City Nat. Bank of Decatur v. Nelson

• Decision Date: 29 March 1928
• Docket Number: 8 Div. 1
• Citation: 117 So. 681,218 Ala. 90
• Parties: CITY NAT. BANK OF DECATUR v. NELSON.
• Court: Alabama Supreme Court

117 So. 681

218 Ala. 90

CITY NAT. BANK OF DECATUR v. NELSON.

8 Div. 1

Supreme Court of Alabama

March 29, 1928

Rehearing Denied June 28, 1928

Appeal from Circuit Court, Morgan County; J.E. Horton, Judge.

Action by Lillie Ray Nelson against the City National Bank of Decatur. From a judgment for plaintiff defendant appeals. Reversed and remanded.

Somerville and Brown, JJ., dissenting on application for modification.

Defining clauses should be used only to interpret ambiguous words.

Count six alleges that during the years 1915, 1916, 1917, 1918 1919, and 1920, plaintiff was continuously the owner of a certain farm, called the Nelson farm, and during each of said years rented land to F.P. Sims, who cultivated same and raised crops thereon; that in the fall of 1919, Sims rented a part of said farm (described) for the year 1920; that while Sims was her tenant and during certain of the above-mentioned years plaintiff made certain advances in money (detailed) to him, all which were made at the instance and request of Sims who agreed to pay her the amount thereof with interest; that Sims agreed to pay plaintiff 9 bales of cotton as rent for 1916, a like amount for 1917 and 1918, and 15 1/2 bales for 1920; that he failed to pay rent in full for 1916, for 1917 for 1918, and for 1920--averring the respective amounts remaining due for each such year; that the balances due her for rent, advances, etc., became due and payable on the first day of November of the respective years; that on April 10 1920, Sims executed to plaintiff his promissory note for $2,335.80, due and payable November 1, of said year, which was the amount due for rent and advances, and included $600 advanced to him on that day; that the amount due her is the amount of said note and other sums later advanced; that during 1920 Sims raised a crop of cotton on said land, upon which crop plaintiff had a lien for the sum due her; that the defendant with notice of said lien took possession of 28 bales of said cotton so grown, and upon which plaintiff had a lien as aforesaid, and did thereafter, March 22, 1922, sell and dispose of said cotton, thereby destroying said lien, and preventing plaintiff from enforcing said lien for the collection of the amount due her for balance on rents and advancements, to her damage.

Ground (d) of the demurrer is as follows:

"It is not shown except by way of conclusion how the defendant prevented plaintiff from enforcing her lien."

The following charges were refused to defendant:

(4) If Sims deposited in Emmens Warehouse and intermingled ginned bales of cotton with gin marks on them or other marks of identification raised on the Nelson place, together with bales of cotton which he received from other sources, then I charge you that there is not in law such an intermingling or confusion of goods, as relieves the plaintiff from the burden of proving to your reasonable satisfaction the specific bales of cotton on which she had a lien, if any, which would be only such cotton as was raised on her place.

(11) Negligence upon the part of the bank in failing to inquire, or otherwise ascertain if the plaintiff had a lien on the cotton involved in this suit, is not sufficient to charge it with liability if it took the warehouse receipts in good faith, and to secure money which it had loaned.

(12) Notice to the City National Bank that Sims was a tenant of the plaintiff, is not sufficient to charge it with liability in this case, even though it purchased the cotton upon which the plaintiff had a landlord's lien; but before you can find the bank liable you must believe from the evidence that it acted dishonestly in the taking of the warehouse receipts.

(13) If the bank took the warehouse receipts in good faith then your verdict must be for the defendant.

(14) The fact, if it be a fact, that the bank knew or had notice that Sims was a tenant of the plaintiff, is not such knowledge as will charge it with liability in this case if it took from Sims the warehouse receipts honestly, and to secure money which it had loaned to Sims.

(15) If the bank acted honestly, taking the warehouse receipts to secure money which it had loaned to Fred P. Sims, and did not know at the time that the plaintiff had a lien on any cotton represented by any such receipt, then your verdict should be for the defendant.

(16) If you believe from the evidence that the defendant, bank, took the warehouse receipts from Fred P. Sims as a pledge to secure money which the bank loaned to Sims, and in taking such receipts it acted honestly and did not know that the plaintiff had a lien on the cotton represented by such receipts, then I charge you to find for the defendant, even though it had such notice of facts which if followed up in a diligent manner would have disclosed plaintiff's lien on the cotton.

The excepted-to portions of the oral charge made the basis of assignments 9, 10, 12 and 13 are as follows:

"Still if the person buying it under those circumstances had notice that landlord had a lien upon that crop, then the landlord's lien would be superior to the person buying under those circumstances."

"If the purchaser knew that the cotton was raised on rented premises by the tenant--if he knew that the person he is buying the cotton from was a tenant of a certain landlord, that is sufficient notice--although he may not know that the tenant owes the landlord a cent for rent or for advances, yet if he knows that that crop was grown upon rented premises, that fact alone would be notice of the lien."

"If an authorized agent of the bank, acting in the capacity as an authorized agent of the bank, had actual notice of the relation between the parties, that is, that the cotton was raised upon rented premises and that if he had actual notice--or if he had actual notice of facts which would have excited his suspicion and which would cause a reasonable man to inquire about it, then, gentlemen, if that inquiry would have developed the facts there was a lien upon the crops which was held by a landlord, that would be sufficient; and if the bank or any officer of the bank had notice of those facts--had knowledge of those facts, then, gentlemen, the bank would not be an innocent purchaser of the cotton--and they could not claim to have a superior lien to the landlord's claim of Mrs. Nelson, if she had a claim as landlord."

"In other words, the lien of the bank would only be superior to Mrs. Nelson's lien, even though the bank was an innocent purchaser for the amount which they would receive for the cotton; any balance above that indebtedness, with interest, Mrs. Nelson would be entitled to recover."

A.J. Harris, of Decatur, for appellant.

Tennis Tidwell, of Decatur, for appellee.

ANDERSON C.J.

This is the second appeal in this case. 214 Ala. 297, 107 So. 849.

We think the sixth count of the complaint not only sufficiently charges that the plaintiff had a lien, but that the defendant had notice that the cotton in question was subject to said lien.

It is true section 8806, of the Code of 1923, not only gives the landlord a lien on the crop grown by the tenant but upon the proceeds of the sale of said crop. It is also true, that there cannot be a total or entire destruction of the lien until the crop is disposed of and the proceeds are beyond reach of the landlord. Ehrman v. Oats, 101 Ala. 608, 14 So. 361.

But we have held, that a landlord may maintain case against one who, with notice of the landlord's statutory lien, purchases from the tenant crops grown on the rented lands, and removes or converts them so as to defeat or otherwise obstruct the enforcement of such lien by the statutory remedy of attachment. Thompson v. Powell, 77 Ala. 391. "The principle is analogous to, if not strictly identical with, that which affords a like remedy against one who converts property upon which a plaintiff has an equitable mortgage." First National Bank v. Sproull, 105 Ala. 280, 16 So. 879.

It is true, the complaint proceeds upon the theory of a total destruction and prevention of the enforcement of the lien, rather than an obstruction, but we do not think it was subject to ground (d) of defendant's demurrer, the one insisted upon in brief. The complaint avers how the lien was destroyed and how plaintiff was prevented from enforcing her lien, that is by selling and disposing of the cotton. If these facts do not show a total destruction of the lien so as to prevent the enforcement thereof, the demurrer does not point out the defect.

It is insisted, that the defendant was entitled to the general affirmative charge because a purchaser for value of the warehouse receipts. True, under the "Uniform Law for Warehouse Receipts," section 10509, of the Code of 1923 makes them negotiable if issued under the terms of section 10506, and sections 10549 and 10550 deal with transfers and the title thereby acquired, but we find nothing in these provisions protecting any one, but a bona fide purchaser, that is, one who purchases for value and without notice, express or implied, of a superior claim or title. Farmers' Warehouse Co. v. Barnett, 214 Ala. 202, 107 So. 46. Indeed, the main case relied upon by appellant's counsel, Commercial National Bank v. Canal-Louisiana Bank & Trust Co., 239 U.S. 520, 36 S.Ct. 194, 60 L.Ed. 417, in effect, holds that only bona fide purchasers are protected, that is, purchasers without notice. To like effect is the case of Warrant Warehouse Co. v. Cook, 209 Ala. 60, 95 So. 282. There was evidence from which the jury could infer that the defendant not only knew that Sims was the plaintiff's tenant, but that the cotton was grown on her place and was subject to her lien. At any rate, there was proof of such facts from which the jury could infer that the defendant could have...