Opinion
33742.
DECIDED NOVEMBER 9, 1951. REHEARING DENIED NOVEMBER 30, 1951.
Complaint on note; from Forsyth Superior Court — Judge Brooke, June 29, 1951. (Application to Supreme Court for certiorari.)
J. P. Fowler, Wheeler, Robinson Thurmond, for plaintiff in error.
E. C. Brannon, Robert S. Allen, A. B. Tollison, contra.
Where one who signed a promissory note apparently as principal proves in the trial of an action on the note that he signed solely for the accommodation of the maker of the note, such fact alone is not sufficient to show that the signature was in the capacity of surety. Since the passage of the Negotiable Instruments Law, in order to show that an accommodation indorser is a surety there must be evidence of a contract or agreement to that effect between the indorser and the payee.
DECIDED NOVEMBER 9, 1951 — REHEARING DENIED NOVEMBER 30, 1951.
H. D. Majors sued W. G. Fowler, Robert S. Allen, J. B. Allen, and W. H. Flanagan on a promissory note. Flanagan defended on the ground that, while he and the other defendants signed the note apparently as principals, he in fact actually signed as surety, and was released because the plaintiff, payee in the note, failed to record a bill of sale (or mortgage) given by Fowler, the alleged sole principal, which failure allegedly increased the risk of the surety and resulted in loss to the payee. The court directed a verdict for the defendant J. B. Allen, and the jury found against all of the other defendants. Flanagan filed his motion for a new trial, which was overruled, and he expected.
The only evidence introduced by Flanagan to prove that he signed the note as surety was that he got no benefit from the transaction, and that the money for which the note was given was borrowed and received solely by Fowler. The contention of the plaintiff in error is that, since he got no benefit from the loan, he was a surety, and that the plaintiff was bound to know it, etc. This contention was good, under many decisions, prior to the passage of the Negotiable Instruments Law in 1924. In Cantrell v. Byars, 66 Ga. App. 672 ( 19 S.E.2d 44), the contention was made by one apparently an accommodation indorser that he was a surety. The only evidence of the contract of alleged suretyship was that Byars received no consideration or benefit. This court held that, since the passage of the Negotiable Instruments Law, the mere fact that the indorser got no benefit would not as a matter of legal consequence make him a surety, for the reason that, under the Negotiable Instruments Law, the legal consequence of mere indorsement for another's benefit is that of accommodation indorsement, in the absence of a specific and definite agreement that the indorsement was in the capacity of surety. The same principle applies in this case. Even if the evidence demanded the finding that the plaintiff in error got no benefit, in the absence of evidence that he signed as surety by agreement with the payee, the legal consequence is that the plaintiff in error was an accommodation indorser and not a surety. Since there is no contention that there was a release of the plaintiff in error as an accommodation indorser under Code § 14-902, the evidence demanded a verdict against the plaintiff in error. In this view it is not necessary to pass on any of the other questions raised.
The court did not err in overruling the motion for a new trial.
Judgment affirmed. Sutton, C.J., and Worrill, J., concur.