Brown v. First Nat. Bank

• Decision Date: 01 May 1894
• Citation: 15 So. 435,103 Ala. 123
• Parties: BROWN v. FIRST NAT. BANK OF TUSCALOOSA.
• Court: Alabama Supreme Court

15 So. 435

103 Ala. 123

BROWN v. FIRST NAT. BANK OF TUSCALOOSA.

Supreme Court of Alabama

May 1, 1894

Appeal from circuit court, Tuscaloosa county; S. H. Sprott, Judge.

This was an action brought by the appellee, the First National Bank of Tuscaloosa, against J. Wick Brown; and counted on a promissory note. The facts of the case are sufficiently stated in the opinion. The defendant offered to introduce evidence tending to show that there was no such place as the Tuscaloosa Fence Factory. The plaintiff objected to the introduction of this testimony, the court sustained the objection, and the defendant duly excepted. Upon the hearing of all the evidence, the court at the request of the plaintiff, gave the general affirmative charge in its behalf and to the giving of this charge the defendant duly excepted. There was judgment for the plaintiff, and defendant appeals. Affirmed.

Hargrove & Vande Graaff, for appellant.

Frank S. Moody, for appellee.

HARALSON J.

The note sued on in this case reads as follows: "Tuscaloosa Alabama, April 28, 1891. Six months after date, I promise to pay to the order of W. B. Pollett & Co., the sum of one hundred and twenty-five dollars, value received, with interest from the 28th day of April, 1891, and do hereby expressly waive all exemption rights under the constitution and laws of the state of Alabama. Payable at Tuscaloosa Fence Factory. J. Wick Brown." The defenses set up were want and failure of consideration, fraud in procuring the execution of the note, and that at the time of its execution there was not, "and at no other time before nor since it was executed, was there, nor has there been, such a place or factory, as the Tuscaloosa Fence Factory." The replications to the pleas setting up these defenses-demurrers to which were overruled, and on which issue was joined-set up in substance, that the plaintiff, the appellee here purchased the note sued on, in the usual course of business for a valuable consideration, in good faith, before maturity, and without notice of any defense to said note, or of any defect or informality therein; that the defendant executed the note sued on, and stated therein, that it was payable at the Tuscaloosa Fence Factory, and the defendant cannot be heard to say, as against the plaintiff, that there is not now, nor was there at the time said note was signed, nor since, such a place as the Tuscaloosa Fence Factory, and that defendant is estopped by the recitals in the exhibit to his pleas, from denying that there was or is such a place.

It is a principle of general recognition, that a purchaser of commercial paper in the usual course of business before its maturity, for a valuable consideration, having no notice of defenses that existed between the original parties, or have subsequently arisen, is a "bona fide holder for value," and, as such, takes the instrument free from defenses which were available between the original parties. Rand. Com. Paper, § 14; 2 Daniel, Neg. Inst. 769a. This court has held to this doctrine with an unwavering hand. We have gone to the extent of holding, that such a purchaser is under no legal obligation to inquire of the maker whether there was any defense or any defect in the note (Wildsmith v Tracy, 80 Ala. 261); that in his hands, the instrument is discharged of all legal and equitable defenses to which it may have been subject before it came to him (Insurance Co. v. Quinn, 73 Ala. 560); that the holder of such paper, transferring it before dishonor, for value, to a bona fide purchaser, though he may have obtained it feloniously or fraudulently, can confer a title greater than he had, freed from all infirmity, and which will prevail over that of the true owner (Blackman v. Lehman, Durr & Co., 63 Ala. 550); that when fraud or illegality in putting it in circulation is shown, if the purchaser prove that he acquired it in a manner to make him a bona fide holder for value, he will be protected (Mayor, etc., v. Wharf Co., Id. 612). Such paper is, as Mr. Daniel says, like the currency of the country, a circulating credit, and before maturity, the genuineness and solvency of the parties are alone to be considered in determining its value, and it has been fitly termed, "a courier without luggage." 1 Daniel, Neg. Inst. § 1. It has been elsewhere also well said, that negotiable paper carries on its face its own history, so that nothing can be alleged against it, while it continues in circulation undishonored, as against an innocent purchaser, other than what is there apparent. "The policy of the law, in reference to commercial paper requires that it shall tell its own story, and have effect in the hands of innocent holders for value, according to what appears on it." Schneider v. Schiffman, 20 Mo. 571. Akin to the doctrine just asserted, is that other, which estops a party from denying that which he has declared in a note, bond or plea, to the detriment of another, who trusted the statement. It is not of importance, as has been said, whether the declaration or admission is made innocently or fraudulently, whether in point of fact it is true or false; it is the fact, that another has been induced to act on it, and must suffer injury, if its truth is gainsaid, that renders it conclusive. Prickett v. Sibert, 75 Ala. 319; 1 Brick. Dig. p. 796, § 10. When one of two innocent persons must suffer from the tortious acts of a third, he must bear the loss who enabled the third party, or the aggressor, to cause it. Person v. Thornton, 86 Ala. 308, 5 So. 470; Hill v. Nelms, ...