Elmore County Bank v. Avant

• Decision Date: 07 November 1914
• Docket Number: 544
• Citation: 66 So. 509,189 Ala. 418
• Court: Alabama Supreme Court
• Parties: ELMORE COUNTY BANK v. AVANT.

66 So. 509

189 Ala. 418

ELMORE COUNTY BANK v. AVANT.

No. 544

Supreme Court of Alabama

November 7, 1914

Appeal from Circuit Court, Coosa County; S.L. Brewer, Judge.

Action by the Elmore County Bank against J.G. Avant. Judgment for defendant, and plaintiff appeals. Reversed and remanded.

Holloway & McKenzie, of Montgomery, Hillier & Weston, S.J. Darby, and Jno. W. Batson, all of Rockford, for appellant.

William H. & J.R. Thomas, of Montgomery, and Felix Smith, of Rockford, for appellee.

MAYFIELD J.

This action was on a negotiable promissory note, made by appellee and payable to himself, and indorsed in blank.

The first count was in code form, with claim for attorneys' fees, and declaration of waiver added.

The second and third counts, added by amendment--omitting allegations as to attorneys' fees, waiver of exemptions etc.--were as follows:

"(2) The plaintiff claims of the defendant the sum of $250 due by promissory note made on the 3d day of September 1912, payable to himself, with interest thereon at the rate of 7 per cent. per annum from the date thereof, to wit, 3d day of September, 1912, which said note is now the property of the plaintiff.

"(3) And the plaintiff further claims of the defendant the further sum of $250 due by promissory note made by him on the 3d day of September, 1912, payable to himself, with interest thereon at the rate of 7 per cent. per annum from the date thereof, which said note was indorsed by the defendant and delivered to the plaintiff in due course, and which said note is now the property of plaintiff."

To this complaint the defendant filed 17 pleas, which cover five pages of transcript paper. The substance of all these special pleas was: (1) That the plaintiff was not the owner, holder or transferee of the note sued on; (2) that there was no consideration for the note; (3) that there was a failure of consideration; and (4) that the signature of the defendant was obtained through fraud or deceit.

The facts alleged to show failure of consideration, and fraud and deceit, are in substance as follows:

"That the signature of the defendant to the note sued on in the complaint was obtained by fraud, misrepresentation and deceit, in this, that one L.E. Aymard represented to this defendant that he and his associates were going to organize a bank at the town of Equality, in Coosa county, Ala., that he desired this defendant to become one of the original stockholders, and that if this defendant would execute the note sued on in the complaint he would hold the same until said bank was established, at which time this defendant should pay into the capital stock of said bank the sum of $250 and receive stock in said bank of the value of $250, and this defendant says said bank has never been organized and he has never received stock of any amount in said bank."

The plaintiff demurred to each of the special pleas numbered from 8 to 17, and also moved to strike pleas 14 to 17 because the same were frivolous, prolix, and repetitions of other pleas. The defendant confessed the demurrer to plea 8, which plea does not appear of record. The court overruled the plaintiff's demurrers, and motion to strike, and these rulings are separately assigned as error, as to each plea.

The plaintiff then filed a general and a special replication. The special replication was in substance as follows:

"For special replication to pleas 9, 10, 11, 12, 13, 14, 15, 16, and 17 separately and severally plaintiff says that the note, the foundation of this suit, is a commercial paper, complete and regular on its face, that the plaintiff purchased the same in good faith in the regular course of business, for value, before maturity thereof, and without notice of any defects of title or defense set up by defendant."

The authorities are not uniform as to the order of pleadings, and the burden of proof, in actions like the one at bar. The subject was discussed at some length, and the authorities reviewed, by Walker, C.J., in the case of Ross v. Drinkard, 35 Ala. 434. It is there said:

"After this review of the law as recognized in England and in some of the other states, we come to our own decisions. This court has, as may be gathered from its decision in Wallace v. Bank, 1 Ala. 567, Marston v. Forward, 5 Ala. 347, Thompson v. Armstrong, 7 Ala. 256, and Boyd & Macon v. McIvor, 11 Ala. 822, unequivocally asserted that fraud in putting a bill in circulation, or the want or failure of consideration, would cast upon the indorsee the burden of proving the payment of value. Neither the opinion in Pond v. Lockwood, 8 Ala. 674, nor Minell v. Read, 26 Ala. 730, is in conflict with those decisions. The former of those cases discusses the question as to what are the rights of a holder for value, but does not touch the question of the onus of proof as to the valuable consideration of the indorsement. The latter case pertains to a payment made to the payee of a note after its indorsement. It is very clear that the presumption in favor of the payment of value by the indorsee could not be affected by anything which might transpire between the original parties to the note or bill after its indorsement."

The above case was quoted in the case of Bank v. Halsey, 109 Ala. 207, 19 So. 526, where, speaking directly to the sufficiency of pleas like pleas 9 to 17 in this case, touching allegations of notice to the payee of defenses to the note, it was said:

"The further objection taken by the demurrer to these pleas, that they do not show that plaintiff had any notice of this infirmity of the original note, is in point of fact well grounded--the pleas do not show such notice--but in point of law the objection is untenable. Prima facie, the pleas, without averment of such notice, presented a good defense, and put it upon plaintiff to reply that it purchased the note in good faith, for value, before maturity, and without notice of the alleged infirmity. Ross v. Drinkard's Adm'r, 35 Ala. 434; Gilman Sons & Co. v. New Orleans & S.R. Co., 72 Ala. 566, 582; Mayor v. Wetumpka Wharf Co., 63 Ala. 611, 632; Johnson v. Hanover Bank, 88 Ala. 271 [." Tatum v. Bank, 64 So. 561.

The order of pleadings when the plaintiff relies upon the law merchant was stated by this court in the case of Slaughter v. Bank, 109 Ala. 157, 162, 19 So. 430, 432. It is there said:

"If the plaintiff desires to invoke the protection of the law merchant, it should interpose its replications, properly presenting the facts. None of the pleas can be taken as confessing that plaintiff was a bona fide purchaser of the note, before maturity, for value, without notice of the

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