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Lawskills.com Georgia Caselaw
SPIEGEL v. HAYS et at.
38632.
Action on contract. Fulton Superior Court. Before Judge Wood.
TOWNSEND, Presiding Judge.
1. (a) Allegations in a petition as to the contents of a written instrument must yield on demurrer where they conflict with the instrument itself as shown by a copy attached to the petition as an exhibit. Where the exhibit attached shows that the contract in question was unsigned, such exhibit cannot be the basis of a cause of action based on a written contract.
(b) Where the contract recites that it represents the entire agreement between the parties and no deviation there from shall exist unless mutually agreed to by all parties and reduced to writing, it cannot be shown by extrinsic parol evidence that one of the signatories did not sign, as recited in the contract, on his own behalf, but did in fact sign as the agent of another person not named in the contract.
(c) A contract to lend a fund represented by a certified check should state the time and manner of repayment.
2. Where three agree jointly to be bound to a fourth person, the obligation is joint and not joint and several. This being so, the borrower cannot agree with one of the lenders, without the consent of those jointly bound, that such lender shall not be individually liable on the contract because acting as agent for another, and thereby change the cause of action from one against the signatories on the contract to one against two of them jointly and another with whom the two have not obligated themselves to be bound. There was accordingly a misjoinder of persons defendant.
3. (a) An agreement on the part of the defendants to furnish the plaintiff with a certified check in an amount of more than $50 is such an agreement as under the statute of frauds is required to be in writing. The transaction is a sale rather than a loan under Code 12-501 since the subject matter thereof is to be returned in kind but not in specie, and since it consists of personal property capable of assignment and transfer.
(b) Writings relied upon to take a transaction out of the statute of frauds must disclose the entire agreement, including both the parties and the subject matter. A petition alleging that some of the parties to such a written contract orally agreed that one of the parties signing was in fact acting as agent for another who did not sign the instrument is demurrable as showing that such contract rests partly in parol. In all such cases the authority of the agent to sign in place of the principal must also be in writing.
Stanley Spiegel filed an action in the Superior Court of Fulton County against William G. Hays, Jr., Garland T. Byrd, and R. C. Brooks, alleging that the defendants were liable to him in damages for the breach of a contract entered into between the plaintiff, William G. Hays, Jr., Garland T. Byrd, and R. C. Brooks Motor Co. The petition further alleges that "a copy of said contract is hereto attached marked Exhibit A and made a part of this paragraph and this petition." "Exhibit A" is headed "Contract," and begins with the recital: "This agreement entered into this 27th day of November, 1957, by and between R. C. Brooks Motor Company . . . Garland T. Byrd and William G. Hays . . . parties of the first part, and Stanley Spiegel . . . party of the second part." It then recites that parties of the first part have agreed to loan to party of the second part the sum of $863,750 under the following terms and conditions: it is agreed that they will furnish to party of the second part a certified check in said amount to be made available on demand, to be used in the purchase of not less than 83,000 nor more than 86,000 shares of stock of the Advance Aluminum Castings Corp., which stock party of the second part agrees to pledge as security for said loan, and in addition he agrees to and does pledge all of his stock in the Monarch Sewing Centers, Inc., it being agreed that upon his failure to perform under the above terms and conditions, parties of the first part shall be able to dispose of the stock to the extent of the consideration above stated. It is further agreed that party of the second part will pay to parties of the first part 8% of the amount of the loan as legal and brokerage fee in cash upon consummation of the purchase of said stock, and, if not paid in cash at that time, the fee to be secured by all stock of Advance Aluminum Castings Corp. so purchased. The contract then concludes: "The above referred to terms and conditions of this contract represent the entire agreement and there will be no deviation therefrom unless mutually agreed to by all parties concerned and that said agreement shall be reduced to writing and made a part of this contract. This contract is signed in duplicate the day and year above written and each party in affixing his signature hereby agrees to the tends and conditions enumerated above." No signatures, no place for signatures, and no other writing appears below this paragraph.
The petition further alleges, in its amended form, that the plaintiff made all arrangements to purchase 86,329 shares of the shock of Advance Aluminum Castings Corp. in the amount of $884,872.25 from named persons, the transaction to be consummated on December 1, 2 or 3, 1957; that the defendants in accordance with the terms of the contract caused to be delivered to the plaintiff a certified check on the Coastal Bank of Hinesville, Ga., in the amount of $863,750.00; that on December 2nd, Brooks informed the plaintiff that the certified check was not valid and would not be paid, despite the fact that said bank was owned and controlled by said Brooks, and the defendants would not and could not comply with the contract, nor could the bank honor said check, and the defendants could not and did not otherwise procure said fund for him; that the plaintiff was at all times ready, willing and able to carry out the terms of the contract, but the defendants were unable to do so and it became useless for the plaintiff to further offer to carry out his obligations under the contract; that the plaintiff expended $10,097.77 in negotiating for the purchase and sale of said stock; that before be could negotiate and obtain the money elsewhere the offer to sell the stock was withdrawn; that although the contract was signed by R. C. Brooks Motor Co., a corporation, it was then and there acting as agent for R. C. Brooks individually with his full knowledge and consent and with full knowledge of the plaintiff of such agency and that R. C. Brooks owned all of the stock of said corporation; that on December 3rd, the reasonable market value of the stock sought to be purchased was $1,307,884.35; that the defendants knew that, unless the agreement attached as Exhibit A was complied with and the defendants delivered the money as therein provided, petitioner could not purchase said stock and would sustain the aforesaid losses; that in compliance with the agreement the plaintiff executed and delivered two promissory notes, one in the sum of $69,100 payable to Citizens State Bank, Reynolds, Ga., a hank owned and controlled by the defendant Brooks, and one in the amount of $863,750 payable to R. C. Brooks d/b/a Coastal Bank, Hinesville, Ga., as evidence of the indebtedness for the amount of the certified check, which note was received and accepted by Brooks personally, and all of which was done with the knowledge, consent and approval of the defendants and at their direction.
The defendants filed their several general and special demurrers to the petition, which demurrers were renewed following the first amendment, and the general demurrer sustained with leave to amend. Following a second amendment the demurrers were renewed and additional demurrers filed, and the court then sustained all the demurrers and dismissed the petition.
1. It is clear that this petition intends to declare upon a written contract and no other, and it is equally clear that the contract intended to be declared upon is attached as an exhibit to the petition in its entirety and denominated "Exhibit A." Being so attached and before this court, it alone can be looked to to determine all of its terms and conditions, not only as to its subject matter and date of execution, but as to the parties who entered into it and every other element essential to its validity. If the defendants can admit all that is set out therein and still escape liability, then the petition is of course subject to general demurrer. Where copies of the instrument sued upon are attached to a petition as exhibits, the exhibits and not the allegations of the petition will control as to the contents and legal effect of the instrument. Strickland v. Lowry Nat. Bank, 140 Ga. 653 (2) (79 S. E. 539); Williams v. Appliances, Inc., 91 Ga. App. 608 (4) (86 S. E. 2d 632); Hurt & Quinn v. Keen, 89 Ga. App. 4, 6 (2) (78 S. E. 2d 345); Vandiver v. Endicott, 215 Ga. 250 (109 S. E. 2d 775).
Looking alone, then, to the copy of the contract as set out and contained in Exhibit A, it is subject to three fatal defects. In the first place, it is not signed. Being an unsigned document, it has no legal efficacy whatever, and it is possible for the defendants to admit everything therein contained and still escape liability on the ground that they are not bound thereby. In the second place, it shows on its face that it is intended to be a contract between the plaintiff and Hays, Byrd and Brooks Motor Co., whereas Hays, Byrd and R. C. Brooks are the defendants named in the petition. The liability of the contracting parties, if any, is joint and not joint and several, from which it follows that unless the proper parties are joined in the action the petition will not set forth a cause of action against any of them. Wall v. Wall, 176 Ga. 757 (168 S. E. 893). It is argued that the allegations of the petition show a disclosed agency as between Brooks Motor Co. acting for R. C. Brooks and the plaintiff, and that in such a case the disclosed principal and not the agent is the proper party against whom the action should be brought, but this argument ignores the provision of the contract itself which recites that it represents the entire agreement from which there can be no deviation except in writing, and the petition utterly fails to allege any writing purporting to bind R. C. Brooks rather than Brooks Motor Co. The substitution of one party for another in a contract is certainly a material deviation, and where the contract itself recites that it contains the entire agreement, it can hardly be contended that such a contract will permit one of the parties to show by parol that another than the person named therein was in fact the one intended to be bound. Even if there were no such provision in this contract form, and even if it were presumed that the parties did in fact sign it in the manner alleged, there would still be no way of determining whether or not they signed under seal. If the attached exhibit is complete, it is not signed at all, and is accordingly no contract. If the original was signed, seals may be recited and shorn. If under seal, then this would of itself prohibit the plaintiff from bringing this action in the form in which it is here brought against one whose signature does not appear thereon. Harp v. First Nat. Bank of Reynolds, 173 Ga. 768 (2) (161 S. E. 355). A petition must be construed against the pleader, and the plaintiff must allege every material traversable fact upon which it is necessary for him to rely for recovery. The pleader here has not only failed to set out an enforceable contract, for the reason that the contract on which he relies for recovery appears not to have been signed at all, but he fails to show facts which would entitle him to recover on this contract in any event against the parties named by him as defendants. And, thirdly, the contract is also subject to the defect that, while it purports to contain the entire agreement between the parties, it utterly fails to place any obligation upon the plaintiff to return the sum of money to be borrowed by him, which alone would seem to make it too vague and indefinite to be enforceable. Morgan v. Hemphill, 214 Ga. 555 (105 S. E. 2d 580).
2. The petition is also subject to other defects than those inherent in the contract itself. Even if it could be assumed that there existed a written contract sufficiently definite to be enforceable, and that the parties to that contract were in fact the persons sued as defendants in this action, yet while the petition alleges that the agency of R. C. Brooks Motor Co., a corporation, for R. C. Brooks as an individual was known to Brooks and the plaintiff, it fails to allege that such agency was disclosed to the codefendants Hays and Byrd. A contract depends upon the mutual consent of all of the parties thereto, and the provisions of a written agreement cannot be changed by the consent of less than all of them. Southern Feed Stores v. Sanders, 193 Ga. 884 (3) (20 S. E. 2d 413). It is a general rule that the terms of a tripartite agreement cannot be modified to the detriment of one of the parties by the others without his consent. 17 C. J. S. 860, Contracts, 375. The liability of the lenders here is joint, and it is easily recognizable that two of three lenders might be willing to obligate themselves to a third person along with X lender and most unwilling to do so jointly with Y lender. It is not alleged whether it would be an advantage or a detriment to the other defendants to contract with Brooks, an individual, rather than with the corporation, or whether it would be a matter of indifference to them. They would have a right to object to another joint contractor being substituted in the place of the one with whom they bound themselves, and they have objected by demurrer on the grounds that they are entitled to be sued jointly with the contracting corporation, if at all, and not with another. These grounds of demurrer were also well taken.
3. A third defense interposed by the defendants' demurrers is that of the statute of frauds, which was first raised by renewed demurrers to the petition after it first became apparent through an amendment that the plaintiff was relying solely upon an oral statement of R. C. Brooks to the plaintiff to the effect that the corporation in signing the contract was acting as his agent. The demurrer, being raised at the first opportunity, was timely, whether considered as a general or special demurrer. See in this connection Herbener & Son v. Boston Oil &c. Co., 17 Ga. App. 437 (87 S. E. 607).
The question of whether the agreement to provide the plaintiff with a certified check in a given amount is such as comes within the purview of the statute of frauds is a knotty one. If so, it is because of the provisions of Code 20-401 (7) relating to "any contract for the sale of goods, wares and merchandise in existence or not in esse, to the amount of $50 or more." Under our Code 12-501, all loans for consumption where the article is not to be returned in specie, but in kind, must be considered as a sale. It is possible that the General Assembly intended this section to apply to property other than money. However, under the authority of Hightower v. Ansley, 126 Ga. 8, 10 (54 S. E. 939, 7 Ann. Cas. 927), the words "Goods, wares and merchandise" should not be given their literal meaning but should include "That personal property which is capable of assignment or transfer." Since a certified check is personal property capable of assignment, it falls within this category, and since the value of the check but not the check itself was to be returned, it is the equivalent of a sale so far as its legal effect is concerned. It accordingly follows that the agreement, if not in writing, would be within the statute of frauds unless removed from its operations by one of the exceptions contained in Code 20-402. "When writings are relied upon to take a transaction out of the statute of frauds, they must be complete within themselves, and they must contain the entire agreement, must disclose the subject matter, the parties thereto, and all the terms of the undertaking. F. & W. Grand &c. Stores v. Eiseman, 160 Ga. 321 (1) (127 S. E. 872)." Cashin v. Markwalter, 208 Ga. 444 (3) (67 S. E. 2d 226). Under Code 4-105 the act creating the agency must be executed with the same formality as the law prescribed for the execution of the act for which the agency is created, and this applies where a contract which is required to be in writing under the statute of frauds is executed by another as a disclosed agent for the person intended to be bound, and in such case the authority of the principal to the agent to so sign must also be in writing. Byrd v. Piha, 165 Ga. 397 (2) (141 S. E. 48); Holland v. Riverside Park Estates, 214 Ga. 247 (104 S. E. 2d 83). It appears from the petition here that the authority given by R. C. Brooks to the Brooks Motor Co. to sign for him was oral, and accordingly the demurrers based on the statute of frauds were also properly sustained.
There was no such part performance of this contract as would render a refusal to comply a fraud against the plaintiff and thus remove the contract from the statute of frauds under Code 20-402 (3). That part performance which will remove a contract from the statute of frauds refers to performance of the provisions of the contract and not to acts done by one because of his belief in and reliance on the agreement. In Smith v. Bradshaw, 26 Ga. App. 304 (1) (106 S. E. 20), it was held that an oral agreement for the purchase of goods not to be performed until the purchaser had negotiated a contract for resale, was not partly performed by the purchaser's negotiating the second contract. Here, the contract to lend money with which the plaintiff intended to purchase a specified amount of stock in another corporation was not partly performed by the plaintiff negotiating with the owners of the stock and arranging to purchase the same after he received the funds. Nor was there a part performance where the plaintiff agreed to pay a brokerage fee to the defendants jointly in cash upon consummation of the purchase of the stock from the proceeds of the loan, and where what he actually did was to make out a promissory note in the amount, but payable to the Citizens State Bank of Reynolds (a bank allegedly owned and controlled by the defendant Brooks). This sum was not due at the time; it was not paid in cash, and it was not paid to the defendants. Therefore it constituted no part performance of the contract. The judgment of the trial court sustaining the demurrers of the various defendants and dismissing the petition was without error.
Judgment affirmed. Carlisle, Frankum and Jordan, JJ., concur.
M. Neil Andrews, Marvin O'Neal, Jr., for plaintiff in error.
DECIDED FEBRUARY 24, 1961 -- REHEARING DENIED MARCH 9, 1961.
Friday May 22 23:47 EDT


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