Loveless v. Carten, 28596.

• Decision Date: 09 November 1940
• Docket Number: No. 28596.,28596.
• Citation: 12 S.E.2d 175
• Parties: LOVELESS . v. CARTEN.
• Court: Georgia Court of Appeals

12 S.E.2d 175

LOVELESS .

v.CARTEN.

No. 28596.

Court of Appeals of Georgia,

Division No. 2.

Nov. 9, 1940

.

Rehearing Denied Dee. 17, 1940.

Syllabus by the Court.

1. A plea of res judicata is not a dilatory plea, but is in the nature of a plea in bar. It is not necessary that it should be filed at the first term.

2. In a suit on a note, a plea of res judicata which alleges in effect generally that the rights of the parties were adjudicated in the former litigation, wherein the defendant had brought suit against the plaintiff for an accounting, is sufficient, as against a general demurrer, that the matter sued on was adjudicated in the former suit. However, an allegation in the plea that the note "was an issue, and was introduced in evidence before said auditor, in said former action", is insufficient as an allegation that the right of action upon the note was adjudicated in the former suit.

3. Where a debtor, whose indebtedness is represented by notes secured by deeds to real estate, brings a bill in equity against the creditor for an accounting for sums of money, including rents from the property, collected by the creditor, and where the creditor answers and prays judgment against the debtor on an alleged balance due the creditor over and above the funds collected by the creditor, and also files a cross-bill in which the creditor prays judgment against the debtor for the principal and interest on one of the notes, and where the creditor dismisses the cross-bill, in which he prays judgment on the note, and afterward the court by an order eliminates from the case any consideration of the rights of the parties as respecting the note, and adjudicates that the matter is not within the pleadings, and leaves the matter open to be determined in another litigation between the parties, and the judgment rendered for the creditor against the debtor is in an amount which excludes from consideration any amount due by the debtor on the note, this suit, by the order and adjudication of the court eliminating therefrom any cause of action on the note, does not contain a suit upon any cause of action on the note. And the liability on the note not being actually adjudicated therein, the judgment is not res judicata in a subsequent suit brought by the creditor against the debtor to recover on the note.

Error from City Court of Decatur; Frank Guess, Judge.

Suit by F. M. Loveless against John W. McCollum on a note. To review an ad-

verse judgment the plaintiff brings error. The bill of exceptions named Lillian Car-ten as administratrix of John W. McCollum, deceased, as defendant in error. Reversed.

H. A. Etheridge, of Atlanta, for plaintiff in error.

A. C. Corbett and Howard, Tiller & Howard, all of Atlanta, for defendant in error.

STEPHENS, Presiding Judge.

F. M. Loveless brought suit against John W. McCollum, on a note in the sum of $3,000 executed by the defendant to "Sarah J. Mosby estate or order, " of which the plaintiff was, in one count, the alleged transferee by virtue of individual indorsers thereon who were the alleged "beneficiaries" and "heirs at law" of Sarah J. Mosby, and of which in the other count he was the alleged owner by virtue of the note's having been made to a fictitious or nonexisting person, and, therefore, under the Code, § 14-209, a section of the Negotiable Instruments Law, was payable to bearer. The only defense filed thereto was a plea of res judicata. The defendant pleaded that the right of action on the note had been adjudicated in a former suit in the Fulton Superior Court in which the defendant John W. McCollum had brought a bill in equity for an accounting against F. M. Loveless, and which involved and adjudicated the rights of the parties under the note. It was specifically alleged in the plea that "this defendant shows that the identical note which is sued upon in this case was an issue, and was introduced in evidence before said auditor, in said former action." Attached to the plea was a copy of the petition of the defendant John W. McCollum as the plaintiff in the court of equity, extracts from the auditor's report, McCollum's exceptions thereto, an extract from the decision of the Supreme Court in which the judgment rendered in the former suit was reviewed, and in which the Supreme Court ruled that the note, which was payable to "Sarah J. Mosby estate, " was payable to a fictitious or non-existing person and was therefore payable to bearer, and the judgment of the superior court putting into effect the judgment of the Supreme Court. The material portions of this judgment are as follows: "In accordance with the said decision of the Supreme Court, it is further ordered, adjudged and decreed: 1. That the notesigned by John W. McCollum payable to 'Sarah J. Mosby Estate, ' dated February 19, 1926, for the sum of $3,000.00, is a valid negotiable paper. 2. That the loan deed signed by John W. McCollum to 'Sarah J. Mosby Estate', dated February 19, 1926, and recorded in deed book 224, page 124, of DeKalb County records, is null and void and conveyed no title, and it is ordered that the same be cancelled; and it is further ordered and decreed that the attempted foreclosure under said loan deed whereby the defendant F. M. Loveless attempted to purchase the property therein described, as shown by deed of foreclosure dated 20th day of March, 1935, and recorded in deed book----page---- of DeKalb County Records, is likewise void and conveyed no title to the said F. M. Loveless. 3. That the judgment heretofore rendered in favor of F. M. Loveless against John W. McCollum for the sum of $1,742.-24, be, and the same is hereby reduced to $736.52 as found by the auditor (less whatever sums have been collected by the said F. M. Loveless as rent from the property described in the deeds above mentioned in this decree from the date of the auditor's finding to this date)."

The plea, which was not filed at the first term, was objected to and a motion was made to disallow it on the ground that it was a dilatory plea which could only be filed at the first term. The plea was demurred to on the ground that it did not appear that the note sued on "had been actually adjudicated or disposed of" in the former litigation, and on the ground that the allegation that the note "was an issue and was introduced in evidence before" the auditor to whom the case was referred in the former action was insufficient to show an adjudication of the rights of the parties as to the note. The court overruled the objection to the plea, and also overruled the demurrer.

The case went' to trial on the plea of res judicata. Besides the note sued on and the testimony of the plaintiff that he bought the note before maturity from certain named persons, and was a holder thereof, there was introduced to sustain the plea, evidence consisting entirely of extracts from records of the former suit.

From the evidence the following appears: Extracts from the petition of J. W. McCollum in Fulton Superior Court against F. M. Loveless in which it was alleged that he was the owner of certain described real estate which he had conveyed on February 19, 1926, to "Sarah J. Mosby estate, " to secure a loan for $3,000, that in compliance with an agreement between McCollum and Loveless all rents from McCollum's properties from the date of March 24, 1928, to the date of filing the petition had been paid over to Loveless, amounting to approximately $10,000, that more than sufficient funds had been paid to Loveless to discharge all liens for taxes and street improvements and incumbrances upon other property, that McCollum owes Loveless nothing, but that Loveless is indebted to McCollum in a large sum, that McCollum is willing to do equity and is willing that the rents which have accrued and are accruing may be impounded and that if, upon an accounting between himself and Loveless, it should be found that McCollum is indebted to Loveless in any sum, that such rents be paid over to Loveless. McCollum as petitioner prayed that an accounting be had between him and Loveless "covering all sums of money paid over to defendant [that is Loveless] during the period hereinbefore stated, and all sums paid out by defendant for use of petitioner."

There was introduced in evidence the answer filed by Loveless to McCollum's petition in which there is set forth a statement of account between them showing an alleged balance of $1,628.42 in favor of Loveless against McCollum for which Loveless prayed judgment. There was introduced in evidence a cross-bill filed by Loveless to McCollum's petition in which it is alleged that McCollum was indebted to him on the $3,000 note which McCollum had executed in favor of "Sarah J. Mosby estate" in the sum of $3,000 principal with interest thereon in the sum of $120, and prayed that judgment be given him against McCollum in the present action for whatever sum or balance may be shown to be due him upon an accounting between the parties, and also that judgment and decree be entered in his favor upon another loan set forth in the cross-bill, that the properties be sold by decree and order of the court for the satisfaction of the indebtedness. There appeared in evidence the order of the court as of September 13, 1935, referring the case, including the cross-bill, to an auditor. There was introduced in evidence an amendment by McCollum to his petition before the auditor, in which he alleged that the note and the loan deed to secure the note, both of which were made payable to "Sarah J. Mosby estate, "be declared null and void on the ground that there was no such person as "Sarah J. Mosby estate, " either natural or artificial. There was introduced in evidence the finding of the auditor that both the note and the deed were void. There was introduced in evidence an order of the court sustaining the exceptions to the auditor's finding disallowing the amendment of McCollum and finding, the note and deed void. In this order of the court it was provided as follows: ...