Standard Cooperage Co. v. O'Neill

Gilbert, J.

(After stating the foregoing facts.) There was no denial that the defendant bought and received, at the price stated, each and every item of the account sued on. The only defense was that the account had been closed by note, and that the note was discounted at a named bank. There was no demurrer to *237 the answer. Scoggins, a witness for the defense, swore that only a portion of the account was closed by note, while the witness Treadaway swore that the manager of the creditor company admitted that “he had just closed the account by note; . . discounted it at the State Bank.” No such note was produced at the trial, nor was its whereabouts accounted for in any way except by the evidence of Treadaway, as above stated.

Did the evidence raise an issue of fact which the court should have submitted to the jury? We think it did. The general rule is that bank checks and promissory notes are not payment of a pre-existing indebtedness until themselves paid. Civil Code (1910), § 4314. Where there is an express agreement that such cheek or note shall operate as an extinguishment of the original demand, this agreement will prevail, independently of whether the note or check is ever paid. In a given case, whether there was such an express agreement depends upon the intention of the parties. Norton v. Paragon Oil Can Co., 98 Ga. 468, 470 ( 25 S. E. 501 ), citing a number of authorities. .In the absence of such express agreement to the contrary, the general rule applies. It is not contended in the instant ease that there was any express agreement that the note was to extinguish the account. Hence the making of the note could not amount to payment. Without more it would seem that the defendant had succeeded in raising an issue which only amounted to shadow, without substance, in which event the direction of the verdict would have been legally authorized. Sanders Mfg. Co. v. Dollar Savings Bank, 110 Ga. 559 ( 35 S. E. 777 ). However, in the case of Belmont Farm v. Dobbs Hardware Co., 124 Ga. 827 ( 53 S. E. 312 ), it was decided that where a promissory note was given in settlement of an account,’ without an express agreement that the note should extinguish the pre-existing debt, “as a condition precedent to final judgment” upon the account the note must be surrendered to the maker, or accounted for by showing that it is not in any event enforceable against him. In Glenn v. Smith, 2 Gill & Johnson (Md.), 493 ( 20 Am. D. 452 ), a leading case, fully argued, it was held that “the acceptance by a creditor from his debtor of his promissory note, for an antecedent simple contract debt, does not extinguish the original debt (both being of equal degree in the eye of the law), if it remains in the hands of the creditor unpaid, and he can produce it to be cancelled, or show it *238 to be lost. But he will not be suffered to recover on the original cause of action, unless he can show the note to have been lost, or produces it at the trial to be cancelled.”

As already stated, the plaintiff insisted that no such note was given, in extinguishment of the account, as claimed by the defendant. If such be the truth of the ease, necessarily there was no note to be produced or accounted for. If, on the other hand, such a note was made and delivered to the creditor company, the condition precedent must have been complied with before judgment in its favor could legally be awarded. In directing the verdict complained of, the jury was not allowed to pass upon this substantial right of the defendant, and to say whether or not the account or any portion thereof had been closed by note, in order to force the plaintiff to bring the same into court for surrender and cancellation, without which it would be possible for some transferee of the note to force payment of the same notwithstanding a previous recovery on the open account. Therefore the judgment must be Reversed.

All the Justices concur.