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HAMMOND v. SOUTHERN COTTON OIL COMPANY.
SOUTHERN COTTON OIL COMPANY v. HAMMOND.
38013.
38014.
Action on notes. Gordon Superior Court. Before Judge Hicks from Rome Circuit. September 2, 1959.
FELTON, Chief Judge.
Southern Cotton Oil Company, hereinafter called "Southern," filed its action in Gordon Superior Court against H. L. Miller, as principal, and W. M. Hammond, as surety, on five promissory notes of the principal sum of $2,000 each. Southern also sought a special lien on certain property on which Miller had executed to it a security deed. This property had been sold for a net price of $1,984.50, which was shown as a credit against the $10,000 principal amount. Copies of the five notes showing Miller as the maker of each were attached to the petition. Each of these notes contained the following endorsement: "For value received, the endorser or endorsers on this note hereby guarantee the payment of the same at maturity, or at any time thereafter, with interest at the rate of 8 percent per annum until paid, waiving demand, notice of non-payment, and protest. (s) W. M. Hammond."
After the ruling of this court in Hammond v. Southern Cotton Oil Co., 89 Ga. App. 79 (78 S. E. 2d 544), Southern amended its petition to allege that Hammond was "merely an endorser for accommodation and is a surety upon said notes." In Southern Cotton Oil Co. v. Hammond, 92 Ga. App. 11 (87 S. E. 2d 426), this court held that the amended petition stated a cause of action against Hammond as a surety. In his original answer, Hammond stated "that he signed said notes solely as surety" but he subsequently amended this portion of his answer to allege that he signed as a guarantor. The case proceeded to trial before a jury, which was unable to reach a verdict, whereupon a mistrial was declared. Both Southern and Hammond filed motions for a judgment notwithstanding the mistrial in accordance with their previous motions for a directed verdict. The trial court denied the motions for a judgment notwithstanding the mistrial and each party assigns error on the ruling adverse to him or it.
"The contract of surety ship is one whereby a person obligates himself to pay the debt of another in consideration of credit or indulgence, or other benefit given to his principal, the principal remaining bound there for. It differs from a guaranty in this, that the consideration of the latter is a benefit flowing to the guarantor." Code 103-101. The endorsements of Hammond quoted above prima facie import a contract of guaranty. Hammond v. Southern Cotton Oil Co., 89 Ga. App. 79 (1), supra. If the uncontradicted evidence discloses a benefit flowing to Hammond, his status as a guarantor is conclusively established and he is entitled to a judgment notwithstanding the mistrial, since a guarantor can not be sued in the same action as a codefendant with the principal debtor. Pelham v. W. T. Rawleigh Co., 33 Ga. App. 356 (1) (126 S. E. 302).
It appears from the evidence that Hammond was the owner of certain cotton gin properties which he wished to sell; that Miller was a prospective purchaser; that Hammond and Miller discussed the proposed sale with J. S. Tedford, who was the plaintiff's local manager at the time and that Tedford attempted to arrange a loan by Southern to Miller to be used in payment of the purchase price. According to Hammond's testimony, Tedford "said that he thought he could get the loan through if I would endorse the first two notes of $2,000 each; at a later date he said that he couldn't get it done, that he could get the loan for Miller if I would endorse all of the notes." On Hammond's endorsement of the five notes as shown above, Southern issued its check for $10,000 to Miller, who immediately endorsed it to Hammond in payment of the purchase price. There is no conflict in this evidence and it plainly indicates that in return for his endorsement of the notes, Hammond was able to consummate the sale of his cotton gin properties for cash at the agreed sale price. A substantial benefit has therefore flowed to Hammond, and his endorsement whereby he obligated himself to pay the debt of another in consideration of a benefit flowing to himself renders him a guarantor and not a surety or accommodation endorser. Our ruling here is not in conflict with that in Southern Cotton Oil Co. v. Hammond, 92 Ga. App. 11 (1), supra, indicating that "no independent consideration flowed to such endorser" (Hammond), since that decision dealt solely with the sufficiency of the plaintiff's petition on demurrer, and the facts which render Hammond a guarantor, were not alleged in the petition, such issue being raised in his amended answer.
The court did not err in denying Southern's motion for a judgment notwithstanding the mistrial. However, the similar motion by defendant Hammond should have been granted for the reasons stated above, and the judgment denying such motion must be reversed.
Judgment in case No. 38013 reversed with direction that the court enter judgment in accordance with the motion. Judgment in case No. 38014 affirmed. Quillian and Nichols, JJ., concur.
J. Beverly Langford, Matthews, Maddox, Walton & Smith, Oscar M. Smith, contra.
Ronald F. Chance, James Maddox, for plaintiff in error.
DECIDED JANUARY 27, 1960 -- REHEARING DENIED MARCH 29, 1960.
Saturday May 23 00:09 EDT


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