Opinion
46437.
SUBMITTED SEPTEMBER 13, 1971.
DECIDED JANUARY 28, 1972.
Action on note. Floyd Superior Court. Before Judge Scoggin.
Henry J. Fullbright, Jr., for appellant.
Clary Kent, Jack Kent, Jr., for appellees.
Where there is a suit on a note and it appears that there was consideration to a corporation and thus to the defendant directors who endorsed the note, the fact that the consideration was furnished by one other than the promise would not prevent the promise from maintaining a suit on such note.
SUBMITTED SEPTEMBER 13, 1971 — DECIDED JANUARY 28, 1972.
Mrs. O. H. Edgar sued Edgar Casket Company, L. R. Broom and Roy Selman on a promissory note dated July 29, 1960, prior to the adoption of the Uniform Commercial Code. The note in the principal amount of $8,000 due on demand, and bearing interest at 5 1/2% interest from date, was executed by defendant corporation to plaintiff as evidence of a loan or advance to the corporation at a time when it was in financial difficulties; defendants Broom and Selman, along with plaintiff's husband O. H. Edgar, now deceased, were the stockholders, directors and officers of the corporation and each personally endorsed the note of the corporation. The sum of $8,000, evidenced by the note, was received by the defendant corporation, acknowledged on its books, deposited in its bank and used in keeping the business of the corporation going; the $8,000 was borrowed by plaintiff's deceased husband, from the Rome Bank Trust Company, on security of life insurance policies on his life, in which plaintiff was the named beneficiary; the note was carried on the defendant corporation's books as an obligation due to plaintiff and interest paid regularly thereon as a credit to plaintiff's account, but the money was actually paid to the Rome Bank Trust Company and applied as interest on the debt of plaintiff's husband to the bank. The corporation continued to pay such interest until the death on February 12, 1967, of plaintiff's husband, O. H. Edgar, who was the president of defendant corporation, shortly after which the business of the corporation ceased. Plaintiff testified that she did not pay from her own funds any part of the $8,000 to the corporation but that the money was procured by her husband by the bank loan.
Before filing the suit on the note, the statutory notice of attorney's fees was given to defendants as provided in Code Ann. § 20-506 (Ga. L. 1946, pp. 761, 766; 1953, pp. 545, 546; 1957, p. 264; 1968, p. 317). Upon the trial plaintiff identified the original note sued on, proved demand and nonpayment and introduced the note in evidence. The defendants Broom and Selman admitted statutory notice of attorney's fees, the execution of the note and the genuineness of their signatures, along with that of O. H. Edgar, as endorsers, and that the corporation did receive and use the funds at a time when it needed money.
It was further proved that after the death of plaintiff's husband the debt to the Rome Bank Trust Company was repaid from proceeds of insurance policies on the life of plaintiff's husband, in which policies plaintiff was the beneficiary, but which policies had been assigned to the Rome Bank Trust Company as collateral security for the loan of $8,000 to plaintiff's husband.
The defendants filed an answer and set forth a plea of no consideration. The trial judge, on the facts as stipulated, entered judgment for the defendants and appeal was taken by the plaintiff.
The note in this case provided "we promise to pay." Under the rule formerly in effect, the note was prima facie a joint and not a joint and several undertaking. Bank of LaFayette v. Giles, 208 Ga. 674 (5) ( 69 S.E.2d 78). This has been changed by the Commercial Code ( Code Ann. § 109A-3-118; Ga. L. 1962, pp. 156, 245). Ghitter v. Edge, 118 Ga. App. 750 (2) ( 165 S.E.2d 598); Simpson v. Wages, 119 Ga. App. 324 ( 167 S.E.2d 213). Nevertheless, one of the parties who signed the instrument died before payment of the obligation and under Code § 3-305, the plaintiff, as holder of the obligation, might in her discretion "sue the survivor or survivors, or the representatives of such deceased person or persons, or survivor or survivors, in the same action with the representative or representatives of such deceased person or persons."
Since the common law did not allow the joinder of the representative of joint obligors with the survivors, "by this act the plaintiff is expressly authorized, at his discretion, to bring suit against the survivor, or against the representative, or against both in the same action, as he may choose." Hargroves v. Chambers, 30 Ga. 580, 588. In this connection, see Leonard v. Collier, 53 Ga. 387, 390.
The determinative question raised by this appeal is whether there was consideration for the note in question.
"A consideration is valid if any benefit accrues to him who makes the promise, or any injury to him who receives the promise." Code § 20-302. In Crawford v. Schaefer, 181 Ga. 221, 227 ( 181 S.E. 587), the court found that a plea of failure of consideration was wholly deficient in law. There the plaintiff agreed to pay into the treasury of a bank some $43,000 to restore the impairment of its capital stock and the defendants, stockholders and directors of the bank, executed a note in consideration of this action by the plaintiff. The court held: "The defendants ... were interested in sustaining the bank as a going concern, and the consideration thus flowed indirectly to each of them and directly from the payee." Code § 20-306 points out: "If there be a valid consideration for the promise, it matters not from whom it moves, the promisee may sustain his action, though a stranger to the consideration." In Read v. Gould, 139 Ga. 499 (4 a) ( 77 S.E. 642), the Supreme Court held: "Apparently the husband of such second grantee furnished a sufficient consideration to have a deed made to himself, but directed the deed to be made to his wife. If so, the consideration by him would support the conveyance to his wife, as if a conveyance had been made to him and by him to his wife..." For similar situations in which it was held that the consideration need not flow directly from the promisor, see Bing v. Bank of Kingston, 5 Ga. App. 578 (3) ( 63 S.E. 652); Archer v. Kelley, 194 Ga. 117, 125 ( 21 S.E.2d 51).
"Where A makes a promise to B, and the consideration therefor is furnished by C, the promisee, B may maintain suit thereon." Hawkins v. Central of Ga. R. Co., 119 Ga. 159, 166 ( 40 S.E. 82). It is clear under the facts of this case that consideration was furnished to the corporation and thus to the defendants as the directors thereof. The fact that the consideration came from Mr. Edgar and not Mrs. Edgar, the promisee, did not affect her right to recover.
The trial judge erred in finding in favor of the defendants.
Judgment reversed. Jordan, P. J., and Evans, J., concur.