Bank of Florala v. American Nat. Bank of Pensacola

• Decision Date: 19 April 1917
• Docket Number: 4 Div. 671
• Citation: 199 Ala. 659,75 So. 310
• Parties: BANK OF FLORALA v. AMERICAN NAT. BANK OF PENSACOLA.
• Court: Alabama Supreme Court

75 So. 310

199 Ala. 659

BANK OF FLORALA v. AMERICAN NAT. BANK OF PENSACOLA.

4 Div. 671

Supreme Court of Alabama

April 19, 1917

Appeal from Chancery Court, Covington County; O.S. Lewis Chancellor.

Suit by the American National Bank of Pensacola against the Bank of Florala and A.E. Mann. From a decree for complainant defendant bank appeals. Affirmed.

W.O Mulky, of Geneva, and Weil, Stakel & Vardaman, of Montgomery for appellant.

Jones & Powell, of Andalusia, and Watson & Pasco, of Pensacola, Fla., for appellee.

SAYRE J.

The American National Bank of Pensacola filed the bill in this cause against the Bank of Florala and A.E. Mann, its former cashier, to enjoin the defendant bank from foreclosing its statutory lien on 16 shares of its stock, standing on its books in the name of Mann, and to enforce the complainant bank's lien on said shares of stock. The complaint bank claimed its lien by virtue of a pledge by Mann of his stock antedating his debt to defendant bank. The defendant bank based its lien on section 3476 of the Code, which gives corporations "a lien on the shares of its stockholders, for any debt or liability incurred to it by a stockholder, before a notice of a transfer or levy on such shares." There was no dispute about the existence or bona fides of the indebtedness claimed by either bank.

The sole issue between the parties is one of priority. Mann's pledge to the Pensacola bank of his stock in the Bank of Florala was not noted on the transfer registry of the latter bank, and the controlling question in the cause is whether the defendant bank had notice otherwise of the pledge at the time of its several loans to him. The cause being submitted in the court below for final decree on pleading and proof, decree was rendered for the American Bank of Pensacola, and the Bank of Florala has appealed.

It is clear on the evidence that Mann became indebted to the Pensacola bank on account of several loans negotiated by him in the years 1911 and 1912, and that to secure the same as they were made he pledged to that bank 40 shares of stock which he owned in the Bank of Florala. In December, 1914, the capital of the last-named bank having been depleted, there was a reorganization, one result of which was that Mann's 40 shares were reduced to 16, and these 16 were by the Bank of Florala issued and delivered to the Pensacola bank in lieu of the 40 which all along had been held by the latter as security for the debts of Mann negotiated as aforesaid and renewed from time to time. An objection was taken before the chancellor against the conclusion we have stated as to the dates of Mann's indebtednesses to the Pensacola bank and the pledges to secure the same that they could not be proved by the books of the bank which were incompetent evidence of the facts. Counsel here "insist on" the objection to the books, though it can hardly be said that they have argued the question. Scant attention was paid to our rule ( McDonald v. Carnes, 90 Ala. 147, 7 So. 919; Bolling v. Fannin, 97 Ala. 619, 12 So. 59) in the introduction of this evidence; but without regard to it, we are satisfied from the testimony of the witnesses Mann, Lamar, and West that Mann became indebted to the bank at Pensacola during the years 1911 and 1912--the more particular dates are not material--and that his stock was pledged for the security of his debts at their inception. The debts due from Mann to the Bank of Florala all date from 1913 and 1914. The brief for appellant states that the note of J.W. Mann, for $510, dated December 1, 1914, on which the defendant A.E. Mann became liable as indorser, evidenced an indebtedness that originated as far back as 1898. But it is very clear that there has been a mistake in the testimony of the witness Lanz, or in the stenographic report of it, upon which this statement is based. The context of the witness' testimony bears this out. If, however, the isolated expression upon which the statement is based be accepted as reported, it is clear error, for the evidence shows without dispute, other than such contradiction as may be inferred from the statement in question, and overwhelmingly in any case, that the Bank of Florala was not organized until 1904, nor did Mann have official connection with the bank until 1911, and all these credits for which the bank claims a lien under the statute were extended by Mann, acting as cashier, to Mann the individual.

Mann's hypothecation of his Florala bank stock with the bank at Pensacola was not noted on the former bank's stock book or transfer registry, as we have already said; but the Bank of Florala was chargeable with notice brought home through other channels to its officers and agents acting within the line and scope of their duty and authority, and the lien effected by the hypothecation thus brought to its notice could not be impaired by its...