Opinion
34215.
DECIDED SEPTEMBER 25, 1952.
Complaint; from Fulton Civil Court — Judge Hathcock. August 4, 1952.
Grant, Wiggins, Grizzard Smith, for plaintiff in error.
Henry M. Hatcher Jr., contra.
The evidence, construed in its light most favorable to support the verdict, is sufficient to authorize the finding that there was an oral contract between the parties to this suit on which recovery is here sought and that such contract was supported by a consideration.
DECIDED SEPTEMBER 25, 1952.
The General Tire Service Company filed suit in the Civil Court of Fulton County against William T. Carlisle, alleging that the defendant was indebted to it in the sum of $1600 by reason of the following facts: that on January 25, 1945, the A.A.A. Highway Express was indebted to the plaintiff in the amount of $3603.21 and to the defendant in the amount of $8077.84; that on that date the three parties entered into an oral agreement for the purpose of protecting the plaintiff's and defendant's accounts with A.A.A. Highway Express, which was in poor financial condition; that pursuant to this agreement the debtor express company conveyed to the defendant Carlisle a bill of sale to secure debt on its property, Carlisle agreeing that he would handle all funds received by virtue thereof and divide the same pro rata in payment of his claim and that of the plaintiff; that in reliance on the defendant's promise the plaintiff waived its open account against the express company; that under this agreement the plaintiff is entitled to 30.9% of sums received by the defendant by virtue of this conveyance; that the defendant has actually received $8000 from sales of the debtor's equipment and has paid over to the defendant from this sum the amount of $800, but that he fails to pay over the remaining $1600 due the plaintiff and refuses to do so.
The evidence on the trial of the case, construed in its light most favorable to support the verdict in favor of the plaintiff, was substantially as follows: The plaintiff testified that his first conference on the subject was with two officers of the debtor express company, Suggs and Nelson, who informed him that they were going to execute a mortgage to the defendant in order to take care of the plaintiff's and defendant's accounts; that following this there was a conference in the office of Mr. Herbert Johnson, an attorney, at which Mr. Johnson, Mr. Suggs, Mr. Nelson and the defendant were present. The witness stated: "Carlisle and myself both had accounts against A.A.A. Highway and the mortgage was given to Carlisle with the understanding that my account was his account. We discussed the drawing up of the document." The actual execution of the bill of sale to secure debt was after this conference, in the office of another attorney. This testimony was corroborated by Mr. Johnson, who testified as follows: "This discussion was for the purpose of seeing what could be done to protect both of these two accounts and the funds advanced for the purchase of accounts. The agreement was that Mr. Carlisle would try to sell this equipment unless A.A.A. was able to pay this mortgage; if A.A.A. was not able to pay this mortgage, that in case of bankruptcy or receivership he would sell all of the equipment, that money prorated between Mr. Carlisle, which was the larger, and General's account. If after they were collected, then the third account to be paid was Mr. Nelson for money advanced. At the time of this conference it was said that Mr. Reynolds, attorney for A.A.A. would draw up the mortgage."
Some months after the execution of this instrument the A.A.A. Highway Express Company went into bankruptcy. The defendant sold a considerable amount of the equipment covered by the bill of sale to secure debt, receiving a total amount of $5276 from such sales. Mr. Johnson further testified, as to another conference between the plaintiff, the defendant and himself: "Mr. Carlisle stated at that time he had received $4476. I added $800 received from the bankruptcy court for a total of $5276 and took 30% of that in his presence, giving a figure due General of $1630.61. He did not dispute that figure. At this conference Mr. Carlisle turned over to me for General the check he had received from Harper [in the amount of $800]. Mr. Carlisle, like the rest of us, was not enthusiastic about putting out money, but stated that additional payments would be made. He stated he was not able to pay the whole thirty percent right then."
The president of the debtor corporation testified in part that at the time the conveyance was entered into a lawsuit was pending against it in the sum of $195,000; that the defendant Carlisle wanted to take "grabber's luck" on the corporation's equipment; that the witness did not know what agreement Carlisle had with the plaintiff here but that he knew there was an agreement of some sort; that he offered the plaintiff fifty cents on the dollar for his accounts but the plaintiff wouldn't sell and never did come back and said nothing more to him about paying the accounts. He stated further: "Well, Mr. Carlisle went along with us, so did Mr. Jentzen [manager of the plaintiff corporation]. I wanted them to get the money if there was any way in the world I could give it to them. The only way I saw I could square it was to go and sell the office equipment and get what they could out of it; they took grabber's luck. There had to be some sort of agreement between Mr. Carlisle and Mr. Jentzen because Mr. Jentzen never did come back into the picture any more to me; and on the basis of that I turned all this equipment over to Mr. Carlisle."
The case was tried by the court without the intervention of a jury and judgment entered up in favor of the plaintiff. The defendant filed a motion for a new trial on the general grounds, and the overruling of this motion is assigned as error.
Counsel for the defendant contends that the evidence clearly refutes the allegations of the petition relative to the oral contract which is the basis of this suit; second, that if any agreement of this character was entered into, the evidence shows conclusively that it was a voluntary promise of the defendant made after the execution of the bill of sale and was a mere nudum pactum, and, third, in any event if such an agreement was entered into, it was without consideration.
As to the first contention, the testimony of the plaintiff's manager, Mr. Jentzen, is supported by that of the attorney, who testified positively that there was such an agreement, and that it was to the effect that if the debtor corporation went into bankruptcy or receivership the equipment would be sold and the proceeds prorated between the plaintiff and the defendant. The testimony of these witnesses also authorizes a finding that this agreement was entered into in January at a meeting of these parties and Messrs. Nelson and Suggs representing the debtor corporation, shortly before the execution of the bill of sale, and that it was there agreed that a bill of sale would later be drawn up by the attorney for the A.A.A. Highway Express Inc., which was in fact done shortly thereafter. While the testimony of Nelson and Suggs was somewhat negative, in that they failed to remember a particular conference or a particular agreement, it does appear from their testimony that they were attempting to protect both creditors, and wanted both creditors to get what they could out of the sale of the equipment. This testimony, therefore, is not seriously at variance with the testimony of the plaintiff, or is, at most, a contradiction of some parts of it which would present an issue of fact for determination by the court sitting without a jury.
The same testimony also establishes that this agreement was entered into prior to the execution of the conditional bill of sale. Both witnesses testified that it was in Mr. Johnson's office in the early part of January, 1945, and at the same conference it was agreed that the instrument would be drawn up, and by whom. The agreement to pro-rate the proceeds, therefore, under this evidence, must obviously have been entered into prior to the execution of the bill of sale.
The third and main contention of the defendant is that the agreement was without consideration. A consideration is essential to a contract which the law will enforce. Code, § 20-301; Brown v. Nichols, 23 Ga. App. 569 ( 99 S.E. 57). As stated in Davis v. Tift, 70 Ga. 52: "A promise to pay the pre-existing debt of another, without any detriment or inconvenience to the creditor or any benefit secured to the debtor in consequence of the undertaking, is a mere nudum pactum." See also Saul v. Southern Seating Cabinet Co., 6 Ga. App. 843 ( 65 S.E. 1065). Code § 20-302 provides as follows: "A consideration is valid if any benefit accrues to him who makes the promise, or any injury to him who receives the promise." The plaintiff here, who was the promisee under the alleged oral agreement with the defendant, was due approximately $3000 from the debtor corporation on open account. The evidence as a whole discloses that he could have settled this open account for approximately $1500, but that, relying on his agreement, and preferring to take "grabber's luck" thereunder, as the witness stated, he did not insist upon the open account. He further failed to prosecute other legal remedies open to him if he was not a party to the agreement, and from which he would be precluded as such party, under the bankruptcy statutes, 11 U.S.C.A., §§ 21 (a) (2), 96(b), 107. Becoming a party to the agreement would necessarily mean foregoing his rights as creditor of an insolvent corporation to have the bill of sale set aside as a preference of creditors, and the testimony as a whole clearly shows that the debtor corporation was threatened with a large foreign judgment; that accounts were being bought for fifty cents on the dollar, and that the whole purpose of the discussions was to salvage some part of the assets for the benefit of the plaintiff and defendant in this suit. Accordingly, it cannot be said that the agreement was without benefit to the promisor or without detriment to the promisee.
The trial court did not err in overruling the motion for a new trial.
Judgment affirmed. Gardner, P.J., and Carlisle, J., concur.