Cooper v. National Fertilizer Co.

Decision Date14 April 1909
Citation64 S.E. 650,132 Ga. 529
PartiesCOOPER v. NATIONAL FERTILIZER CO. et al.
CourtGeorgia Supreme Court

Rehearing Denied May 12, 1909.

Syllabus by the Court.

Where a vendee gives to his vendor a negotiable note for the purchase price of goods, and the note is discounted before maturity to an innocent purchaser by the payee, who indorses the same and after default in payment at maturity the maker agrees in writing with the payee that, in consideration of the payee procuring from the holder an extension of time of payment, he will secure the payee's endorsement by an hypothecation of stock with power of sale, equity will not stay the sale of the stock under the provisions of the agreement for extension because of an alleged partial failure of consideration resulting from a defect known to the maker when he entered into the contract for the extension of time of payment although the payee be a nonresident without property in this state.

[Ed Note.-For other cases, see Pledges, Dec. Dig. § 56 [*]]

Where a manufacturer sells goods for the purpose of resale by his vendee, and delivers some of them in a defective condition, and the vendee, with knowledge of such defects, resells them to his customers, the manufacturer is not liable on his breach of warranty for a injury to the vendee's business entailed by the latter's resale of the goods with a knowledge of their defective condition.

[Ed. Note.-For other cases, see Sales, Cent. Dig. § 818; Dec. Dig. § 288. [*] ]

Section 3 of the act approved December 18, 1901 (Acts 1901, p. 65), recognizes a variance of less than 3 per cent. between the total commercial value of the fertilizing ingredients as guaranteed and printed on the sacks, and that found by official analysis, as immaterial, relatively to the rights and liability provided by this act.

[Ed. Note.-For other cases, see Agriculture, Dec. Dig. § 7. [*]]

A surety is entitled to proceed in equity against his principal at any time after the debt has fallen due to compel payment, although he may not have been sued.

[Ed. Note.-For other cases, see Principal and Surety, Cent. Dig. § 512; Dec. Dig. § 179. [*]]

Constitutional questions which were not raised by the pleadings, nor passed upon in the trial court, cannot be raised for the first time in this court.

[Ed. Note.-For other cases, see Appeal and Error, Cent. Dig. § 1037; Dec. Dig. § 170. [*]]

Error from Superior Court, Clarke County; J. N. Worley, Judge.

Suit by J. C. Cooper against the National Fertilizer Company and others. Judgment for defendants, and plaintiff brings error. Affirmed.

John R. Cooper and E. K. Lumpkin, for plaintiff in error.

Cobb & Erwin, for defendants in error.

EVANS P.J.

In January, 1907, J. C. Cooper purchased 1,504 tons of fertilizers from the National Fertilizer Company of Nashville, Tenn. The contract was in writing, and provided that the fertilizer company agreed to sell to Cooper certain brands of fertilizers at stated prices, which were to contain a certain percentage of fertilizer ingredients, and that Cooper was to sell the fertilizer, take notes from the purchasers, payable to the company, and deliver to the company these notes as collateral for the notes which Cooper was to give to the company. Agreeably to the contract, the fertilizer was shipped to Cooper, and Cooper executed to the company seven notes, aggregating $31,726.60, and delivered to the company the notes of the persons to whom he had sold the fertilizer, aggregating $30,544.24, as collateral to his own notes. Before the maturity of the notes of Cooper to the company, the latter discounted them with the American National Bank of Nashville, Tenn., indorsing each note. On September 9, 1907, the company returned the collateral notes to Cooper for collection for the account of the company, the proceeds to be applied to the payment of his notes. Cooper paid his note of $4,000, maturing November 1, 1907, and wrote the bank that, because of poor collections, he could not meet the other notes at maturity, and asked indulgence. On January 9, 1908, after repeated demands from the company, Cooper surrendered some of the collateral notes upon which there was due about $6,300. On January 16, 1908, Cooper and the company entered into a written agreement, the purport of which was that Cooper deposited with the company 292 shares of the stock of the Oconee Oil & Refining Company to secure the company against loss on its indorsements of Cooper's notes held by the bank, and the company agreed to secure an extension on the notes, so that Cooper could pay the balance, aggregating $27,326.60 in five installments, beginning in January and ending in June, 1908, each of the installments being for $5,000, except the last, which was to be the balance then due on the debt. Upon the payment of $10,000 Cooper was to have the right to withdraw 100 shares of the hypothecated stock, and, upon failure to pay any installment within 10 days after it was due, the company was authorized to sell the stock after publication of time and place of sale. Cooper paid $10,000 and withdrew 100 shares of the stock; but, he having failed to pay the installment due in May, 1908, the company gave notice of its intention to sell 192 shares of stock, and advertised the same as provided in the contract. Cooper then filed his petition to enjoin the sale, alleging that the company and the bank were foreign corporations owning no property in Georgia; that the bank was not an innocent purchaser, and the company was liable to him in the sum of $6,000 or other large sum on account of some of the fertilizer being shipped in defective sacks, and being short in quantity; and that because of these deficiencies, and because two of the brands did not come up to the guaranteed analysis as printed on the sack, he lost many of his customers, and his business was seriously injured. The prayer was that the bank be required to bring in the notes, that an accounting be had, and the amount of his damage be ascertained and credited on his notes, and the company be restrained from selling the stock hypothecated until the final hearing. No service was had on the bank, and it never appeared or answered. The company filed an answer denying that Cooper was entitled to any deduction on the notes by way of damages or otherwise, and also an answer in the nature of a cross-bill, in which it was alleged that the Oconee Oil & Refining Company had sold the most valuable part of its property, and what remained was worth much less than the capital stock; that this company was indebted to Cooper for salary and otherwise; that Cooper had no visible property except about $600 worth of personal property, and it was apprehensive that the 192 shares of stock was insufficient to pay the balance due of the debt, and by way of equitable garnishment it prayed that Cooper be enjoined from collecting any debt due by the Oconee Company to him, and the Oconee Company be enjoined from paying such debts to Cooper. On the interlocutory hearing the court refused to enjoin the sale of the hypothecated stock, and did enjoin the Oconee Oil & Refining Company and J. C. Cooper as prayed in the crossbill. Cooper excepted.

1-3. We will first notice the phase of the case presented by the application of the plaintiff in error to enjoin the National Fertilizer Company from selling the stock of the Oconee Oil & Refining Company, hypothecated to secure the payment of his notes to it, pursuant to the agreement of January 16, 1908. Briefly stated, the plaintiff's contention is that he has suffered damage by the fertilizer company's breach of contract; that the fertilizer company is a nonresident without property in this state, and the sale of the collateral should be stayed until an accounting can be had and the exact amount of the plaintiff's indebtedness ascertained, which amount the plaintiff avers his willingness to pay. The basis of damage is alleged to be (1) loss in weight in the fertilizers shipped; (2) cost of resacking fertilizers received in damaged sacks; and (3) injury to his business as a dealer in fertilizers, resulting from the fertilizers being shipped in bad and inferior sacks, and from a shortage in weight, and because the actual and official analysis of two of the brands fell below the guaranteed analysis printed on the sacks. With reference to the first and second elements of damage, there was practically no dispute that at the time Cooper signed the agreement of January 16, 1908, by means of which he procured an extension of the time of payment of his notes, he had knowledge of these deficiencies in the fertilizers. When the plaintiff with such knowledge entered into an agreement, and secured an extension of time of payment of his notes, he waived his right to plead these matters as a defense to his notes. Am. Car. Co. v. Atlanta St. Ry. Co., 100 Ga. 254, 28 S.E. 40; Lunsford v. Malsby, 101 Ga. 39, 28 S.E. 496; Montfort v. Americus Guano Co., 108 Ga. 12, 33 S.E. 636. On the interlocutory hearing the plaintiff testified, and it was not denied by the defendant, that at the time the agreement of January 16, 1908, was signed the plaintiff did not know that some of the fertilizer ingredients fell below the percentage contained in the guaranteed analysis as printed on the sacks. In his petition the plaintiff alleged that by reason of the fertilizers "being shipped in bad and inferior bags, and...

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