5 Ga. App. 865 | Ga. Ct. App. | 1909
The plaintiff sued upon a negotiable promissory-note under seal. The defendant filed a plea showing in substance that the note was wholly lacking in consideration. The court refused to allow the defendant to introduce testimony tending to-support his plea; and the sole question before this court is whether total lack of consideration is a good defense to a negotiable promissory note under seal.
It has frequently been held that failure of consideration, total or partial, is a good defense to such an instrument in this State. It has been held that fraud in the procurement may also be pleaded to such an instrument (House v. Martin, 125 Ga. 643, 54 S. E. 735); but it is said in the case of Slaton v. Fowler, 124 Ga. 955 (53 S. E. 567), that it is an open question in Georgia whether the common-law rule which forbade inquiry into consideration, in a suit based on a specialty, is applicable to promissory notes under seal to such an extent as to forbid recognition of a plea
We have made a painstaking and careful search of the decisions of our Supreme Court, and in no ease has the right to plead a total want of consideration to a negotiable promissory note under seal been denied, except by way of obiter. There is a case (Beazley v. Gignilliat, 61 Ga. 187) in which the opinion expressly recites that the promissory note involved was under seal, and yet the judgment of the court below was reversed for refusing to allow the defendant to lile a plea of lack of consideration. This is a full bench decision, but it does not seem to have been cited in any subsequent case. It would probably be subject to the criticism that it is a physical precedent only (as the section of the code on the subject of instruments under seal is not noticed), were it not for the fact that Chief Justice Warner, who wrote the opinion, cited the cash of Albertson v. Holloway, 16 Ga. 377. In. the case last cited (which was decided, however, prior to the adoption of our code) it was said by the court: “We believe that the rule, that a plea of failure of consideration can not be used as a defense to a specialty, applies to no other instruments, save such as were known to the common law as specialties; as deeds, bonds and instruments executed with like solemnities of sealing and delivery. It has been common for courts to say that such defense can not be set up to an instrument under seal. But we think that these words were used, or should have been used, with reference to such instruments as were executed with the ceremonies necessary to specialties at common law.” In Sivell v. Hogan, 119 Ga. 169 (46 S. E. 67), there is a somewhat lengthy review of the authorities by Justice Cobb, and the intimation of a personal opinion that a plea of original lack of consideration would not be a good defense to a suit based on a contract under seal; though the court very frankly states that what is said on this subject is obiter.
The Civil Code, §3656, provides: “A consideration is essential to a contract which the law will enforce? An executory contract, without such consideration, is called a nudum pactum, or a naked
In this connection, it may be pertinent to call attention to the peculiar relation existing between right and remedy at common law. In those times when'the common law was being developed, the courts had a very indistinct concept of an actual wrong in the abstract; indeed for the most part it seems that they had no concept at all of a legal wrong apart from the forms of action which had been framed and developed from time to time. We recall the familiar Grecian tradition that the robber, Procrustes, had a bed used in the torture of his victims. He placed his captives on. this bed, and if they were short they were stretched, and if they were tall they were lopped off so that the length of the body was made exactly the length of the bed. Common-law writs and forms wer.e proerustean beds, and the rights of parties were the hapless-victims that were stretched or cut to adapt them to the measure of the particular forms of action or defense which the courts had invented or permitted. Our doctrine, announced as a fundamental, in sections 3076 and 4929 of the Civil Code, that for every right there is a remedy, ,and every court having jurisdiction of the-one may if necessary frame the other, is not declaratory of the common law as actually practiced. Lawyers in this State will recall an interesting paper on this subject read before the*
Until the adoption of the Hilary rules, there was no provision, under the administration of the common law in the English courts, for pleading either an original lack of consideration or a failure of consideration, otherwise than under the general issue; that is to say, the plea of general issue put in issue not only the alleged promise, but also the alleged consideration therefor. 4 Ene. PI. & Pr. 944. If, therefore, the suit were on a specialty, either by action of debt or covenant, since the prescribed form for either of these actions contained no reference to consideration, there was no possibility of raising the question of the lack of consideration b}^ .the plea of the general issue, .as in assumpsit and other similar cases where a recital of consideration was required. The English courts, in the early times in which the principles of the common law were taking on their primitive embodiment, seem never to have been called upon to frame or permit a plea raising the point that a specialty was without consideration. A reason which promptly suggests itself as to why this state of things should have existed is that in those early times when commercial transactions were few, the execution of a deed or bond, or other paper at common law known as a specialty, was generally attended by such circumstances of solemnity and formality, and with such mafure deliberation as to the consequences, that but few, if any, cases actually arose in which the person sealing the bond or other specialty did so without receiving from the obligee something which the law in later times called a consideration; and consequently the cases were naturally rare in which a defendant could have been likely to seek to raise, by plea, the defense of want of consideration. The courts, therefore, may not have been called upon to frame a plea for the setting up of want of consideration to an action based on a specialty; the remedy not being created, because there was no need for it. The foregoing statement relates, of course, to the eariier days of the common law; but those earlier days were nevertheless the formative period. While the courts were developing the doctrine of consideration as a necessary element of a simple contract, specialties continued to be enforced, because of the formality of their execution, and were considered as entirely without the rule thus more lately applied as to consensual obligations
So rigid was the common-law practice of enforcing contracts under seal, on account of the formality and solemnity of their execution, that the rule in courts of law was that a sealed instrument could be discharged onfy by another instrument of as high a character, or else by the surrender of it so that the creditor could not make profert of it. A debtor who had complied with his bond but who had failed to take a release under seal could not defend an action on the bond. On the other hand, the law courts enforced, with like hardship, the rule that the obligee in a sealed instrument which had been lost or accidentally destroyed was prohibited from maintaining an action upon it, since he could not make the profert which the inflexible rules of legal procedure required. Pom. Eq. Jur. (3d ed.) §§70, 71, 383. Thus the matter stood in the courts of law. The courts of equity, however, took a broader view, more in accordance with common sense and the natural justice of the transaction. “The important part played by the seal in the early common law, and the intensely technical and arbitrary effects produced by it according to the legal rules, axe too well known to require any statement. . . Equity, disregarding such form and looking at the reality, always requires an actual consideration, and permits the want of it to be shown, notwithstanding the seal, and applies this doctrine to covenants, settlements, and executory agreements of every description.” Pom. Eq. Jur. (3d ed.) §383; Pollock’s Principles of Contract, 168, 169; Ord v. Johnston, 1 Jur. (N. S.) 1063, 1065; Houghton v. Lees, 1 Jur. (N. S.) 862, 863; Jeffreys v. Jeffreys, Craig & P. 138, 141. In a few of the early chancery cases, as is remarked in the footnote to the foregoing section from Pomeroy’s Equity Jurisprudence, it was held that voluntary agreements under seal would be enforced; but these decisions and dicta have long since
Every student of the development of the common-law system has been struck by the fact that between the courts of law and the courts of equity there existed throughout the formative period a juridic jealousy. Whenever courts of equitj'' began to give a remedy which modified the rigor and technicality of any common-law principle especially prolific of hardship and injustice, the law courts would at first protest against the invasion, but would finally follow the lead by themselves finding some wajr to give the same relief against the hardship and injustice. This was frequently done by resort to fictions; at other times by providing new writs, new processes, or new pleas formerly unknown or unrecognized. ITsualty, in the end, the law courts reached the point that in ordinary transactions they dealt the same degree of substantial justice (as contradistinguished from formal justice) as did the courts of equity. Eor example, despite the rigid adherence of the-early common-law courts to the rule that, although the debtor on a bond or other specialty had paid the demand in full, but had failed to secure a release under seal or a surrender of the instrument, even if he had taken an ordinary receipt reciting the payment of the bond, the creditor might still sue and recover the full amount of the bond again, yet when the courts of equity broke in on the rigor of the law and gave a remedy against this hardship, the common-law lawyers at first inveighed against the courts of chancery for this invasion of legal rules; nevertheless the equitable doctrine long ago became a part of the law enforceable in any and all courts. See Pomeroy, supra, §383, note 2. As showing how reluctance in this respect finally became alacrity, if not eagerness, it is interesting to note the case of Sturdy v. Arnaud (1790), 3 T. R. 599, in which the defendant had given to his creditor a bond to secure an annuity, but before this demand became due loaned Mm a sum of money, and it was agreed that the latter should retain the payments of the annuity as they became- due, until the same was discharged; and this creditor having become bankrupt and the defendant being sued by his assignees in bankruptcy, the agreement to retain was held to be well pleaded to an action on the bond for the payments on the annuity accruing after
So far as we have been able to find, no court of law situated in -.a jurisdiction administering the unmodified common law has so far departed from the early doctrine as to allow a plea of want ■■of consideration as a defense to a purely legal action on a common-law specialty; and yet to this extent alone the ancient rule seems to have preserved its original rigor. See footnote to the ease of Garden v. Derrickson, 2 Del. Ch. 386, as reported in 95 Am. Dec. 286. See also Joyce on Defenses to Commercial Paper, §217.
In this State, while the common law affords the basis of our system of jurisprudence, we have adopted the common law only so far as it is suited to our form of government and to our general juridie policy. We have emancipated substantive law from the forms of action, so that the former is no longer dependent upon the latter for its right of recognition. The form and the remedy are now subservient to the right. The distinction between law and ■equity has been to a large extent abolished, and courts of law administer equitable rights, and equitable defenses may be filed to actions at law. We no longer, except in a few very rare cases, resort to those fictions by which the common-law courts were wont to give elasticity to the system, but we do directly and without apology what the common-law courts did indirectly and, in a sense, equivocally.
So much of the common law as declared that the form alone in which the contract was embodied and the formality with which it was executed were equivalent to a consideration, or so important .as ,to forbid inquiry into consideration, or to dispense with the
Commercial negotiable instruments under seal were not recognized at common law. To apply to them the rigor of the common-law rule dispensing with consideration is to apply this rule in a case in which the common law itself did not apply it. A negotiable promissory note under seal is a legal hybrid; but it is fully recognized in the law of this State. Such a note at common law would not have been a commercial paper, nor would it have been classed as a negotiable instrument. We treat it as a commercial paper, and apply to it all the incidents of a negotiable instrument. The custom of putting a seal upon a promissory note has come about, not through a desire on the part of those making and taking such papers to foreclose the question of consideration, but chiefly to make the period of the statute of limitations applicable thereto twenty years instead of six years. It would seem just and reasonable and highly expedient, therefore, that the presence of the seal on such instruments should have no higher effect than the parties using it intend that it should have, and should not give to it the effect of foreclosing the question of consideration. As showing how any other rule would' result in hardship, take the case of A, desiring to borrow money from B, with C willing to give his accommodation paper to A, that he might transfer it to B as security for the loan. B prefers that the note he takes as collateral security shall be sealed, in order that it may not go out of date before the expiry of a period, more than six years, during which the loan is to run. C, therefore, executes his note under seal to A, who indorses it as collateral security to B. Afterwards A pays the debt due to B, and receives back the note signed by C. - Shall he then be entitled to collect this accommodation paper out of C?
Our use, in this State, of promissory notes under seal is so frequent as to make it a matter of the greatest inexpediency and bad policy to allow an inapt and antiquated rule of the common law to stand in the way of inquiry into the consideration for such paper. Whether we look at the question from the view that a sealed contract will be enforced because of its formality, without
We have shown above that courts of equity have always refused ■to give the same sanctity to a seal as did the courts of law, and have always allowed inquiry into consideration, and have never •dispensed with the necessity therefor. We have adverted to the fact that in this State equitable defenses may be asserted in courts of law. Civil Code, §5049, provides: “The defendant may, by proper pleadings, raise issues of law, or of fact, legal or equitable or both.” Any equitable defense not necessitating the granting of affirmative extraordinary relief may be successfully filed in a city court. House v. Oliver, 123 Ga. 784 (51 S. E. 722); Gentle v. Atlas Savings & Loan Asso., 105 Ga. 406 (31 S. E. 544); National Bank v. Carlton, 96 Ga. 469, (23 S. E. 388). It follows, ■therefore, that when.a-defendant is sued upon a sealed instrument lacking in consideration, he may plead the defense of want, of consideration, in ■ a court .of law, as he formerly could have done in a court of equity. This express point was ruled in the case of Judy v. Louderman, 48 Ohio St. 562 (29 N. E. 181). In 1834 .an act was passed ,in that State permitting the plea of lack of consideration .to .be ;filed /in an action founded on a specialty, but
Ktrra 5. Argument. Argument is limited, in misdemeanors and in ■oases originating in municipal courts, justice’s courts, or county courts, to thirty minutes on each side, and in all other cases to two hours on each side, unless by special leave an extension of time is granted by the court; and none will be granted except on specific application made before the argument of the case is begun. Save when section 5581 of the Code applies, only two counsel on each side will be heard. The plaintiff in error opens and concludes; and on motions the movant has the like privilege. Tlie reading from authorities cited on the brief, while not absolutely prohibited, is usually unnecessary and is therefore discouraged.
(As amended March 1, 1909. 1 Ga. App. p. XI.)