Henderson v. Rice, 13125.

• Court: United States State Supreme Court of South Carolina
• Writing for the Court: BLEASE, C.J.
• Citation: 158 S.E. 258,160 S.C. 307
• Parties: HENDERSON v. RICE et al.
• Docket Number: 13125.
• Decision Date: 20 April 1931

158 S.E. 258

160 S.C. 307

HENDERSON
v.
RICE et al.

No. 13125.

Supreme Court of South Carolina

April 20, 1931

Appeal from Common Pleas Circuit Court of Greenville County; T. J. Mauldin, Judge.

Action by J. W. Henderson against P. D. Rice, E. F. Rice, R. M. Coley, and another. From the judgment, plaintiff and the last two named defendants appeal.

Reversed, and remanded. [158 S.E. 259]

Blythe & Bonham, of Greenville, for appellants.

Morgan & Cothran, of Greenville, for respondent.

BLEASE, C.J.

This action was originally instituted in the county court of Greenville county, but it afterwards appearing that the total amount demanded in the complaint exceeded the sum of which that court had jurisdiction, the cause was transferred to the court of common pleas of that county.

The original complaint alleged the execution and delivery by the four defendants, P. D. Rice, Virginia Chiles Rice, E. F. Rice, and R. M. Coley, of their promissory note to N. A. Henderson on February 18, 1924, in the sum of $2,300, principal, with the agreement to pay interest and attorney's fees, and the assignment of the note by the named payee to the plaintiff, J. W. Henderson. The defendants P. D. Rice and Virginia Chiles Rice defaulted, and judgment was entered up against them by default in favor of the plaintiff for $3,623.12. These two defendants are not concerned in this appeal.

The defendants E. F. Rice and R. M. Coley set up in their answer to the original complaint a denial that they executed the note sued upon, and alleged that, after the note had been executed, they signed their names on the back thereof as indorsers only for the accommodation of the makers of the note; that they received nothing of value from the payee; that upon maturity of the note it was dishonored by the makers, and they were not notified of such [160 S.C. 310] dishonor until two years after the note became due; and they demanded the protection they were entitled to have as indorsers because of the failure of the holder of the note to protest the same upon its nonpayment, and to notify them of the dishonor.

At the January, 1930, term of the court, the cause came on for hearing. The note, introduced in evidence, disclosed on its face that P. D. Rice and Virginia Chiles Rice, the defaulting defendants, alone were the makers, and that the answering defendants, E. F. Rice and R. M. Coley, were indorsers; their signatures appearing on the back of the note.

The plaintiff offered testimony, tending to show that the note was made at the request, and for the benefit of, the defendants E. F. Rice and R. M. Coley. The presiding judge, Honorable W. H. Townsend, held the testimony irrelevant under the allegations of the complaint. The plaintiff then asked leave to amend the complaint by alleging the facts sought to be established. The defendants objected to the allowance of the requested amendment, on the ground that it substantially changed the cause of action and could not be made during the trial; and they claimed that they were entitled to a dismissal of the complaint. The court allowed the amendment, on the ground that the same was "in furtherance of justice for the purpose of getting before the Court the issues which the plaintiff was attempting to make in his complaint." The defendants announced that they were not in position to proceed with the trial upon the complaint as amended, and they excepted to the allowance of the amendment. The court gave the defendant twenty days in which to answer the amended complaint, after its service, and ordered the case withdrawn from the jury and continued.

Thereafter, the plaintiff served an amended complaint, the allegations of which, so far as they are pertinent in this appeal, may be summarized, briefly, as follows: That shortly before February 18, 1924, the defendant E. F. Rice applied [160 S.C. 311] to N. A. Henderson, father of the plaintiff, for a loan to himself and the defendant R. M. Coley of the sum of $2,300, for the purpose of paying off certain notes at the bank on which E. F. Rice and Coley were indorsers, and agreed with N. A. Henderson that he would on the following day bring to N. A. Henderson a note of himself (E. F. Rice) and R. M. Coley; that relying upon the promise made, N. A. Henderson furnished the requested sum of money to E. F. Rice, but that Rice failed to perform the agreement made as to the delivery of the promised note, and instead thereof delivered to N. A. Henderson [158 S.E. 260] the note referred to in the complaint; that N. A. Henderson's business capacity was limited; that he had no knowledge of the law with reference to the execution of notes, and the proper place for the signatures of makers and indorsers, and had no knowledge that the note turned over to him was such an instrument as only bound E. F. Rice and Coley as indorsers, and believed, because of the express representations of Rice, that the note had been made in accordance with the agreement between himself on the one hand, and E. F. Rice acting for himself and for Coley on the other hand; that later N. A. Henderson assigned the note, for value, to the plaintiff; that after maturity of the note, the plaintiff made demand on E. F. Rice and R. M. Coley for payment, and both of the defendants specifically promised to pay the amount due and made no claim that they were bound only as indorsers, did not question their liability for their payment, and, on the contrary, expressly promised to pay the note, thereby ratifying and affirming the contract as originally made by them and waived any immunity that they might claim as indorsers; that no part of the note has been paid by discount or otherwise; and that, by reason of the facts alleged, the plaintiff was entitled to the reformation of the note, "in order that it may conform to the agreement of the parties thereto in regard thereto."

The note referred to, a copy of which was set out in the [160 S.C. 312] complaint, showed the usual form of a promissory note, dated February 18, 1924, payable one year after date to the order of N. A. Henderson, in the sum of $2,300, with provisions as to the payment of interest, and attorney's fees in case of suit. It appeared to be signed by the defaulting defendants, P. D. Rice and Virginia Chiles Rice, as makers, and indorsed by the contesting defendants, E. F. Rice and R. M. Coley, who had written their signatures on the back of the instrument.

The amended complaint was attacked by the defendants with a notice of motion to strike out many of its allegations. Without inserting this notice in full, we think it sufficient only to state that the defendants sought to have stricken out all the allegations going to show that they were makers of the note instead of indorsers, on the ground that such allegations varied the terms of the written instrument; the allegations as to the acceptance of the note by N. A. Henderson upon the alleged representations of E. F. Rice and the averments as to the business capacity of N. A. Henderson, for the reason that when the note was executed and delivered, the transaction was then ended; and the allegations as to promises and statements made by the defendants after the maturity of the note and those looking to a reformation of the instrument, on the ground that the order of the court allowing the plaintiff to amend his complaint did not cover these allegations.

The motion to strike out was heard and refused by Judge Townsend, who, it will be recalled, allowed the complaint to be amended. In his order on these matters, the presiding judge said:

"The leave to amend was given for the purpose of allowing the Plaintiff to allege such a statement of facts as would entitle him to show the liability of the Defendants as makers upon the note sued on. The facts alleged would show that the Defendant, E. F. Rice, obtained a loan of approximately twenty-three hundred dollars ($2300.00) from the Plaintiff's [160 S.C. 313] assignor upon a promise to give a note of the defendants as security for repayment and that the said assignor received the note sued upon believing it to be such note as the Defendants had promised to give, and ask the reformation of the note so as to conform to the contract between the parties at the time the money was advanced. I don't recall that at the time the leave to amend was allowed the question of reformation was mentioned, but I think the amendment allowed so as to state the facts, showing the defendants to be in equity makers would include the allegation of such facts as would authorize the reformation, if necessary, for that purpose The amended

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