Baggs v. Funderburke
| Decision Date | 22 May 1912 |
| Docket Number | (No. 4,042.) |
| Parties | BAGGS. v. FUNDERBURKE. |
| Court | Georgia Court of Appeals |
(Syllabus by the Court.)
A contract on the back of a promissory note, signed by one other than the payee thereof and in the following words, "For value received, we hereby guarantee the payment of the within note at maturity, or at any time thereafter, with interest at the rate of 8 per cent, per annum, until paid, waiving demand notice of nonpayment and protest, " prima facie imports a contract of guaranty.
[Ed. Note.—For other cases, see Guaranty, Cent. Dig. § 10; Dec. Dig. § 9.*]
Parol evidence is, however, admissible to show that the party signing the contract received no independent consideration, and that the contract is in fact one of suretyship.
[Ed. Note.—For other cases, see Evidence, Cent. Dig. §§ 1912-1928; Dec Dig. § 419.*]
3. Bills and Notes (§ 467*)—Pleading—. Accommodation Indobser.
An allegation that a defendant is sued as indorser of a promissory note, but that he received no independent consideration, is equivalent to an averment that he is an accommodation indorser or surety.
[Ed. Note.—For other cases, see Bills and Notes, Cent. Dig. §§ 1480-1493; Dec. Dig. § 467.*]
Error from City Court of Macon; Robt. Hodges, Judge.
Action by T. C. Funderburke against L. D. Baggs and one Deal. From an order overruling a demurrer to the petition, Baggs brings error. Affirmed.
Russell & Custer, of Bainbridge, and Lane & Park, of Macon, for plaintiff in error.
M. E. O'Neal, of Bainbridge, Hardeman, Jones, Callaway & Johnston, of Macon, for defendant in error.
POTTLE, J. [1] This was an action in the city court of Macon, against Deal, a resident of Bibb county, and Baggs, a resident of Decatur county, upon a promissory note. The petition described Deal as the maker and Baggs as the indorser of the note. It was alleged that the indorsement of Baggs "rested upon no independent consideration." The indorsement relied on was on the back of the note, undated, and signed by Baggs, and was in the following language: "For value received, we hereby guarantee the payment of the within note at maturity, or at any time thereafter, with interest at the rate of 8 per cent. per annum, until paid, waiving demand, notice, or nonpayment and protest." By demurrer the point was made that the contract of Baggs was one of guaranty; that the averment in the petition that he received no independent consideration was an attempt to vary the contract of guaranty; and that the city court of Macon was without jurisdiction of the cause of action, so far as Baggs was concerned. The demurrer was overruled, and Baggs excepted.
The Code provides that a "contract of suretyship" is where one obligates himself to pay the debt of another in consideration of credit or indulgence, or other benefit given to his principal; the principal remaining bound therefor. It differs from a "guaranty, " in that the consideration of the latter is a benefit flowing to the guarantor. Civil Code 1910, § 3538. But the test laid down in the Code to distinguish a contract ofsuretyship from one of guaranty is not decisive. As with other contracts, the whole matter is governed by the intention of the parties. For instance, in the usual indemnity contracts, the parties generally intend that the indemnitor shall be surety, although he receives an independent consideration. And again, sometimes a contract will be construed to be one of guaranty, although the guarantor receives no consideration other than the benefit flowing to his principal. Musgrove v. Luther Pub. Co., 5 Ga. App. 279,. 63 S. E. 52. As a general rule, where one other than the payee undertakes to guarantee the payment of a note, and he employs apt language to evidence a contract of guaranty, the undertaking will not be construed to be one of suretyship, unless the only consideration be the benefit flowing to the principal. But if the contract be made at the time the note is executed, and solely in consideration of the benefit to the principal, or if made afterwards in consideration of an extension of time to the principal, or the like, the obligation will generally be held to be that of a surety, even though words importing a contract of guaranty are employed. Baldwin Fertilizer Co. v. Carmichael, 116 Ga. 762, 42 S. E. 1002; Schittler v. Deering Harvester Co., 3 Ga. App. 86, 59 S. E. 342; Fields v. Willis, 123 Ga. 272, 51 S. E. 280; Watters v. Hertz, 135 Ga. 814, 70 S. E. 343. It is contended, however, that, as the contract of Baggs recites that it was executed "for value received, " it must conclusively be presumed that it was founded upon an independent...
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