Summary
In Peoples Bank of LaGrange v. Ga. Bank c. Co., 126 Ga. App. 768, 771-772 (1) (191 S.E.2d 876) (1972), summary judgment was sought and granted based on the doctrine of single satisfaction because the injured party had recovered the same loss under a bond.
Summary of this case from Citizens Bank c. v. SaundersOpinion
46993.
SUBMITTED MARCH 2, 1972.
DECIDED JUNE 30, 1972. REHEARING DENIED JULY 24, 1972.
Action on contract. Troup Superior Court. Before Judge Knight.
Richter Birdsong, A. W. Birdsong, Jr., for appellant.
Sims Lewis, James R. Lewis, Martin, Snow, Grant Napier, Cubbedge Snow, for appellee.
1. The defendant bank counterclaimed against the plaintiff bank for money it alleged was wrongfully removed from its account with the plaintiff bank. In such circumstances, payments made to the defendant bank by its bonding company pursuant to a contractual obligation would not serve to discharge any of the plaintiff bank's liability to the defendant bank.
2. The plaintiff bank, as movant for summary judgment, failed to establish as a matter of law that the defendant bank was estopped to assert its counterclaim.
SUBMITTED MARCH 2, 1972 — DECIDED JUNE 30, 1972 — REHEARING DENIED JULY 24, 1972 — CERT. APPLIED FOR.
Georgia Bank Trust Company (hereinafter referred to as Georgia Bank) brought this action against Peoples Bank of LaGrange (hereinafter referred to as Peoples Bank) in the Troup Superior Court. The complaint alleged that Gerson E. Robinson executed a security agreement in favor of Peoples Bank to secure an indebtedness of $61,320 and that on the same day (November 6, 1969) Georgia Bank entered into a participation agreement with Peoples Bank whereunder it purchased $9,056 of the loan; that under the participation letter the defendant agreed that all principal and interest collected by it would be held in trust for the plaintiff; the defendant immediately agreed to pay the same over to the plaintiff; that the defendant is in possession of $8,414.92, representing money it had collected from the maker of the note, which it refuses to pay over to the plaintiff after demand. Georgia Bank also sought recovery of attorney's fees.
Peoples Bank filed an answer and a counterclaim. The counterclaim alleged that Georgia Bank was indebted to it in the amounts of $24,886, $100,000, $3,500 and $10,000; that on October 23, 1970, Georgia Bank loaned L. C. Robinson Sons, Inc. the sum of $30,075, including $75 as interest; that this was evidenced by a note endorsed by B. D. Bray and G. E. Robinson; that on November 7, 1970, it was discovered that the note was void since G. E. Robinson did not sign the note but that B. D. Bray signed all names to the note without legal authority; that Peoples Bank received a notice on November 5, 1970 that its account with Georgia Bank was being charged to pay off the note: "If this meets with your approval ... if not, communicate with us at one."
The counterclaim further alleged that Peoples Bank notified Georgia Bank that it would not accept the charge and set forth reasons therefor; that affidavits were given to Georgia Bank through its attorney that G. E. Robinson did not sign the note; that the acting president of Peoples Bank demanded that the Georgia Bank place $30,075 back in its account; that at that time the Georgia Bank was aware that the note was void; that prior to this time, September 15, 1970, the Executive Committee of Peoples Bank had directed B. D. Bray (who was then president of Peoples Bank) not to lend any funds to G. E. Robinson or L. C. Robinson Sons, Inc.; that at the time Georgia Bank loaned the money in question the note referred to in plaintiff's petition was in default since L. C. Robinson Sons had not made the monthly payments required by that note.
The counterclaim alleged: that Peoples Bank informed Georgia Bank, it was holding $7,414.92 collected in the participation loan referred to in Georgia Bank's original petition, which would be paid to Georgia Bank when Georgia Bank reversed the entry on Peoples Bank's account as to the $30,075; that on February 2, 1971, Peoples Bank had on deposit with Georgia Bank the sum of $32,300.92 and a check was issued by Peoples Bank to Fulton National Bank for this amount on the account; that the check was returned by Georgia Bank showing "insufficient funds" and this was done intentionally, maliciously and oppressively in bad faith to injure the credit and reputation of Peoples Bank; that Peoples Bank was entitled to $100,000 as compensatory damages; that on February 4, 1971, Georgia Bank, without permission or authorization of the Peoples Bank, oppressively took an additional $2,225.92 from Peoples Bank's account and advised Peoples Bank that it had applied these funds to L. C. Robinson Sons, Inc. note; that Georgia Bank, as a result of the aforesaid acts, had unlawfully removed from Peoples Bank's account at Georgia Bank the sum of $32,300.92 and that Peoples Bank had $7,414.92 which belonged to Georgia Bank, leaving a difference of $24,886 which belonged to Peoples Bank; that Georgia Bank wantonly and oppressively and with wilful disregard of Peoples Bank's rights, illegally and unlawfully converted the funds of Peoples Bank.
Peoples Bank sought recovery of $10,000 as punitive damages and attorney's fees in the amount of $3,500.
Based on the taking of interrogatories, depositions, and other proof, both parties filed motions for summary judgment. The trial judge sustained Georgia Bank's motion for summary judgment and denied and dismissed Peoples Bank's counterclaim. Peoples Bank's motion for summary judgment was also overruled. Appeal was taken from the grant of summary judgment in favor of Georgia Bank.
1. The appellee contends that the election by Peoples Bank to assert its claim against the United States Fidelity Guaranty Company (hereinafter referred to as the bonding company) and its execution of a release to the bonding company bars its claim against Georgia Bank. This contention is based on the rules of law that a party can have but one satisfaction for injuries and that once a party elects one remedy and obtains satisfaction under that theory, he can assert no other inconsistent remedies. McLendon Bros. v. Finch, 2 Ga. App. 421 (3) ( 58 S.E. 690); Winn v. Nat. Bank of Athens, 110 Ga. App. 133 (2) ( 138 S.E.2d 89).
We first point out that the burden was on Georgia Bank, as movant for summary judgment, to establish that the bonding company was acting for Bray, the alleged tortfeasor, and that it failed to conclusively show such was the case. Moreover, the release recites that Peoples Bank was proceeding under a "Bankers Blanket Bond to indemnify Peoples Bank of LaGrange, as provided and set forth in said bond, in connection with actions of officers, agents and employees of Peoples Bank of LaGrange resulting in loss to the Peoples Bank of LaGrange."
Peoples Bank was indemnified against just such a loss as here occurred under the contract with the bonding company. This case is directly analogous to the case of Thompson v. Milam, 115 Ga. App. 396 ( 154 S.E.2d 721). There an insured executed to his insurance carrier a release of liability for bodily injury under the terms of the uninsured motorist provision of his policy. There it was contended that by executing such a release, the insured had obtained full satisfaction for his injuries and could not proceed against the alleged tortfeasor. We held: "A tortfeasor can not diminish the amount of his liability by pleading payments made to the plaintiff under the terms of a contract between the plaintiff and a third party who was not a joint tortfeasor." Thompson v. Milam, 115 Ga. App. 396, 397, supra. This application of the "Collateral Source Rule" has been approved in the recent Supreme Court case of State Farm Mut. Auto. Ins. Co. v. Bd. of Regents, 226 Ga. 310, 311 ( 174 S.E.2d 920), where it was reiterated that payments made to an insured under the terms of a policy are "payments made pursuant to a contractual obligation and not in discharge of the tortfeasor's liability to the injured or damaged person." See Cincinnati, N. O. c. R. Co. v. Hilley, 121 Ga. App. 196, 201 ( 173 S.E.2d 242), and cases therein cited.
It is therefore evident that cases dealing with election of remedy or prohibiting double satisfaction for a claim have no application to a situation of the sort here presented. There is no showing that Peoples Bank has ever made any effort to proceed against Bray, the alleged tortfeasor. The release here given would not serve to bar Peoples Bank from proceeding with this action against Georgia Bank.
2. (a) Georgia Bank urges that the trial court correctly sustained the motion for summary judgment because Bray was the president and thus chief executive officer of Peoples Bank; that the apparent authority given to Bray by Peoples Bank led the Georgia Bank to rely on his actions to its detriment. In support of this proposition we are cited cases which hold: "When an alleged principal, by act or conduct, has knowingly caused or permitted another to appear as his agent, he will be estopped to deny the agency." Folsom v. Miller, 102 Ga. App. 232 ( 116 S.E.2d 1). See Fitzgerald Cotton Oil Co. v. Farmers Supply Co., 3 Ga. App. 212 (1) ( 59 S.E. 713); Palmer-Murphey Co. v. Fruit Haven Farm, 34 Ga. App. 153 ( 128 S.E. 693).
There is a caveat to this rule, however, for its protection extends only to "third persons who have in good faith and in reasonable prudence dealt with the apparent agent on the faith of the relation." Folsom v. Miller, 102 Ga. App. 232, supra. The burden was on Georgia Bank to establish conclusively and as a matter of law that it acted in good faith and with reasonable prudence. Georgia Bank failed to carry this burden because the proof offered was at best uncertain and at least conflicting as to whether the bank exercised reasonable prudence. The notes which were sent to the bank presumably by the hand of Bray contained references that "the FDIC is down the street and I am sure they will be here next," and that bank examiners were present. These are facts from which the jury might conclude that a person of reasonable prudence would make further inquiry before lending money. There are also other facts which might lead to inquiry including the personal endorsement by Bray on the note (not in his capacity of president of Peoples Bank), and that the note on which the plaintiff now seeks recovery was in default. Reasonable inquiry, according to the proof offered, would have led to the fact that Bray was not authorized to make loans on the account in question and that the loan would not have been endorsed by two directors of the bank as the information in the letter indicated. Georgia Bank was not entitled to a summary judgment on this theory of estoppel.
(b) Georgia Bank urges the rule that: "No application of the doctrine of ultra vires acts will allow a corporation to retain and use the benefits of a contract and at the same time refuse to comply with its part of the contract under which they were obtained." Alexis Inc. v. Werbell, 209 Ga. 665, 669 ( 75 S.E.2d 168). It is argued that Peoples Bank received benefits within the meaning of this rule so as to estop it from charging Georgia Bank with Bray's misconduct. The facts on which this contention is predicated are as follows: The $30,000 proceeds from the forged note were credited to the Peoples Bank account with Georgia Bank for credit to the Robinson Sons account with Peoples Bank. Upon credit of the proceeds of the $30,000 note to the Robinson Sons account with it, Peoples Bank immediately charged the Robinson Sons account with $30,225, the amount due on a note of Robinson Sons which Peoples Bank had been holding in its suspense account.
Assuming arguendo that a benefit might have accrued to Peoples Bank as a result of the proceeds from the note being deposited in the L. C. robinson Sons' account, it is clear that the note for $30,075 was not a contract between Peoples Bank and Georgia Bank. Hence, Peoples Bank did not retain any benefit within the meaning of Alexis Inc. v. Werbell, 209 Ga. 665, supra, under that contract.
Whether the letters in question constituted a contract between Peoples Bank and Georgia Bank, or an individual undertaking by Bray as to Georgia Bank is the essential question. Under similar circumstances, the Supreme Court has pointed out that a "promissory note without consideration, executed in the name of a corporation by one of its officers, and payable to such officer individually, is void as against the corporation ... upon the theory that none of its officers is or can be empowered to gratuitously pledge the assets of the corporation, and that one taking such a note is bound to take cognizance that the agent of the corporation, in thus seeking to bind the corporation, might have been acting not in its interest and for its benefit, but for the benefit of himself." D. A. D., Inc. v. C. S. Bank of Tucker, 227 Ga. 111, 114 ( 179 S.E.2d 71), citing Henderson Lumber Co. v. Chatham Bank c. Co., 33 Ga. App. 196, 198 ( 125 S.E. 867). Furthermore, "the burden is upon the holder of such a note to show that it is in fact the contract of the corporation." Id., p. 115., citing Capital City Brick Co. v. Jackson, 2 Ga. App. 771 (2) ( 59 S.E. 92).
Here a jury might find that, in view of the language used in the letters and other surrounding circumstances, Georgia Bank should have discovered that Bray was exceeding his authority and thus any contract or transaction was between Georgia Bank and Bray individually. Thus, Georgia Bank failed to establish as a matter of law that Peoples Bank received and retained a benefit under a contract between it and Georgia Bank.
Since all genuine issues of material fact were not eliminated the trial judge erred in granting Georgia Bank's motion for summary judgment.
Judgment reversed. Hall, P. J., and Pannell, J., concur.