Opinion
29393.
DECIDED JULY 16, 1942. ADHERED TO ON REHEARING JULY 30, 1942.
Complaint; from Macon city court — Harry S. Strozier judge prohac vice. October 24, 1941.
R. F. Scarborough, Thomas W. Johnson, for plaintiff.
Jones, Jones Sparks, for defendant.
1. J, in a suit against him by H, can not set off a credit made by J on an account against H which J had acquired as transferee from M, where such credit had been made without the knowledge or consent of H, and where it does not appear that H admitted any liability on the account.
2. Where J, after having made the credit as indicated above, retransferred and surrendered to M, his transferor, the account in an amount representing the reduction in its face value by such credit, and where M, to whom J had retransferred and surrendered the account, afterwards instituted suit on it against H, and where it appeared from the petition in that suit that the defendant had been given credit for the amount which J had credited to H on the account, a judgment against H in that suit against him by M, in which H defended solely on the ground that he did not owe the account, in a suit afterwards filed against him by J is not res judicata, or an estoppel by judgment. This is true because the two suits were not between the same parties or their privies. Nor is H, by virtue of his conduct as defendant in the suit against him by M, on the account which had been retransferred to M by J, in defending the suit with the credit which the plaintiff M in that suit had allowed him, barred of a recovery in a subsequent suit by J on the ground of estoppel in pais, or by election of remedies or assertion of rights.
DECIDED JULY 16, 1942. ADHERED TO ON REHEARING JULY 30, 1942.
Albert J. Harris Jr. sued the Jacksonville Paper Company in the city court of Macon on February 11, 1941, to recover $174.98 with interest from September 1, 1938, which it was alleged was due him by the defendant on open account. In the allegations of the plea and answer and in an agreed statement of facts it appears as follows: On or about March, 1938, "Macon Paper Company Inc.," a corporation of Bibb County, Georgia, conveyed all its assets including its accounts and bills receivable to "Jacksonville Paper Company," a corporation of Jacksonville, Florida. This latter company is the defendant in the present suit. By the contract of sale the accounts and bills receivable of the Macon Paper Company were taken by the Jacksonville Paper Company at their face value, but all such accounts and bills receivable which the Jacksonville Paper Company was unable to collect, or which it considered uncollectable, could be turned back to and charged to the Macon Paper Company. There was no written assignment to the Jacksonville Paper Company of any of the accounts receivable. Among the accounts receivable transferred by the Macon Paper Company to the Jacksonville Paper Company was a claim of the Macon Paper Company, in some undisclosed sum, against the present plaintiff, for moneys advanced while he was in the employ of the Macon Paper Company. The Jacksonville Paper Company, after it had acquired these assets of the Macon Paper Company, operated the business in Macon under the name of Macon Paper Company, and Harris, who had been in the employ of the Macon Paper Company continued in the employ of the Jacksonville Paper Company. While Harris was in the employ of the Jacksonville Paper Company this company became indebted to him in the sum of $174.98 which Harris had earned as commissions while in the employ of the Jacksonville Paper Company. Harris left the employ of the Jacksonville Paper Company on or about September 1, 1938. Sometime after the Jacksonville Paper Company had acquired and taken over the Macon Paper Company there were, for the Jacksonville Paper Company, taken out of the earnings of Harris monthly sums which were applied on a reduction of his alleged indebtedness to the Macon Paper Company. Harris, during this period, did not know that these collections were made for the benefit of the Jacksonville Paper Company, and did not know that the account had been assigned to the Jacksonville Paper Company or that that company had any interest in the account. When Harris left the employ of Jacksonville Paper Company the amount of his indebtedness on the claim against him by Macon Paper Company had been reduced by the payments taken out to $1108.08. The Jacksonville Paper Company thereupon credited on this sum the $174.98 which it owed Harris, and transferred the account, in the sum of $933.10, back to the Macon Paper Company as uncollectable, and took credit in this amount on the agreed purchase-price of the assets sold to it by the Macon Paper Company. This assignment or charge back to the Macon Paper Company was not in writing except in so far as it was entered on the books. The defendant has never accounted to the plaintiff for the $174.98 other than by crediting that amount on the old account against him which had been transferred to it by the Macon Paper Company in the manner indicated.
Afterwards, in April, 1939, the Macon Paper Company brought suit in the city court of Macon against Harris to recover $933.10 as the alleged amount due by Harris to the Macon Paper Company on this account which the Jacksonville Paper Company had turned back to the Macon Paper Company. Attached to the petition in this suit was an itemized statement of the account sued on, showing the credits and debits from July 28, 1933, to September 1, 1938. The last credit recited, dated September 1, 1938, being "balance due as commissions on sales for year ending September 1, 1938, $174.98." This last credit represented the commissions owing by the Jacksonville Paper Company to Harris. In this suit against him by Macon Paper Company, Harris denied indebtedness in any amount whatsoever. On the trial a verdict and judgment were found against Harris in the sum sued for, $933.10, with interest.
At no time during the trial of that case did Harris repudiate the credit entry of $174.98 on the account sued on, but he only denied any obligation to pay the account, which was in fact credited with this sum which Jacksonville Paper Company had owed Harris. On the trial Harris testified that before that trial he did not know that the Jacksonville Paper Company at any time had any interest in the account, or that such account had ever been transferred to Jacksonville Paper Company, or that the Jacksonville Paper Company had transferred the account back to the Macon Paper Company.
After the rendition of the verdict and judgment in that case Harris filed a voluntary petition in bankruptcy, listed as his sole creditor the Macon Paper Company, and listed as assets the account due him by Jacksonville Paper Company in the amount of $174.98. This he claimed as a homestead or exemption. It was so allowed and he was subsequently discharged.
The defense insisted on by Jacksonville Paper Company in this present suit by Harris against it to recover $174.98 is that, upon the following grounds, the defendant is not indebted to the plaintiff: (1) The defendant had a right to apply the $174.98 which it owed Harris on the account against him of $1108.08 which had been transferred to the defendant by the Macon Paper Company, and the application of this amount as a credit on this account by the plaintiff amounted to payment. (2) At the time of the trial of the case of the Macon Paper Company against Harris he did not repudiate the credit of $174.98 which the Macon Paper Company expressly gave him on the account sued on, but by permitting the Macon Paper Company to obtain judgment on the account thus credited, Harris acquiesced therein, and even though the account was not owned by Jacksonville Paper Company the act of Jacksonville Paper Company in so making the payment on this account, whether or not this was authorized by Harris, "was thus ratified by him," and for this reason such application of the credit amounted to payment by the Jacksonville Paper Company to Harris of the $174.98. (3) By virtue of this conduct of Harris "an estoppel in pais has arisen against him," which now prevents his denial or repudiation of such payment. (4) By such failure of Harris to repudiate the credit of the $174.98 allowed him by the Macon Paper Company in the suit by that company against him, and by Harris's acceptance of this credit at the time of the trial, he made an affirmative election between two remedies, or of two substantial rights, which were available to him, and he is now bound by such election to accept such payment as a credit "upon said account and is estopped to assert the same and to pursue any remedy for the enforcement of the same against this defendant." Jacksonville Paper Company also pleaded the judgment rendered against Harris in the suit by Macon Paper Company against him as an estoppel by judgment and as res judicata, and that by virtue of such judgment Harris is barred of recovery against Jacksonville Paper Company on the account of $174.98, sued on.
The judge pro hac vice, the Honorable Harry S. Strozier, presiding in lieu of the Honorable Cecil A. Baldwin, judge of the court, who was disqualified, overruled the objection to the plea and the amendment thereto, which objection was on the ground that neither the plea nor the amendment set out any defense to the suit, and on the agreed statement of facts found for the defendant. The plaintiff filed exceptions pendente lite to the judgment on the pleadings, and moved for a new trial on the general grounds only. This motion was overruled. To both judgments the plaintiff excepted.
The defendant admits the correctness of the claim in the present suit, but denies liability on the grounds above referred to. There is no dispute as respects the allegations of fact in the plea as amended, and in the evidence as appears from the agreed statement of facts, in so far as respects the substantial issues.
Sometime before the institution of this suit, the Jacksonville Paper Company, the transferee of the Macon Paper Company of the account against Harris, which was of the face value of $1108.08, credited on this account, without Harris's knowledge or consent, the $174.98 which the defendant owed Harris, and retransferred to its transferor, Macon Paper Company, this account as of the face value of $933.10 — a sum less this credit — as an uncollectable asset. This retransfer the defendant had a right to make under its contract with the Macon Paper Company. It appears nowhere that Harris owed this account or any part thereof. Whether or not Harris owed this account, the crediting on it by the defendant of $174.98, without Harris's consent, was a purely voluntary payment by the defendant for Harris's benefit. When the defendant credited this amount on this account it paid a portion of the amount of this claim against Harris. The defendant therefore can not call on Harris for reimbursement to it of this amount, and can not set it off against Harris's claim in the present suit. There is therefore no merit in any set off against the present claim of Harris of $174.98 on the account which the defendant held as assignee against Harris. Moreover, counsel for the defendant concede that the defendant can not in this suit set off against Harris's claim against the defendant this credit on the account which the defendant had held against Harris.
If the defendant has any defense against this claim of Harris such defense must be found in an estoppel, res judicata, or election of remedies, etc., asserted by the defendant as arising against Harris by virtue of the judgment against him in favor of the Macon Paper Company in the amount of the retransferred claim against Harris, reduced by the credit which had been made on it by the Jacksonville Paper Company of the $174.98.
After the defendant had transferred back to the Macon Paper Company the latter's claim against Harris in an amount less $174.98 which the defendant had credited to Harris on this claim, the Macon Paper Company brought suit against Harris on this claim in the reduced amount. It appears in a statement attached to the Macon Paper Company's suit that Harris was given credit for $174.98 which was the amount which the Jacksonville Paper Company had credited to him on the account when the Jacksonville Paper Company owned it, together with other credits of sums which had been paid on the account, leaving a balance due as sued for of $933.10. In this suit Harris pleaded that he was not indebted in any amount. The case went to trial on this issue, and a verdict was rendered for the Macon Paper Company for $933.10, which sum represented the balance due after these credits had been allowed.
It does not appear that Harris did anything in this suit except to rest purely on a denial of indebtedness, and the production of evidence sustaining his contention. Nothing that he did as respected this suit could in any way amount to an estoppel in pais, or otherwise, or election of remedies. It is essential to an estoppel in pais that the person sought to be estopped must, by his conduct, either active, or passive when he was called on to say or do something and omitted so to do, have misled the opposite party and induced him to act to his detriment. Peacock v. Horne, 159 Ga. 707 ( 126 S.E. 813). Harris, in his conduct as a defendant in the suit against him by the Macon Paper Company, certainly did nothing, either actively or passively, that misled to its detriment or disadvantage either this defendant or the plaintiff in that suit.
Is Harris barred in the present suit by having, in the former suit against him by Macon Paper Company, elected a remedy, or by having insisted on a right inconsistent with or commensurate with what he is attempting in the present suit? Such election would have to be predicated on some positive or affirmative act of Harris. Harris, by merely remaining passive in that suit, and defending it merely on a general denial of the indebtedness represented by the account sued on, and in producing evidence to sustain this denial, certainly committed no passive or affirmative act admitting or asserting the correctness of the credit given him of the $174.98 which was allowed on the claim which was the basis of that suit. He did not, by his conduct in that case, admit that he was justly indebted to any one in this amount. In fact, Harris was not sued for this $174.98. His conduct therefore, in defending against the account, less this sum as a credit thereon, and his denying that he owed the account sued on, certainly can not be construed as an election to accept $174.98 as a credit on the ground that he was indebted therefor, notwithstanding he, at the time, knew that this credit was being given him. Therefore in that suit Harris made no election of a remedy, or an assertion of a right, that would operate to bar his right to recover in the present suit by him against Jacksonville Paper Company the $174.98 which he earned as commissions in the employ of that company. If any election was made by any one it was made by the Jacksonville Paper Company in crediting its account as transferee of the Macon Paper Company against Harris with an amount which it owed Harris. Such an election, of course, was not an election by Harris.
The Jacksonville Paper Company can not set up by way of res judicata, or estoppel of Harris by judgment, the judgment in the suit of the Macon Paper Company against Harris. Res judicata and estoppel by judgment can only be set up in a subsequent suit between the same parties or their privies. Code, § 3-601; Farmer v. Baird, 35 Ga. App. 208 ( 132 S.E. 260). The present suit is between Harris and the Jacksonville Paper Company. The former suit, whose judgment it is sought to set up as res judicata or an estoppel by judgment, was between the Macon Paper Company and Harris. The Macon Paper Company and the Jacksonville Paper Company were separate entities. One was an assignor and the other was an assignee. There was no privity between them. Blackwood v. Yellow Cab Co., 61 Ga. App. 149 ( 6 S.E.2d 126). Ebert v. Long, 43 Minn. 235 ( 45 N.W. 226), and Farmers v. Andruss, 63 Okla. 310 ( 165 P. 172), relied on by the defendant in support of its contention of res judicata or estoppel, are cases in which the parties in the subsequent litigation were the same as those in the former litigation. The plaintiff in each of these suits had given a credit to the defendant, and the court held, in a subsequent suit between the same parties, that the judgment in each of the former suits in which such credit had been allowed was res judicata. In Union Guardian Trust Co. v. First National Bank, 271 Mich. 323 ( 259 N.W. 912), which the defendant relies on to sustain its contention that Harris made an election of remedies, the facts are clearly distinguishable from those in the present case. In that case, which was a suit against a bank by an administrator to recover money of his intestate which the bank had paid to the daughter of the intestate on a forged withdrawal slip, it was held that, in a former suit by the administrator against the daughter to recover the money which had been so fraudulently withdrawn, the administrator had elected a remedy inconsistent with that in the present suit, and was therefore barred in the present suit. In the case now before this court it can not be said that an acceptance, if any, by Harris in a suit against him by the Macon Paper Company, of the credit of $174.98, which that company gave him on its account against him, amounted to an election of a remedy inconsistent with his remedy in the present suit against Jacksonville Paper Company to recover $174.98 which that company owed him for services rendered. There was certainly no election of remedies by Harris's conduct in the suit against him by the Macon Paper Company, in accepting the credit of $174.98 on that company's account against him, and the credit made on that same account by the Jacksonville Paper Company, while the Jacksonville Paper Company held this account as a transferee of the Macon Paper Company, when such credit was made without Harris's knowledge or consent, and Harris had never admitted liability therefor.
The court erred in overruling the motion to dismiss the answer as amended. The undisputed evidence was insufficient to authorize the verdict and judgment rendered for the defendant, but demanded a verdict and judgment for the plaintiff in the amount of $174.98 sued for.
The court erred in overruling the motion for new trial.
Judgment reversed. Sutton, J., concurs.
It appears from the record that Harris knew that the account on which he was sued by the Macon Paper Company contained the credit claimed by him against the Jacksonville Paper Company and that the credit was necessarily allowed him in the action on the account. In these circumstances it seems to me that in equity and good conscience Harris is now estopped to deny that he has received the benefit of the credit, and is precluded from receiving the benefit of the sum a second time.