Opinion
44587.
ARGUED JULY 7, 1969.
DECIDED SEPTEMBER 3, 1969.
Action on notes. DeKalb Civil and Criminal Court. Before Judge Mitchell.
D. R. Cumming, Jr., John G. Aldridge, for appellant.
Rich, Bass, Kidd Broome, E. Dale Dewberry, for appellee.
1. The doctrine that causes of action merge in the judgment rendered thereon and cannot be re-litigated does not extend to causes of action on a cause of action discharged by adjudication of bankruptcy and reaffirmed by the debtor and to causes of action assumed by one not originally liable, executed in writing and for a consideration.
2. The principle of res judicial does not apply in this case because the original debt is not the basis of the cause of action. The reaffirmation of the original debt by the defendant is the basis of the cause of action.
3, 4. There is consideration for the agreements made by the defendant in this case to pay the debts sued on.
5, 6, 7. The other enumerations of error are without merit.
ARGUED JULY 7, 1969 — DECIDED SEPTEMBER 3, 1969.
This is an action filed on July 3, 1968, on two documents entitled "Reaffirmation of Indebtedness," whereby the defendant allegedly reaffirmed the indebtedness evidenced by three promissory notes which had been reduced to judgment. One of the reaffirmation documents covers a note executed by the defendant as endorser for Cherry Transfer Storage Company, which note defendant executed in his official capacity as president of the corporation and also signed by him as maker or endorser. One of the notes was executed "T. R. Moorer, Pres. Cherry Transfer and Storage Co.," which was the signature of T. R. Moorer in his representative capacity. Code Ann. § 109A-3-403 (3). This note was not endorsed by the defendant individually. The third note was executed by the defendant in his official capacity as president of the corporation aforenamed and was not endorsed by the defendant individually and, unlike the first note above described, did not contain an obligation to pay by the defendant individually. The two reaffirmation instruments contained the following provisions: "Notwithstanding my adjudication as a bankrupt . . . I, T. R. Moorer . . . hereby reaffirm, promise and agree to pay to Rudy Merrill, herein referred to as `Creditor,' the principal sum of ____." There follow in the two documents the descriptions of the three notes, one in one reaffirmation and two in the other. In these two documents there was a promise to pay by the defendant, to the plaintiff, the debts described "in full" on January 11, 1968. These reaffirmation documents were dated January 11, 1966.
The answers of the defendant stated the following defenses:
1. That as to the note dated April 16, 1965, for $1,700 executed as follows: "T. R. Moorer, Pres. Cherry Transfer Storage Co.," and as to the note dated May 28, 1965, for $1,073.50, executed as follows: "Cherry Transfer Storage Co., T. R. Moorer, Pres.," the notes show on their faces that the defendant was not individually liable thereon and that as to them the reaffirmation agreement was ineffective and not supported by any consideration.
2. That the defendant was adjudicated a bankrupt and was granted his discharge on June 9, 1966, and any and all liability of defendant to plaintiff was discharged thereby.
3. Total failure of consideration because the documents sued on were executed by the defendant in reliance on the promise of plaintiff that he would sign and agree to a proposed agreement among creditors of Cherry Transfer Storage Co., a corporation in which defendant was interested, which promise plaintiff refused to perform and because the defendant executed the documents sued on solely in reliance on plaintiff's promise to sign said agreement among the corporation's creditors and that plaintiff never intended to sign the agreement and because the documents sued on are void in that they were obtained by fraud and misrepresentation by the plaintiff.
4. Total failure of consideration because neither defendant nor the corporation received from plaintiff the sums stated in the notes sought to be reaffirmed.
5. Res Judicata.
6. Merger.
The court directed a verdict for the plaintiff and entered judgment thereon, from which judgment the defendant appeals. He also appeals from the judgment overruling his motion for a summary judgment.
1. The contention that the defendant should have prevailed in this cause because the obligations and bases for causes of action in the plaintiff were merged in the judgment obtained by the plaintiff in an action therefor is without merit. The doctrine applies in some cases insofar as enforcement of process to collect the debt is concerned. "The doctrine of merger will not, however, be carried any further than the ends of justice require. The judgment does not annihilate the debt, destroy the character as evidence, or change the essential nature and real foundation of the cause of action. It does not preclude all inquiry as to the character or nature of the original cause of action, or an ascertainment of whether or not the claim is really one of a nature such as the court is authorized to enforce; and, when the essential rights of the parties are influenced by the original contract, the court will look behind the judgment for the purpose of ascertaining what the original contract was. The judgment only changes the form of action for recovery. The incident of the old debt may be carried forward to prevent the inequitable destruction of a right, privilege, or exemption." 50 CJS 22, Judgments, § 599. The doctrine does not apply in this case. Aiken v. Bank of Ga., 101 Ga. App. 200 ( 113 S.E.2d 405), cited by the appellant as authority for the proposition that the doctrine of merger forecloses recovery in this case, does not sustain the contention urged. (The writer dissented in that case on the main issue only.) On that point see Kendrix v. Superior Egg Co., 99 Ga. App. 575 ( 109 S.E.2d 59) and Peterson v. Calhoun, 137 Ga. 799 ( 74 S.E. 519).
2. Also without merit is the contention by the defendant that the principle of res judicata demands a finding in his favor. The causes of action in the action on the original and the action on the reaffirmation agreements are not the same. The obligation on the original notes merged into the judgment, insofar as direct additional action on them is concerned. The reaffirmation agreement suspended the operation of the judgment and revitalized the original obligations in the three notes by extending the time of payment of the sums due for two years. The acceptance of the note by the plaintiff bound him for the extension of the time even though he did not sign the affirmation agreements.
3. The defendant was personally bound on one of the notes. One of them he endorsed as security for the corporation. This obligation was discharged by the defendant's adjudication in bankruptcy and discharge. An agreement to revive it is founded on a sufficient consideration since the discharge does not affect the debt. It merely prevents enforcement thereof. There was sufficient consideration for the above note under the reaffirmation agreement.
4. The terms "reaffirm" and "reaffirmation document" are not appropriate designations of the agreement on the part of the defendant to pay the obligation of the notes on which the corporation alone was liable. The defendant evidently thought that he was personally obligated. But even if the parties had the wrong reason for doing what they did as to these obligations, their object and intention was accomplished and the transaction should not be aborted simply because one legal theory on which the agreement could have been based did not exist when there is a legal theory upon which it can survive and which supports and is consistent with the intent of the parties. The defendant could legally obligate himself to answer for the corporation debt if he did so in writing and for a consideration. The consideration in this instance was the agreed forbearance of the plaintiff to collect the debts for two years. Loewenherz v. Weil, 33 Ga. App. 760, 765 ( 127 S.E. 883); Saul v. Southern Seating Co., 6 Ga. App. 843 ( 65 S.E. 1065); Foote v. Reece Son, 17 Ga. App. 799 ( 88 S.E. 689); Watkins Medical Co. v. Marbach, 20 Ga. App. 691 ( 93 S.E. 270).
5. The contention that the plaintiff is barred from recovery on the documents sued on because he agreed that if they were executed by the defendant he would approve the reorganization plan to be agreed on by the creditors of the Cherry Transfer Storage Co. and failed to do so is without merit. The plaintiff accepted the documents sued on and thereby was bound to fulfill his promise to sign the reorganization agreement. The record shows that the plaintiff's attorney at law signed the agreement for the plaintiff probably without the plaintiff's knowledge. There is no evidence that any injury was done to anyone by reason of the plaintiff's failure to personally sign the reorganization agreement. Under the facts we see no reason why the plaintiff's failure to sign the agreement should defeat his recovery in this case.
6. There is no evidence to authorize a finding that the reaffirmation agreements were procured by fraud in that the plaintiff promised to sign the reorganization agreements with the intention at the time not to perform the promise.
7. Enumerated errors not argued are treated as abandoned.
8. The judgments are affirmed with direction that the court write off the sum of $150 from the judgment to represent the balance of moneys not received from the plaintiff when the notes were executed, which the court, through oversight, neglected to deduct in the direction of the verdict and entering of the judgment.
Judgments affirmed with direction. Pannell and Quillian, JJ., concur.