant known the true facts, he would not have signed the note. There is, however, no allegation that the misrepresentations were knowingly false. See Code Ann. § 81A-109 (b). The third-party plaintiff sought judgment in his favor for what ever amount might be found in favor of the original plaintiff plus additional damages.
The appeal is from the denial of a motion to dismiss the third-party complaint.
Code Ann. § 81A-114, which is in the language of Rule 14, Federal Rules of Civil Procedure, gives the defendant in an action the option to bring into the case "a person not a party to the action who is or may be liable to him for all or part of the plaintiff's claim against him." Following Federal precedent, we have held that for such a procedure to be maintained it must appear that the proposed third-party defendant is or may be secondarily liable to the original defendant, and a right over against him must be established, either by indemnity, subrogation, contribution or warranty. Central of Ga. R. Co. v. Lester, 118 Ga. App. 794, 801 ( 165 S.E.2d 587). In the present case it is not clear whether the defendant predicates his complaint on a failure of consideration based on a breach of warranty, or whether he seeks rescission and damages for fraud. The exact question, under an identical rule, was stated in Arms Roofing Company v. Petrie, (Colo.) 314 P.2d 903, as follows: "May the makers of a promissory note, when sued by a holder in due course, file a third party complaint under rule 14 (a), R. C. P., against the original payee who transferred the note before maturity without recourse?" Citing United States v. Dobrowolski, (D.C. Md.) 16 F. R. D. 134 and United States v. Jollimore, (D. C. Mass.) 2 F. R. D. 148, the court answered the question in the negative. "Rule 14 (a) does not permit nor does it grant discretion to the court to implead when there are separate and independent controversies between the defendant and his desired third-party defendant." Id., p. 906. Whether or not there has been fraud or failure of consideration on the part of the vendor toward the vendee is no part of the action of a holder in due course of a promissory note, nor may it be interposed as a defense against such a plaintiff. The rule is different where the assignee-plaintiff is not a holder in due course, and in such case it has been held in United States v. Scott, 18 F. R. D. 324, that the payee might be impleaded by the defendant insofar as a recovery over was involved, but not for the purpose of recovering damages.
Applying this rule to the present case, the trial court erred in denying the motion to dismiss the third-party complaint.
This result is not changed by the fact that the company, in assigning the note to GMAC, warranted to the plaintiff that the property was as represented to the purchaser, and additionally guaranteed to the plaintiff full payment of any amount due and unpaid thereunder after demand. Such an agreement constitutes a separate contract between the assignor and assignee but it does not inure to the benefit of the maker of the note, since it contained no agreement to indemnify the maker, but only to indemnify the assignee.
Judgment reversed. Bell, C. J., and Eberhardt, J., concur.