Bank of Loretto v. Bobo, 8 Div. 31

• Decision Date: 17 March 1953
• Docket Number: 8 Div. 31
• Citation: 67 So.2d 77,37 Ala.App. 139
• Parties: BANK OF LORETTO v. BOBO.
• Court: Alabama Court of Appeals

Page 77

67 So.2d 77

37 Ala.App. 139

BANK OF LORETTO v. BOBO.

8 Div. 31.

Court of Appeals of Alabama.

March 17, 1953.

Rehearing Denied April 7, 1953.

Bradshaw & Barnett and Elbert B. Haltom, Florence, for appellant.

Potts & Young and Wm. F. Baker, Florence, for appellee.

HARWOOD, Judge.

Trial below was had before the court without a jury.

The plaintiff is a Tennessee banking corporation and the defendant is a sole trader doing business in Florence, Alabama, under the name of Bobo Motor Company.

The complaint as amended was in one count and claimed the sum of $770 due from defendant by a check drawn by him on a bank in Florence, Alabama, in favor of the plaintiff on or about January 3, 1950, which was presented and payment refused because of defendant stopping payment on same.

To the complaint the defendant filed seven pleas.

Pleas 1 and 2 were of the general issue.

Plea 3 was no consideration.

Plea 4 was non indebitatus.

Plea 5 sets up no consideration, and then showed that:

'Defendant did issue a check in the amount of Seven Hundred Seventy And No/100 Dollars ($770.00), dated the 3rd day of January, 1950, payable to the Plaintiff, but at the time Defendant did not owe Plaintiff any money whatsoever and because of this fact stopped payment on the check before it was presented to the First National Bank for payment. Defendant alleges that the issuance of the check was merely a voluntary act of the Defendant without any consideration therefor and that when payment was stopped, at his request, the act in effect was destroyed; Defendant also alleges that the Plaintiff has no change of position in reliance upon the act of the Defendant; wherefore your Defendant says he is not indebed in any amount to the Plaintiff.'

Plea 6 went out on demurrer.

Plea 7, to which the demurrer was overruled, sets up that defendant purchased an automobile in good faith in Lauderdale County, Alabama, with no knowledge that plaintiff had a mortgage on said automobile, and after said automobile had been in Lauderdale County, Alabama, for more than six months; that the first knowledge defendant had of said mortgage was when plaintiff's attorney, Howard Freeman, came to Florence, Alabama, and advised him to same; that said attorney fraudulently advised defendant he was liable for the unpaid balance due on said mortgage, when in fact defendant was not so liable, and that such representation by plaintiff's attorney was made with intent to deceive defendant and induce him to act thereon; that defendant was and is a layman unlearned in law and did not understand the effect of recording statutes, whereas plaintiff's attorney was skilled in law, which fact the made known to defendant; that defendant relied on the representations of plaintiff's attorney and issued the check sued on, which check is null and void because procured by said false representations.

The plaintiff demurred to pleas 5, 6 and 7, which demurrers were overruled as to pleas 5 and 7, and sustained as to plea 6.

The plaintiff then filed a replication of the general issue to the pleas, and a special replication, also to all of the pleas.

This special replication sets up that the mortgage on the automobile was made by Ed Craig, and secured a note made by mortgagor Craig; some $770 being due on said note at the time defendant executed the check sued on; that on January 4, 1950 the defendant came to Loretto, Tennessee, and informed the officers of plaintiff that he had come to pick up the Ed Craig note and mortgage held by the plaintiff; that on said day the defendant executed the check sued on in consideration of the assignment of the mortgage and note to him; and plaintiff did on said day assign and deliver the note and mortgage to defendant; that defendant was at the time engaged in buying and selling automobiles in Florence, Alabama; that prior to January 4, 1950 the defendant had purchased the automobile in question from Ed Craig, not knowing when the vehicle had been brought into Alabama; that upon plaintiff's attorney informing defendant that he was going to repossess the automobile under its mortgage the defendant advised the attorney he had sold the automobile to a third party and if no attempt was made to repossess the automobile the defendant would pay the Craig mortgage; that plaintiff's lawyer practices in Tennessee and has never engaged in law practice in Alabama; that plaintiff's attorney made no false or fraudulent representations in any manner; that defendant had ample opportunity to advise with counsel of his choice; that defendant after talking with plaintiff's attorney called plaintiff by long distance telephone and stated that if plaintiff would hold its claim in abeyance he would come to Loretto and pay the Craig indebtedness; plaintiff's agent did hold the claim in abeyance until defendant came to its place of business and executed the check in question in exchange for the transfer of the Craig note and mortgage; that on the date of the said transfer the note and mortgage were valid obligations and liens under the law of Tennessee; and further, that subsequent to the date of said transfer various creditors of Ed Craig have collected from him obligations owed by him to them.

Issue was joined on the pleadings above mentioned.

The evidence presented below tends to show that on March 15, 1949 Ed Craig executed a note for $950 payable to plaintiff in 15 equal installments of $60 each, beginning April 15, 1949, and secured said note by a chattel mortgage on a Fraser automobile.

This mortgage was recorded in Lawrence County, Tennessee, on March 24, 1949.

On April 16, 1949 Craig made four payments for April, May, June, and July 1949. No other payments were made on the mortgage.

On April 9, 1949 the defendant (appellee) bought this automobile from Craig in Lauderdale County, Alabama. The defendant did not check the records of Lauderdale County, Alabama, before making the purchase, but did call two or more other automobile dealers in reference to Craig. The car bore Tennessee tags at the time of the sale.

Around May 1, 1949 the defendant sold this automobile to Elmer Johnson.

No further payment was made by Craig to plaintiff on his note though the bank sent him notices. In September or October, 1949, the plaintiff learned that the car was no longer in Lawrence County, Tennessee. It then turned the note over to an attorney to collect. This attorney produced no results, and about December 25, 1949 the plaintiff turned the matter over to another attorney, Mr. Howard Freeman of Lawrenceburg, Tennessee.

About the last day of December Mr. Freeman called at defendant's place of business in Florence, bringing the chattel mortgage with him.

Mr. Freeman testified that defendant admitted he had bought the automobile from Craig, and 'knew all about the matter.' That he had kept the car about a month and sold it to Elmer Johnson.

Freeman further testified that he told the defendant that the plaintiff had a mortgage on the car and that he, as a lawyer of Lawrenceburg, Tennessee, was representing the bank.

The defendant permitted Freeman to examine his records. Freeman observed that the motor number of the car, as listed on the defendant's records, did not correspond with such number in the mortgage and raised the question that it might not be the same automobile, and he would like to check the motor number on the car itself.

The defendant replied that he did not want Freeman to do that as he did not want his customers made uneasy. Freeman denied that he made any claim against the defendant whatsoever, stating that he told the defendant that he want to see the automobile to determine if it was the one the plaintiff had a claim on so he could repossess it.

Freeman stated that he showed defendant where the mortgage had been recorded in Tennessee, but that he did not attempt to advise defendant during their conversation at any time, and made no representations as to Alabama law.

On cross-examination Freeman testified that he told the defendant that the plaintiff had a legal claim on the car and that he was going to try and repossess it from whoever had it; that he did not think he went into detail as to what defendant's rights were in either Alabama or Tennessee; that he suggested to defendant that he see his lawyer about the matter.

Freeman further testified on cross-examination that the defendant stated that Johnson had bought the car in good faith, and that he wanted to straighten the matter out even if he had to pay the mortgage off, and he did not want Johnson to know about it.

Freeman further testified that the defendant finally stated that he wanted two or three days to look onto the matter an wanted the matter left in abeyance during that time. Freeman agreed to this and the men parted with the understanding that the defendant would contact K. J. Augustine, plaintiff's cashier, concerning the mortgage.

Mr. Freeman also testified that under the law of Tennessee that the assignment placed on the Craig note was assignment form, and further that under such law a check was prima facie presumed to have been issued for a consideration.

For the plaintiff Mr. K. J. Augustine, its cashier, testified that defendant called him over long distance telephone and told him he would be in Loretto in a day or so to 'take up or buy the Ed Craig note' and requested that no action be taken in the matter. Augustine told defendant the plaintiff would let the matter stand until he came to Loretto.

Mr. Augustine further testified that on January 3, 1950, the defendant came into the bank and introduced himself, stating that he was there to 'straighten up the Ed Craig matter,' or words to that effect, or that he was there to pay off the Craig mortgage. Upon being told that the amount due on the Craig note, $770, the defendant executed a check in that amount to plaintiff and presented it to Augustine.

Augustine testified that he then, in behalf of the bank,...