Lacey v. Hutchinson

• Citation: 64 S.E. 105,5 Ga.App. 865
• Decision Date: 23 March 1909
• Docket Number: 1,557.
• Parties: LACEY v. HUTCHINSON.
• Court: United States Court of Appeals (Georgia)

64 S.E. 105

5 Ga.App. 865

LACEY v. HUTCHINSON.

No. 1,557.

Court of Appeals of Georgia

March 23, 1909

Syllabus by the Court.

It is a good defense to an action on a negotiable promissory note under seal in the hands of the original payee that it was executed without any lawful consideration.

[Ed Note.-For other cases, see Bills and Notes, Cent. Dig. § 163; Dec. Dig. § 90. ^[*]]

The common-law courts of England enforced specialties in the absence of consideration, not because the presence of a seal carried with it any presumption of consideration, but because consideration was not essential to an instrument executed with such formality. The doctrine of enforcing a contract because of the formality of its execution is older than the juridic concept of consideration as an element of a binding promise.

[Ed Note.-For other cases, see Contracts, Cent. Dig. § 406; Dec Dig. § 48. ^[*] ]

The courts of equity recognize consideration as an essential element of all contracts, with but few exceptions, and do not recognize formality of execution as a substitute therefor. Hence lack of consideration is a good defense in equity to a contract under seal.

[Ed Note.-For other cases, see Contracts, Dec. Dig. § 48. ^[*]]

A negotiable promissory note under seal is legal hybrid unknown to the common law.

[Ed. Note.-For other cases, see Bills and Notes, Cent. Dig. § 63; Dec. Dig. § 43. ^[*]]

In this state an equitable defense not involving affirmative relief or extraordinary remedy may be filed to any action at law in any of the courts. Hence to an action in a city court on a note under seal the defense of lack of consideration may be successfully pleaded.

[Ed. Note.-For other cases, see Courts, Dec. Dig. § 189. ^[*]]

Error from City Court of Abbeville; D. H. Nicholson, Judge.

Action by J. H. Hutchinson against J. S. Lacey. Judgment for plaintiff, and defendant brings error. Reversed.

Land & Hall, for plaintiff in error.

Hal. Lawson, for defendant in error.

POWELL J.

The plaintiff sued upon a negotiable promissory note under seal. The defendant filed a plea showing, in substance, that the note was wholly lacking in consideration. The court refused to allow the defendant to introduce testimony tending to support his plea; and the sole question before this court is whether total lack of consideration is a good defense to a negotiable promissory note under seal.

It has frequently been held that failure of consideration, total or partial, is a good defense to such an instrument in this state. It has been held that fraud in the procurement may also be pleaded to such an instrument (House v. Martin, 125 Ga. 643, 54 S.E. 735), but it is said in the case of Slaton v. Fowler, 124 Ga. 955, 53 S.E. 567, that it is an open question in Georgia whether the common-law rule which forbade inquiry into consideration in a suit based on a specialty is applicable to promissory notes under seal to such an extent as to forbid recognition of a plea of total absence or want of consideration; and this precise point has not been decided subsequently. There is no question but that the presence of a seal raises a prima facie presumption that it is founded upon a consideration. Weaver v. Cosby, 109 Ga. 313, 34 S.E. 680; Rutherford v. Baptist Convention, 9 Ga. 54; Smith v. Smith, 36 Ga. 184, 91 Am.Dec. 761.

We have made a painstaking and careful search of the decisions of the Supreme Court, and in no case has the right to plead a total want of consideration to a negotiable promissory note under seal been denied except by way of obiter. There is a case ( Beazley v. Gignilliat, 61 Ga. 187) in which the opinion expressly recites that the promissory note involved was under seal, and yet the judgment of the court below was reversed for refusing to allow the defendant to file a plea of lack of consideration. This is a full bench decision, but it does not seem to have been cited in any subsequent case. It would probably be subject to the criticism that it is a physical precedent only (as the section of the code on the subject of instruments under seal is not noticed) were it not for the fact that Chief Justice Warner, who wrote the opinion, cited the case of Albertson v. Holloway, 16 Ga. 377. In the case last cited (which was decided, however, prior to the adoption of our Code), it was said by the court: "We believe that the rule that a plea of failure of consideration cannot be used as a defense to a specialty applies to no other instruments, save such as were known to the common law as specialties, as deeds, bonds, and instruments executed with like solemnities of sealing and delivery. It has been common for courts to say that such defense cannot be set up to an instrument under seal. But we think that these words were used, or should have been used, with reference to such instruments as were executed with the ceremonies necessary to specialties at common law." In Sivell v. Hogan, 119 Ga. 169, 46 S.E. 67, there is a somewhat lengthy review of the authorities by Justice Cobb and the intimation of a personal opinion that a plea of original lack of consideration would not be a good defense to a suit based on a contract under seal, though the court very frankly states that what is said on this subject is obiter.

Section 3656 of the Civil Code of 1895 provides: "A consideration is essential to a contract which the law will enforce. An executory contract without such consideration is called a nudum pactum, or a naked promise. In some cases a consideration is presumed, and an averment to the contrary will not be received. Such are generally contracts under seal, and negotiable instruments alleging a consideration upon their face, in the hands of innocent holders without notice, who have received the same before dishonored." It is said in Sivell v. Hogan, supra, that this section of the Code is declaratory of the common law; and this is true in the sense that it is not the codification of a statute. However, in so far as the section contains an assumption or indirect statement that at common law contracts under seal were conclusively presumed to be founded on a consideration, it is not an accurate declaration of the common-law principle on that subject. The courts and text-writers who have made the deepest and most philosophical research into the history of the question are in accord upon the proposition that specialties-those formal common-law contracts under seal-were enforced in the absence of an allegation of consideration, not because it was conclusively presumed that they were founded on a consideration, but because consideration was not an essential element to such contracts. Contracts under seal were enforceable at common law because of the formality of their execution, and such contracts were fully recognized and enforced long before the doctrine of consideration appeared in the law. In those early days the courts looked to the form and solemnity attending the execution of the promise rather than to it nature, the subject-matter, and surrounding circumstances in determining whether the promise was enforceable and binding or not. Except in a few cases to which the common-law action of debt was applied, no contract was enforceable at early common law unless it was under seal. An ordinary executory contract not under seal was without a remedy for its enforcement. Later on, by looking at the breach of an executory contract not under seal as a wrong arising ex delicto, the courts afforded a remedy by extending to such transactions the action of trespass on the case, a remedy not originally designed for that purpose. For example, a plaintiff would allege that the defendant had done him a wrong and had damaged him, in that he had undertaken to build a house in a good and workmanlike manner, which undertaking the defendant had not kept, whereby the plaintiff was damaged. To afford a remedy in such a case the court looked upon the defendant's conduct as something in the nature of a deceit resulting in damage to the plaintiff, and applied to the transaction the tort action of trespass on the case. Finally this form of action was extended so as to afford a remedy for the breach of every promise which had resulted in detriment to the promisee. Cases arose, however, in which this remedy was invoked, and it appeared that the plaintiff had given the defendant nothing to induce his promise; that is to say, the plaintiff had suffered no detriment through the promise since he had done nothing or given up nothing therefor, and the court refused to afford such a plaintiff the remedy. This was the inchoation of the doctrine of the necessity for consideration in contracts. The plaintiff was required to show that he had given a consideration before he was allowed to have a remedy for the breach of the defendant's promise. A similar concept attached to the action of assumpsit when it came into use. On the general subject, see Anson's Law of Contracts; 2 Pollock & Maitland's History of English Law, c. 5; 3 Halsbury's Laws of England, p. 83, § 170; J. B. Ames on the History of Assumpsit, 2 Harv. Law Rev. 1, 53.

In this connection, it may be pertinent to call attention to the peculiar relation existing between right and remedy at common law. In those times, when the common law was being developed the courts had a very indistinct concept of an actual wrong in the abstract; indeed, for the most part it seems that they had no concept at all of a legal wrong apart from the forms of action which had been framed and developed from time to time. We recall the familiar Grecian tradition that the robber, Procrustes, had a bed used in the torture of his victims. He placed his captives on this bed, and, if they were short, they were stretched, and if they were tall, they were lopped off so...