Calkins v. Vaughan

• Decision Date: 15 June 1927
• Docket Number: 3 Div. 791
• Citation: 217 Ala. 56,114 So. 570
• Parties: CALKINS v. VAUGHAN.
• Court: Alabama Supreme Court

114 So. 570

217 Ala. 56

CALKINS v. VAUGHAN.

3 Div. 791

Supreme Court of Alabama

June 15, 1927

Rehearing Granted Oct. 27, 1927

Rehearing Denied Dec. 15, 1927

Appeal from Circuit Court, Montgomery County; Leon McCord, Judge.

Action on a note by Frank Calkins against W.H. Vaughan. From a judgment granting defendant's motion for a new trial plaintiff appeals. Affirmed on rehearing.

Supreme Court, convinced of its own error, may of its own motion restore cause to docket and reconsider its rulings.

The action is on a promissory note. The complaint is in nine counts, variously charging the defendant with liability as maker, as indorser, as accommodated indorser, and as joint maker with one L.B. Stanley, and showing that the note is a negotiable instrument, payable to plaintiff on April 27 1923, at the Merchants' Bank at Montgomery, Ala.

The defendant pleaded the general issue and 35 special pleas, of which 8 were held good on demurrer. These set up separately the defenses that the note is negotiable paper, and that no notice of its dishonor was given within the time required by law; that presentment for payment was not made at the place of payment on the day of maturity; that presentment for payment was not made to any person at the place of payment nor to the maker at any place, on the day of maturity; that no steps were taken by the plaintiff to insure presentment to the maker, or at the place of payment; and that no steps were taken by the plaintiff to insure notice to defendant of the dishonor of the note, after presentment at the place of payment.

The plaintiff joined issue on the pleas, and filed 11 special replications, setting up, substantially, that: (1) On October 1, 1923, after maturity of the note, defendant promised plaintiff he would pay the note; (2) the note was made for the accommodation of defendant, and therefore he was not discharged by want of presentment or notice; (3) for 16 months prior to maturity of the note, said Merchants' Bank had been closed, and was in liquidation in the hands of the state banking department; (4) that at said maturity the maker, Stanley, had no funds in said bank, and had made no provision thereat for payment of the note, and defendant knew that said bank had been closed and was in liquidation; (5) the note was made for defendant's accommodation, and he had no reason to expect its payment if presented at maturity for payment; (6) the note was made for defendant's accommodation, and long before its maturity the maker moved to Hileah, Fla., leaving no funds in the bank where payable, and said bank had long before gone into liquidation, and said Stanley had become insolvent, and plaintiff, on April 27, 1923, mailed to defendant at his place of business in Montgomery, from Chicago, a letter fully postpaid, notifying him of the nonpayment of the note. Numerous grounds of demurrer were severally assigned to these replications, and all were overruled.

The evidence showed without dispute that the note in suit was made and indorsed under the following circumstances and considerations: The defendant and said Stanley separately sold to plaintiff blocks of stock in a farm enterprise organized by defendant, for which plaintiff actually paid in cash $7,000; but, for the protection of plaintiff's investment, they entered into a written agreement with plaintiff reciting the sale by them to plaintiff of 50 shares of Gary Farms Company for $16,666.66, and providing:

"It is further agreed that, if the said Frank Calkins (plaintiff) decides to sell said stock within 12 months from the date hereof, the said W.H. Vaughan and L.B. Stanley shall purchase the same at and for the said sum of $16,666.66, but, in the event they are unable to pay the cash money at the time the offer is made, they have the option to take said stock and give their note, collectively or individually, payable to the said Frank Calkins on or before two years from April 27, 1921, with 3 per cent. interest."

Plaintiff elected to sell the stock back to Vaughan and Stanley, and the transaction was adjusted by Vaughan giving his note to plaintiff for $3,585.83, without any indorsement by Stanley; and by Stanley giving to plaintiff the note in suit, indorsed by Vaughan. Vaughan was requested to sign the note as maker, but declined to do so.

The evidence showed that the said Merchants' Bank was closed and went into liquidation in December, 1921, which condition still continues; that it did no further business as a bank; and that its liquidating agent maintained an office for that purpose in Montgomery. It further showed that Stanley, the maker of the note, moved to Florida some time before April 27, 1923, and that he was insolvent and a bankrupt on that date--facts unknown to Vaughan.

No presentment of the note for payment was made or attempted; but Mr. Olson, plaintiff's Chicago attorney, who was employed to collect the note, testified that on April 27, 1923, he wrote and posted at Chicago a properly addressed and stamped letter to defendant Vaughan, at Montgomery, advising him that the maker of the note had failed to pay it on its maturity, and demanding payment by Vaughan, and that on May 1, 1923, he wrote to the Merchants' Bank, at Montgomery, asking if it could handle the note for collection. He stated that he received no reply to either of these letters, and that neither of them was returned.

Mr. Ball, of counsel for plaintiff, testified that before this suit was filed, and after maturity of the note, defendant discussed the matter of the note with him, and stated that he had no defense against it, and promised to pay it--asking for indulgences as to time. Defendant denied that he promised to pay the note as claimed.

The trial judge, on request, gave the general affirmative charge for plaintiff, and there was verdict and judgment for plaintiff for $4,686. Thereupon defendant moved for a new trial because of error in the verdict and judgment, and in the rulings of the court, and in the giving affirmative charge. This motion was granted, and the judgment set aside, and plaintiff appeals from that order and judgment.

Ball & Ball, of Montgomery, for appellant.

James S. Parrish, of Montgomery, for appellee.

SOMERVILLE J.

The pleadings in this case are unnecessarily voluminous, and we shall not undertake to deal with them in a detailed and technical way.

The action is a simple one to recover on a promissory note; the theory of defendant's liability being, as stated in the several counts, that he executed the note as a maker, or as an ordinary indorser, or as an accommodated (not accommodation) indorser.

The special defenses set up are (1) that presentment for payment was n t made at all, or not properly made, and (2) that notice of nonpayment or dishonor by the maker, Stanley, was not seasonably given to defendant, who was an indorser merely.

The replications offered in avoidance of these defenses are (1) that, after those alleged omissions of presentment and of notice of dishonor, defendant promised, nevertheless, to pay the note; (2) defendant was an accommodated indorser, and being primarily liable, as between himself and the maker, and having no right to expect payment by the latter, he was not injured by nonpresentment to the maker, nor by want of notice of dishonor, and was not discharged from liability by either of those omissions; (3) that the place of payment, the Merchants' Bank, had long before ceased to exist as such, thereby excusing presentment there; that the...