Opinion
29660.
DECIDED OCTOBER 3, 1942.
Complaint on note; from Carrollton city court — Judge Boykin. March 23, 1942.
J. L. Smith, for plaintiff in error. Boykin Boykin, contra.
1. The bare promise by an attorney to extend the collection of a past-due debt of his client, which has been placed with the attorney for collection without special authority to extend the time of collection, in the absence of fraud and without consideration, can not be urged as a defense to a proceeding instituted for the collection of the debt before the expiration of the time promised.
2. Where a series of promissory notes are given for the purchase-price of property, and the legal rate of interest is added to each deferred payment from the date of the sale to the maturity of each note, and the notes stipulate that they bear interest from maturity at 8 per cent., and where the contract of sale provides that the due dates of the deferred payments are to be accelerated by default under the terms of the contract, the defendant is entitled to claim the unearned interest as of the date of the judgment.
DECIDED OCTOBER 3, 1942.
R. J. Lyle, hereinafter called the defendant, purchased a tract of land from Mandeville Mills, hereinafter called plaintiff. On May 9, 1939, he executed for the purchase-price five installment notes, due on the 1st of November for the years 1939 through 1943, both inclusive, with the stipulation that interest was payable after maturity. To secure the purchase-price defendant simultaneously executed a security deed covering the tract of land. The security deed provides, in effect: ". . acceleration of all the debt, both principal and interest, if the principal or interest be not paid according to the terms and conditions thereof when due and full payment of all other indebtedness secured by the deed, the payment of taxes, assessments, insurance. . . It is further understood and agreed between the parties hereto, that in case of default in the payment of the debt hereby secured to be paid, said party of the second part, his heirs, successors, or assigns, may enter upon and take possession of the above-described land and sell the same for the purpose of paying the debt hereby secured to be paid, after first advertising the time, place and terms of said sale in some newspaper. . ." The defendant did not pay the taxes of $38, and did not pay the insurance premiums for the years 1940 and 1941 aggregating $67.01. In "July or August," 1941, the land was sold in conformity with the provisions of the power of sale contained in the security deed. The plaintiff was the purchaser at $225, leaving an alleged deficiency of the amount sued for. The present suit was brought to obtain a judgment for the deficiency, $992.22, and it was afterwards amended to include the insurance paid and the taxes, making a total of $1007.23, together with interest and ten per cent. attorney's fees.
In answering defendant denied that he was indebted for the principal sum sued for, and denied that he had received the notice for attorney's fee. Further answering he alleged in substance that the plaintiff, by and through its attorney, had promised the defendant that the lien would not be foreclosed until the fall of 1941, in order to give the defendant a chance to pay said debt from the earnings of defendant on Government work; that at the time of the conversation between defendant and the attorney of plaintiff the attorney promised defendant that he would not foreclose or sue; that defendant went to his work away from home and wrote the attorney "to be sure and hold the matter up and not foreclose," and that he did not receive any reply, taking it for granted that he was going to hold the matter up until fall and not foreclose so the defendant could pay the amount due; that the plaintiff, after such statements made by its attorney, sold the land, which was reasonably worth $1000, and therefore the plaintiff was due the defendant a credit of $775 on said indebtedness; that defendant could have raised the money and could have paid for the land, but that he relied on the statement of the attorney because the attorney had represented defendant at various times and he had the utmost confidence in the statement of the attorney. In paragraph 5 of the answer the defendant alleged: "Defendant shows that the note sued on had added to the face of same 8 per cent. interest until maturity, and the note due November 1, 1942, and the note due November 1, 1943, has in the face of said note 8 per cent. interest from May 9, 1939."
To the answer the plaintiff filed a demurrer which was sustained, the court striking the defense above set out, including paragraph 5, except as to the allegation regarding the notice to claim 10 per cent. attorney's fee. The defendant filed exceptions pendente lite to the order sustaining the demurrer to the answer. The case came on for trial on March 23, 1942, whereupon the plaintiff waived his claim for attorney's fee. The court then directed a verdict for the plaintiff for $902.22. The defendant assigns error on the judgment sustaining the demurrer to his answer and on the direction of the verdict.
1. We will deal first with the question whether the allegations of the answer with reference to the statement of the attorney of plaintiff to the defendant, the promise alleged and the reliance of the defendant thereon, constituted a valid defense as against the suit on the notes. We do not think so for, (a) there was no consideration for the extension; (b) the promise was too indefinite; (c) the allegations are not sufficient to set out fraud as a defense; (d) it is alleged that after defendant left home for work he wrote the attorney, received no reply, and took it for granted that no action would be taken against him; (e) it is not alleged that the sale was not in conformity with the power of sale as to advertisement and notice, thereby giving defendant the notice as provided by the contract. If it could be contended that plaintiff's attorney could deal with his client's business which had been entrusted to him without special authority in the manner alleged, in the absence of fraud, such agreement to extend the time of the collection of the debt, to make it valid, would have to be based upon a consideration. A naked promise would not be binding on the plaintiff himself. It would be a mere nudum pactum. See in this connection Wilder Bros. v. Montgomery, 51 Ga. App. 231 ( 179 S.E. 861).
2. We come next to consider whether the court erred in striking paragraph 5 of the answer with reference to the unearned interest. It is contended by counsel for plaintiff that paragraph 5 is insufficient in law to set out a plea of usury. We do not construe this paragraph to be a claim of usury. It is a claim for unearned interest. It is not usury to add to the principal amount in the face of the note interest until the date of maturity, but where notes are executed for deferred payments and the interest is so included and the due dates of the deferred payments are accelerated by default, under the terms of the contract, the defendant is entitled to claim the unearned interest as of the date of the judgment. It was held in McCrary v. Woodard, 122 Ga. App. 793 ( 50 S.E. 941): "It was lawful to include in each note the amount of interest which would be due at the date of its maturity and to provide that the sum represented by the principal and interest should bear interest from maturity. It was also lawful to provide that if any of the notes in the series should not be paid at maturity all should fall due. There was nothing in this transaction to make it usurious. The effect of the stipulation that all of the notes should fall due in the event one of them was not paid would prevent the plaintiff from recovering a sum greater than the amount loaned and 8% interest thereon to the date of judgment, and if judgment had been rendered before maturity of the last note, the defendant would have been entitled, under the facts set forth in his plea, to have the plaintiff's recovery of interest reduced by whatever amount of interest each of the notes contained which had not been earned at the time the judgment was rendered." It follows that the court erred in striking paragraph 5 of the answer. This court is vested with authority under Blackshear Mfg. Co. v. Stone, 8 Ga. App. 661 (3), 664 ( 70 S.E. 29), and Langston Co. v. Neely Co., 8 Ga. App. 67 ( 68 S.E. 559), to cause to be written off of the judgment such unearned interest as was included therein. At the date of the judgment the note for $212.09 due November 1, 1942, and the note for $272 due November 1, 1943, according to the plea of paragraph 5, contained in the face amounts of unearned interest from the date of the judgment to the due dates of the notes respectively. Let the amount of the unearned interest be written off of the judgment and let the judgment for the remainder be affirmed.
Judgment affirmed, with direction. Broyles, C. J., and MacIntyre, J., concur.