Steelman v. Associates Discount Corp.

• Court: Georgia Court of Appeals
• Writing for the Court: JORDAN
• Citation: Steelman v. Associates Discount Corp., 175 S.E.2d 62, 121 Ga.App. 649 (Ga. App. 1970)
• Decision Date: 07 April 1970
• Docket Number: No. 2,No. 45046,45046,2
• Parties: , 7 UCC Rep.Serv. 697 Ruth STEELMAN v. ASSOCIATES DISCOUNT CORPORATION

Page 62

175 S.E.2d 62

121 Ga.App. 649, 7 UCC Rep.Serv. 697

Ruth STEELMAN v. ASSOCIATES DISCOUNT CORPORATION.

No. 45046.

Court of Appeals of Georgia, Division No. 2.

April 7, 1970.

John D. Edge, Calhoun, for appellant.

Pittman & Kinney, Maurice M. Sponcler, Jr., Dalton, for appellee.

Syllabus Opinion by the Court

JORDAN, Presiding Judge.

This is an action by the assignee against the maker on a security agreement covering the conditional sale of an automobile, to recover the balance due on default, allowing credit for the net proceeds of the sale of the security and other credits. The court directed a verdict for the plaintiff and entered judgment thereon. The defendant, Mrs. Ruth Steelman, appeals, asserting three issues: 1. Was the plaintiff protected as a holder in due course? 2. Was the plea of non est factum sufficient? 3. Was the notice to the defendant sufficient? Held:

1. The defendant admitted the substance of the contract in her defensive pleadings, controverting only the description of the automobile as 'Used' instead of 'New.' She testified that the automobile was sold to her as a new automobile, and that she signed the papers in blank with this understanding, whereas in fact the automobile was used. There is nothing in her testimony, however, to disclose any misunderstanding as to the amount of the indebtedness or the mode of payment, or that she received a different automobile from the one she purchased, or that the plaintiff, as the assignee of the contract, was aware of any misrepresentation of the condition of the automobile, or aware that she had signed the papers in blank, or had any knowledge whatsoever of the transaction except as disclosed by the completed papers.

Under the pleadings and the evidence the assignee clearly qualifies as a holder in due course who took (a) for value, (b) in good faith, (c) and without notice of any defense. See Ga.L.1962, pp. 156, 252; Code Ann. § 109A-3-302(1). Even if the plaintiff had knowledge that an incomplete instrument had been completed, this is not notice of a defense, unless the plaintiff had notice of improper completion. Ga.L.1962, pp. 156, 254; Code Ann. § 109A-3-304(4)(d).

As a holder in due course the plaintiff was protected from (1) all claims and (2) all defenses by a party with whom the holder had not dealt, except (a) infancy, (b) other incapacity, duress, or illegality as renders the obligation a nullity, (c) misrepresentation which induced the party to sign without knowledge or reasonable opportunity to obtain knowledge or reasonable opportunity to obtain knowledge of its character or essential terms, (d) discharge in insolvency proceedings, and (e) any other discharge of which the holder has notice when he took the instrument. Ga.L.1962, pp. 156, 255; Code Ann. § 109A-3-305.

The only defense that could possibly be involved herein would be misrepresentation, and the defendant's own testimony falls far short of disclosing that she was induced to sign without knowledge or reasonable opportunity to obtain knowledge of the character of the agreement or its essential terms 2. The defendant not only fails to deny the existence of a contract in her pleadings, which are not under oath, but she admits signing the agreements and making three monthly payments under the terms thereof. A plea of non est factum is a denial of the execution of a contract. See former Code § 81-701, repealed by § 135(q) of the Civil Practice Act; Ga.L.1966, pp. 609, 687; Code Ann. § 81A-201. This definition is still preserved in the language of Code § 20-801, which requires the denial of the execution or existence of a contract by a plea on oath. Also, under the Uniform Commercial Code, a signature to an instrument is admitted unless specifically denied in the pleadings. Ga.L.1962, pp. 156, 256; Code § 109A-3-307(1). The pleadings eliminate non est factum as a material issue.

3. The printed portion of the contract which the defendant signed provides that upon default 'all unpaid installments shall immediately become due and payable without notice or demand and the holder hereof may, without notice or demand and with or without process of law enter any premises where said motor vehicle may be and take possession of it and sell it at public or private sale with or without notice.'

Notwithstanding these provisions of the contract, however, the defendant pleaded that 'she was not furnished with a notice that the car would be sold, and what date same would be sold.' The evidence discloses that timely notice of intended private sale was sent by certified mail to the defendant, and that receipt was acknowledged by Mrs. Donald Stuhman as the agent of the addressee, listed on the receipt as 'Mrs. Ruth Stuhman.' The handwritten names on the receipt could also be read as 'Steelman' instead of 'Stuhman.' The defendant and Mrs. Donald Stuhman, or...