Bentley Mercantile Co. v. Blackwood

• Decision Date: 05 April 1923
• Docket Number: 6 Div. 593.
• Citation: 95 So. 808,209 Ala. 169
• Parties: BENTLEY MERCANTILE CO. ET AL. v. BLACKWOOD.
• Court: Alabama Supreme Court

95 So. 808

209 Ala. 169

BENTLEY MERCANTILE CO. ET AL. v. BLACKWOOD.

6 Div. 593.

Supreme Court of Alabama

April 5, 1923

Appeal from Circuit Court, Blount County; O. A. Steele, Judge.

Bill of interpleader by V. Foust and others against John Blackwood the Bentley Mercantile Company, and the North Birmingham Trust & Savings Bank. Decree for cross-complainant John Blackwood, and cross-complainants Bentley Mercantile Company and North Birmingham Trust & Savings Bank appeal. Reversed and rendered.

Black &amp Harris, E. N. Hamill, and Stokely, Scrivner & Dominick, all of Birmingham, for appellants.

Russell & Johnson, of Oneonta, for appellee.

MILLER J.

The bill of complaint as amended is presented to the court by V Foust, A. G. Foust, and Velpo Foust, Jr., against John Blackwood, Bentley Mercantile Company, a corporation, and North Birmingham Trust & Savings Bank, a corporation. Complainants aver they purchased certain lands and machinery therein described from John Blackwood; that he executed to them a deed to the property, and they executed to him a mortgage on it for the unpaid purchase price; that all of the mortgage debt has been paid except one note payable to the order of John Blackwood for $2,133.34, dated July 29, 1916 due and payable December 1, 1918, with interest from September 1, 1916, payable at the Alabama Bank & Trust Company, Gadsden, Ala. The bill was filed December 2, 1918, the day after the maturity of the note. The complainants deposit in court $2,517.35, which is the principal and interest due on the note for the purpose of paying it to the lawful holder and owner of it. They aver the note is in possession of the North Birmingham Trust & Savings Bank; it is claimed by this bank and also by John Blackwood, as well as the Bentley Mercantile Company. The complainants by the bill seek to pay the note to the legal owner, and to enjoin each defendant from foreclosing the mortgage.

Demurrers to the bill of complaint as amended were overruled by the court. Each defendant filed answer in the nature of cross-bill, setting up his or its special claim to the proceeds of the note. Demurrers to each answer and cross-bill were overruled by the court. On final hearing and decree the court declared that John Blackwood, the original payee, was entitled to $2,517.35, and directed it to be paid to him. From this decree the Bentley Mercantile Company and the North Birmingham Trust & Savings Bank take separate appeals, and assign separately this decree as error.

John Blackwood avers and claims in his answer and cross-bill that he owns the note; that he transferred and loaned it to his son, E. J. Blackwood, without any consideration, for the purpose of obtaining money or credit for his son individually, and for no other purpose; there was no consideration for the transfer; there was no authority for it to be hypothecated for the benefit of Blackwood-Bentley Mercantile Company, a corporation, which afterwards by change of name became the defendant Bentley Mercantile Company; and that, by collusion and fraud, with knowledge of this rights and defenses, the note and mortgage securing it were hypothecated by the Blackwood-Bentley Mercantile Company with the North Birmingham Trust & Savings Bank for debts due this bank by it.

The North Birmingham Trust & Savings Bank avers it is a bona fide holder of the note in due course of business for valuable consideration, without any notice of any rights or defenses of John Blackwood thereto; that the Bentley Mercantile Company borrowed $1,000 cash from it on May 5, 1918, delivered this note for $2,133.34 as collateral to secure the payment of the $1,000 cash loan, and as security for loans the bank had already made it in the sum of $3,000, and as security for loans to be made it in the future; and that the Bentley Mercantile Company now owes it over $7,000, which includes said cash loan of $1,000, for which this $2,133.34 note is held by it as security.

The Bentley Mercantile Company by its answer and cross-bill avers that John Blackwood owed it for merchandise over $3,000; that this note and mortgage were duly and formally transferred by separate instrument by John Blackwood to his son, E. J. Blackwood; and that the note was indorsed by John Blackwood and another son, J. E. Blackwood. E. J. Blackwood borrowed from I. E. N. Johnson the sum of $1,000, evidenced by a note to him, and transferred this $2,133.34 note and mortgage to him as collateral security. When this $1,000 note matured the Bentley Mercantile Company paid I. E. N. Johnson the amount due on it, and he transferred it to the Bentley Mercantile Company. This defendant claims that E. J. Blackwood was president of the Blackwood-Bentley Mercantile Company; that this $2,133.34 note and accumulated interest was credited by him on the books to the $3,000 account of his father, John Blackwood; and that it owns this note and mortgage. It avers it transferred this note and mortgage before its maturity to the North Birmingham Trust & Savings Bank to secure a cash loan of $1,000, which is still unpaid, to secure a prior indebtedness of $3,000, and as security for loans to be made in the future; that the bank is a bona fide holder of the note as security for about $7,000 due it, without any notice of any equities or defenses or rights of John Blackwood to it.

On September 30, 1916, John Blackwood, by formal instrument in writing, transferred this Foust mortgage and the debt...