Schwitzerlet-seigler Co v. Citizens' & Southern Bank

• Decision Date: 07 June 1923
• Docket Number: (No. 3565.)
• Court: Georgia Supreme Court
• Parties: SCHWITZERLET-SEIGLER CO. et al. v. CITIZENS' & SOUTHERN BANK.

155 Ga. 740

118 S.E. 365

SCHWITZERLET-SEIGLER CO. et al.

v.CITIZENS' & SOUTHERN BANK.

(No. 3565.)

Supreme Court of Georgia.

June 7, 1923.

(Syllabus by the Court.)

Error from Superior Court, Richmond County; H. C. Hammond, Judge.

Suit by the Citizens' & Southern Bank against the Schwitzerlet-Seigler Company and others. Judgment for plaintiff on demurrer, and defendants bring error. Affirmed.

The Citizens' & Southern Bank brought suit against the Schwitzerlet-Seigler Company, O. P. Schwitzerlet, W. Cleveland Seigler, and Eula L. Seigler, and alleged that the Schwitzerlet-Seigler Company, O. P. Schwitzerlet, and W. Cleveland Seigler are indebted to petitioner in the sum of $13,373.77; that this indebtedness is evidenced by two promissory notes—one for $9,000, dated February 10, 1921, due April, 1922, after date, with interest from maturity at the rate of 8 per cent. per annum, and 10 per cent. on principal and interest as attorney's fees, on which note there is a cash credit under date of April 28, 1921, of $2,926, 23, making the balance of principal due thereon $6,073.77; and another for $7,300, dated April 15, 1921, due 60 days after date, with interest from maturity at 8 per cent per annum, with 10 per cent. on principal and interest as attorney's fees. Both are payable to the order of the Citizens' & Southern Bank, were given for money borrowed by the defendant company from petitioner, were executed in the name of said company, and were indorsed individually by defendants Schwitzerlet and Seigler. Copies of said notes are attached to the petition. The indorsement thereof by said Schwitzerlet and Seigler constituted a part of the consideration inducing petitioner to extend said credit to said company. Petitioner's attorneys notified the defendants in writing, 10 days before this suit was brought, of its intention to bring suit thereon to the July term, 1921, of Richmond superior court. A copy of said notice is attached to the petition. Schwitzerlet-Seigler Company is insolvent, and made assignment of all its assets to W. B. Oliver. W. Cleveland Seigler, who is treasurer of said company and indorser upon said notes, and individually liable for their payment, and on whose financial responsibility petitioner relied in making said loans, is seeking fraudulently to transfer his individual property to his wife, Eula L. Selgler, to escape liability and to defraud petitioner. A list of said attempted fraudulent transfers is attached to the petition. Said transfers and deeds are fraudulent and void, made with intent to delay and defraud petitioner; and such intention was known to said Eula L. Seigler when she took same. The considerations alleged in said conveyances were love and affection and nominal or small money considerations, and were fraudulent and void against petitioner. Unless prevented by an order of the court, Seigler will dispose of all his property, if he has not already done so. Petitioner is informed and believes said Seigler has become involved by the failure of said company and by indorsing for it. Petitioner does not know to what extent he is now able to respond, but believes his property so conveyed to his wife and what he may have undisposed of will be ample to protect petitioner, provided he is not permitted to dispose of same, and said conveyances to his wife are declared void. Petitioner has no adequate remedy at law. It prays for a general judgment against the company and the indorsers as sureties on the notes; that Seigler be enjoined and restrained from disposing of any of his property before final hearing of the case; that the conveyances to his Wife be declared null and void against petitioner; thas his wife be enjoined from in any manner disposing of the property conveyed to her by her husband; and that she be required to deliver up said deeds and conveyances for cancellation. Petitioner further prayed for temporary injunction and general relief.

By amendment plaintiff alleged that the payment of $2,926.23 on the note of $9,000 was made by said company, and that the assignment to Oliver by said company was for the benefit of its creditors, and by adding an allegation that, if said Seigler is permitted to make such fraudulent transfers to his wife, he will be left insolvent and unable to respond to plaintiff's claim. By another amendment plaintiff alleged that said payment of $2,926.23 was made through said Oliver as assignee of said company. By this amendment plaintiff attached to its petition a copy of said deed of assignment, which contained, among other provisions, the following:

"This assignment is made in full satisfaction of all claims set forth in the attached list of creditors, and the acceptance by the assignee of the trust is binding and conclusive on the creditors in the list attached who accept any benefits hereunder."

This assignment embraces a stock of merchandise and fixtures of the approximate purchase price of $37,000, and books of account. In this amendment plaintiff alleges that at the time said assignment was made it specifically refused to consent to the same, or to take any benefit thereunder, if by so doing Seigler and Schwitzerlet would thereby be released from their individual liability as said indorsers. As soon as a copy of said assignment was submitted to plaintiff, it addressed a letter, on April 4, 1921, to said Seigler and Schwitzerlet, as follows:

"We note in the copy of the deed of assignment, furnished us from you to Mr. W. B. Oliver for benefit of the creditors, the following clause: [Reciting the above clause.] Of course, we understand that the language of this paragraph refers only to releasing the corporation of Schwitzerlet-Seigler Company, and is not to be construed as affecting the liability of the indorsers on any notes of the corporation. We will be glad to have you confirm this understanding by reply."

On the same day Seigler and Schwitzerlet entered at the foot of the above letter this statement:

"Citizens' & Southern Bank: Your understanding is correct. W. C. Seigler. O. P. Schwitzerlet."

Plaintiff alleges that thereby both of said indorsers or sureties waived any possible release of themselves that might have otherwise arisen by reason of the plaintiff accepting any benefit under said deed of assignment, and estopped themselves from claiming any release, and plaintiff would not under any circumstances, but for this waiver, have consented to said assignment or to accepting any benefits thereunder. By said amendment plaintiff struck the name of said company as maker of the notes as a defendant, and the prayer for general judgment against it.

The defendants demurred to the petition as amended, on the grounds: (1) That it sets forth no cause of action; (2) that it sets forth no legal or equitable cause of action; (3) that Eula L. Seigler could not be bound by any secret or private arrangement between plaintiff and Schwitzerlet and Seigler, to the effect that they should remain bound on said notes, because the deed of assignment, which was duly recorded, provided that the assets assigned to assignee for the benefit of creditors was in full settlement of all claims against the defendant corporation, there being no allegation that Eula L. Seigler had any knowledge of the existence Of the agreement of said indorsers to be bound for said notes; (4) that plaintiff abandoned its suit against the defendant corporation, the principal defendant, and for this reason no judgment can be rendered against said sureties; (5) that there is no consideration for the agreement by which Schwitzerlet and Seigler became substituted debtors for said company, by which they were to be held liable for said notes...