Alexander-Seewald Co. v. Questa

Eberhardt, Judge.

Pretermitting the question as to whether the original contract of employment was one of indefinite hiring, see 'Code § 66-101; Lambert v. Ga. Power Co., 181 Ga. 624, 627 (183 SE 814); Odom v. Bush, 125 Ga. 184 (2) (53 SE 1013), or whether the effect of Questa’s continuance on the job and acceptance of payment of compensation in accordance with the notice of June 26, 1966, estops him to assume a position inconsistent with the notice, see Green & Co. v. Jackson & Co., 66 Ga. 250 (4); Warner v. Hill, 153 Ga. 510 (1a) (112 SE 478); Johnson v. Wilson, 165 Ga. 810 (2) (142 SE 70), the controlling factor here is the subsequent acceptance of promissory notes for a portion of an account receivable and the discounting of those notes by the creditor to another.

It is a general rule, as expressed in Code § 20-1004 and in Wylly v. S. J. Collins & Co., 9 Ga. 223; Beazley v. Gignilliat, 61 Ga. 187 (2); Hodges v. Smith, 118 Ga. 789 (3) (45 SE 617); Blackshear Mfg. Co. v. Harrell, 191 Ga. 433 (12 SE2d 328); Adams & Co. v. Skipper, 9 Ga. App. 123 (70 SE 692); Stokes v. Walker, 21 Ga. App. 630 (2) (94 SE 841); Schneider Marble Co. v. Knight, 37 Ga. App. 646 (3, 4) (141 SE 420); Sulter v. Citizens Bank &c. Co., 51 Ga. App. 798 (3) (181 SE 694); Farmers & Merchants Bank of Charing v. Rogers, 55 Ga. App. 38 (1) (189 SE 274); Cohen’s Dept. Stores v. Siegel, 60 Ga. App. 79 (1) (2 SE2d 762), that a note given for an obligation already incurred, such as an open account, is not payment until it is itself paid, absent some express agreement or compelling circumstance which clearly indicates a contrary intention of the parties. A mere transfer by the creditor of the indebtedness from the accounts receivable ledger to notes receivable does not work a payment of the account. Hatcher & Baldwin v. Comer & Co., 75 Ga. 728. Nor would marking it “paid.” Kinard v. First Nat. Bank of Sylvester, 125 Ga. 228, 229 (53 SE 1018).

There is, however, a compelling circumstance here which requires the finding of an intention that the notes serve as payment. The two notes taken by Alexander-Seewald for the account which Cumming Sales Company owed were transferred to Parts Management Corporation, and by it transferred to The Citizens & Southern National Bank as discounts with full recourse in each instance, and they remained in the hands of the bank when the judgment appealed from was entered.

The transfer to the Parts Management Corporation and, in turn by it to the bank, placed the bank in position to sue on the notes if there should be a default in payment when due. Although, until the transfer of the notes, Alexander-Seewald might have elected to sue on the account, or on the notes ■—■ there having been no express agreement by the payee to accept the notes in payment of the account •—■ if it should elect to sue on the account no judgment could be lawfully entered until the surrender of the notes to the debtor, unless they have been lost or destroyed. Belmont Farm Co. v. Dobbs Hardware Co., 124 Ga. 827, 828 (53 SE 312); Standard Cooperage Co. v. O’Neill, 146 Ga. 235, 237 (91 SE 82); Wilson v. McEachern, 9 Ga. App. 584, 586 (71 SE 946); Hiatt v. Edwards, 52 Ga. App. 152, 156 (182 SE 634); Holmes v. DeCamj, 1 Johns. 34 (3 AD 293). This Alexander-Seewald could not do with the notes in the hands of a transferee. Further, the bank could sue on the notes and two people should not, at the same time, be in position to obtain judgment against the debtor on the same obligation. For these reasons the law implies an intention on the part of Alexander-Seewald, when it transferred the notes, to accept them in payment of the account. Thus, when and so long as the notes are not in its hands it is estopped to deny that the notes have been accepted as payment or to sue on the account.

The debtor is protected from a possible double recovery against him.

We have not found among the reported cases of this court or of the Supreme Court one which deals with this very situation, but the principle is discussed and was approved in Hiatt v. Edwards, 52 Ga. App. 152, 156, supra, and in Cauble v. Mutual Benefit Life Ins. Co., 53 Ga. App. 360, 362 (185 SE 834). “While the mere transfer by a creditor to a third person of a bill or note not received as payment does not extinguish the debt, as long as such bill or note is outstanding in the hands of a third person it will be treated as having been accepted in discharge of the debt so as to bar action thereon.” 70 CJS 232, Payment, § 23(c). Accord: 40 AmJur 781, Payment, § 92. See Donnelly v. District of Columbia, 119 U. S. 339 (7 SC 276, 30 LE 465); Looney v. District of Columbia, 113 U. S. 258 (5 SC 463, 28 LE 974); Harris v. Johnston, 3 Cranch (7 U. S.) 311 (2 LE 450); Johnson v. Murray (Mo. App.) 289 S. W. 977; Wright v. Crockery Ware Co., 1 N. H. 281 (8 AD 68, 69); Tobey v. Barber, 5 Johns. (N. Y.) 68 (4 AD 326, 328).

We conclude that under the contract of hiring Questa became entitled to his commission ornthe principal amount of the notes when the transfer was made.

If the notes were taken for only a portion of the account it must follow that these principles apply only to that portion. The creditor is not to be barred from his action on the portion of the account which does not support the consideration for the notes, nor are the notes to be treated as payment thereof.

We do not here deal with a situation in which the creditor has transferred the notes as security for a loan and, having paid the loan or by other means has reacquired them. The texts and some of the foreign authorities indicate that when this happens the creditor’s status returns to that which obtained prior to the transfer.

Judgment affirmed.

Bell, C. J., Jordan, P. J., Hall, P. J., Deen, Whitman and Evans, JJ., concur. Pannell and Quillian JJ., dissent.