Montgomery v. Hunt

• Decision Date: 27 January 1894
• Citation: 21 S.E. 59,93 Ga. 438
• Parties: MONTGOMERY v. HUNT.
• Court: Georgia Supreme Court

21 S.E. 59

93 Ga. 438

MONTGOMERY v. HUNT.

Supreme Court of Georgia

January 27, 1894

Syllabus by the Court.

1. Where suit was brought by the holder of a promissory note payable to the order of a named person, and indorsed by the payee in blank, and the defendant, in his plea, admits the execution of the note and the ownership of it by the plaintiff, a prima facie case for the latter is made out. The burden of proof to establish his defense is upon the defendant, and consequently he is entitled to open and conclude.

2. Where a promissory note is given contemporaneously with a written agreement between the same parties which states the consideration of the note, the two instruments constitute one contract, and are to be construed together; and the maker of the note, when sued thereon by one who purchased it before maturity, for value, may plead the failure of consideration and also that, when the plaintiff purchased, he knew what the consideration was and that it had failed, or had sufficient notice to put him upon inquiry which would lead to a knowledge of these facts.

Error from city court, Hall county; M. L. Smith, Judge.

Action by J. H. Hunt against T. B. Montgomery. Verdict for plaintiff, and defendant brings error. Reversed.

Defendant's plea admitting execution of note sued on and plaintiff's ownership makes prima facie case for plaintiff, and entitles defendant to open and close argument.

The following is the official report:

J. H Hunt sued T. B. Montgomery on a promissory note payable to the order of Magee, Fletcher & Co., and indorsed by them. The jury found for the plaintiff, and the defendant excepted to the refusal of a new trial. The pleas of the defendant set up that the note was without consideration, and that the plaintiff was not a bona fide holder without notice. The defendant testified that the note was signed in connection with and at the same time with a written contract in evidence, between Magee, Fletcher & Co., of the first part and the defendant, of the second part, reciting that "the parties of the first part, having established a permanent industry in Gainesville for the purpose of manufacturing and selling the Champion combination slat and wire fence, do hereby make and constitute the party of the second part a lawful agent, with power to contract or sell the manufactured fence in" a certain district of that county, the manufactured fence to be kept in stock by the manufacturing agent, D. E. Evans, at Gainesville, and at all times to be furnished to the second party at certain stated prices; that the manufacturing agent has also bound himself "to use his endeavor to sell the fence, and that on all sales made by him or at the factory to credit the precinct agent wherein the fence goes with twenty-five cents per rod that the party of the second part, in consideration of the rights and privileges herein granted, agrees to use his endeavors to sell the fence in the territory named, and pay the first parties five cents per rod of the commissions after he had sold 1,000 rods of fence, and received all the commissions, $250, as he has this day secured to be paid $125 by execution of his note, being one-half of the commission on the first 1,000 rods sold; and, if 500 rods of fence have not been sold at the end of six months by the said second party then the said company or their authorized representatives are fully empowered to cancel the agency, and appoint another agent in his stead, but if they decide to cancel said agency, which shall be at their option, they shall surrender said note after first being paid one-half of the commissions on the fence sold during the said six months," etc. This agreement and the note were each dated March 21, 1892. There was testimony by the defendant and his son that, six days after the note was signed, defendant received from one Bearden a letter asking if the note was all right, and if it was safe to buy it, to which defendant replied that he supposed he signed the note, but did not expect to have to pay it on the conditions upon which he signed it. He did not expect to have much, if anything, to pay on it, as he did not think the fence would sell in his district, and he had signed the note on these conditions. On the first Tuesday in April he met the plaintiff, who asked him: "How are you getting along selling fences?" "Not very well," replied the defendant. Said plaintiff: "Well, I have bought your note." Defendant said: "I did not think you would have bought that note." Plaintiff replied: "I saw your letter to Bearden about the note, but, when I saw the note was payable to order, I bought it. I will buy all such notes as that, especially with your name on them." On this point the plaintiff testified that he purchased the note from Magee a few days after it was given, paying value for it; knew of nothing to make it defective, and had no knowledge or notice of anything making it invalid; never saw defendant's letter to Bearden about the note, and did not tell defendant he had seen it; never knew anything about that letter to Bearden. Magee was a stranger at this place. Plaintiff did not know him. Plaintiff only knew he was going about in the county selling a patent fence, or rights to it, and taking notes. Plaintiff bought three notes from him, and this is one of them. Martin and plaintiff afterwards bought four more. Plaintiff did not know when he bought what the note sued on was given for. He knew they were dealing in fences. He made no inquiry about it; supposed it was something about the fence; did not ask Magee how defendant came to make him the note, or anything else; did not know anything about Magee, Fletcher & Co., or their solvency, and knew nothing about the contract. T. M. Bell testified that he was interested with Bearden, and wrote to Montgomery the letter mentioned. At that time Magee had the note. When the answer to the letter came, it was read by witness and Bearden. Witness thought there was enough in the letter to keep him from buying the note, and in five minutes tore up the letter. No one saw it but him and Bearden. Hunt did not see it, nor did witness tell Hunt about it. The letter stated that defendant did not expect to have much, if anything, to pay on the note, which was signed on conditions, but did not state the conditions. The defendant gave the following testimony as to the circumstances under which the note was signed, etc.: "A man representing himself to be a Mr. Magee came up the road in a buggy, and, getting out, came to see me, and said he wanted me to act as agent to sell a patent wire fence. He said Jack Thompson and William Byers had consented to become agents in their districts, and he wanted a good man in my district; that, if I did not make anything, I could not lose anything. He said I would have the exclusive right to sell in my district, and would only have to pay a certain commission on what fence I actually sold. He then read me the contract in evidence, and the note, but in reading the note I do not think he read the words 'or order of.' I hesitated about signing the note. He said that the contract was that the note was only given as security for what commissions would be due them or their part of the commissions if I sold any fence, and I would not have anything to pay on the note unless I sold some of the fence, and then only their part of the commissions. He said the note was only given as security, and that it would not and could not be traded; that it was more than they dare do to trade the note; that the notes taken by them would be filed away in their office to secure payment. I can read, but not without glasses. I did not have my glasses with me, and could not read the contract or note, and he read them to me. He said he would send to my post office, Murraysville, samples of the fence in two or three days. I signed the contract and note upon these...