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Action on note. DeKalb State Court. Before Judge Smith.
DEEN, Judge.
Where the defendant was indebted to the plaintiff on a note representing the purchase price of a franchise, and the defendant sold the business and franchise to another who agreed to assume liability on the note, and where after both vendor and vendee ceased payments on the note because of a failure of consideration due to the franchiser's loss of his dealership, the franchiser brought suit against the vendor who filed a third party action against the vendee based on the latter's assumption of liability, a verdict in favor of the vendee in the cross action and against the vendor in the main action is irreconcilable and must be set aside.
Sportsman Camping Centers of America, Inc., the plaintiff, was engaged in the outdoor recreation franchise business, including renting, servicing and sale of a certain line of campers. It entered into a franchise agreement with one Fox in April, 1971, under which Fox set up a camping center with Sportsman agreeing to supply name, promotional materials, advertising, and a fleet of campers, at a monthly fee, which the franchisee maintained as a rental fleet, and "to permit franchisee to transfer and assign this agreement only with Sportsman's prior written consent, which consent, however, shall not be unreasonably withheld, subject to proof of financial responsibility." In October, Sportsman consented to the transfer of the franchise to Bagwell, and Bagwell executed an instalment note of $8,000 to it. The following month Bagwell sought to sell the camp and franchise to Carter, the two having entered into an agreement under which Carter would pay Bagwell $5,000, purchase the inventory on hand, and "assume note for the balance due on franchise" in the sum of $7,861. The contract expressly states that it is contingent on the approval of the franchiser. Sportsman, in a letter dated December 3, acceded to the transfer on five conditions, one of which was that Bagwell would continue to pay the monthly $175.00 direct on the instalment note, Carter to execute his note to Bagwell for a like amount. In other words, Sportsman would continue to look to Bagwell for its franchise payments.
Further contact elicited a telegram from Sportsman dated January 5, 1972, stating: "Accept this as your authority to transfer franchise to Phillip W. Carter. Outstanding balance $595.49 due plus repurchase of two caravans from bank." Carter quickly took over the operation, paid Bagwell the agreed amount and executed a bill of sale to secure debt to him for the balance, which recited one of his obligations as "an instalment note dated October 11, 1971, in the original amount of $8,000 from secured parties to Sportsman," moved in, paid the January installment on the note direct, and commenced business. Following this and on January 31 Sportsman telegraphed Bagwell: "Please rescind past permissive authority to transfer franchise to Phillip Carter due to his nonperformance of requirements including repurchasing of floor plan units and monies owed."
Neither the Bagwells nor Carter made any further payments in connection with the franchise note, and eventually Sportsman filed this suit, an action on the note, against the Bagwells. The defendants, pleading that Carter had assumed the obligation and an obligation to defend them, filed a third party complaint against him. Both the defendants and third party defendant pleaded a failure of consideration. On the trial of the case it appears that Sportsman had obtained its campers from a firm which ceased to supply them; all other testimony regarding the respective obligations of the parties under the franchise agreement were in sharp conflict. Sportsman contended that it rescinded the franchise because of various breaches on the part of Carter, including nonpayment of debts. Carter and Bagwell contended the franchise was worthless because of inability to obtain new Sprite caravans and parts for the old ones. The jury returned a verdict in favor of Carter as to liability to Bagwell on the note and in favor of Sportsman against Bagwell on the latter's obligation on the instrument.
Carter and the Bagwells are in agreement that they have no factual quarrel among themselves, in that the property was purchased and paid for as between themselves, there was no misrepresentation, and Carter agreed to "assume note for the balance due on franchise." This is a situation frequently encountered in sales of personal property or real estate encumbered by secured debts, and it is well established that while the property may be sold, the grantor will continue to be the person primarily responsible thereon in the absence of an agreement by the creditor to look to the grantee for payment, but as between the grantor and grantee, the latter is primarily liable. " 'Assumption' is defined in Black's Law Dictionary as 'The act or agreement of' assuming or taking upon one's self; the undertaking or adoption of a debt or obligation primarily resting upon another, as where the purchaser of real estate "assumes" a mortgage resting upon it, in which case he adopts the mortgage debt as his own and becomes personally liable for its payment. Thus, the words 'the assumption by the grantee herein of the principal balance' may be read 'the agreement by the grantee herein to pay the principal balance.' " Manget Foundation, Inc. v. White, 101 Ga. App. 239, 241 (113 SE2d 235). We are satisfied after reading the transcript of evidence here that if the franchise in fact became worthless because of the destruction of the Sprite dealership there was a failure of consideration equally as to Carter and Bagwell; that only if there was such a failure of consideration as to Carter could the jury have determined he was not indebted to Bagwell under his agreement to assume the liability on the franchise note, and that if such failure of consideration existed Bagwell had the right to urge it in defense of the note obligation to Sportsman. The jury, however, found in favor of Carter and against the Bagwells on the same state of facts. The verdict is inconsistent and self contradictory. Where two verdicts simultaneously rendered by the same jury on the same evidence, the same issues, and the same state of facts are "absolutely inconsistent with each other and manifestly based on diametrically conflicting opinions as to the credibility of the same witnesses" they must be set aside. Anthony v. Anthony, 103 Ga. 250 (29 SE 923).
The crucial question is not whether the inconsistent verdict arises because of contradictory findings in an action involving a third party defendant, but the fact that it is based on repugnant conclusions by the same jury. As stated in White v. Hammond, 129 Ga. App. 408 (2) (199 SE2d 809), although the two cases remain separate and distinct actions "it does not follow that the same jury can reach opposite conclusions based on the same evidence" (p. 411) and such result "breeds an inconsistency in our system that undermines its foundations through destruction of its credibility" (p. 412).
The motion for new trial should have been granted.
Judgment reversed. Hall, P. J., and Stolz. J., concur.
Cofer Beauchamp & Hawes, Robert S. Jones, Hinkle & Bianco, Theodore P. Bianco, James A. Hinkle, for appellees.
Dewberry & Avery, C. Richard Avery, for appellants.
Friday May 22 11:28 EDT

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