Lunceford v. Nunnally , 65 Ga. App. 234 ( 1941 )

1. Where a defect in a petition subjecting it to demurrer may be remedied by amendment, but no amendment is made, and the demurrer pointing out such defect is overruled by the court, such error is rendered harmless where upon the trial of the case there is introduced, without objection, evidence which cures the defect in the petition.

2. Assuming but not conceding that the petition in a suit on a note is defective and subject to demurrer in that it does not appear that the note has been transferred by indorsement in writing by the payee to the plaintiff who is the alleged transferee, and it is not alleged that the plaintiff is a transferee for value, the overruling of the demurrer is harmless where on the trial evidence of a written transfer by indorsement from the payee to the plaintiff is admitted without objection.

3. A demand for payment is not necessary in order to charge the maker of a promissory note; and hence such a demand by the transferee of a note is not a prerequisite to the institution and maintenance of a suit on the note against the maker.

4. The evidence did not demand a finding that the defendant was not indebted on the note.

DECIDED JUNE 26, 1941. J. S. Nunnally instituted suit on a note against W. H. Lunceford in the civil court of Fulton County. The petition alleged that the defendant was indebted to the plaintiff, as transferee, in the sum of $25 principal on a note. A purported copy thereof which was attached to the petition showed a note dated January 18, 1938, due thirty days after date, signed by the defendant and two others in favor of J. C. Goss, without any transfer, assignment, or indorsement thereof from Goss to the plaintiff or to any other person. The defendant filed an answer in which he denied all the allegations of the petition except that he was a resident of Fulton County, Georgia, and resided in the jurisdiction of the court. The defendant also filed a "special plea and answer," and alleged that the note sued on "was paid to the said J. C. Goss prior to any alleged transfer of the note . . to the present plaintiff," and that the plaintiff "is not a bona fide holder for value before maturity of the note declared upon inasmuch as the same had been settled with the original payee prior to any alleged transfer thereof." The defendant demurred to the petition on the ground that no cause of action was set forth against the defendant, and because the petition was fatally defective in that it was alleged therein that the defendant was indebted to the plaintiff in the sum sued for and the note attached to the petition did not indicate any indebtedness in favor of the plaintiff, but indicated a special indebtedness in favor of J. C. Goss, who was not a party to the suit.

The trial court overruled the demurrer and the case proceeded to trial before a judge of the civil court of Fulton County, without the intervention of a jury. The plaintiff introduced in evidence the original note which corresponded with the copy attached to the petition except that there appeared on the back of the original note two different undated transfers as follows: (1) "For valuable consideration I do hereby sell, transfer, and convey this note to F. G. Hamm," which transfer was signed by J. C. Goss. (2) "For valuable consideration I hereby sell, transfer and assign the within note to J. S. Nunnally," which transfer was signed by F. G. Hamm. J. C. Goss testified for the plaintiff that shortly after acquiring the note sued on he transferred it to F. G. Hamm; that such note was given to him by the defendant in payment of two previous notes of $12.50 each which had matured and which had been given to him by the defendant as part payment on the purchase-price of an automobile. F. G. Hamm testified for the plaintiff that the note was transferred to him by J. C. Goss, before its maturity and for a valuable consideration, and that when the note was not paid by the defendant at maturity he transferred it to the plaintiff for a valuable consideration; that he was indebted to the plaintiff and transferred the note to him in part payment thereof. The plaintiff testified that F. G. Hamm was indebted to him for services rendered; that the note sued on was transferred to him by Hamm in part payment thereof; that he had never seen or talked to the defendant, or made any personal demand on the defendant for a settlement, but that he had written the defendant two letters to his home address which letters were not returned.

The defendant admitted the execution of the note and stated that it had been given by him to replace two original notes of $12.50 each which were due, and that he had refused to pay these two notes because the automobile which he had purchased from J. C. Goss and for which the notes were given was materially defective; that he executed the note sued on with the definite understanding that before it matured, or was paid, he and J. C. Goss would have a settlement regarding the defective condition of the automobile, and that he would be given due allowance for any expense which he incurred in repairing and conditioning it; that he had never received any notice or letters from the plaintiff, and that no demand on him for payment of the note had been made by the plaintiff.

J. C. Goss testified further, and denied that he had ever made any agreement with the defendant as testified to by the defendant. Judgment was rendered on September 30, 1940, for the plaintiff. A motion for new trial was filed by the defendant and was overruled on October 18, 1940. The defendant thereupon appealed to the appellate division of the court and assigned error in his appeal on the judgment overruling the motion for new trial on the general grounds, and also because the court erred in overruling the demurrers to the petition. It was recited in the appeal that the defendant, during the trial and at the conclusion thereof, moved orally to dismiss the plaintiff's case on the ground that it was not alleged in the petition or in the exhibit thereto that the plaintiff had acquired title to the notes sued on by indorsement and negotiation, as the note was made payable to J. C. Goss and the copy attached did not show any transfer or assignment thereof, nor was there any separate document attached to the suit and note indicating any transfer thereof. The defendant also assigned error on the ground that the court failed at the conclusion of the evidence to grant a nonsuit and dismiss the petition on motion of the defendant that there was no indorsement on the copy of the note attached to the suit or any recital in the petition of a transfer or assignment of the note, and that in the absence of an amendment the suit should be dismissed. The defendant alleged in the appeal to the appellate division that the court had erred in rendering judgment for the plaintiff and in thereafter denying his motion for new trial. On December 2, 1940, the appellate division of the court affirmed the judgment of the trial judge. To this judgment the defendant excepted. It is contended by the defendant that the plaintiff, who was not the payee of the note sued on, could not maintain a suit on the note in his own name unless it appeared from the petition, or from the copy of the note sued on which was attached as an exhibit to the petition, that there had been a written indorsement, transfer, or assignment of the note to the plaintiff, and that therefore the court should have dismissed the petition. The defendant bases his contention on Allen v. Commercial Credit Co., 155 Ga. 545 (117 S.E. 650), in which the Supreme Court held: "Where promissory notes are made payable to a named person or order, the holder thereof other than the payee can not sue thereon in his own name, where the notes have not been indorsed or assigned in writing to him; but suit can only be brought thereon in the name of the original payee for the use of the holder. Where the petition fails to allege or show such indorsement or assignment in writing, it is subject to dismissal on general demurrer." The note here is payable to J. C. Goss, and the suit was instituted by J. S. Nunnally "transferee." Neither the petition nor the exhibits show any indorsement, transfer, or assignment of the note in writing to the plaintiff. However, the decision in the above-stated case was rendered before the enactment in this State in 1924 of the negotiable instruments law, which provides: "Where the holder of an instrument payable to his order transfers it for value without indorsing it, the transfer vests in the transferee such title as the transferor had therein, and the transferee acquires, in addition, the right to have the indorsement of the transferor." Code, § 14-420. In Folsom v. ContinentalAdjustment Cor., 48 Ga. App. 435 (172 S.E. 833), it was said: "Prior to the enactment in this State of the uniform negotiable-instruments law, it was the rule that, where a promissory note was payable to a named person or order, the holder other than the payee could not sue thereon in his own name where the note had not been indorsed or assigned in writing to him, and that suit could be brought only in the name of the original payee for the use of the transferee. . . The indorsement or assignment in writing of the note was necessary to put the legal title in the holder. . . Thus, where a petition failed to allege or show such indorsement or assignment in writing, it was subject to dismissal on general demurrer. . . But this rule was changed by the adoption of section 49 of the negotiable-instruments law in the act of 1924 [which is embodied in Code, § 14-420, quoted above]. . . Such a transfer without indorsement, vesting the transferee with legal title, although not effective to render the transferee a holder in due course, . . now permits the transferee to bring suit in his own name. . . The instant petition, alleging that the note was ``transferred for a valuable consideration,' was good as against the general demurrer that it showed no cause of action." The petition in the case now before the court alleges that the plaintiff was "transferee" of the note but does not allege that he is a transferee for value. This omission may take this case without this section of the negotiable-instruments law. This question it is not necessary to decide.

However, if the plaintiff could not maintain this suit in his own name, he introduced in evidence without objection the original note on the back of which appeared two undated transfers, one from the payee to F. G. Hamm and the other from F. G. Hamm to the plaintiff, both of which transfers recited that they were given for a valuable consideration. It is true that at the conclusion of the evidence the defendant moved to dismiss the case on the ground that it was not alleged in the petition or in the exhibit thereto that the plaintiff had acquired title to the note sued on by indorsement, and the copy thereto attached did no show any transfer or assignment from Goss, and there was no separate writing undertaking any transfer of the note, and also moved the court to grant a nonsuit and dismiss the petition because there was no indorsement on the copy of the note attached as an exhibit nor any recital in the petition of a transfer or assignment of the note, and that in the absence of an amendment by the plaintiff the suit should be dismissed. If there was any error in overruling the demurrer, or in overruling the motion to dismiss the case, such error was rendered harmless by the admission without objection of evidence that the note had been transferred or assigned to the plaintiff in writing and for value.

There is no merit in the contention of the defendant that "the present transferee having acquired title to the note in controversy after its maturity was legally bound to make demand for payment on defendant prior to instituting this action." Conceding that the evidence shows as a matter of law that the plaintiff acquired the note sued on after maturity, a demand on the defendant was not necessary before the institution of the suit. The defendant was one of the makers of the note and was primarily liable thereon. "Presentment for payment is not necessary in order to charge the person primarily liable on the instrument." Code, § 14-701.

There was sufficient evidence to authorize the judge to find against the defendant's plea that he was not indebted on the note. The evidence authorized the finding for the plaintiff.

It follows that the appellate division of the trial court did not err in affirming the judgment of the trial judge in overruling the defendant's motion for new trial.

Judgment affirmed. Sutton, J., concurs. Felton, J., concursspecially.