Court: Court of Appeals of Georgia; October 19, 1979; Georgia; State Appellate Court
The Court of Appeals of Georgia reviewed an appeal regarding a partial summary judgment in a case involving a promissory note executed by defendant Berry in favor of plaintiff Atlas Metals. Berry, a shareholder and employee of three corporations that transacted with Atlas, signed the note on September 2, 1976, at the request of Atlas's officer, Mr. Barashick, to serve as collateral for an account of Eagle Mining with Atlas. While Berry acknowledged his signature on the note, he raised defenses including duress, failure of consideration, mutual mistake, and payment.
The trial court granted summary judgment in favor of Atlas on the defenses of duress, failure of consideration, and payment, but allowed for trial on specific alleged payments made after the note's execution. Berry appealed the ruling on his defenses of payment and failure of consideration, along with the limitation on evidence regarding payments.
Berry claimed he owed no money to Atlas and asserted a mutual mistake, arguing that Atlas owed him approximately $11,772.35. He contended he was coerced into signing the note due to threats of jail and his impending hospitalization. Although he had issued checks to Atlas that were returned for insufficient funds, he later made good on one but not the other. Berry claimed Barashick was to maintain records of their dealings, but Barashick noted that transactions in the precious metals business typically lacked formal documentation. Berry's subsequent compilation of records led him to believe that Atlas owed him money.
The court found Berry's defense of failure of consideration to be without merit, citing that no additional consideration is necessary for a note given in payment of an antecedent obligation. It established that the execution of a note serves to eliminate defenses to the underlying account, provided the maker had knowledge of the relevant facts. Thus, the court upheld the trial court's decisions on the summary judgment motions.
A unilateral mistake regarding the amount owed at the time of executing a promissory note does not provide a valid defense if it stems from the party's own negligence. The defendant admitted to not keeping a ledger and reconstructing the account only after the lawsuit was initiated, indicating a lack of diligence. As a result, this negligence bars the defendant from claiming a mistake of fact as a defense. The trial court's summary judgment on the payment issue is partial, as it reserved the matter of alleged payments made after the note's execution for trial, given that earlier defenses were negated by the note itself. Generally, the introduction of a written note establishes a prima facie case that cannot be countered by parol evidence, especially where the parties engaged in arms-length transactions without evidence of fraud. Each party had an opportunity to verify the amounts due, and failure to do so due to negligence defeats the defense of mistake of fact. The judgment was affirmed, with both judges concurring.
