Summary
In McCullough v. Stepp, 91 Ga. App. 103, 85 S.E.2d 159, the words "I hereby transfer my right to this note to W. E. McCullough" were used. The Georgia court held this to be an unqualified endorsement.
Summary of this case from Yates v. BrownOpinion
35218.
DECIDED NOVEMBER 22, 1954.
Action on promissory note. Before Judge Mitchell. DeKalb Civil Court. March 31, 1954.
Haas, White, Douglas Arnold, George A. Haas, for plaintiff in error.
McCord Cooper, Wayne H. Fore, contra.
1. The indorsement on the note sued on, "I hereby transfer my right to this note over to W. E. McCullough," is not a qualified indorsement.
2. The indorsement is a special indorsement, and a special indorsement in full cannot be varied by parol; therefore the court erred in overruling the demurrer to an allegation in the defendant's answer, that the indorser and indorsee intended that the special indorsement operate as a qualified indorsement.
DECIDED NOVEMBER 22, 1954.
W. E. McCullough sued William C. Stepp on a promissory note. The note was executed by Floyd W. McBerry, and was payable to the order of William C. Stepp. Stepp indorsed the note to the plaintiff with the following indorsement, "I hereby transfer my right to this note over to W. E. McCullough (signed) William C. Stepp." In his answer the defendant alleged: "By way of further answer, defendant says that it was with the intention of both plaintiff and defendant that defendant was to transfer said note to plaintiff `without recourse'." The plaintiff's demurrer to this allegation was overruled, and he excepted pendente lite. On the trial evidence was introduced to sustain this allegation. The court's charge authorized the jury to find that the parties had an agreement at the time of the transfer of the note that the indorsement was to be without recourse. The jury found for the defendant. The plaintiff's amended motion for new trial was denied and he assigns error on that judgment and on his exceptions pendente lite.
1. The indorsement in and of itself was not a qualified indorsement. Code § 14-409 provides: "A qualified indorsement constitutes the indorser a mere assignor of the title to the instrument. It may be made by adding to the indorser's signature the words, `without recourse', or any words of similar import. . ." The words, "I hereby transfer my right to this note over to W. E. McCullough," are not words of similar import to "without recourse." Hurt v. Wiley, 18 Ga. App. 420 (2) ( 89 S.E. 494); 10 C. J. S. 703, § 214; 8 Am. Jur. 61, § 325; Fay v. White, 262 N.Y. 215 ( 186 N.E. 678); Britton's Handbook on the Law of Bills Notes, p. 230.
2. In Georgia, indorsements may be special, in blank, restrictive, qualified, or conditional. Code § 14-404. A special indorsement specifies the person to whom, or to whose order, the instrument is to be payable, and the indorsement of such indorsee is necessary to the further negotiation of the instrument. An indorsement in blank specifies no indorsee, and an instrument indorsed in blank is payable to bearer and may be negotiated by delivery. Code § 14-405. In the instant case an indorsee was named and his indorsement was necessary to a further negotiation of the instrument. Therefore the indorsement here was a special indorsement. Chandler v. Smith, 147 Ga. 637, 638 (2, 3) ( 95 S.E. 223); Fay v. Witte, supra. The indorsement being a special indorsement in full, the defendant could not contradict the terms thereof and show that the indorsement was intended to be a qualified one, in the absence of fraud or mistake. Meador v. Dollar Savings Bank, 56 Ga. 605 (2); Odom Realty Co. v. Central Trust Co., 22 Ga. App. 711 (1) ( 97 S.E. 116). The only question presented in this case is the effect of the indorsement, and no questions of conditional delivery or the capacity of the indorser are involved.
The court erred in overruling the demurrer to the allegation in the answer set out above. Such error rendered all further proceedings in the case nugatory.
The motion for rehearing having been granted, on rehearing the judgment of affirmance previously entered in this case is vacated, the original opinion is withdrawn, the judgment of the trial court is reversed, and the foregoing opinion is substituted for the original opinion filed herein. Quillian and Nichols, JJ., concur.