Opinion
34467.
DECIDED JANUARY 28, 1953.
Affidavit of illegality; from McDuffie Superior Court — Judge Perryman. November 13, 1952.
Peebles Burnside, for plaintiff in error.
Stevens Stevens, contra.
1.( a) Where a note and conditional-sale contract for personalty are on one piece of paper, the whole constitutes a negotiable instrument to the extent that the holder in due course is protected against defenses which might be urged against the original parties thereto.
( b) "A signature on a blank paper delivered by the person making the signature in order that the paper may be converted into a negotiable instrument operates as a prima facie authority to fill it up as such for any amount. . . If any such instrument, after completion, is negotiated to a holder in due course, it is valid and effectual for all purposes in his hands, and he may enforce it as if it had been filled up strictly in accordance with the authority given."
( c) It is a general rule that where a person intends to enter into a simple contract in writing — such instrument when signed by him containing blanks obviously meant to be filled in — he creates in the receiver with whom he intends to contract an implied authority to complete the instrument in the way apparently contemplated by the maker with matter in general conformity to the character of the writing.
2. The plaintiff having proved a balance due under the sale contract, and the defendant offering no defense valid as against a bona fide holder for value of the original instrument, and having acknowledged his signature on all renewals thereof, it was not error to direct a verdict for the plaintiff.
DECIDED JANUARY 28, 1953.
The defendant in error, Trusco Finance Company, filed an affidavit of foreclosure, in the Superior Court of McDuffie County, against a 1950 Dodge coronet club coupe belonging to the plaintiff in error, F. J. Howard, as evidenced by a conditional-sale contract dated February 27, 1950, for $1872.82 payable in monthly instalments, and a note executed contemporaneously therewith, the instruments being made out to Crowley Motor Company and by it assigned to the defendant in error. Howard filed an affidavit of illegality and plea of non est factum, which were duly traversed.
On the trial, Howard, called to the stand for cross-examination, testified in part as follows: "This is my signature on the paper which you exhibit to me. That is a note now. This is my signature here. This is designated as a conditional-sales contract. . . I said I was contending this was blank at the time I signed it, and it definitely was. As to why I signed a blank note and conditional-sales contract — it was to enable the Crowley Motor Company to liquidate a deposit of $1400 that I had paid towards the purchase of a new car monthly rather than paying the full amount of $1400 at one time. . . But by signing that blank piece of paper I did not know that I was obligating myself for any such amount as is on that piece of paper. . . I had filled out a good many of these notes myself, but not on every car that was sold there; I did on the ones I sold, probably. And when I sold them I described the car in these conditional-sales contracts, always before the man signed it. I knew that was the proper way to transact the business. And I knew when a man signed this conditional-sales contract and note that the Crowley Motor Company was going to receive the cash from Trusco Finance Company in Augusta for the amount the man signed for. . . I am general manager of the present Dodge agency." The defendant was then shown renewal agreements dated September 11, 1950, and March 6, 1951, amending the sale contract and note as to schedule of payments, and he testified: "I never have signed any renewal agreement at all. I state that is my signature. As to whether or not I know that is a renewal there — well, that is what it says, a renewal from of the indebtedness. I don't recall signing that one. If I signed it there was no amount on it, because the amounts that they have there are in excess of any amount I would have signed any paper for if it had been filled out; I never would have signed any paper in excess of $1400. . . I had a deposit with Crowley Motor Company of $1400, and I signed a paper that he said he could arrange to pay the motor contract $50 a month . . and as he made those $50 payments he would charge it against my deposit account."
On the basis of the above testimony, the notes and conditional-sale contract were admitted in evidence. There was further evidence that the defendant had gone to the plaintiff's office to execute the renewal agreements amending the conditional-sale contract and had signed them after they were completely filled out; also that he had made his insurance payable to the defendant "as its interest may appear" on the automobile. It was undisputed that the balance owing on the Dodge at the time of its purchase was $1400, which amount the defendant already had on deposit with Crowley Motor Company when he received the car; that he knew the Crowley Company intended to hypothecate the contract and notes to the plaintiff and signed the instruments to enable it to do so; and that Crowley kept up the payments on the car until the time of his death, at which time, upon failure to pay the balance set forth in the instruments, the defendant initiated its action of foreclosure.
At the conclusion of the evidence the trial court directed a verdict in favor of the plaintiff. The defendant filed a motion for a new trial which was denied, and this judgment is assigned as error.
1. It is the contention of the defendant in the first ground of his amended motion for a new trial that, as against the plea of non est factum, the conditional-sale contract was improperly admitted in evidence upon the testimony of the plaintiff that it was blank at the time of his signature and was subsequently filled out for an amount other than that upon which the parties had agreed. Such contention would be sound if the suit had been brought by the payee, but the plaintiff here is a bona fide holder in due course of the sale contract and notes, without notice of any infirmity therein. The defendant admitted his signature on the sale contract, note, and renewal agreements. Code § 14-214, relating to negotiable instruments, provides in part as follows: "A signature on a blank paper delivered by the person making the signature in order that the paper may be converted into a negotiable instrument, operates as a prima facie authority to fill it up as such for any amount. . . If any such instrument, after completion, is negotiated to a holder in due course, it is valid and effectual for all purposes in his hands, and he may enforce it as if it had been filled up strictly in accordance with the authority given." Where the note and conditional-sale contract are on one piece of paper, the whole constitutes a negotiable instrument to the extent that a holder in due course is protected against defenses which might be urged between the original parties thereto. Peoples Loan Finance Co. v. Ledbetter, 69 Ga. App. 729, 733 ( 26 S.E.2d 671). A promissory note and security deed or agreement relating thereto, executed as a part of the same transaction, form but a single contract. King v. Edel, 69 Ga. App. 607, 613 ( 26 S.E.2d 365); Wartman v. Brown, 41 Ga. App. 288 ( 152 S.E. 596). Had the plaintiff here been suing on the note rather than foreclosing the contract of sale, there is no question but that the evidence would have been sufficient to admit the documents over a plea of non est factum containing a defense that the amount filled in was unauthorized, as against a holder in due course. The two documents comprising one and the same contract, no reason appears why a different rule should obtain merely because this is a foreclosure proceeding.
In Thompson v. Bank of Chatsworth, 30 Ga. App. 443 (3) ( 118 S.E. 470) it is held: "It may be stated as a general rule, which is unquestionably applicable to all simple contracts in writing and, according to some authorities, also to specialties, that where a person intending to enter into a contract delivers a writing containing blanks, evidently meant to be filled, this creates in the receiver, and, at least in the case of negotiable paper, in his transferees, an implied authority to complete the instrument by filling the blanks in the way apparently contemplated by the maker with matter in general conformity to the character of the writing." The contract of sale is not under seal.
In Universal Credit Co. v. Moore, 173 Miss. 740 ( 163 So. 142), involving a replevin suit to recover possession of an automobile by a holder in due course of the conditional-sale contract, the court held: "The appellee admits that he signed the contract not filled out, expecting the agent of the Pate Auto Company to fill same out. On his testimony, therefore, he made the Pate Auto Company an agent, and the contract being in the hands of a bona fide purchaser for value is binding upon him."
In Commercial Auto Loan Corp. v. Baker, 72 Ga. App. 534 ( 37 S.E.2d 636), it was held that where a conditional-sale contract is filled in contrary to the directions of the maker and to his injury, with full knowledge on the part of the transferee of these facts, such instrument is void as to him. We here hold the converse of that proposition, which is, that where a conditional-sale contract and notes, together forming the entire contract, are filled in contrary to the directions of the maker by one whom he has constituted his agent to complete the instrument, a bona fide holder without knowledge of this fact will be protected. Further, the defendant having acknowledged his signature on the renewals of the original contract, under the authority of the rule stated in Thompson v. Bank of Chatsworth, supra, the plaintiff was given implied authority to complete the instrument by filling in its blanks in accordance with the instrument thus being renewed. Accordingly, these documents were properly admitted in evidence.
2. The plaintiff having proved a balance due under the sale contract, and the defendant offering no defense valid as against a bona fide holder for value of the original instrument, and having acknowledged his signature on all renewals thereof, it was not error to direct a verdict in favor of the plaintiff.
The trial court did not err in denying the motion for new trial as amended.
Judgment affirmed. Gardner, P. J., and Carlisle, J., concur.