Syllabus by the Court.
1. The
maker of a negotiable promissory note pays the amount due
thereon to any person other than the holder at his own risk
and a defense to an action on such note setting up payment to
one authorized by the holder to collect for him casts upon
the defendant the burden of showing, not only that he has
paid the money, but that he has made payment to a person
authorized by the holder to receive it, or else that it
actually reached the holder's hands.
2. In
the present case there was no evidence from which the jury
could rightfully infer that the person to whom the alleged
payment was made was the agent of the holder, or was
authorized generally or specially to receive for it payment
of the note, or that the holder ever received the money; and
consequently a verdict finding in favor of the defendant upon
his plea of payment was contrary to law, and should have been
set aside.
Error
from superior court, Clarke county; N. L. Hutchins, Judge.
Action
by the Bank of the University against W. R. Tuck. Verdict for
defendant. From an order refusing a new trial, plaintiff
brings error. Reversed.
ATKINSON
J.
The
Bank of the University brought suit in the city court of
Clarke county against W. R. Tuck upon a promissory note
executed by him on the 20th day of January, 1892, in favor of
the Reaves Warehouse Company, or order, for $2,200, besides
interest, costs, and attorney's fees which might be
incurred in collecting the same, and which had been indorsed
to it by the Reaves Warehouse Company, the payee. Among other
matters set up in his plea, which matters it will not be
necessary for the purposes of the present discussion to
consider, the defendant filed a plea of payment. He alleged
that the note sued upon had been fully paid off and
discharged in consequence of payments made by
him to the Reaves Warehouse Company, the original payee, upon
specified dated, the sums specified aggregating in amount the
entire principal and interest due on the note. The defendant
alleged, further, that the Reaves Warehouse Company was the
agent of the plaintiff, and was duly authorized to receive
and collect said moneys, and, as such agent, did collect and
receive the same. The defendant, having assumed the burden of
proof, proceeded to introduce evidence in support of his
plea. The evidence introduced by him was, in substance, as
follows:
William
R. Tuck, the defendant, himself testified: "I gave this
note [the note sued on] to the Reaves Warehouse Company. I
paid the note to the Reaves Warehouse Company, commencing to
pay in the fall after I gave it, and finished in Aug., 1893.
The dates of the payments were as follows: October 15, 1892,
$215.42; November 4, 1892, $55; November 13, 1892, $300;
August 8, 1893, $1,272.31. I paid in money and cotton and
drafts, except the last payment, for which I gave a new note.
About a month after the failure of the Reaves Warehouse
Company, I received a notice from the Bank of the University
about this note. I did not know that the bank held it. The
notice was in the shape of a note from Mr. Phinizy, president
of the bank, calling upon me to pay it, which I have lost.
The company's failure took place in April, 1894. I went
at once to see Mr. Phinizy, and told him I had paid the note
to the Reaches Warehouse Company. I had been in the bank
frequently between the date of the note and the failure. Mr.
Phinizy said, when I told him I had paid it, he was not
surprised. I had paid the note for $1,272.31, now sued on by
the national bank, also to warehouse company, prior to the
failure." Cross-examined, the witness said: "Some
of the payments were made before the note was due, and some
afterwards. All were made to the Reaves Warehouse Company. I
did not know where the note was when I made the payments.
Supposed it was at the warehouse. I did not pay it to the
Reaves warehouse Company, as agents for the bank, but as a
debt I owed themselves. I never heard that they were agents
for the bank. They did not claim to be so. I did not know of
any course of dealing between them and the bank. I paid the
company, because I supposed they held the note, and did not
ask whether they had it or not."
W. T.
Bryan, sworn for the defense, testified: "I was book
keeper for the Reaves Warehouse Company from 1889 to their
failure, on April 14, 1894. During this time the company
borrowed money from the Bank of the University, deposited
money there, and drew checks on the bank. Some of the money
borrowed was secured by transfers of notes of different
parties held by the company. The company indorsed such notes,
and delivered them to the bank as collateral security.
Transactions of this sort didn't occur every year. I
cannot say what amount of notes was thus transferred during
the whole time I was bookkeeper." Referring to a paper
(mentioned afterwards), he said there were $27,473.22 in this
lot. "There were others, but I don't remember the
amounts; may be $50,000, more or less." The defendant
here introduced papers, copies of which, marked "A"
and "B" are given at the end of the oral testimony.
The witness, referring to these papers, said: "I
don't know that these papers show all the notes. There
may have been others. The Reaves Warehouse Company owned the
notes thus transferred. The bank never collected any note
deposited with it by the company as collateral security while
I was bookkeeper for the company. When such notes were
withdrawn, the company did it. I withdrew one, --the
Spratling note. The McRee note was also withdrawn. The note
of Tuck sued on is in this paper [B]. When I went to the bank
to get the Spratling note, out for collection; that Spratling
was dead, and his executors wanted to pay it. I withdrew the
note, collected it, and put the money in the company's
business. The bank never demanded it. The debt of the company
to the bank, for which Tuck's note was held as
collateral, was never paid in full; $20,000 behind when
warehouse failed. None of these collateral notes were ever
paid directly to the bank. The money due on them, when
collected by the company, was credited to the maker, and used
in the regular course of business. I never took the money
collected on a note, carried it to the bank, and took up the
note. When we had settlements with the bank, our notes would
be renewed or paid. If paid, it was with money arising from
the general business. Q. Did the bank know you were
collecting these notes? A. Yes; I told you I went to the
bank, and told Mr. Hull that I wanted the Spratling note for
collection." Cross-examined, the witness as said:
"The notes placed with the bank as collateral were not
credited to the company, and did not affect the account of
the company in any way, whether one was withdrawn or not.
They were placed with the bank as security for the debt of
the company to the bank. The Spratling note was withdrawn,
with the bank's consent, for collection. It was collected
for the company, not for the bank. I don't remember
whether I withdrew the McRee note. That was withdrawn for the
purpose of taking a judgment, with the bank's consent.
The effect of the withdrawal of these notes was to release
them from the pledge of them as security, and lessen the
security to that extent. These are the only two I remember.
These collateral notes remained in the bank various lengths
of time, after maturity as well as before. The bank never
called on the company to pay the Tuck note or any of the
collateral notes. The indebtedness
of the warehouse to the bank was represented by notes ranging
from 30 to 90 days. When one would fall due, the warehouse
would pay the interest, and renew the note or pay the
note."
W. D
O'Farrell, for the defense, said: "I am one of the
firm of the Reaves Warehouse Company. It had dealings with
the bank since its organization, about eight years before
failure. The dealings between the bank and the company were
as follows: The company would take a note from one of its
customers. All such notes were the property of the company.
When the company was over checked, the bank would call on
them for some notes to make a showing to the directors. We
then deposited notes at the request of the president of the
bank, as a matter of accommodation to the bank. We knew when
a note was due. If a customer came in to take up his note, we
had the bills receivable account to show him, and the note
was paid to the Reaves Warehouse Company. We frequently had
collateral notes there to amount of $50,000 or more. I am
certain we were never called upon to pay any of these
collateral notes. They were taken up at intervals, as the
company saw fit. The company was never urged by the bank on
these notes, nor any one giving them. The company collected
such notes; the bank never did. I have no reason to doubt
that the bank knew that the company was collecting these
notes, for on several occasions I have gone to the bank and
withdrawn them, not to return them or to pay them, but
stating that I wanted them for collection. My recollection is
Mr. Hull would make a note of the matter, and attach it to
the papers. The bank never demanded payment of the company of
any such notes. They would stay in the bank sometimes a year
or a year and a half. The bank never said anything to us
about collecting, these notes. The company collected them,
whether due or not. The bank never called on us for any money
collected on these notes. The collateral notes were taken out
at intervals, as the warehouse company saw fit. The bank
collected none of these notes of the makers."
Cross-examined, the...
