W. T. Rawleigh Co v. Kelly

• Decision Date: 07 October 1948
• Docket Number: No. 32092.,32092.
• Citation: 50 S.E.2d 113
• Court: Georgia Court of Appeals
• Parties: W. T. RAWLEIGH CO. v. KELLY et al.

50 S.E.2d 113

W. T. RAWLEIGH CO.

v.KELLY et al.

No. 32092.

Court of Appeals of Georgia, Division No. 2.

Oct. 7, 1948.

Rehearing Denied Nov. 13, 1948.

Syllabus by the Court.

1. The plea to the effect that the signature of the sureties were procured by a misrepresentation of material existing fact and thus relieve the surety, was supported by the evidence.

2. (a) A plea to the effect that a surety is induced to sign by a false representation that a surety whose name appeared as such had already signed the contract of suretyship is not an effort to vary the terms of a written contract.

(b) A principal who accepts a contract procured by fraudulent conduct of an agent, regardless of such agent's authority, is bound by such fraudulent conduct of the agent in procuring such contract.

(c) Where a false representation of an existing fact to the effect that a person had signed as surety to a contract and this false representation induced another to sign as surety, such misrepresentation increased the risk and exposed to greater liability the person who signed by reason of such false representation, and it is not necessary to prove loss to avoid the contract.

(d) Where a defense is pleaded in an answer duly filed and in response to a special demurrer the defense is enlarged, this is not such a plea as is contemplated by the Code, section 81-1310. It is not setting up new facts or a new defense, under the provisions of that Code section, and an amendment need not be verified. Moreover, no point was made when the amendment was filed that it was not verified. If the point had been made, the trial judge had a discretion to allow it without verification.

3. The special grounds of the amended motion require no reversal, for the reasons set forth in the opinion dealing with each of them.

Error from City Court of Louisville; Milton A. Carlton, Presiding Judge.

Action on contract of suretyship by W. T. Rawleigh Company by T. B. Kelly and others. Judgment for defendants, and the plaintiff brings error.

Affirmed.

The W. T. Rawleigh Company, whom we shall call the plaintiff, brought a petition naming C. L. Kelly, T. B. Kelly, Mrs. J. M. Moore, and J. W. Overstreet as defendants, whom we shall hereinafter call the defendants. The petition alleged that the defendants were indebted to it in a named sum. It appears that C. L. Kelly was a salesman for the plaintiff of the plaintiff's merchandise. The other three defendants were sureties on a written contract under the provisions of which the merchandise was to be shipped to the principal, C. L. Kelly. The provisions of the contract undertook to make T. B. Kelly, Mrs. J. M. Moore and J. W. Overstreet sureties of C. L. Kelly, the principal. While the petition alleged a principal and the three alleged sureties as parties defendant, no service was ever perfected on either the principal C. L. Kelly, or Mrs. J. M. Moore. But service was perfected on T. B. Kelly and J. W. Overstreet. (The record reveals that at the time of the filing of the petition C. L. Kelly and Mrs. J. M. Moore were dead and there was no effort made to have a representative qualify and be made parties defendant). T. B. Kelly and J. W. Overstreet, having been served, appeared and filed a joint answer. They alleged in their plea that they were not indebted to the plaintiff in any sum whatsoever, as alleged in the petition. In addition thereto, they alleged as a defense that the agent of the plaintiff who was instrumental in procuring their signature to the contract, had made a false statement to them to the effect that Mrs. J. M. Moore (whose name appeared as surety on the contract when presented to them)had already signed the contract; as a surety; that this statement was not true; that Mrs. Moore, while her name appeared on the contract as a surety, had not signed the same as such and that this false statement made by the agent of the plaintiff induced the defendants T. B. Kelly and J. W. Overstreet to sign as sureties and that but for this statement to them they would not have signed it, and the contract was void as to them. The plaintiff demurred to this answer. In response to the demurrer the defendants filed an amendment to the original plea and answered, going into more detail with reference to their defenses, particularly to the effect that the statement of the agent of the plaintiff that Mrs. Moore had signed the contract before it was presented to the defendants was untrue, and relieved them as sureties. The trial court, after such amendment to the plea, overruled the plaintiff's demurrers and the plaintiff duly excepted pendente lite to such judgment overruling its demurrer. The case proceeded to trial. Evidence was introduced. The jury were instructed by the court and a verdict was returned in favor of the defendants. Error is assigned here on the exceptions pendente lite and on the judgment overruling the motion for a new trial.

We will not here attempt to set out the evidence. We will discuss it, however, as we deem it essential, in the opinion.

Wm. T. Revell, of Louisville, for plaintiff in error.

M. C. Barwick, of Louisville, for defendants in error.

GARDNER, Judge.

1. In the outset we might say that the overruling of the demurrer of the plaintiff to the defendants' amended answer was not error. The answer as amended set up a good defense. The next question, then, is whether the evidence supports such a plea. The evidence, without dispute, shows that Mrs. J. M. Moore never signed the contract as surety, and that so far as the evidence reveals, she never authorized anyone to sign it for her, and that she did not even know it during her life time. The evidence is also undisputed that the agent for the plaintiff who procured the contract represented to the defendants that T. B. Kelly and J. W. Overstreet at the time he presented the contract to them to sign as surety, that it had been signed by Mrs. Moore. There appears in the evidence also a report of W. M. Campbell bearing date of December 3, 1930 (evidently after the principal had made default in his transactions with the company and this appears from the record to be approximately 18 years before suit was filed), who procured the contract "One of his plans [meaning Overstreet's] to beat the contract is that he claimed I knew that the contract had the forged signature when I mailed it with the first order. I don't think he can prove that, for I did not know it was forged until I wrote you about it * * * But I plainly told Mr. Overstreet that the contract was turned over to me and as far as I knew the signatures were regular, accepted it as such and mailed it to the company, and so far as we knew it was a good contract and signed by all sureties in person, and that we still contended that it is good, and were holding all three sureties responsible for the account jointly. * * *" We think it thus clear that the jury were authorized to find that the evidence sustained the plea of the defendants and does not demand a verdict for the plaintiff.

2. (a) It might be well to discuss the legal contentions of the plaintiff that the plea of the defendants sought to alter and vary the terms of a written instrument. This contention is based on this provision of the contract: "It is mutually agreed that this contract is binding upon the parties who sign it whether it is signed by any other party or not, and that statement made to any of the sureties by any person as to how many other parties will sign this surety agreement shall not affect the rights of the seller." Under this provision of the contract the plea of the defendants did not seek to alter, vary or change the terms of the contract. It would have been different if the agent had told the defendants that Mrs. Moore was going to sign the contract. This wouldhave been a promise to do a thing in the future and would have fallen within the teeth of the quoted provision. It would not have amounted to fraud. But to state that Mrs....