Opinion
41645.
SUBMITTED NOVEMBER 1, 1965.
DECIDED JANUARY 19, 1966.
Action on notes. Fulton Civil Court. Before Judge Parker.
Lee Evans, for appellant.
Robert Carpenter, A. Tate Conyers, for appellee.
1. Where the trial court, after instructing the jury that the defendant relied on three separate defenses, equated the defenses with the issues in the case by saying, as to the first, "That's one of the issues you have to pass on" and thereafter charged they should bring in a verdict for the defendant if they found for her on the issues, the charge as a whole was harmful error as indicating that the defendant could prevail only if she proved all the issues or defenses contended for, when proof of any one would have entitled her to a verdict.
2. It is not error to instruct the jury that the burden is on the defendant to prove her defense to their satisfaction by a legal preponderance of the evidence.
3-5. No error is shown in the trial court's instruction on the defense of assignment, lack of consideration, or estoppel on the part of the plaintiff seeking recovery on notes executed and delivered to him by the defendant.
SUBMITTED NOVEMBER 1, 1965 — DECIDED JANUARY 19, 1966.
Levin sued Mrs. Potts on ten $1,000 notes, the defendant contending that she had no liability by reason of failure of consideration and estoppel. The evidence favorable to the plaintiff shows that Myers, Doyal and the plaintiff's brother, Mayer, each owned a 1/3 interest in C. B., Inc. The corporation leased land, negotiated for by Levin, for a liquor store location. This corporation was later dissolved. Levin was negotiating for the transfer of Myers' interest to Wood and acquired it for Wood, but Wood brought the defendant, Mrs. Potts, into the negotiations. The stock certificates had been endorsed in blank to Potts in September, 1961, making Mayer, Doyal and Potts the three partners. In October, 1961, Potts executed the notes in question and gave them to Levin during a meeting at which Potts, Levin and Wood were present. A building was constructed on the premises, which were then subleased to Brown who paid 9% of the liquor sales as rent. Brown was indignant over some prior transactions and as a result Levin or Mayer withheld 1/3 of Potts' 1/3 interest in the rents, apparently for Brown. Mrs. Potts discovered the fact and complained. The partnership was dissolved September 23, 1963, by selling the assets to Brown, and in the agreement by the partners to this effect appears the following: "Mrs. I. H. Potts contends that as of this date she has substantial monies coming to her from rentals heretofore collected, the amount of which is not known to her at this time, and in consideration of Mrs. I. H. Potts renouncing any and all claim to said monies, Herman Mayer agrees that he will hold Mrs. I. H. Potts free from liability on a series of notes executed in 1961, totalling $10,000, and payable on demand to Leonard Levin," plus payment of a stipulation of amounts due Potts as rent, upon which "neither party shall have or claim to have any claim of any kind or nature against the other." Levin's signature does not appear on the instrument. Mrs. Potts testified that she did receive a 1/3 interest in the liquor store for which she put up nothing and which she subsequently sold for $25,000, and that she received approximately $15,000 in rents over the lifetime of the agreement, out of which was deducted approximately $700 per month toward expenses of erecting the building and that Wood received no part of these sums. The record also shows a letter to the defendant from Mayer dated August 15, 1963, signed by Mayer, which stated: "I am holding a demand note for $1,000" and requesting payment. No assignment of any of the notes in question to Mayer appears. A verdict was returned in favor of the plaintiff.
1. The court erred in charging the jury as follows: "If you find the issues in the case in favor of defendant, Mrs. Imogene H. Potts, it will be your duty to render a verdict in her favor." The defendant relied on three different defenses: (1) that the title to the notes sued on was not in the plaintiff, (2) estoppel, and (3) that there was no consideration for the notes. In his charge the court related "defenses" to "issues" and treated them as synonymous terms. The defendant was entitled to prevail if she established any one of her three defenses. There was no evidence authorizing a verdict for the defendant on defenses 1 and 2 but there was on number 3. The court's charge placed a greater burden on the defendant than the law requires by requiring her to establish all three defenses before she would be entitled to a verdict when she would have been entitled to a verdict if she had established only the defense that there was no consideration for the notes.
2. It was not error to instruct the jury that the burden was on the defendant to prove her defense to their satisfaction by a legal preponderance of the evidence. Powell v. Georgia, Fla. c. R. Co., 121 Ga. 803 ( 49 S.E. 759); Martin Sons v. Bank of Leesburg, 137 Ga. 285 (1) ( 73 S.E. 387); Atlantic C. L. R. Co. v. Carpenter, 73 Ga. App. 849 ( 38 S.E.2d 309).
3. The contention that the instruction by the court that "the notes have not been endorsed and, therefore, absolute title to them has not passed to anybody" was error because further instructions should have been given concerning the letter of August 15, 1963, from Mayer to Potts is not well taken. Hix v. Headrick, 97 Ga. App. 540 (2) ( 103 S.E.2d 516).
4. Generally estoppel, to be relied on, must be pleaded, and a judgment based on estoppel not specially pleaded may not be rendered even though evidence admitted without objection shows the estoppel to exist. DeVore v. Baxter, 155 Ga. 109 ( 116 S.E. 610); National Land c. Co. v. Zugar, 171 Ga. 228 ( 155 S.E. 7). Rule 17 (c) (3) (a) of this court provides: "Each enumerated error shall be supported in the brief by specific reference to the record or transcript or both." Enumerated errors 6 and 7 refer to alleged inaccuracies of the court in giving the defendant the benefit of the defense of estoppel, but neither it nor the brief points out any pleading of the defendant referring to such a defense and we have been unable to find it in the record. Accordingly, these contentions are without merit.
5. The court properly instructed the jury: "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." Code § 20-306. The trial of this case is more impressive because of what was not said as to certain crucial issues than as to the testimony given; nevertheless, the burden was on the defendant to rebut the presumption of consideration recited in the notes, and it can not be said that she did this by uncontradicted evidence, or that there was no evidence from which an inference may be gleaned that the promise to pay which Mrs. Potts made to Levin was not in fact the consideration for the stock she received. Levin testified that C. B., Inc. was originally a corporation owned by Lee Myers, Herman Mayer, and R. L. Doyal; that the corporation owned property on which was situated a liquor store, the rent being adjusted to the profits of the liquor business; that this property was condemned by the State Highway Department; that Wood Realty Company then worked out a lease of property at a new location of which C. B., Inc. was lessee about April, 1961, and the store opened in October, 1961; that about March, 1962, C. B., Inc. transferred the lease to Herman Mayer, R. L. Doyal, and Mrs. Potts, after Mrs. Potts had executed the notes to him, the notes being signed October, 1961; that the notes represented her purchase into the business and "she bought the thing prior to getting into the deal"; that the stock certificate representing a 1/3 interest in the corporation had been made out to plaintiff's brother, Herman Mayer and by him endorsed in blank, making it bearer paper; that the arrangement was for Mrs. Potts to pay 1/3 of the cost of building improvements on the new lot and that she received a 2/9 interest in the lease; that he procured for Douglas Wood a 1/3 interest owned by the Myers Company, made a deal with Lee Myers to give up his 1/3 interest, for which he gave Myers certain things he had going with him in real estate, and received Mrs. Potts' promise to pay $10,000; that he had originally acquired the interest from Myers for Douglas Wood, but Wood brought Mrs. Potts into it. Mrs. Potts testified that she did in fact get an interest in the store; that it was supposed to have been a 1/3 interest in the store but it turned out that she received a 2/9 interest; that she put up nothing for this interest, received 2/9 of the profits amounting to some $15,000 and eventually sold the interest for $25,000. She further testified: "A. Yes, I signed the notes, yes. Q. For some interest in that liquor store? A. For a 1/3 interest, I thought."
Why the stock which Levin claimed represented the 1/3 interest of Myers was in fact made out to plaintiff's brother, Mayer, was never explained, but it was bearer stock, and it was delivered by Levin either to Mrs. Potts directly or to Douglas Wood and by Wood to Mrs. Potts. Neither was it explained what concessions Levin made to Myers in return for the stock, nor why Wood did not remain in the deal, except that he decided he "should not keep the certificate of stock because of my position," nor why he transferred it to Mrs. Potts except that "we have done some business together," nor why it was he who arranged for Potts and Levin to meet with him at the time Mrs. Potts executed the notes to Levin except that he "told her it was a good deal," nor why Levin made all the arrangements at both ends except that he was "putting the thing together." The defendant never contended that anyone except Levin claimed to be the owner of the stock or that she owed any other person for it. Since it was bearer stock and delivered to her, it was her property. Since after this transaction the corporation was dissolved, a partnership formed and the business conducted by Potts, Mayer and Doyal, and thereafter this partnership was dissolved in September, 1963, (a part of the agreement reciting that "Herman Mayer agrees that he will hold Mrs. I. H. Potts free from all liability on a series of notes executed in 1961, totalling $10,000, and payable on demand to Leonard Levin") it would appear that all parties concerned knew the details of the transaction, whatever the true state of affairs was. Where it appears that a defendant has received shares of stock in a corporation made out to X and transferred in blank, and the consideration for such transfer is a note made payable to Y, Y may sustain the action under Code § 20-306 although a stranger to the consideration. Lee v. Exchange Nat. Bank of Fitzgerald, 31 Ga. App. 470 (3) ( 120 S.E. 694). It was not error to give this section in charge, nor did the evidence demand a finding that there was no consideration flowing to the defendant for the notes.
Judgment reversed. Jordan, J., concurs. Felton, C. J., concurs specially.
I concur in the judgment and in all of the rulings of the majority except the ruling in Division 5. I think the court erred in giving the charge excepted to and the judgment should be reversed for this additional reason. The court erred in charging Code § 20-306 which reads: "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." This Code section does not fit the issues or facts in this case. There is no evidence that Mrs. Potts received any direct benefit from anything the plaintiff did. What he did was for the benefit of a corporation in which Mrs. Potts held a one-third interest in stock, which corporation was later converted into a partnership of which Mrs. Potts was a member. The plaintiff testified that the notes were given by Mrs. Potts for Lee Myers' interest. The only reasonable construction of this testimony is that Lee Myers owned an interest for which he was under obligation to pay the plaintiff. There is no evidence that Myers consented to the substitution of Mrs. Potts for him or that the plaintiff released Lee Myers from the obligation. There was therefore no benefit which flowed to Mrs. Potts for the signing of the notes nor was there a detriment to the plaintiff from a release of Myers, or otherwise. Gibson v. Kyle, 46 Ga. App. 295 ( 167 S.E. 547); Wright v. Threatt, 146 Ga. 778 (3) ( 92 S.E. 640), and cases cited.