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Lawskills.com Georgia Caselaw
PITILLO v. DEMETRY.
41552.
Action on note. Fulton Civil Court. Before Judge Wright.
FELTON, Chief Judge.
Danny Demetry brought an action on a note, as transferee, against Angelo Pitillo, maker of the note, and John R. Barwick, payee and transferor by blank indorsement for an alleged good and valuable consideration. It is alleged that the note, made on November 23, 1964, and payable on December 23, 1964, is in default and that both defendants have refused to pay on demand. Defendant Pitillo filed an answer in which he alleged "that the note was given to John R. Barwick upon his promise to complete the grading and construction of a parking area located behind a building leased by your defendant and operated as Napoli's Restaurant at 2833 Peachtree Rd., N. E.; that said work has not been completed according to the promise of said John R. Barwick, and that the plaintiff in this action is not a holder in due course of said note." At the call of the case for trial the plaintiff moved for a summary judgment on the grounds that the answer was not sworn to and, even if sworn to, does not set out a valid defense to the action. The court allowed defendant Pitillo to swear to his answer and then sustained the motion for a summary judgment on the ground that the answer does not set forth a valid defense at law. A default judgment, also in the full amount of the principal plus interest and costs, was entered against the co-defendant. To the judgment of the court sustaining the motion for a summary judgment defendant Pitillo excepts.
Code Ann. 109A-3--307 (3) (Ga. L. 1962, pp. 156, 256) provides as follows: "After it is shown that a defense exists a person claiming the rights of a holder in due course has the burden of establishing that he or some person under whom he claims is in all respects a holder in due course." The defense alleged by the answer is failure of consideration. If the plaintiff was not a holder in due course, he took the instrument subject to this defense. Code Ann. 109A-3--306 (c) (Ga. L. 1962, pp. 156, 255). The contrary is true if he was a holder in due course. Code Ann. 109A-3--305 (2) (Ga. L. 1962, pp. 156, 255). There is no allegation in the petition that the plaintiff was a holder in due course, nor was such allegation necessary to state a prima facie cause of action on the note, since a holder who is not a holder in due course nevertheless has a prima facie right of action on the note, subject only to the claims and defense provided in Code Ann. 109A-3--306. Assuming, however, that the plaintiff was claiming the rights of a holder in due course, his prima facie right of action on the note was challenged by the allegation that the defense of failure of consideration exists, which thereby cast the burden on him "of establishing that he or some person under whom he claims is in all respects a holder in due course." The defenses which may be alleged and shown to exist cannot be restricted merely to those which are available only against holders in due course, since this would mean that the statute (Code Ann. 109A-3--307 (3)) would require the plaintiff holder to assume the burden of establishing that he is a holder in due course even though his proof of that fact would not free him from such defense. The law does not require a man to do a useless act. The only possible construction of this statute, then, is that the showing of any defense provided by Code Ann. 109A-3--305, 109A-3--306, against holders in due course as well as holders not in due course, is what is required to cast the burden on the plaintiff holder. The allegation of the defense of failure of consideration in the answer in the present case was therefore adequate to cast on the plaintiff holder the burden of establishing himself as a holder in due course by showing, inter alia, that he took the instrument without notice of any defense against it on the part of any person. Code Ann. 109A-3--302 (Ga. L. 1962, pp. 156, 252).
Although the allegation in the answer, that the plaintiff is not a holder in due course, does not state why this is true and is hence merely a conclusion, this does not prevent the answer from raising an issue of fact, since the allegation of the defense of failure of consideration was what served to cast the burden on the plaintiff and raised the issue of whether or not he was a holder in due course, hence not subject to the alleged defense. There being this genuine issue of material fact to be resolved in the case, the court erred in its judgment granting the summary judgment.
Leon Epstein, contra.
T. Charles Allen, Paul T. O'Connor, for plaintiff in error.
SUBMITTED OCTOBER 4, 1965 -- DECIDED NOVEMBER 12, 1965.
Friday May 22 21:10 EDT


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