This is an appeal from a summary judgment in favor of the Citizens & Southern National Bank (C & S) on a promissory note, signed by defendant as the maker. Defendant contends that the trial court erred in granting summary judgment as there were genuine issues of material fact. We agree. Held:
1. On May 24, 1971, a group of investors formed the "Bolton Road Medical Center,” a Georgia limited partnership, and obtained financing for construction of the Bolton Road Hospital. The partnership formed a wholly owned management company to operate the hospital and arranged to finance the equipment through C & S. To raise operating capital the partnership offered 1,200 "units” of "Limited Partnership Interest” at $2,500 per "unit.” C & S, through its Bolton Road branch bank, "agreed to loan $2,000 on each unit ... up to a million dollars ...” Thus, the purchaser of the unit would put up $500 (20%) and C & S would finance $2,000 (80%). C & S conditioned the financing upon a guarantee by the general partners to redeem the units from any borrower who defaulted in payment. The "units” would be pledged to the bank as security for the loan.
Sale of the "units” started in October, 1973, but the partnership was unable to raise sufficient funds needed by the hospital. C & S was aware of the hospital’s financial plight and advanced them $350,000 for hospital operations. The manager of the Bolton Road C & S branch bank described the hospital’s "insatiable appetite for cash.” He stated: "We knew they were in a cash flow problem ... that is basically why we changed ... that last letter, to show we wanted financial statements and wanted — we were kind of spreading the liability as I would call it a little bit... [W]e had shifted to the position of wanting — rather than having the hospital and the *856 partners — quote—on the loan, that we would want, you know, other principals involved ... and having their equity contribution involved in the hospital. . . [W]e felt that the hospital had gotten as much as we were comfortable with, and we wanted it more spread out. . . through different individuals, through the purchase of units ... [W]hat we had was the hospital operating in the red longer than it had been initially projected, and we had a repayment agreement on our funds . .. and it had gone from a repayment to a renewal situation.” We note that the Bolton Road Medical Center is presently in bankruptcy in the U. S. District Court.
When the defendant answered the complaint, he also filed a third-party complaint, naming the general partners of the Bolton Road Medical Center as third-party defendants. W. E. Strother, Sr., as one of the third-party defendants, and a general partner, admitted that he had acted as a "limited agent” for C & S in taking loan applications and borrower’s authorization form from the bank to a meeting of the general and limited partners and requested the doctors to sign the promissory notes for money needed by the Bolton Road Hospital. He had advised the doctors that all they had to do was to sign the blank promissory note forms. Defendant stated: "I was told this actually was a loan by the [C & S] bank to the [Bolton Road] hospital for operating expenses and that [the general partners]... would take over the payment of these notes and that the bank understood this ... I was told: 'No, you won’t have to pay anything on this unless you actually want to keep the shares’ . . . [I]n my conversation with the bank later, when I expressed this, it was a rather nonchalant response I got that expressed that they understood... [Strother said] it was to be a show of support for the hospital and the general partners were entirely responsible and we would not be expected to pay any payments . . . Mr. Strother said . . . that the bank understood that I would not be called on to make any payments . . .”
In the third-party defendant’s answer, it was admitted "W. Earl Strother, Sr., in causing the Note to be executed by the Defendant in favor of the Plaintiff was acting as a limited agent of the Plaintiff and made such *857 misrepresentations in the course of his duties as a limited agent of the Plaintiff.” Strother, in his affidavit, stated:"... it was understood by the Bank, by the General Partners, and the limited partners that the General Partners were the persons to whom the Bank should look for repayment of the funds advanced to the Partnership ... The General Partners agreed to make all payments under such Note... I discussed the aforesaid financing scheme with officers of the Bank, in particular Brooks Campbell... then head of the Bolton Road Branch of the Bank, and they were willing to advance additional funds to the Partnership on this basis. At that time the Bank was very anxious to have the business of the Partnership, the Hospital, and any and all limited partners of the Partnership, the Hospital, and any and all limited partners of the Partnership, and Campbell was very helpful in implementing the foregoing scheme ... Campbell would prepare the necessary forms, and I would give the limited partner a check for twenty per cent (20%) of the purchase price of such Units . . . Campbell would, after a General Partner had guaranteed the Note, transfer the funds represented by the Note to the Partnership account. On some occasions, I even took the documents from Campbell, had the limited partner sign them, and returned them to Campbell, all without the limited partner even going to the Bank to get his 'loan’... The Bank was fully aware that the limited partners were participating in the aforesaid financing scheme as an accommodation to the Bank and the Partnership... and did not intend to repay the Notes, since such Notes were at all times by all parties, including the Bank, intended to be obligations of the General Partners.”
(a) Defendant enumerates as error, lack of consideration flowing to him from the loan. He admits execution of the promissory note and agreed to let his name be used in this commercial transaction so that the loan to the hospital could be accomplished. A person who lends his name to another party to a negotiable instrument in any capacity is an "accommodation party.” Georgia Uniform Commercial Code, Code Ann. § 109A-3 — 415 (Ga. L. 1962, pp. 156,262). And, he is an accommodation party regardless of whether he received any compensation for so acting or did so gratuitously. 2
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Anderson, Uniform Commercial Code, 1000, Commercial Paper § 3-415:4. The accommodation party cannot legally assert lack of consideration for his accommodation as the value received by the principal debtor — in this instance, the hospital, is the consideration for which the accommodation party bargained.
McClure v. Farmers & Merchants Bank,
(b) Defendant contends that Strother was the "special agent” of the plaintiff in the solicitation and execution of this loan. "The relation of principal and agent arises wherever one person, expressly or by implication, authorizes another to act for him, or subsequently ratifies the acts of another in his behalf.” Code § 4-101. A "special agent” is one to whom there is a delegation to do a single act.
Armour Fertilizer Works v. Maddox,
This court has held that bare assertion or denial of the existence of an agency relationship is a statement of fact when made by one of the purported parties to the relationship, but when made by an outsider — as by the defendant here, bare assertions are merely conclusions of law.
Salters v. Pugmire Lincoln-Mercury, Inc.,
Treating these responses in inverse order, this court has consistently held that proof of agency may be made by showing circumstances, apparent relations, and conduct of parties
(King v. Towns,
Even if the conduct of C & S and Strother did not create the special agency, the subsequent ratification by C & S of Strother’s actions fall within the parameters of Code § 4-101. After execution of the note defendant stated, "someone from the bank called me . . . and I explained to them why I had signed the note, because Mr. Strother and the others to whom I had talked had taken full responsibility for the note ... . and that I would not be looked to for payment of the note. . .” When the payment slips were received by defendant, he sent them to Strother and called the bank and told them "the general partners were taking care of this, the bank seemed to understand.” Further, when the first quarterly payment was not made the bank called defendant and he told them "Mr. Strother has taken this over from me and he will make the payment... and the response they gave me indicated they understood what it was about.” Thereafter, the general partners made the first quarterly payment and it was accepted by the bank. The acceptance of benefits flowing from acts of an agent is "implied ratification” whether the principal intends to ratify the agency or not.
Armour Fertilizer Works v. Maddox,
The remaining ground asserted as establishing a special agency was an admission of one of the parties. In his answer, Strother admitted that "in causing the Note to be executed by the defendant in favor of the plaintiff [he] was acting as a limited agent of the plaintiff and made such misrepresentation in the course of his duties as a limited agent of the plaintiff.” As we noted earlier "assertion or denial of the existence of an agency relationship is a statement of fact when made by one of the purported parties . . .”
National Life &c. of Canada v. Massey-Ferguson Credit Corp.,
"The cardinal rule of the summary judgment procedure is that the court can neither resolve the facts nor reconcile the issues, but only look to ascertain if there is an
issue.” Bagley v. Firestone Tire &c. Co.,
"A litigant has a right to a trial where there is the slightest doubt as to the facts ...” Doehler Metal Furniture Co. v. United States, 149 F2d 130, 135 (2d Cir. 1945); Peckham v. Ronrico Corp., 171 F2d 653, 657 (1st Cir. 1948). "[A]ll inferences from the evidence introduced ... will be interpreted favorably toward making an issue of fact.”
Bagley v. Firestone Tire &c. Co.,
(c) Plaintiff contends that defendant should not be permitted to rebut an "unconditional promise to pay contained in [the note]... by proof of a contemporaneous oral agreement that it would never be enforced.” Plaintiff is correct in his statement of the law insofar as he goes, but he stops short of the full issue. We are aware that "[p]arol contemporaneous evidence is inadmissible generally to contradict or vary the terms of a valid written instrument.” Code § 38-501;
Pulliam v. Merchants & Miners State Bank,
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We cannot say as a matter of law that a jury could not have found actual or constructive fraud under the facts and circumstances recited above. See
Hendrix v. Scarborough,
Judgment reversed.