Overstreet v. W. T. Rawleigh Co. Inc. , 75 Ga. App. 483 ( 1947 )

1. When a surety has been sued separately from his principal, it is not then too late for the surety to give the notice provided for in § 103-205 of the Code, to proceed against the principal debtor, he being within the jurisdiction of this State, and said section providing that the surety, "at any time" after the debt on which he is liable becomes due, may give the notice. Sally v. Bank of Union, 150 Ga. 281 (1) (103 S.E. 460).

(a) Since, under the rules of law in this State dealing with the relationship of principal and surety, the creditor may proceed against the surety before first exhausting its remedies against the principal, sureties waived nothing on account of such a provision being incorporated in the contract.

2. On the trial either party has the right to support allegations contained in the pleadings as laid. Clark v. Bandy, 196 Ga. 546 (27 S.E.2d 17); Phillips v. Southern Ry. Co., 112 Ga. 197 (37 S.E. 418).

3. When an amendment to an answer is demurrable, and a timely oral motion to strike the same is interposed and sustained, the record not showing the grounds thereof, such ruling is presumed to have been upon proper grounds, and is not error. Herring v. Smith, 141 Ga. 824 (4) (82 S.E. 132); McClaren v. Williams, 132 Ga. 352 (64 S.E. 65).

DECIDED MAY 29, 1947. REHEARING DENIED JULY 23, 1947. This is the second appearance of this case in this court. See71 Ga. App. 874. As stated there, "Suit was brought by W. T. Rawleigh Company against Hoke S. Williams as principal, and J. W. Overstreet, W. T. J. Davis, and J. W. Cato as sureties. Williams, the principal, and Cato, one of the sureties, were not served. and the suit proceeded against J. W. Overstreet and W. T. J. Davis. The latter having died, W. G. Davis, his administrator, was by amendment made a party in his stead. The contract sued on was dated September 30, 1929, and expired December 31, 1930. On January 31, 1931, W. T. Rawleigh Company made another contract with Hoke S. Williams as principal and J. W. Cato and T. W. Forbes as sureties. This contract expired December 31, 1931. The suit, after the petition was amended, proceeded to trial against J. W. Overstreet and W. G. Davis, as administrator of W. T. J. Davis, deceased, as sureties under the first contract, dated September 30, 1929."

The two contracts are set forth in detail in the former decision of this court, to which reference is now made. As originally drawn, the petition also included Hoke S. Williams, the principal in the contract sued on. A second original and process were made out, and a copy thereof sent to the Sheriff of Richmond County, where Williams was alleged to reside. The sheriff failed to locate Williams, who was never served with any copy of the suit. No other attempt to serve him in Richmond County was made after the sheriff of that county made a return on the second original for that county that he was unable to find Williams in the county. On the trial, no attempt was made to obtain a judgment against Williams.

After evidence was heard, the court, at the conclusion of the trial on September 4, 1946, directed the jury to return a verdict against the defendants for $764.30 principal, and $838.18 interest from December 31, 1930.

On the trial an amendment was offered and allowed, in which it was alleged that these sureties were released because on April 25, 1946, they had given notice in writing to the plaintiff to sue the principal; and the plaintiff not having done so within three months, they were released. On demurrer thereto, the court struck this amendment as a defense.

Upon a former trial of this same case on April 19, 1945, another judge, Honorable G. C. Anderson, Judge of the City Court of Waynesboro, at that time presided for Honorable W. W. Abbot, Judge of the City Court of Louisville. On that trial, over the objection of the plaintiff, Honorable G. C. Anderson allowed an amendment by the defendants, which in substance alleged that, after the conclusion of the contract with Overstreet and Davis and the plaintiff, an authorized agent of the plaintiff took from the goods making a part of this case $500 worth of merchandise, for which this plaintiff had never been given credit, and which these defendants said should be credited against any obligation. To support said amendment, the plaintiffs introduced, as a witness, Hoke S. Williams, who, under a showing made to the court, proposed to testify as follows: "After the contract upon which Overstreet and Davis signed as sureties upon my contract with the plaintiff which is now sued on, I had on hand $500 worth of merchandise, at wholesale prices, and goods I had purchased from W. T. Rawleigh Company on contract and account now sued on. W. M. Campbell was the general field agent of the plaintiff in this territory. He was authorized to take up unsold goods from dealers who had not sold same and deliver them to the plaintiff. The said W. M. Campbell had repeatedly taken up unsold goods from other dealers for them in this territory and shipped them back to the plaintiff. The said W. M. Campbell did take up from me the $500 worth of goods purchased under the Overstreet and Davis contract, but the price of such goods has never been credited to the account now sued on."

After the court had been informed as to this testimony, counsel for the plaintiff objected to the admission of this entire evidence, on the ground that it sought to vary the terms of a valid written instrument. The court's attention was then called to the fact that an amendment had been allowed, over objection by the plaintiff, setting up these identical facts; that it was, therefore, the law of this case, regardless of what the situation might have been previous to the allowance of this amendment. The plaintiff's counsel admitted this former allowance over objection, but contended that he still had the right to attack the allowance of such an amendment and he objected thereto. The judge then said that he agreed with the ruling of the former judge in allowing the amendment. The court excluded from the jury the above-quoted testimony in its entirety.

There was allowed and made part of the record an amendment by the defendants during the trial. It alleged in substance: That, after the expiration of the contract sued on, December 31, 1930, the principal Williams continued to buy goods from the plaintiff on a new contract upon which T. W. Forbes was surety. $500 worth of goods, for which the defendants were liable, was then on hand, as well as $1000 of accounts from customers from the sale of 1930 goods. The principal sold the goods and collected on the said accounts, and sent to the plaintiff for credit on the account which is now sued on and for which this case is brought. From such accounts was collected a sum of money more than enough to pay any debt that might have been due under the Overstreet-Davis contract; and such payments, produced from both sources, should have been applied on the Overstreet-Davis contract; but, on the contrary, the plaintiff is seeking to apply such payments to a later contract. After the allowance of such an amendment, subject to demurrer, so as to make it a part of the record, the court upon objection by the plaintiff struck this amendment and refused to admit any evidence in support thereof. The bill of exceptions contained assignments of error, as follows:

(1) The order of the trial court, dated September 3, 1946, sustaining the demurrer to the amendment of the defendants alleging that, by reason of notice in writing to the plaintiff to sue the principal, given on April 25, 1946, and the failure of the plaintiff to do so within three months, they were released thereby from liability as sureties upon the contract sued on.

(2) The exclusion by the trial court of the proffered testimony of Hoke S. Williams in support of the amendment allowed on April 19, 1945, upon a former trial of this case, to the effect that after the conclusion of the contract with Overstreet and Davis and the plaintiff, an authorized agent of the plaintiff took up of the goods making a part of this case $500 worth of merchandise, for which the plaintiff has never been given credit.

(3) The order dated September 4, 1946, on motion of the defendant, striking the amendment of the defendants alleging: that, after the expiration of the contract sued upon, Williams continued to buy goods from the plaintiff on a new contract, and that at that time $500 worth of goods for which the defendants were liable was on hand, as well as $1000 of accounts on customers from the sale of 1930 goods; that the principal sold the goods, collected the accounts, and sent, of the proceeds thereof to the plaintiff, more than enough to pay any debt under the Overstreet-Davis contract.

(4) The order directing a verdict for the plaintiff and against the defendants in the sum of $764.30 principal and $838.18 interest from December 31, 1930.

The order dated September 3, 1946 — sustaining the demurrer to the amendment to the petition alleging in part that these defendants, "pending suit, to wit, on April 25, 1945, . . did give plaintiff notice to sue defendant Williams, as provided in Code, § 103-205," and thereupon setting forth in said amendment notice fully meeting statutory requirements — was error. It is contended by the defendant in error that it was filed too late. The case of Sally v. Bank of Union, supra, was certified by this court to the Supreme Court. One of the questions was: "When a surety has been sued separately from his principal, is it notthen too late for the surety to give the notice provided for in § 3546 of the Civil Code (1910), to proceed against the principal debtor?" Section 3546 of the Civil Code of 1910 is the same as § 103-205 of the Code of 1933, the section under which this notice was alleged to have been given. In answering the foregoing question in the negative, it will be noted that the Supreme Court made the following observation: "Said section provides that the surety ``at any time' after the debt on which he is liable becomes due, may give the notice." Said amendment was therefore not demurrable because it came too late.

It is also insisted by counsel for the defendants in error that said defensive pleading was demurrable because the contract signed by the plaintiffs in error contained a proviso as follows: "We agree that it shall not be necessary for the seller to first exhaust its remedies against the buyer before proceeding to collect from us." In this case the relationship of principal and surety existed between Hoke S. Williams as principal and the plaintiffs in error as sureties. Overstreet v. W. T. RawleighC., 71 Ga. App. 874 (32 S.E.2d 574). When this relationship exists, the creditor for whose protection the sureties become such, may proceed against the sureties without first exhausting its remedies against the principal as a matter of law, with or without such a provision in the contract. It therefore follows that the creditor acquired nothing by this provision and the sureties surrendered nothing. Under such circumstances, we are of the opinion that the sureties do not waive the right to give notice to sue the principal.Watkins v. Seawright, 41 Ga. App. 617 (154 S.E. 293). At the time this suit was originally brought, the principal was a party defendant; his residence was alleged to be in Richmond County. The sheriff of that county had, before the giving of the alleged notice to sue, made a return to the effect that said defendant was not to be found in his county. We think that the bringing of a suit in a county other than the residence of the defendant is the equivalent of no suit at all, and can not be urged as a compliance with service of notice provided for in the Code, § 103-205.

Attention is also directed to the second question by this court to the Supreme Court in Sally v. Bank of Union, supra, as follows: "Do the provisions of § 3546 of the Civil Code [§ 103-205] affect the contract or go only to the remedy?" The Supreme Court in answer to this question held as follows: "The provisions of § 3546 of the Civil Code do not affect either the nature, obligation, construction, or validity of the contract, but go only to the remedy. See Vanzant v. Arnold, 31 Ga. 210 (4), 213, where this view was expressed in the opinion, but where the decision of the question was not necessary to the disposition of the case. ``The indorser derives his right to be released from the statute,' and not from anything contained in the contract. Howard v. Brown, 3 Ga. 523, 531. See Thomas v. Clarkson, 125 Ga. 72 (3), 78 (54 S.E. 77, 6 L.R.A. (N.S.) 658). The statute operates as the extinguishment of a remedy, and not of a right, and is therefore in the nature of a limitation of actions. 17 Rawle C. L. 666, and authorities cited."

The amendment to the answer of the defendants — to the effect that, after the conclusion of the contract with Overstreet, Davis, and the plaintiff, an authorized agent of the plaintiff took up of the goods making a part of this case $500 worth of merchandise, for which the principal has never been given credit — was allowed on April 19, 1945, by Judge G. C. Anderson, over objection of opposing counsel. Exceptions pendente lite were taken to the allowance of this amendment. The trial of the case at that time resulted in favor of the defendants, and on motion a new trial was granted. The exceptions pendente lite to this amendment have not been pursued by counsel. They are not before this court on a cross-bill, and are therefore abandoned. The amendment is a part of the pleadings of this case and can not now be stricken. Without passing upon whether or not the amendment is subject to demurrer or motion to strike, it being now a part of the pleadings, the defendants were, on the trial, entitled to introduce the proffered evidence in its support. Parties have the right to support allegations contained in their pleadings as laid. Clark v. Bandy, supra; Phillips v. Southern Ry.Co., supra. It appears that the amendment, allowed subject to demurrer — to the effect that after the expiration of the contract sued upon, Williams continued to buy goods from the plaintiff on a new contract, and at that time $500 worth of goods for which the defendants were liable was on hand as well as $1000 of accounts on customers from the sale of 1930 goods, and that the principal sold the goods, collected the accounts, and sent of the proceeds to the plaintiff more than enough to pay any debt under the Overstreet-Davis contract — was demurrable and subject to proper motion to dismiss unless amended. The record not showing the grounds of such motion, although showing that the motion was sustained, such ruling is presumed to have been upon proper grounds and is not error. Herring v. Smith, supra;McClaren v. Williams, supra.

On account of the antecedent errors pointed out in headnotes 1 and 2 and in this opinion, the final order of the court directing a verdict for the plaintiff was improper.

Judgment reversed. MacIntyre, P. J., and Gardner, J.,concur.