Loudermilk v. Loudermilk

• Citation: 98 Ga. 780,25 S.E. 927
• Parties: LOUDERMILK et al. v. LOUDERMILK.
• Decision Date: 18 August 1896
• Court: Supreme Court of Georgia

25 S.E. 927

98 Ga. 780

LOUDERMILK et al.

v.LOUDERMILK.

Supreme Court of Georgia.

Aug. 18, 1896.

Equity—Mistake of Law — Correction — Bills and Notes.

1. Applying the rule that an honest mistake of law as to the effect of an instrument on the part of both of the parties thereto may, when such mistake operates as a gross injustice to one and gives an unconscionable advantage to the other, be relieved against in equity, it follows that, where both the maker and the payee of a promissory note intended that it should bear no interest, and ignorantly supposed that this would result from an omission to insert in its terms any reference to the subject of interest, equity will, at the instance of the maker, when sued upon the note by a third person, to whom the payee had indorsed it, correct such mistake, when it appears that the plaintiff took the note as a donation, paying nothing for it, and also that at the time of taking it he had full knowledge of the fact that the original parties to it intended that it should not bear interest.

2. This being an action by the indorsee upon such a note, the court erred in striking an equitable plea filed by the maker, and setting up a defense of the nature above indicated.

3. The plea now in question differs materially from that which this court dealt with when this case was before it at the October term, 1893. 21 S. E. 77, 93 Ga. 444.

(Syllabus by the Court.)

Error from superior court, Habersham county; J. J. Kimsey, Judge.

Action by J. M. Loudermilk against T. A. Loudermilk as maker, and James Louder-milk as indorser, on a note. Prom a judgment for plaintiff, defendants bring error. Reversed.

The following is the official report: Each of the defendants filed a special plea. Both pleas were stricken on motion, and defendants excepted. This court ruled that there was no error in striking the plea of the maker, but it was error to strike the plea of the Indorser. 93 Ga. 444, 21 S. E. 77. After that decision was rendered, the maker filed another special plea by way of amendment to the plea berore filed. The defense of the indorser was conceded. On motion, the court ordered that the special pleas of the maker be stricken, except the plea of general issue. To this ruling exception is taken. The amendment sets up the following as equitable grounds against the action and against recovering interest on the note. At the time the note was executed it was agreed between the maker and the indorser (who was the payee) that it did not draw any interest, and such was the plain and manifest intention of both of them. it was by them honestly believed that, as the note did not specify that it drew interest, it would not draw interest; and they did not know that the legal...