Opinion
33932.
DECIDED FEBRUARY 28, 1952. REHEARING DENIED MARCH 27, 1952.
Complaint; from Fulton Superior Court — Judge Hendrix. November 28, 1951.
Ralph R. Quillian, for plaintiff.
Moreton Rolleston Jr., MacDougald, Troutman, Sams Schroder, Lokey Bowden, for defendants.
If the defendants' letter of December 29, 1950, did constitute a novation of the agreement between the plaintiff and Simmons, the time limitation stipulated therein was binding on the plaintiff; and, since the petition showed that the plaintiff did not perform its obligation under the agreement until after the expiration of the agreement, the court did not err in sustaining a general demurrer to the petition.
DECIDED FEBRUARY 28, 1952 — REHEARING DENIED MARCH 27, 1952.
Miller-Terrell Incorporated, sued William E. Strother and Otis A. Barge Jr., trading as Strother-Barge Company, for an alleged breach of contract. The petition alleged substantially: that early in 1950, the plaintiff, through one of its agents, contacted W. Walter Simmons, an architect, for the purpose of offering its services in connection with the proposed development and construction by Simmons of a multiple housing unit project in Atlanta, which was within the purview of the Federal Housing Program; that Simmons agreed to accept the services of the plaintiff, and on June 30, 1950, he purchased a tract of land for the purpose of the development; that through the efforts of the plaintiff the FHA issued a commitment of insurance on the mortgage to the temporary mortgagee, who was procured by the plaintiff; that at the outset of the relationship between Simmons and the plaintiff it was orally agreed that the plaintiff would have the exclusive right and privilege of handling the sale of the permanent mortgage on the housing project, as well as the exclusive right and privilege to issue the fire and extended-insurance coverage on the project for the duration of the permanent mortgage; that this agreement was later recognized in a letter from Simmons to the plaintiff; that thereafter and prior to December 29, 1950, Simmons advised the plaintiff that he desired to transfer all of his right, title, and interest in and to the said project to the defendants, and that the defendants had been notified of the existing agreement with the plaintiff, and Simmons said that the defendants would accept such agreement as successor sponsors to Simmons and would abide by the terms thereof; that "this fact" was confirmed by the plaintiff with Moreton Rolleston Jr., who was the attorney for the defendants and who had been acting as attorney for Simmons; that after such "confirmation" the plaintiff continued its work with reference to the project, and by its efforts had the FHA commitment transferred to the defendants; that on or about December 29, 1950, Simmons transferred all of his right, title, and interest in the project to the defendants; that, immediately thereafter, the defendants, acting by and through Alvin Barge, one of the copartners, ratified in writing the agreement theretofore existing between the plaintiff and Simmons through the medium of a letter; that the defendants attempted to modify the said agreement by placing a time limitation upon the plaintiff for the delivery by the plaintiff of the formal commitment for the permanent mortgage on the housing project; that the time set for such delivery was by January 30, 1951; that the plaintiff did not and had never agreed to the attempted imposition of a time limitation for the delivery of the permanent-mortgage commitment; that, on or about January 10, 1951, the plaintiff advised the defendants through their attorney, Mr. Rolleston, of the receipt by the plaintiff of a telegram from the plaintiff's correspondents in New York, advising of the fact that the City Savings Bank of Brooklyn had agreed to issue the permanent mortgage on the project, and that the formal commitment would be delivered as soon as necessary legal details had been completed; that later the plaintiff received a letter from the defendants dated January 31, 1951, advising the plaintiff that the defendants were under no further obligation to the plaintiff in relation to the sale of the mortgage and the insurance on the project, and that the defendants were proceeding to secure a sale of the loan and the issuance of the insurance through their regular agents; that, on the morning of February 2, 1951, the plaintiff received the formal commitment from the City Savings Bank of Brooklyn, and that on the same day such commitment was forwarded to the Trust Company of Georgia, temporary mortgagee of the defendants; that the defendants through another broker secured a permanent mortgage for the project from another bank, this mortgage being secured by the defendants after February 10, 1951; that the defendants thereby breached their contract with the plaintiff, and that because of such breach the plaintiff had been damaged in enumerated particulars. A general demurrer to the petition was sustained, and the plaintiff excepts.
The plaintiff based its cause of action on the agreement with Simmons which it alleged the defendants "ratified." It alleged that the defendants were substituted for Simmons in the agreement. In substance it alleged a novation of the contract and is therefore governed by the law of novation. There are four essential elements of a novation: (1) a previous valid obligation, (2) the agreement of all the parties to the new contract, (3) the extinguishment of the old contract, (4) the validity of the new one. Savannah Bank Trust Co. v. Wolff, 191 Ga. 111, 120 ( 11 S.E.2d 766); Cowart v. Smith, 78 Ga. App. 194, 198 ( 50 S.E.2d 863). While we do not think that the petition showed requirement (3) above, we will concern ourselves with requirement (2). The petition alleged: "10. Thereafter, and prior to December 29, 1950, the said Simmons advised plaintiff that he desired to transfer all of his right, title, and interest in and to said project to Strother-Barge Company, the defendant herein, but that said Strother-Barge Company had been notified by the said Simmons, as well as his representative, of the existing agreement with plaintiff with respect to the permanent mortgage and the insurance on said project, and that said Strother-Barge Company would accept such agreement as successor sponsors to the said Simmons and abide by the terms thereof. 11. This fact was confirmed by plaintiff with Mr. Moreton Rolleston Jr., attorney for Strother-Barge Company. . ." Paragraph 10 of the petition did not allege an agreement by the defendants to assume Simmons' obligations under his contract with the plaintiff. And if the plaintiff contends that the "fact" confirmed by the defendants' attorney constituted a novation of the agreement, the contention is without merit. Nowhere is it alleged that the attorney had such authority. The plaintiff alleged that the defendants ratified the agreement with Simmons by a letter. The substantial part of that letter was as follows: "We do hereby agree that you shall have the right to sell the permanent loan for the above project and to receive any premium which might be paid by your purchaser for the loan, provided that you shall procure for the Trust Company of Georgia a letter from your permanent mortgage [mortgagee] addressed to the Trust Company of Georgia in which your permanent mortgagee will give to the Trust Company of Georgia a permanent commitment to buy the loan after the completion of Seminole Court Apartments and within thirty days after the acceptance of the apartments by FHA. This letter from your permanent mortgagee must be delivered to the Trust Company of Georgia not later than January 30, 1951." There is nothing alleged in the petition to show that the plaintiff notified the defendants that it would not agree to the time limitation, other than the allegation that the plaintiff "did not and has never agreed to the attempted imposition of a time limitation by the defendants." If there was a novation alleged anywhere in the petition, it was by virtue of this letter; and, if this letter did constitute a novation of the agreement, its terms were wholly binding on all the parties concerned and the time limitation stipulated therein applied. Assuming but not deciding that the letter did constitute a novation, the plaintiff was bound to perform the service called for under the agreement by January 30, 1951. The petition showed that the plaintiff did not procure the permanent-mortgage commitment until February 2, 1951, and therefore showed that the plaintiff did not perform the service agreed upon until the agreement had expired. The petition did not show that the plaintiff's receipt of the telegram of January 10 and notice thereof to the defendants' attorney was a fulfillment of its obligation under the contract, for two reasons: first, it did not show that the attorney had such authority to receive the notice; and second, the contract provided for a letter of commitment from the permanent mortgagee addressed to the temporary mortgagee.
The petition did not allege a cause of action against the defendants, and the court did not err in sustaining the general demurrer thereto.
Judgment affirmed. Sutton, C. J., and Worrill, J., concur.