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Complaint on note; from Ben Hill Superior Court-- Judge Horne. August 2, 1951.
1. (a) The transferee of a negotiable instrument for value before maturity is a bona fide holder in due course, provided she is not a party to any fraud or illegality affecting the instrument and has no actual knowledge of any infirmity, defect, or other facts, so that her action in taking the instrument amounts to bad faith.
(b) Where the defendant carries the burden of showing that the transfer of a negotiable instrument is a mere colorable transaction, an obligation is then imposed upon the plaintiff to prove that she came into possession of the instrument fairly and under such circumstances as entitle her to recover.
(c) The defendant maker of the note having breached the contract by refusing to accept the goods purchased thereunder, the contract being by its terms not subject to cancellation, and the vendor having elected to store the goods for the vendee, and having notified him of the disposition of the goods the defendant cannot set up as a defense to a suit on the note that the merchandise was not delivered to him according to the terms of the contract. (d) Since the evidence failed to show any defense to the instrument sued upon, it follows that a finding was demanded that the plaintiff transferee of the note had no knowledge of any valid defense thereto, and could not have been guilty of bad faith in accepting the transfer of the instrument.
This case involves a suit on a note for $160 executed by the defendant to one E. L. Love and transferred without recourse by the payee to the plaintiff, Mrs. Oleta B. Carnation. The evidence discloses that the note was made in pursuance of a contract of sale of grapevines by E. L. Love, doing business as Love Orchard & Vineyard Development Company, and was, except as to names and amounts, the same contract of sale held to be valid in the recent cases of Hester v. Love, ante, and Love v. Nixon, 82 Ga. App. 445 (61 S. E. 2d, 423). The defendant filed a plea and answer, alleging that the plaintiff was not a bona fide holder in due course of the note upon which she sued, but that the true owner of the note is E. L. Love, and further alleging a total failure of consideration in that the grapevines which were the subject matter of the sale were never delivered to him.
The case was tried in the Superior Court of Ben Hill County and resulted in a verdict in favor of the defendant. The testimony of the plaintiff and E. L. Love was substantially to the same effect: that they were brother and sister-in-law; that they had had numerous financial transactions; that Love owed the plaintiff about $3000, and he transferred a number of notes on similar contracts to her, some for payments on the debt and others discounted as sales; that the plaintiff did not remember the exact date of the transfer, but it was before the maturity date of the note, December 1, 1949; that the plaintiff gave him written authorization to discount said notes at the rate of 2% for cash and return them to the makers thereof; and that she gave him oral authority to collcot the notes for her and he acted as her agent in so doing. Love testified that he attempted to deliver all orders for grapevines in that vicinity in Fitzgerald, Georgia, at the end of November, 1949, the place and time designated in the contract of sale; that he notified all purchasers in advance of that date; that most of the purchasers came to the hotel in Fitzgerald and picked up their grapevines; that the defendant did not appear; that he took the defendant's grapevines to Peyton Walker's farm, and had them heeled down in trenches in his garden for safekeeping; that he again notified the defendant where the vines were and asked him to get them; that the defendant never did get the vines; and that he refused to pay the note. On cross-examination, the witness stated, as to the transfer of the note: "That is the reason I had the notes so innocent persons could collect them, they could collect better than I could under remedies in the court to innocent persons, you have to pay them." The defendant further introduced a letter written to him by Love, dated November 29, 1949, stating that, if the defendant would meet him at Peyton Walker's home on December 2, he would accept cash for 50% of the bill and a note for the balance due October 1, 1950; otherwise he would have to settle with the purchaser of the note.
The defendant testified that he signed the note in question under a contract agreement to purchase grapevines. He stated further: "Yes, sir, a number of men went up there and got them. Before I got this notice I wrote Mr. Love stating I wouldn't take them. That's right, I wouldn't take them. That was my mind all the way . . . Yes, sir, I got this letter here telling me that they would be put in moist dirt. Mr. Walker lives with Mr. Graham, son-in-law, about three and one-half miles out of town. Yes, sir, I live out on that same road about half mile from Mr. Walker's. Yes, sir, I believe he did notify me to come and get them. I just didn't want them. It wasn't a question of where they were, they were in Fitzgerald, in fact between the city and my home. I refused them because of lot of reasons I could tell you because I didn't. Yes, sir, I know that this contract provides that it was not subject to cancellation."
The plaintiff made a motion for a new trial which was overruled by the trial court, and the exception is to this judgment.
(After stating the foregoing facts.) 1. The special grounds of the amended motion for a new trial are merely amplifications of the general grounds, and will be treated with them. One of the contentions of the plaintiff is that the record contains no evidence from which the jury would be justified in finding that the plaintiff was not a holder in due course and for value of the instrument sued upon, for which reason it was error to allow the defendant to testify, at one point, that he never received the grapevines. As stated in Silver v. Sellers, 59 Ga. App. 690, 692, (2 S. E. 2d, 216), once the defendant has carried the burden of showing that the transfer of a negotiable instrument is a mere colorable transaction, "an obligation is then imposed upon the plaintiff to prove that he came into possession of the instrument fairly and under such circumstances as entitles him to recovery. Evidence that he took for value and before maturity is not sufficient. He must disclose the facts and circumstances under which he came into possession of the instrument." From the testimony of the witness Love an inference is demanded that, so far as he was personally concerned, he transferred the notes with the purpose of forestalling any defense which the maker thereof might attempt to urge against the contract. This would not affect the plaintiff's rights, however, provided she was not a party to any fraud or illegality affecting the instrument and had no actual knowledge of any infirmity, defect, or other facts so that her action in taking the instrument amounted to bad faith. Code, 14-506, 14-508. The only infirmity or defect alleged by the defendant is that there was a total failure of consideration, in that he did not receive the grapevines and they were never delivered to him. The defendant, however, testified that prior to the date of delivery he informed the seller that he did not intend to accept the grapevines, which amounted to a breach of the contract, the same being non-concellable. The plaintiff offered the testimony of E. L. Love that, in spite of this notice, the seller did bring the grapevines to Fitzgerald and notified the defendant of she time and place of delivery according to the terms of the contract. This would amount to a tender of the vines. Code, 20-1106. Tender is "an offer to deliver something, made in pursuance of some contract or obligation, under such circumstances as to require no further act from the party making it to complete the transfer. It may be either of money or of specific articles." Bouvier's Law Dictionary (Rawle's
3rd Revision). But if, as the defendant testified, he did not receive the first notice that the grapevines were to be in the hotel in Fitzgerald, but did receive the second notice a day or two later that, since he had not called for them, they were being held for him at the home of Peyton Walker, between his home and Fitzgerald, he admitting that he had previously written Love that he did not intend to take the vines, this does not change the situation, since it is unnecessary to make a tender where the party to whom the offer is made states that the tender would be refused if made. Groover v. Brandon, 200 Ga. 153 (5) (36 S. E. 2d, 84). Upon this breach of contract by the vendee, the vendor then elected to retain the vines as the vendee's agent (see Code, 96-113), and for this purpose heeled them into the ground a short distance from the vendee's house and again notified him to come for them.
It thus appears from the evidence that the defendant had no valid defense against the note, even though it had remained in the hands of the original payee, and for this reason the defendant wholly failed to show any facts which could be said to charge the plaintiff in this case with knowledge of any infirmity or defect in the instrument or any other facts so that her taking it amounted to bad faith. See Jones v. Roper, 39 Ga. App. 309 (3) (147 S. E. 156). Under these circumstances, a verdict in favor of the defendant was not authorized by the evidence.
The trial court erred in overruling the motion for a new trial as amended.
Judgment reversed. MacIntyre, P. J., and Gardner, J., concur.
McDonald & McDonald, H. B. Sutton, for defendant.
Jesse J. Gainey, D. E. Griffin, James T. Gainey, for plaintiff.
Saturday May 23 05:17 EDT

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