Dolvin v. American Harrow Co. , 125 Ga. 699 ( 1906 )

Lumpkin, J.

(After stating the foregoing facts.)

1-2. “If upon demurrer the court has decided the merits of the cause, the judgment may be pleaded in bar of another suit for the same cause.” Civil Code, §3744. “If in rendering its judgment upon a demurrer to a petition the court does not decide upon the merits of the ease, a judgment sustaining the demurrer and dismissing the action is not a bar to another proceeding for the same cause.” Papworth v. Fitzgerald, 111 Ga. 54. This ruling was made in regard to the plaintiff’s petition, but the same principle would govern in regard to a judgment upon a demurrer to a plea. If the judgment determines that the defense set up by the plea is not good in law, this is an adjudication on the merits; and if substantially the same plea is offered again, it is res adjudicata. But if a plea is dismissed, not for lack of merit in the defense, but merely because the allegations are too general and wanting in specification, this is not an adjudication on the merits; and if a plea fully and distinctly alleging a good defense is offered, the matter is not res adjudicata. The difference between the result of a ruling on a declaration and a ruling on a plea is that, if a declaration is once dismissed for any cause, the case is out of court, and there is nothing to amend by; but the striking of one of several pleas does not take the case out of court, and there is still an opportunity for amendment, subject to the restrictions prescribed by the law in that regard, and the power of the court to impose terms, in proper cases. Civil Code, §§5097, 5057, 5068, 5101.

An examination of the statement of facts preceding this opinion will show that the original allegation of fraud was stricken because it was not set forth “as required by law” (which we understand to mean, without sufficient specification), and that the amendment offered was very different. Whether this amendment amounted to a good plea of fraud, or not, we express no opinion. The judge, in passing on its merits, might hold it to be a good plea, or he might hold that it made one of those not infrequent cases where the parties say one thing orally and another in the written contract, and fail to show any sufficient reason why they signed it as written. A man can not talk one way as to a contract, deliberately and knowingly sign it in writing another way, and expect the courts to relieve him of the results of his folly. As to this plea we say nothing, as the trial judge has not passed on the point. What we hold is that the matter was not res adjudicata by reason of the decision on the demurrer.

3. The presiding judge held that the allegations in reference to accident and mistake constituted no valid defense. In this we are unable to agree with him. “Mere ignorance of the law on the part of the party himself, where the facts are all known, and there is no misplaced confidence, and no artifice or deception or fraudulent practice is used by the other party, either to induce the mistake of law or to prevent its correction, will not authorize the inters vention of equity.” Civil Code, §3978. But “an honest mistake of the law as to the effect of an instrument on the part of both contracting parties, when such mistake operates as a gross injustice to one, and gives an unconscientious advantage to the other, may be relieved in equity.” Civil Code, §3979. The distinction between ignorance of what the law is, and mutual mistake as to the effect of an instrument, may not always appear to be very clearly defined; but it is well settled that there is a distinction. Culbreath v. Culbreath, 7 Ga. 64; Adair v. McDonald, 42 Ga. 506; Ham v. Parkerson, 68 Ga. 830.

It was alleged in the proposed amendment, that facts existed which would have authorized the defendant to plead failure 'of consideration to the original note; that under the statement of the agent of the plaintiffs a new note was given, the result of which would be to destroy that plea (Lunsford v. Malsby, 101 Ga. 39); that this was only intended afe a security until the settlement agreed on should be consummated; that the agent, for the purpose of giving him “a showing” for his protection, wrote, signed in the name of the plaintiff, by himself as agent, and delivered to defendant a paper which read, “I agree to receipt J. G. Dolvin for note given me to-day, April 11, 1901, for $934.18, note due January 1st, 1902;” that this was intended by both parties to signify an agreement on the part of the plaintiff to receipt for and cancel the obligation represented by the new note, upon compliance, with the agreement to deliver up the unsold harrows and account for those sold; that it was drawn by the agent and accepted by the defendant, who was unlearned in the law; and that the use of inapt words to accomplish that result, and the fact that the paper may not have that effect, was due to a mutual mistake. It was alleged that there was a mutual mistake as to the effect of this instrument; or, if not, that then there was a deliberate trick of the agent to destroy the defendant’s legal defense to the first note and give him a meaningless paper under the guise of a protection against the last note.

It has been held that this paper was not ambiguous, and could not be explained by parol. American Harrow Co. v. Dolvin, 119 Ga. 186. But we can well understand how there might' have been a mutual mistake in regard to its effect. To receive a note, and at the same time give, not an actual receipt for it, but an agreement to receipt for it, is unusual. What the parties may have meant we do not say; but the plea of mutual mistake as to its effect was sufficient to withstand the objection urged against it in its entirety, in the nature of a general demurrer. In so far as the plea sought to allege that the original contract and note were not what they plainly purported to be, it was insufficient. Nor was it a sufficient plea as to other instruments beside the particular one pleaded, and as to which a mutual mistake of law was alleged. A mere general reference to “other blank forms” required to be signed is no proper plea of mutual mistake as to such instruments as may have thus been signed. No objection, however, appears to have been raised, or ruling made, as to any special part of the plea, but only to the whole. Let it be borne in mind also that for a plea of mutual mistake of law to prove a successful defense, the mistake must have been mutual as to the effect of the instrument. Mere general statements of omissions avail nothing. “An allegation of fraud, any more than an allegation of mistake, can not be used as a mere cover to bring in an oral agreement, contemporaneous with the note, and in variance with its terms.” Mansfield v. Barber, 59 Ga. 854; Smith v. Brooks, 75 Ga. 356, 360.

4. It is a rule of law that ratification involves knowledge of the facts on the part of the person ratifying, at the time when the ratification is made. But it is also a rule that if an agent exceeds his authority, the principal can not ratify in part and repudiate in part; he must adopt either the whole or none. Civil Code, §3021; Hodnett v. Tatum, 9 Ga. 70; Howard v. Cassels, 105 Ga. 412; McLean v. Clark, 47 Ga. 26. It was alleged in the proposed amendment, that the agent had authority to do what he did, but, if not, that his acts were ratified; that the settlement, the giving of the new note, and the signing of the paper were all parts of one transaction ; and that the principal could not sue on the note so secured, claim that the defense to the old note had been thereby waived, and thus retain the note, continue to press the suit, and adopt the settlement by which it was obtained only so far as was favorable to him, and reject the balance. If the agent in fact did the acts alleged in the plea, and thus obtained the note, and this was in excess of his authority, upon discovery of the facts the principal could ratify the whole transaction or reject it. Even the suit on the note, if in ignorance of the facts, would perhaps not alone destroy the principal's right to act on discovery of them. But the principal can not, after knowledge, ratify only so far as to retain the new note and continue to insist on its collection, with whatever advantages it might give, and yet repudiate as unauthorized all the rest of the agent’s acts in the same transaction in which the note was obtained. Of course we do not mean to intimate that there was any fraud or mistake on the part of the agent, but merely to hold that the company can not, after knowledge of the facts, adopt his acts in part, if he exceeded his authority, and reject the balance. It would be in no worse position by ratification than if the agent had original authority to act for it; and the same contentions would be open to it; but if it ratifies, it is in no better position, and can not say that he was without authority in part.

In Central Ry. Co. v. James, 117 Ga. 834, it was said: “Where the owner of goods does not attend to their shipment in person, but procures another to act in his behalf, who does so without disclosing the name of his principal, the latter is bound by the terms of the contract which his agent makes with the carrier, to the same extent as though the contract was made by the principal in person, irrespective of the question whether the agent did or did not go outside of the authority with which he was vested. This is true for the all-sufficient reason that the principal can not take advantage of the contract made in his behalf without fully ratifying the act of his agent and becoming bound thereby.” In Southern Ry. Co. v. Parramore, 119 Ga. 692, this statement was quoted approvingly. In Supreme Conclave v. O’Connell, 107 Ga. 101, it was said: “It is a well-recognized principle of law that a principal can take no benefit from a contract into which his agent has fraudulently induced a third party to enter; for the principal can not in part ratify and in part repudiate the act of his agent in effecting the contract.” See also Atlas Tack Co. v. Exchange Bank, 111 Ga. 703; Lamar v. Pearre, 90 Ga. 378(5); Lewis v. Equitable Mortgage Co., 94 Ga. 573(2). In DeVaughn v. McLeroy, 82 Ga. 700, it is said, that, “To bind a person by a ratification of an illegal or void act, it must be shown that such person had full knowledge, at the time of the alleged ratification, of the facts which make such act illegal or void.” But on page 701, it is said: “It is true, if the award involves the interest of T. E. B. McLeroy in the land which his heirs are now suing for, that his suit for the money awarded to him in the adjustment of his money demand against bis guardian, and the transfer of the judgment which he obtained, would also be a ratification of the award upon his interest in the land; because it is a plain elementary, principle of law, sustained, by all authority, that he could not ratify what was advantageous to him and repudiate what was against his interests.” See also Harrell v. Terrell, ante, 379. In Smith v. Hodson, 4 T. R. 211, it was; held, that "If a bankrupt on the eve of his bankruptcy fraudulently deliver goods to one of his creditors, the assignees may disaffirm the contract and recover the value of the goods in trover: but if they bring assumpsit, they affirm the contract, and then the creditor may set off -his debt.” In Peters v. Ballister, 3 Pick. 495, 505, it was held, that where assumpsit was brought for the proceeds of a sale, if insisted on it ratified the sale; but if the plaintiff discovered his error, dismissed the action of assumpsit, and brought an action, of trover for the property, this did not, amount to a ratification. In the case before us apparently the principal must have known of the taking of the original note, and that the agent had it for settlement. It received the new note which,the agent obtained, and brought suit on it. For other cases on the subject of ratification by suit, see also Ingraham v. Barber, 73 Ga. 158; Singleton v. Bank of Monticello, 113 Ga. 527; Thomas v. Bagley, 119 Ga. 780; Franklin v. Ezell, 33 Tenn. 497; Beidman v. Goodell, 56 Iowa, 592; Partridge v. White, 59 Me. 564; Reinhard on Agency, §123, and note; Osborn Co. v. Jordan, 53 Neb. 465; Eadie v. Ashbaugh, 44 Iowa, 519; Piano Mfg. Co. v. Millage, 14 S. D. 331; Joslin v. Miller, 14 Neb. 91; Sycamore Marsh Harvester Mfg. Co. v. Sturm, 13 Neb. 210; McKeighan v. Hopkins, 19 Neb. 33; 1 Clark and Skyles on Agency, §142 (a). In Johnston v. Milwaukee etc. Co., 49 Neb. 68 (8), it was held as follows: "In the case at bar, plaintiff commenced an action of replevin to recover of the defendants certain cattle, the possession of which had been acquired by defendants through an alleged unauthorized sale of the cattle to them by an agent of plaintiff. The defendant’s answer was a general denial. After the commencement of the action, but before the trial, the- plaintiff gained knowledge that it had received the benefit of a, portion of the proceeds of the unauthorized sale. Held, that it should then have returned to the defendants so much of the proceeds of the sale as had been applied to its benefit, or tendered such return; and its failure to do so would be a ratification of the sale, which related back to its inception, and which 'could be proved on the trial by defendants under the general denial and without the filing on their part of a supplemental answer setting up such ratification.” Farmers & Merchants Bank v. Farmers & Merchants etc., 49 Neb. 379.

The present case differs from that of Graham v. Williams, 114 Ga. 716, in which it was held that a plaintiff must have a cause of action when he brings suit, and that if the 'defendant has a complete defense at the time suit is brought, he can not be deprived thereof by a third party ratifying a deed which at the commencement of the suit was without binding force for want of such xatification. It also differs from Baldwin Fertilizer Co. v. Thompson, 106 Ga. 480, where the principal only received notes to the possession of which it was legally entitled regardless of the agreement -of the agent.

If anything said in this opinion apparently is not in accord with what was said when the case was here before, it will readily be explained by noticing the difference in the questions then and now involved, and the points then and now decided. It was then sought to introduce parol evidence, on the ground that the paper given by the agent was ambiguous. This evidence was admitted, and the judge charged on the basis of it, including a charge on the subject •of ratification. The rulings were that the evidence was erroneously .admitted, and that the charge based on it was therefore also error. There was some discussion as to the evidence of ratification, and •other evidence, but this is to be construed in reference to the questions involved. Here a plea was rejected, on objection in the nature of a demurrer, which plea alleged original authority, or, if none, ratification. We rule nothing as to the facts as they may appear from the evidence. This decision is based on the pleadings. As the error in the rulings in regard to the pleas was fundamental, It is needless to discuss further points in the trial.

Judgment reversed.

All the Justices concur.