Blue v. First Nat. Bank of Elba

• Decision Date: 19 April 1917
• Docket Number: 4 Div. 660
• Citation: 75 So. 577,200 Ala. 129
• Parties: BLUE v. FIRST NAT. BANK OF ELBA.
• Court: Alabama Supreme Court

75 So. 577

200 Ala. 129

BLUE v. FIRST NAT. BANK OF ELBA.

4 Div. 660

Supreme Court of Alabama

April 19, 1917

Appeal from Chancery Court, Coffee County; O.S. Lewis, Judge.

Suit by J.D. Blue against the First National Bank of Elba. From a decree dismissing the bill, complainant appeals. Reversed rendered in part, and remanded.

H.L Martin, of Ozark, and J.A. Carnley, of Enterprise, for appellant.

W.W Sanders, of Elba for appellee.

SAYRE J.

Appellant Blue filed his bill to redeem under a mortgage he had made to appellee, averring that the debt which the mortgage purported to secure was in large part usurious and that in other large part the consideration upon which it was given was illegal. On hearing the pleading and proof the chancellor dismissed appellant's bill.

After a duly careful consideration of the evidence in this cause the court finds the salient evidential facts to be as follows: In March, 1910, appellant was indebted to appellee, according to the latter's computation, in the sum of $10,328.67, of which $7,500, approximately, was secured by mortgages on appellant's farm lands, live stock, and farming implements, and crops to be grown. As for the balance of the above-named total, it consisted of debts to appellee bank due primarily from tenants on appellant's lands, but secured also by appellant's personal indorsement, and in considerable part it was made up of charges for money that had been advanced by appellee to appellant for the purchase of fertilizers. Moreover, appellant was indebted to the bank in the sum of $500 or $600 on account of overdrafts. The debt had been accumulating during a number of years and had been renewed from time to time. That it was largely swollen by usury is not seriously denied. As for the charges for fertilizers, appellant insists that they should be eliminated from the mortgage debt for the reason that the bank had no power under its charter, nor any license from the state, to sell fertilizers. Later we will revert to this point.

Considering in the first place the question of usury as affecting the result of this cause and the facts relevant and material thereto: J.E. Henderson and L.A. Boyd were the principal owners of the appellee bank at Elba, Boyd being its president. These same parties owned also a saw-milling plant at Richburg in the same county, where Boyd was general manager. At the latter place they had in their employment as bookkeeper a young man, named Scott, who had been with them since he was 22 or 23 years of age; i.e., for 6 or 7 years. Before the date above mentioned the bank had pressed Blue for payment of his debts; but Blue had no money. Nor had he acquaintance with or knowledge of Scott. Appellee's cashier, Powell, suggested to Blue that he apply to Scott for a loan with which to discharge his mortgages to the bank and provide some money with which to take up the overdraft and run him during the current year. Blue testifies that Powell told him that the bank had made arrangements with Scott to take up his (Blue's) indebtedness to the bank, and that, upon his inquiring, "What is that for? To break me up?" Powell said, "No, that Scott was to take up appellant's indebtedness to the bank, and what he failed to pay Scott, the bank would take it up, and that appellant should not be hurt; that that was the bank's way of doing business." The most significant part of this is denied by Powell, but it is not denied that between them they prepared a letter, which was signed by Blue and sent to Scott, asking for a loan of $11,575. In reply Scott offered to make the loan, leaving the sufficiency of the security and all other details entirely to Powell. On March 10, 1910, Blue executed a mortgage for $12,734 upon his lands, live stock, farming implements, crops for three years next in the future, and rents to become due to him from his tenants for four years, due and payable November 15, 1910, and on the next day (March 11th) received Scott's check on the bank for $11,575, which he deposited to his credit with the bank. On March 21, 1910, he gave the bank a check on account of "sundry Mtg." for $10,328.67. Powell testifies that the Blue mortgages to the bank, to which we have heretofore referred, were on the last-named dates marked "Paid." However, they remained in possession of the bank until they were produced by Powell on his examination as a witness in this cause. On November 4, 1910, Boyd wrote a letter from Richburg to Powell at Elba, inclosing the Scott mortgage and saying:

"Better notify the Doctor"--meaning Blue--"that you have the mortgage and Mr. Scott will expect it paid when it is due."

On December 14th, thereafter, Blue gave to Powell a check for $1,400, payable to Scott, which the latter on the next day indorsed to the order of "L.C. Powell, Cashier." On April 13, 1911, the bank took a mortgage from Blue to secure the payment of $12,500, payable December 1st thereafter, and covering substantially the same property as Blue's previous mortgages. On the same day Blue drew in favor of Scott a check on the Bank of Elba for $11,792.40. Scott indorsed this check to Boyd, the latter indorsed it to Powell, and on April 25th it was marked by the hank "Paid." Blue has never seen Scott, nor has any communication passed between them on the subject of the alleged indebtedness. The entire business has been carried on through Powell.

On these facts, stated thus in outline merely, we conclude that Scott, in lending, or pretending to lend, money to Blue with which to redeem the mortgages held against him by the bank, acted as a mere dummy or cat's paw for the bank, and hence that the operations by which the mortgages the bank held against Blue on March 10, 1910, were transmuted into the mortgage of April 13, 1911, were nothing more in legal effect than a renewal of Blue's indebtedness to the bank.

Powell's testimony is pointed to as being wholly and necessarily inconsistent with the conclusion stated above. We are not of that opinion. Without speculating upon possible reservations with which his testimony was given, it may be conceded that his entire testimony was literally true, without necessarily impeaching the conclusion which has forced itself upon our minds. It was...