Hancock v. Empire Cotton Oil Co., 6107.

• Court: United States Court of Appeals (Georgia)
• Citation: 86 S.E. 434,17 Ga.App. 170
• Docket Number: 6107.
• Parties: HANCOCK v. EMPIRE COTTON OIL CO.
• Decision Date: 23 September 1915

86 S.E. 434

17 Ga.App. 170

HANCOCK v. EMPIRE COTTON OIL CO.

No. 6107.

Court of Appeals of Georgia

September 23, 1915

Syllabus by the Court.

Testimony of one whose name appears as the maker of a negotiable note that he signed and delivered it merely as an accommodation maker, without filling various blanks therein, and with the understanding that the person to whom he delivered might thereafter fill the blanks and insert a certain amount and use the note for that person's benefit, but only in the event that the signer should thereafter consent to the completion of the note and to its use, and that thereafter a larger amount was inserted and the note used without his knowledge or consent, would not support a plea of non est factum, or constitute a valid defense against a bona fide transferee for value and before maturity. When one of two innocent persons must suffer by the act of a third person, he who puts it in the power of the third person to inflict the injury must bear the loss.

Where the signer of a note containing blanks delivers it to a person not authorized to fill the blanks or to use the note until thereafter empowered to do so by the maker, but who exceeding his authority, does fill out and use the note evidence that the maker accepted from the payee named therein a note payable to himself, to indemnify him against loss on the note signed by him, might relate back and amount to a ratification of the act of the person to whom he intrusted the incomplete note.

Where the title of the holder of a note, transferred by indorsement, is questioned by a proper plea under oath, and the genuineness of the indorsement itself is so denied, proof is necessary on the part of the plaintiff before the note thus challenged can be introduced in evidence. If, however without proof to establish the title of the holder or the validity of the indorsement, the note is offered in evidence with an apparently sufficient indorsement thereon to convey title to the holder, and no objection to the note, with the indorsement thereon, is urged by the defendant, the failure to object will amount to consent on his part to the introduction of the note, and to a waiver of his right to exact proof of the indorsement, and he cannot for the first time raise the objection in this court.

Where the holder of a bill or note has acquired it as collateral security for a debt and is entitled to recover thereon, the extent of his recovery is limited to the amount of that debt if there be a valid defense against the party transferring it to him. It is only pro tanto that he is entitled, as a bona fide holder, to stand upon a better footing than his transferror. Such a holder can recover against an accommodation party no more than the consideration actually advanced or the debt due him by the person for whose obligation he accepted the collateral; but, in the absence of proof to the contrary, the holder of an accommodation paper, transferred to him as collateral for the debt of the person who transferred it, will be deemed to have advanced the full amount of the paper, or to hold against his debtor a claim equal to or in excess of the paper.

The court did not err in directing a verdict in favor of the plaintiff.

Error from City Court of Jefferson; G. A. Johns, Judge.

Action by the Empire Cotton Oil Company against Claud Hancock. Judgment for plaintiff, and defendant brings error. Affirmed.

P. Cooley, of Jefferson, and H. H. Dean, of Gainesville, for plaintiff in error.

Green, Tilson & McKinney and L. G. Fortson, all of Atlanta, and J. S. Ayers, of Jefferson, for defendant in error.

WADE J.

The Empire Cotton Oil Company brought suit against Hancock on a certain promissory note, signed by him, payable to the order of Carr, Boyd & Co., and indorsed "Carr, Boyd & Co., per B. F. Carr," dated June 17, 1912, and due January 1, 1913, for $856.25 and interest from maturity at 8 per cent. The defendant interposed a plea under oath at the first term, alleging that he signed in blank two notes and delivered them to B. F. Carr, but that neither of them was to be filled out by Carr for the sum of $856.25, and that neither was to be used until further notice, and that Carr was notified before the notes were filled out and made payable to any one not to use them. The plea further alleged that the defendant "did not execute any note to Carr, Boyd & Co. in any sum whatever," and that the note sued upon was not in the hands of the plaintiff as a bona fide holder for value; that there was no consideration for the note at the time it was made, and the plaintiff had notice of this fact at the time it accepted the note; and further that the note was never indorsed by Carr, Boyd & Co. to the plaintiff, and did not then bear the genuine indorsement of Carr, Boyd & Co., and the plaintiff held no legal title thereto. By amendment the defendant struck the word "delivered" in the original plea, and substituted in lieu thereof the word "handed," so that the allegation in the plea amounted to a statement that the defendant signed two blank notes and "handed" the same to B. F. Carr, instead of "delivering" the same.

By further amendment the defendant alleged that the note sued upon was never executed by him, or by any person by him authorized, and was not his act or deed; that he did not fill out the note, and did not authorize any one else to fill it out, either for $856.25 or for any other amount; "that on or about the 16th day of June, 1912, he signed, or placed his name on, what purported to be a blank note, without any amount being specified therein, or containing any writing whatever, and being nothing but a blank paper with this defendant's name placed thereon; that he handed said paper, or blank alleged note, to B. F. Carr to hold and keep as an escrow awaiting further instructions from this defendant, and with positive instructions that the said B. F. Carr should not fill in said alleged note in any amount whatever, or use the same in any way unless thereafter authorized by this defendant to do so, and that the said B. F. Carr then and there, at the time of receiving said note, agreed with this defendant that he would not fill in said alleged blank note, or blank paper, for any amount, or put any writing whatever upon said alleged note, unless and until authorized by this defendant that he could do so;" that a day or two after the execution of this note in blank he notified B. F. Carr to return the note to him or to destroy it, and not to fill it out for any amount whatever, or to use it "in any way, shape, or form whatever," and that Carr then and there notified him that he would not use the note, and had not used it, and would destroy it as directed.

The plea expressly denied that the defendant had ever delivered the note to Carr, or considered it delivered to him, and alleged that Carr was notified "that he was to hold the same as an escrow purely, as agent of defendant, and not to fill in the same or use the same in any way until permitted to do so by this defendant," and the filling out of the note, the indorsement of the same, and the delivery thereof to the Empire Cotton Oil Company, was without any authority on the part of the defendant, without any consideration or knowledge on his part, and was a fraud upon him; that the Empire Cotton Oil Company paid nothing for the note, was not an innocent purchaser or innocent holder of the same, and the note was without consideration, either as between the defendant and B. F. Carr, or Carr, Boyd & Co., or as between the defendant and the Empire Cotton Oil Company; that the defendant did not owe B. F. Carr, or Carr, Boyd & Co., any sum whatever at the time the said note was signed, and had not become indebted to them in any sum since that date; that he received no value for the said note, and never delivered it, except as an escrow; that the note was void for want of consideration, void for want of delivery, and void because it was not the instrument signed by the defendant, as the writing of the name, the date, the amount, the rate of interest, and any writing therein, was without authority and against the positive instructions of the defendant; that the Empire Cotton Oil Company merely claimed to hold this note as collateral for indebtedness already existing between Carr, Boyd & Co. and the Empire Cotton Oil Company, and the said Empire Cotton Oil Company paid nothing for the note, and had no right to hold or collect it from the defendant.

On the trial of the case, the note sued upon was offered in evidence without objection by the defendant, and appeared to have been signed by the defendant, to be payable by its terms to the order of Carr, Boyd & Co., to be dated June 17, 1912, and due January 1, 1913, to provide for interest from maturity at the rate of 8 per cent. per annum, and for 10 per cent. as attorney fees, and to be indorsed, "Carr, Boyd & Co. per B. F. Carr." It was shown by the testimony of the defendant that, on or about the date on which the note sued upon was executed, B. F. Carr, of the firm of Carr, Boyd & Co., who was connected with the defendant by marriage, came to the defendant's home, and, after stating that he was in financial straits and needed money, requested the defendant to sign two accommodation notes payable to his firm; that the defendant complied with the request, to the extent that he appended his signature to two printed blank notes, in which neither the amount to be paid nor any other writing appeared; that he handed these notes to Carr with the distinct understanding and agreement that Carr should hold them until the defendant gave him further notice, the defendant agreeing to call him up by telephone and instruct him the following day whether to use the note or not; that in the...