Tennille Banking Co v. Ward

• Decision Date: 20 February 1923
• Docket Number: (No. 13468.)
• Citation: 116 S.E. 347,29 Ga.App. 660
• Parties: TENNILLE BANKING CO. v. WARD.
• Court: Georgia Court of Appeals

29 Ga.App. 660

116 S.E. 347

TENNILLE BANKING CO.

v.WARD.

(No. 13468.)

Court of Appeals of Georgia, Division No. 1.

Feb. 20, 1923.

(Syllabus by the Court.)

Error from City Court of Sandersville; W. M. Goodwin, Judge.

Action by the Tennille Banking Company against J. J. Ward. Judgment for defendant, and plaintiff brings error. Reversed.

This was a suit upon a "trade acceptance" or "inland bill of exchange, " which was as follows:

''Trade Acceptance. Tennille, Ga. Jan. 29, 1921. On March 1, 1921, I promise to pay to the order of myself four thousand six hundred ninety-nine and 37/100 dollars—40 B/C invDixie Cotton Co. The obligation of the acceptor of this bill arises out of the purchase of goods from the drawer. [Signed] J. J. Ward. To Tennille Yarn Mills, Tennille, Ga."

Written across the face of the bill:

"Accepted, Jan. 29. 1921. Payable Tennille Banking Co., Payable March 1st, 1921. (Signed) Tennille Yarn Mills, L. J. Ward, Cashier."

Indorsed on back:

J. J. Ward was sued as maker and Indorsee He filed a plea denying any indebtedness to the plaintiff, and specially pleaded as follows:

"(2) For further answer this defendant shows that the acceptance, a copy of which is attached to plaintiff's petition, was not the obligation of this defendant, but is the obligation of the Tennille Yarn Mills, and that this defendant is in no way liable thereon for the following reasons: Because at the time the trade acceptance was accepted * * * said bank relied upon and accepted the draft on the Tennille Yarn Mills, and that the credit was extended to the Tennille Yarn Mills and not to this defendant, and this defendant has in no way profited by it, but that he drew the same at the instance and suggestion of the said bank with the understanding that he was not to be subjected to any liability thereon, and that he was merely an accommodating indorser, all of which was known to the bank at the time.

"(3) For further answer this defendant shows that the bank took possession of the cotton which was the basis of said draft, and converted it to its own use without consulting this defendant, and without any authority from him."

The plaintiff moved to strike paragraph 2 of the plea, and upon said motion being overruled he filed exceptions pendente lite. Upon the trial of the case the jury returned a verdict for the defendant, and the plaintiff filed a motion for a new trial. The first and second grounds of the amendments to the motion for a new trial allege that the court erred in admitting the following evidence:

(1) "Mr. Arnall, cashier at that time, who Is now dead, had a conference with my father, the defendant, Mr. Holmes, president of. the mill, and myself being present. He stated that the banking law required that the papers of the Tennille Yarn Mills should be in different form, and that the Federal Reserve Bank or the State Banking Department wanted trade acceptances of the kind and character sued on in this case, rather than a paper we had been accustomed to use. It was distinctly understood by Mr. Arnall, between Mr. Arnall and my father, that my father was not to be liable on the original trade acceptance, or on any future trade acceptances of the mill. He was only doing this to accommodate the mill and Mr. Arnall. and to put the acceptance in the form desired. It was understood and agreed that my father should not be liable on any of these papers. This conversation related to the orig-inal trade acceptance, and not to the one sued on in this case."

(2) "Dr. McMaster (the president of the bank) and I had a conversation in the rear of his drug store in which he also stated that it was a way of beating the devil about the bush, and that my father was not liable on this trade acceptance as drawer or indorser."

The motion for a new trial was overruled,

and plaintiff excepted.

E. W. Jordan, of Sandersville, for plaintiff in error.

Evans & Evans, of Sandersville, for defendant in error.

BLOODWORTH, J. (after stating the facts as above). [1] 1. The trade acceptance or inland bill of exchange sued upon shows affirmatively that it was accepted by the drawee (the Tennille Yarn Mills), and therefore the contract of the defendant (the drawer) was one of suretyship. The case of Bank of Richland v. Nicholson, 120 Ga. 626, 48 S. E. 240 (which was a suit upon an inland bill of exchange), is authority for this statement. It was held in that case that—

"The contract of the drawer is that if the drawee does not accept he will pay, and that if the drawee does not pay after acceptance he will. See, in this connection, Manry v. Waxelbaum, 108 Ga. 17. After acceptance the contract of the drawer is one of suretyship (Davis v. Baker, 71 Ga. 33), and between the drawing and the acceptance it is one in the nature of suretyship." (Italics ours.)

See, in this connection, Preston v. Dozier, 135 Ga. 25 (1), 68 S. E. 793. Thus the defendant, if liable at all, was liable as a surety; and, under the ruling of this court in Watkins Medical Co. v. Marbach, 20 Ga. App. 694, 93 S. E. 270, he cannot defeat such liability by merely proving that he received no monetary consideration, but In order to sustain a plea of want of consideration he would have to show that his principal (the drawee) did not receive any consideration or benefit from the paper sued on. In that case the court said:

"Section 3538 of the Civil Code of 1910 is as follows: 'The contract of suretyship is that whereby one obligates himself to pay the debt of another in consideration of credit or indulgence, or other benefit given to his principal, the principal remaining bound therefor. It differs from a guaranty in this, that the consideration of the latter is a benefit flowing to the guarantor.' It appears from the face of the contract signed by the alleged sureties in the instant case that the consideration to the sureties was 'one dollar' and 'the execution of the foregoing agreement (the contract signed by the Medical Company and Marbach) by said company, and the sale and delivery by it to the party of the second part of its medicines, extracts, and other articles, and the extension of the time of payment of the indebtedness due from him to said company as therein provided. Under the Code section quoted above, and the rulings of the Supreme Court and of this court, one important distinction between a contract of guaranty and one of suretyship seems to be that in the former the benefits given under the contract must flow to the guarantors, and in the latter they must flow to the principal. This Code...