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Wholesale Electric Supply Co. v. Bagley

Court of Appeals of Georgia
Apr 10, 1961
119 S.E.2d 717 (Ga. Ct. App. 1961)

Opinion

38740.

DECIDED APRIL 10, 1961.

Action on note. Fulton Civil Court. Before Judge Parker.

Joseph M. Brown, for plaintiff in error.

Talley Kirkland, contra.


Where A owes B and B owes C, and A executes a note to B and C as copayees, and B indorses the note to C, with the intention that the transaction have the same legal consequences as if the note had been made payable to B alone and by him indorsed to C for the purpose of further negotiation of the note, an action will lie, on the note, in favor of C, against B, after C negotiates the note and it is later renegotiated to C.

DECIDED APRIL 10, 1961.


Wholesale Electric Supply Co. sued W. T. Bagley on a promissory note, dated January 4, 1954, signed by A. Kreitman and payable to W. T. Bagley and Wholesale Electric Supply Co. On the back of the note the following indorsements appear: "W. T. Bagley, Wholesale Electric Supply Co., by Bob J. White, Pres. For value received the within note is hereby transferred to Wholesale Electric Supply Co. without recourse on us. This 28, Jan. 1955, First National Bank, Rome, Ga., Per C. D. Selman a. Cashier." The following amendment to the petition was allowed subject to objection: "5. Plaintiff shows that prior to the execution of the note sued on, specifically on June 23rd, 1953, that the defendant W. T. Bagley did purchase and receive on open account from plaintiff Wholesale Electric Company, merchandise totaling the sum of $1,492.04. Copies of the invoices for said merchandise are attached hereto and made a part of this paragraph and amendment the same as if incorporated herein. 6. That at the time of the execution of the note sued upon, there was an undisputed past due obligation and debt owing by the defendant W. T. Bagley to petitioner Wholesale Electric Supply Company in the sum of $1,471.95. 7. That petitioner made repeated efforts to collect said debt from the defendant W. T. Bagley who pleaded his inability to pay by reason of the said Bagley's own inability to collect an obligation owing by one A. Kreitman to the defendant W. T. Bagley, the merchandise furnished by plaintiff to the defendant having been used by the said defendant to improve the business premises of the said A. Kreitman, located at 3224 Peachtree Road, Atlanta, Fulton County, Georgia. 8. That the said defendant W. T. Bagley, did arrange to bring A. Kreitman to Rome, Georgia, and to the place of business of plaintiff, so that the said A. Kreitman would discharge his obligation to the defendant W. T. Bagley by executing a note to said Bagley, who in turn was to endorse said note over to petitioner, and thus enable petitioner to obtain payment of the debt owing by W. T. Bagley to petitioner, by discounting or transferring said note to First National Bank, Rome, Ga. where petitioner did his banking business. 9. Petitioner shows that the endorsement of the note by W. T. Bagley was with recourse and that the obligation of W. T. Bagley to petitioner was not to be discharged until the note itself was paid. 10. That the aforementioned Kreitman defaulted on said note, and failed to pay any part thereof, and subsequently filed bankruptcy and was discharged from his liability on said note. 11. That petitioner was required under his own indorsement to repurchase the said promissory note from the First National Bank, Rome, Georgia, and is the present holder and owner thereof. 12. That thereafter the payments as set forth in paragraph 3 of the petition were made by the defendant W. T. Bagley to petitioner." On renewed demurrer the court ruled that neither the original petition nor the petition as amended set out a cause of action; this allowed the amendment and sustained the general demurrer to the original petition. To this judgment the plaintiff excepted.


This is a very unusual case and we have not been able to find any authorities governing, in Georgia or elsewhere. We are cognizant of the rule that pleading should be construed against the pleader. Even under this rule we think there is only one construction to be placed on the petition. W. T. Bagley was indebted to the Wholesale Electric Supply Co. for certain equipment purchased from it. A. Kreitman was indebted to W. T. Bagley under a contract between them, with which the plaintiff was not concerned. We do not think it can be disputed that the petition alleges that it was the intention of the parties to the note sued on to accomplish the following purpose to wit: To enter into an agreement whereby A. Kreitman was to obligate himself to pay to W. T. Bagley the amount of the note, and that Bagley was to indorse the note to the plaintiff and to become bound to the plaintiff on said note as if it had been made payable to Bagley alone and by him indorsed to the plaintiff. The confusion in this case arises from the fact that the note was made payable to Bagley and the plaintiff as joint payees. This was not the conventional way to handle this transaction, but, since the parties evidently intended that the consequences of the contract as made would be the same as if the note had been made payable to W. T. Bagley and by him transferred to the plaintiff, we see no reason why the note as executed cannot be construed to accomplish the same purpose. In order to do this the indorsement by W. T. Bagley on the back of the note must be construed to have a dual meaning. One meaning is that he indorsed it to transfer his interest as a copayee to the plaintiff; the other is to construe his indorsement, in addition to the above, as an indorsement for value principally for the benefit of the plaintiff and secondarily as a benefit to the maker. In such circumstances the plaintiff would be authorized to sue W. T. Bagley as an indorser on the note even if the plaintiff had not negotiated the note to the bank. It therefore follows that after the note was renegotiated by the bank to the plaintiff, the plaintiff was authorized to sue W. T. Bagley as it could have done before the plaintiff negotiated the note to the bank. Under the allegations, the payees in the note were not joint payees in the ordinary meaning of the expression. It was not intended that the maker of the note pay to the payees money, part of which belonged to both of the payees. The note as executed, in view of the waiver of presentment, demand, protest, and notice thereof by the indorsers, is in effect equivalent to two notes in one, one from Kreitman to Bagley and one from Bagley to the plaintiff, with the additional incident that the note to Bagley was theoretically indorsed and given as collateral security to secure the note from Bagley to the plaintiff. The circumstances of this case take it out of the general rule that where one of two joint payees transfers his interest to his copayee the latter may not sue the indorsing payee on the instrument. 8 C. J. 340, 341, Bills Notes, § 516. This is not a case in which one of two payees, upon paying the full debt can recover from his copayee a proportionate part on the theory of contribution, for it was never contemplated that part of the sum due by the maker was to be the property of both payees jointly, or that part was to belong to one and part to the other. See Bell v. Kleinberg, 102 Ga. App. 623 ( 117 S.E.2d 262). Parol evidence is admissible to show in what capacity one indorses a negotiable instrument and to explain the true relationship of all parties. Bowden v. Owens, 33 Ga. App. 700 ( 127 S.E. 664); Beutel's Brannan, Negotiable Instruments Law, 7th Ed., p. 559, and cit.; Code § 38-509. The court erred in disallowing the amendment and in sustaining the demurrer to the original petition, and in dismissing the action.

Judgment reversed. Nichols and Bell, JJ., concur.


Summaries of

Wholesale Electric Supply Co. v. Bagley

Court of Appeals of Georgia
Apr 10, 1961
119 S.E.2d 717 (Ga. Ct. App. 1961)
Case details for

Wholesale Electric Supply Co. v. Bagley

Case Details

Full title:WHOLESALE ELECTRIC SUPPLY COMPANY v. BAGLEY

Court:Court of Appeals of Georgia

Date published: Apr 10, 1961

Citations

119 S.E.2d 717 (Ga. Ct. App. 1961)
119 S.E.2d 717