Citizens' Bank of Madison v. Shaw

• Decision Date: 22 June 1909
• Citation: 65 S.E. 81,132 Ga. 771
• Parties: CITIZENS' BANK OF MADISON v. SHAW.
• Court: Georgia Supreme Court

65 S.E. 81

132 Ga. 771

CITIZENS' BANK OF MADISON v. SHAW.

Supreme Court of Georgia

June 22, 1909

Syllabus by the Court.

There was no such variance between the allegata and probata as to require the grant of a new trial.

If a creditor receives promissory notes under an agreement to collect them and apply the proceeds to the payment of the debt, he is bound to use ordinary care and diligence in making such collection, and, if any loss should happen to the pledgor by reason of a want of such care and diligence, the law will compel the pledgee to make good the loss so resulting.

If promissory notes are deposited with a creditor under an agreement of the character indicated in the preceding headnote, and they are converted by the creditor, this does not conclusively entitle the debtor to a credit of the face value of the collateral, but to an amount which represents the actual damage which he has sustained by such conversion.

(a) If promissory notes are converted, and damages are claimed on account thereof, the amount of principal and interest at the time of conversion appearing from the notes themselves to be owing and unpaid, and the interest upon that aggregate from thence to the trial, is prima facie the measure of damages if the person setting them up is entitled to full recovery of the value of the note. The converter has the right to show in reduction the fact of payment in whole or in part, the inability of the makers to pay wholly or partially a release of the makers from their undertaking, the invalidity of the notes, or other matter which will legitimately affect and diminish their value.

While the evidence was conflicting, there was sufficient to sustain the contentions of the defendant, and there was no error in overruling the motion for a new trial.

Error from Superior Court, Bibb County; W. H. Felton, Judge.

Action by the Citizens' Bank of Madison against R. K. Shaw. Judgment for defendant, and plaintiff brings error. Affirmed.

Lane & Park, for plaintiff in error.

O. J Wimberly, Walter J. Grace, and R. C. Jordan, for defendant in error.

ATKINSON J.

1. Suit was brought for $600, with interest and attorney's fees against one of two makers of a promissory note. The defendant pleaded that he signed the note jointly with the other maker as an accommodation indorser; that the other was the principal debtor, and received the money for which the note was given; that in legal effect the defendant was security for the other; that he signed the note as joint maker and became surety on it in consideration of the fact that, for the purpose of securing and protecting it, the other maker deposited with the bank, which loaned the money and was the payee of the note, certain other promissory notes as collateral security, amounting to more than the note on which the suit was predicated, the notes so deposited being indorsed by the principal debtor; that they were good and solvent, and that it was agreed between the defendant and the bank that such notes were to be collected by it and applied to the payment of the note signed by the defendant, and those not falling due until after the debt should mature were to be held as security against any renewal, and for the protection of the defendant; that, in consideration of this, he agreed to sign as a joint maker of the note sued on, and did so, and he would not have signed had not the other maker so placed the collaterals in the hands of the bank; that the bank did not use due diligence to collect the collateral notes, but collected $314.13, delivered to the other maker, without the knowledge or consent of this defendant, a portion of such collateral notes, aggregating $322.36, and has wholly failed to account for or make returns in regard to other notes aggregating $147.35; that loss and damage has accrued to this defendant by reason of the conduct of the plaintiff, and his risk as surety has been increased. On the trial he testified that the other maker of the note desired to discount certain notes, and defendant endeavored to do so for him, but could not; that he inquired of the bank if it would lend the other maker the money, but was told that it would not do so, but would lend it to him; that the officer of the bank discussed the value of the notes, and said that he could safely sign a note for $600; that the other maker of the note agreed to this; that "we went to the bank, and I signed the note, and took his collateral, which I turned over to the bank. The bank wanted no collateral from me, but I wanted collateral from Gray [the other maker], and I took the sundry notes amounting to $785, and gave them to the bank for collection, to be applied to this note. I was present when Mr. Gray signed the note. I took the collateral notes from Gray as security for my signature, and turned them over to the bank to be applied to the discount of this note. They took them with that understanding. I did not get any of the money on that note. My understanding was that it was credited to Mr. Gray's account. The bank did not accept these notes from Gray as collateral. I accepted them from them, and I turned them over to the bank." No objection appears to have been made to this evidence, and, so far as the record shows, no claim of variance was raised during the trial, but the defendant took its chance of obtaining a verdict under the conflicting evidence, and, having lost, for the first time raised the question of variance by a motion for a new trial. As shown by the evidence of the plaintiff, the terms of the contract on which the notes were deposited with the bank for collection and application were not identical with those of the contract as alleged. But both the pleadings and evidence set up a deposit of the same notes with the bank for the purpose of collecting them and applying the proceeds to the debt, and a failure to do so. The term "collateral," used both in the pleadings and evidence, may not have been a technical characterization descriptive of the status of the notes. The allegation in the plea that Gray, the other maker of the note, deposited the notes, which were spoken of as collaterals, with the bank, did not strictly accord with the evidence of the defendant to the effect that Gray delivered the notes to him, and he delivered them to the bank, but both the plea and the evidence referred to the same arrangement, and both set up on behalf of the defendant an agreement of the officer of the bank with the defendant that the notes deposited should be collected, and the proceeds should be applied to the payment of the debt. Taken as a whole, we cannot say that there was such a variance between the allegata and probata as to require the grant of a new trial. Authorities were cited by counsel for plaintiff in error in reference to variance as a ground for new trial, but none of them was based on facts similar to those here involved.

2. If the notes were deposited with the bank under the agreement to which the defendant testified, and collections were made on some of them, it was the...