Coaling Coal & Coke Co. v. Howard

• Decision Date: 15 July 1908
• Citation: 61 S.E. 987,130 Ga. 807
• Parties: COALING COAL & COKE CO. v. HOWARD et al.
• Court: Georgia Supreme Court

61 S.E. 987

130 Ga. 807

COALING COAL & COKE CO. v. HOWARD et al.

Supreme Court of Georgia

July 15, 1908

Syllabus by the Court.

The action in this case is not upon the notes, but upon the original consideration for the purchase price of the property sold.

Where a corporation owning realty sells it through A., its president to B., and notes for the purchase money are signed "B Trustee," which are payable to "A President," and the latter, in the name and behalf of the corporation, makes a deed to the property to "B Trustee," who, without the knowledge of the corporation, makes the purchase for himself and others, and the possession, use, and benefit of the property goes to those for whom he thus purchases, held, the notes not being under seal, though negotiable, the corporation may maintain a suit outside of the notes on the original consideration for the purchase price against B. and the undisclosed principals for whom he acted in making the purchase.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 40, Principal and Agent, §§ 513-516.]

Error from Superior Court, Fulton County; J. T. Pendleton, Judge.

Action by the Coaling Coal & Coke Company against George P. Howard and others. Judgment for defendants, and plaintiff brings error. Reversed.

Evans, P.J., and Lumpkin, J., dissenting.

Culberson & Johnson, for plaintiff in error.

Smith, Hammond & Smith and Evins & Spence, for defendants in error.

HOLDEN J.

The first question to be determined in this case is whether or not this is a suit upon the notes, or a suit outside of the notes on the original consideration for the purchase price of the land. The notes provided for attorney's fees, and the original petition stated that the defendants were indebted to the plaintiff for attorney's fees. This allegation and some others in the original petition were stricken by the amendment allowed by the court, and it does not appear that any objections were offered to the allowance of this amendment, or that any exceptions were taken thereto. The petition will have to be construed just as if it had been originally filed in the exact language in which it appears after amendment, as an amendment relates back to the filing of a suit. The petition sets forth the details of the contract, and in doing so the deeds and notes are described and copies of the notes are attached to the petition; but it is alleged that a copy of the deed is not attached, because defendants have the deed and the plaintiff has no copy of it, but the petition nowhere states that the defendants are due the plaintiff anything upon the notes, and there is no prayer for a recovery upon the notes. The petition states that the defendants are liable to the plaintiff upon the said contract, and that neither the said Watson nor any one of the defendants has paid said notes, or the purchase price of said property, and that the defendants became and are liable in law to pay the purchase price. The petition sets forth an action for the purchase price of the property outside of the notes, and is not a suit on the notes.

2. None of the defendants except Watson are concerned with the surrender and cancellation of the notes. As they are negotiable notes, and as Watson is the only one who signed them, Watson is the only one who could be sued upon them. But, as to Watson, it would not be necessary to surrender them before the trial; it being sufficient for the plaintiff to have the notes at the trial for surrender and cancellation. Jackson v. Brown, 102 Ga. 87, 29 S.E 149, 66 Am.St.Rep. 156; Belmont Farm v. Dobbs Hardware Co., 124 Ga. 827, 53 S.E. 312; 8 Cyc. 24. The plaintiff avers in the amendment which was disallowed that it has the notes, and is ready and able to surrender and cancel them. The plaintiff could maintain the suit in its name, as it alleged that it owned the property and its president, Lyle, acted for it in making the contract, and the purchase price under the contract is due to the plaintiff. Atlanta & W. P. R. Co. v. Texas Grate Co., 81 Ga. 602, 9 S.E. 600. According to the allegations of the petition, the plaintiff, a corporation, owned a tract of land in Alabama. Its president, acting for it, sold the land for $20,000 to R. E. Watson, acting for and in behalf of himself and the other defendants, who became the owners and obtained the possession, use, and benefit of the property under their purchase thus made. Five thousand dollars was paid to Lyle by Watson on the purchase price, which amount was furnished by the defendant for the purpose of being so paid. Notes were taken for the balance of the purchase money, signed by Watson, trustee, and payable to Lyle, president. These notes were dated at Birmingham, Ala., and payable at a bank in that city. A deed was made in Georgia, in the usual form, by Lyle, as president, to Watson, as trustee. Lyle was acting for and in behalf of the plaintiff in the transaction, and Watson was acting for and in behalf of himself and the other defendants, but it was not known to the plaintiff at the time of the transaction that Watson was acting as agent for and in behalf of the defendants. Can this suit on the original consideration outside of the notes for the purchase price of the property be maintained against the defendants? The word "president" after Lyle's name, and the word "trustee" after Watson's name, in the notes are merely descriptio personae; and, there being nothing on the face of the papers to indicate who was to be charged as principal, these notes will have to be treated in the same manner as if such descriptive words were not used, and such notes will, prima facie, have to be considered as expressing an individual transaction between Lyle and Watson. The notes are negotiable instruments, and a suit could not be maintained on them against undisclosed principals. It was generally true, at common law, that a suit could be maintained against undisclosed principals on a written contract, but there were exceptions to this rule, among which were that undisclosed principals could not be held liable in a suit upon negotiable instruments, nor upon instruments under seal, and this is now the law as ruled by this and other courts and announced by many text writers. Lenney v. Finley, 118 Ga. 718, 45 S.E. 593; Van Dyke v. Van Dyke, 123 Ga. 686, 51 S.E. 582; Burkhalter v. Perry, 127 Ga. 438, 56 S.E. 631; 1 Clark & Skyles on Law of Agency, §§ 459, 464, 327; 1 Dan. Neg. Inst. § 303. This is also true where the words "as agent," or "as trustee," occur after the signature of the maker of the negotiable instrument, without disclosing the name of the principal, or without sufficiently indicating on the face of the instrument who the principal is. 1 Clark & Skyles on Law of Agency, §§ 328, 275, 276; 2 Page on Contracts, § 761; Tiffany on Agency, p. 245. It is true, according to the weight of authority, that a suit cannot be maintained on the original consideration where at the time of the making of the contract the parties entered into a contract under seal, because the simple contract was merged into the higher contract under seal. This has also been held to be the law by decisions of this court in the cases of Lenney v. Finley and Van Dyke v. Van Dyke, cited supra. In the former case there was a lease contract under seal, and it was held that no suit could be maintained outside...