Schwitzerlet-Seigler Co. v. Citizens' & Southern Bank
| Decision Date | 07 June 1923 |
| Docket Number | 3565. |
| Citation | 118 S.E. 365,155 Ga. 740 |
| Parties | SCHWITZERLET-SEIGLER CO. ET AL. v. CITIZENS' & SOUTHERN BANK. |
| Court | Georgia Supreme Court |
Syllabus by the Court.
Where the maker of notes with sureties thereon executes a deed of assignment for the benefit of his creditors, with a provision therein that the acceptance of any benefits thereunder by his creditors will be a full satisfaction of the claims of the creditors against such maker, the acceptance, by the payee of such notes, of benefits under the assignment, terminates the liability of the maker of such notes, and would likewise discharge the sureties thereon, if done without their knowledge and consent.
The obligation of the sureties on these notes is accessory to that of the maker, and when the obligation of the latter from acceptance by the holder of the notes of benefits under the assignment, becomes extinct, the obligation of the sureties likewise becomes extinct, unless the creditor reserves all rights against the sureties, or it appears from the whole transaction that the sureties should remain bound in either of which events the sureties would not be discharged.
When the holder of the notes accepted benefits under the assignment with the knowledge of the sureties, and under an express understanding with the sureties that their liability on the notes was to continue, the sureties were not discharged from liability on the notes, although the acceptance of such benefits was a full satisfaction of the notes so far as the maker was concerned.
If the surety, with knowledge of the facts operating to discharge him from liability, does any affirmative act which contemplates the continued existence of his status as a surety, he thereby waives the right to claim that he is discharged.
A new promise by the surety after discharge, with knowledge of the facts discharging him, is binding without any new consideration; aliter, if he has no such knowledge.
A promise by the surety, prior to acts discharging him, that he will continue to be bound, and made to induce the creditor to release and settle with the principal, needs no new consideration to support it, and will bind the surety for any balance due the creditor, where the latter settles with the principal debtor for less than is due, upon the strength of such promise of the surety.
The court did not err in overruling the demurrer to the petition.
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.
When maker of notes, with sureties thereon, executed assignment for creditors, providing that acceptance of benefits thereunder would be full satisfaction of creditors' claims, acceptance by payee of benefits thereunder terminated maker's liability.
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. Seigler, 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:
On the same day Seigler and Schwitzerlet entered at the foot of the above letter this...
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