Biddy v. People's Bank

• Decision Date: 14 February 1923
• Docket Number: 13692.
• Citation: Biddy v. People's Bank, 29 Ga. App. 580, 116 S.E. 222 (Ga. App. 1923)
• Parties: BIDDY ET AL. v. PEOPLE'S BANK.
• Court: Georgia Court of Appeals

116 S.E. 222

29 Ga.App. 580

BIDDY ET AL. v. PEOPLE'S BANK.

No. 13692.

Court of Appeals of Georgia, Second Division

February 14, 1923

Syllabus by the Court.

While under Civil Code 1910, §§ 3543, 3544, a surety will be discharged by a novation changing the nature or terms of his contract without his consent, and therefore the acceptance by a payee bank, without the agreement or consent of the surety of a new note in renewal or payment of the original note signed by the surety will discharge him from liability. Such an acceptance by the payee bank, when induced by the actual fraud of the maker in presenting the renewal instrument with the signature of the surety forged thereon, and without knowledge or reasonable ground to suspect, on the part of the bank, that the signature was in fact a forgery, will not release the surety, where it appears that upon discovery of the fraud of the maker the bank promptly disaffirmed its previous acceptance of the renewal note, by regaining possession of the original note and suing thereon. Ritter v. Singmaster, 73 Pa. 400; Goodrich v. Tracy, 43 Vt. 314, 5 Am.Rep. 281; Allen v. Sharpe, 37 Ind 67, 10 Am.Rep. 80, 85; McDougall v. Walling, 15 Wash. 78, 45 P. 668, 55 Am.St.Rep. 871, 874; Stratton v McMakin, 84 Ky. 641, 4 Am.St.Rep. 215-217; Corydon Deposit Bk. v. McClure, 140 Ky. 149, 130 S.W. 971 Ann.Cas. 1912B, 484; 8 Corp. Jur. 427 (note 31), 573 (§ 796). Under the facts and circumstances of the instant case, it is unnecessary to determine whether the bank owed to the sureties, whose names were forged, the duty of exercising ordinary care and diligence in discovering such forgery, or simply that it must not have been a party to the fraud or guilty of actual bad faith (but see Lyndonville Natl. Bk. v. Fletcher, 68 Vt. 81, 34 A. 38, 54 Am.St.Rep. 874), since the court, under instructions favorable to the defendant sureties, submitted to the jury the issue whether the payee bank did thus exercise ordinary care and diligence, and charged that the plaintiff would not be entitled to recover if its agents failed to exercise such care and diligence, and since the evidence did not demand a finding that it was thus negligent, and there is no contention that it participated in the fraud of the maker or acted otherwise than innocently in the transaction.

"Although the pleadings may not present the whole issue, yet if it be fully made by the evidence without objection, it is too late after verdict, for the losing party, to make that the ground of a motion for a new trial." Parsons v. Wilson, 22 Ga.App. 279 (1), 95 S.E. 1009. Assuming (but not deciding) that the disaffirmance and rescission of the acceptance by the bank of the renewal instruments, under the proper and better practice, should have been set forth in the petition seeking a recovery upon the original note, or even that it was matter more appropriate to equitable jurisdiction, since the defendants permitted evidence to be introduced without objection and themselves offered evidence fully showing the facts and circumstances of the transactions, and since the evidence was sufficient to base thereon the contention that the renewal contracts were voided by the maker's fraud, the court properly submitted such contention to the jury, with appropriate instructions, and, the case having been tried upon evidence unexcepted to, supporting such theory, the defendants cannot be heard to complain upon exceptions merely to the court's charge submitting that contention, notwithstanding the pleadings of the plaintiff bank contained no reference thereto. The defendants having by their plea and answer set up their discharge under an alleged novation, the plaintiff, not being required to file a replication thereto, was not compelled to plead matter to defeat or avoid the allegations and effect of such plea and answer, and it seems would have been entitled to show, as it did, that the alleged novation, by reason of the maker's fraud, was null and void. Such question, however, in view of the failure of the defendants to except to the admission of evidence to maintain such theory and contention, need not be determined. Holland v. Heyman, 60 Ga. 174 (3); Horton v. Murden, 117 Ga. 72, 43 S.E. 786; Moss v. Chappell, 126 Ga. 196, 54 S.E. 968, 11 L.R.A. (N. S.) 398; Smith v. Hodges, 8 Ga.App. 785 (2), 70 S.E. 195; ...