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Action on note. Fulton Civil Court. Before Judge Langford.
FELTON, Chief Judge.
The amended answer to the action on a promissory note raised the issuable defense of setoff based on the plaintiff's breach of a separate contract and alleged such fraud as would toll the running of the statute of limitation on the counterclaim; therefore, the court erred in striking the amended answer and entering a default judgment.
The defendant filed a verified amendment to his answer, whereby he added to the allegations of the original answer the following: "6. That for some years prior to January 31, 1960 the defendant was employed as a sales engineer by the plaintiff who was a franchise holder for The Trane Company. Defendant was paid a sales commission based upon a 60%-40% basis, with the defendant receiving 60% and plaintiff receiving 40% of the commission remitted to plaintiff by The Trane Company. 7. On January 26, 1960, plaintiff and defendant entered into a written contract, heretofore attached to the answer, marked 'Exhibit A.' Paragraph 5 of said contract provides the defendant's commissions accruing after his termination in the employment of plaintiff, '. . . shall be deposited with me [plaintiff] and credited against your indebtedness to me.' 8. Paragraph 5 of said contract further states, 'You [defendant] will be advised monthly the amount credited to you.' 9. Defendant shows that plaintiff maintained all records in the normal course of business, showing the account name, the amount and date of sale, and the delivery made, and all commissions remitted to plaintiff to be disbursed as hereinbefore stated. 10. At various intervals from January 31, 1960, the defendant repeatedly requested the plaintiff to give an accounting of sales commissions due the defendant. That defendant has repeatedly requested plaintiff to provide him with the statements plaintiff received from The Trane Company, indicating the name of the account, the amount and date of sale, and the delivery made, and all commissions due. That defendant has, by his attorney, again made such demands in his notice to produce. 11. The plaintiff repeatedly stated to defendant that no sales commissions were due defendant. 12. Defendant, in reliance upon these representations, executed said note on June 10, 1960, and made payments thereon until February 25, 1964, reducing said note to $2,786. 13. Defendant shows that these representations were false; that plaintiff knew they were false and did not intend to perform said promises at the time they were made; that plaintiff made said representations with the sole intention of deceiving defendant and to induce defendant to execute said note. 14. That on or about November 30, 1964, defendant did discover that plaintiff breached his promise in failing to credit certain sales commissions to said note. Upon learning of the plaintiff's fraud, the defendant ceased to make further payments on said note. 15. For further answer, defendant shows that he is not indebted to plaintiff in any sum or amount. 16. That defendant does not know the exact sum due him, but said sum is well known to the plaintiff. 17. For further answer, defendant shows that he provided plaintiff with a list of 'such orders by February 10, 1960' as provided in paragraph two of said termination agreement."
The plaintiff filed a renewed motion to strike the answer as amended on the grounds that it still constituted a mere general denial to an unconditional contract in writing and that the counterclaim was still barred by the statute of limitation, as had been urged in the demurrers to the original answer. The court granted the plaintiff's renewed motion to strike, on the ground that no issuable defense was filed on oath to an unconditional, written contract, and entered judgment in favor of the plaintiff, from which judgment defendant appeals.
The defendant's original answer to the plaintiff's ex contractu action on the promissory note pleaded a setoff of the plaintiff's alleged indebtedness to the defendant for sales commissions, arising from their employment termination contract. The answer was subject to at least three defects. First, it was not verified, as the verified petition required. Code 81-401 (Ga. L. 1895, p. 44). Second, the attached contract showed the defendant's counterclaim to be barred by the applicable statute of limitation, whether it was 4 years (Code 3-711) or 6 years (Code 3-705), which statute also applies to setoffs. Code 3-708. Third, the answer did not "set out the demand as plainly as if sued on" (Code 81-801), by attaching any itemization of the transactions on which the alleged commissions were earned. Smith v. Monroe, 82 Ga. App. 118, 122 (2) (60 SE2d 790) and cit.
In spite of its defects, however, the original answer set out facts sufficient to indicate and specify the plaintiff's breach of the contract as a cause of action for setoff and constituted enough to amend by under Code 81-1302, even though it was necessary in the amendment to amplify and vary the details of the particular transaction, and even to set up new matter constituting a valid defense against the action. Code 81-1302; Nauman v. McCoy, 84 Ga. App. 131, 132 (1b) (65 SE2d 853).
The omission to verify the answer was an amendable defect. Endicott v. Ogletree, 89 Ga. App. 161, 163 (1) (78 SE2d 851) and cit. Although the verified amendment did not purport to verify the original answer, it contained by reiteration substantially all of the allegations in the original answer. Gladney v. Borders, 50 Ga. App. 608, 609 (3) (179 SE 219).
A pleading can also be amended, under Code 81-1302, so as to set up additional facts such as would prevent the bar by limitation from attaching. Daniels v. Booker, 23 Ga. App. 644 (3) (99 SE 228); Collier v. Georgia Securities Co., 57 Ga. App. 485 (195 SE 920); Pendley v. Powers, 129 Ga. 69 (58 SE 653); Howell v. Seigler, 89 Ga. App. 221, 222 (2) (78 SE2d 874). By his amendment, defendant alleged that, in spite of his efforts to ascertain the amounts, if any, owed him by the plaintiff under the contract (which information the plaintiff had contracted to furnish him monthly), he was unable to do so because all the necessary records of the transactions out of which such amounts would have arisen were in the exclusive possession of the plaintiff, who not only denied access thereto to the defendant but also represented that no such amounts were due the defendant. These were allegations of such fraud as would prevent the running of the statute of limitation on the defendant's right of action on such indebtedness until the time of his discovery of the fraud, which was alleged to have been November, 1964. Code 3-807 (Ga. L. 1855-6, p. 236); Southern Feed Stores v. Sanders, 193 Ga. 884 (4) (20 SE2d 413). The allegation in the amended answer--that the defendant had provided the plaintiff with a list of defendant's orders for which commissions due, in accordance with the termination agreement--does not necessarily show knowledge on the part of the defendant that any commissions were due him, since the contract provided that any commissions would be "subject to back charges in accordance with standard practice," which might have partially or completely offset any commissions. Whether or not the defendant exercised ordinary or reasonable diligence to discover the fraud earlier is a matter of proof, to be determined by a jury. Brown v. Brown, 209 Ga. 620, 622 (7) (75 SE2d 13). Inasmuch as the amended answer alleges the defendant's inability to obtain from the plaintiff the particular records, sufficient compliance with the requirement of itemization and particularization of his claim is shown.
That a promise was made with the intention of not fulfilling it, to induce the defendant to enter into the contract, is another good allegation of actual fraud. Coral Gables Corp. v. Hamilton, 168 Ga. 182, 183 (8) (147 SE 494); Clinton v. State Farm &c. Ins. Co., 110 Ga. App. 417, 420 (138 SE2d 687) and cit.; Adamson v. Maddox, 111 Ga. App. 533, 535 (3) (142 SE2d 313), and cases cited on p. 536.
The amended answer was not defective as a setoff of fraud (ex delicto) to the action on the note (ex contractu). Although the answer alleges fraud for the purpose of tolling the statute of limitation, it is based upon a breach of the termination contract, an ex contractu claim.
The amended answer alleged an issuable setoff to the action on the note; therefore, the court erred in its judgment striking the amended answer and rendering a default judgment.
Judgment reversed. Hall and Eberhardt, JJ., concur.
Alston, Miller & Gaines, Lloyd T. Whitaker, Robert G. Edge, for appellee.
Poole, Pearce & Cooper, Jon R. Gray, for appellant.
Friday May 22 19:07 EDT

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