Appeal
from circuit court, Pike county; J. M. Carmichael, Judge.
This
was an action by the appellant, the Farley National Bank
against J. M. Henderson, the appellee, and counted upon a
bill of exchange which had been drawn by one J. C. McKenzie
upon J. M. Henderson, and made payable to the order of the
Farley National Bank, and which was accepted by J. M
Henderson. Judgment for defendant. Plaintiff appeals.
Reversed.
The
defendant filed eight pleas. Demurrers were sustained to the
second, third, fourth, and sixth pleas, and it is therefore
unnecessary to set out these pleas at length on this appeal.
The first plea was the general issue. The substance of the
fifth plea, as amended, is stated in the opinion. The seventh
and eighth pleas were as follows: "(7) Comes the
defendant, by his attorneys, and for further answer to the
complaint says that he is not liable to the plaintiff on said
acceptance described in the complaint, for this, to wit: That
prior to January 20, 1896, the plaintiff had discounted for
J. C. McKenzie & Co., a partnership composed of J. C
McKenzie and J. S. Eidson, three separate bills of exchange
each for the sum of $2,500, which said bills were on, to wit
the 20th day of January, 1896, still held and owned by the
plaintiff, and had not then matured, according to their tenor
and effect; that the said plaintiff, on, to wit, shortly
prior to the date last aforesaid, being desirous of having
said debt put in a different shape, requested the said J. C.
McKenzie to obtain from this defendant his acceptance for
$7,500, with which to take up and pay the three bills above
mentioned; that the said McKenzie informed the plaintiff that
he could not get the acceptance of this defendant for said
sum of $7,500, but that he could and would get it for $5,000,
and it was thereupon agreed and understood between plaintiff
and said J. C. McKenzie that the latter should procure from
said defendant his acceptance for said sum of $5,000, for the
purpose of taking up two of said bills of exchange; that the
said J. C. McKenzie thereupon came to this defendant, and
requested him to accept a paper for McKenzie's
accommodation for $5,000, for the purpose of enabling said
McKenzie to buy out the interest of said J. S. Eidson in said
firm of J. C. McKenzie & Co., but this defendant refused to
accept the paper for that purpose, and said McKenzie then
requested this defendant to accept a paper for $5,000, to be
used by the said McKenzie to raise money to buy additional
goods to add to the stock of goods, wares, and merchandise
then in the business of the said firm of J. C. McKenzie & Co.
Defendant avers that the said J. C. McKenzie was then
indebted to this defendant in the sum of, to wit, $1,000, for
which this defendant had no security; that upon the said
McKenzie agreeing and promising to use such acceptance for
$5,000 in the purchase of goods, to be added to the stock of
goods, wares, and merchandise then owned in the business of
said J. C. McKenzie & Co., this defendant, in consideration
of said promise, and relying thereon, agreed to accept, and
did accept, the bill of exchange for $5,000, being the same
bill sued on in this action, and, upon so accepting the same,
delivered it to the said J. C. McKenzie, and thereupon said
J. C. McKenzie, on, to wit, the 20th day of January, 1896,
took the said acceptance to the plaintiff, and then and there
informed J. L. Hall, the president of said plaintiff bank, of
the terms and conditions upon which he, the said J. C.
McKenzie, had procured the acceptance of this defendant upon
said bill as above set forth; and that the said plaintiff,
with such knowledge and notice, acting through said J. L.
Hall, its president, received said bill of exchange from the
said J. C. McKenzie in payment and satisfaction of two of the
said bills of exchange of said J. C. McKenzie & Co. herein
first mentioned, which two said bills of exchange were then
and there delivered to the said J. C. McKenzie. And defendant
avers that said J. C. McKenzie, at the time of making said
promise to this defendant to use said acceptance in
purchasing additional goods to be put into the business of
the said firm of J. C. McKenzie & Co., had no intention of
performing said promise, but defendant, in accepting said
bill as aforesaid, did so upon the faith of said promise, and
without any other consideration thereof, and the said bill
was sold to, or discounted with, the said plaintiff by the
said McKenzie in payment for said two bills of exchange first
mentioned, without the knowledge or consent of this
defendant, and that this defendant had no knowledge or notice
of the fact that said acceptance sued had been used for the
purpose to which it was applied, as above shown, until after
the maturity of said last-named acceptance, to wit, about the
1st of January, 1897, and upon obtaining such information
this defendant thereupon notified the said plaintiff that he
would not pay the said acceptance, wherefore," etc.
"(8) For further answer to the complaint, this defendant
says that he is not liable to the plaintiff on said
acceptance described in the complaint, for this, to wit: That
prior to January the 20th the said J. C. McKenzie had been
engaged in carrying on the business of merchandising with one
J. S. Eidson in the city of Montgomery, Alabama, and was so
engaged on the 20th day of January, 1896, under the firm name
of J. C. McKenzie & Co., which said firm was on said date
indebted to the plaintiff in the three separate bills of
exchange, each for the sum of twenty-five hundred and 00/100
dollars ($2,500), which said bills were on, to wit, the date
last aforesaid, still held and owned by the plaintiff, and
had not then matured, according to their tenor and effect.
That the said McKenzie was at that time desirous of making a
change in said business, either by buying out the interest of
the said Eidson therein, or by procuring this defendant to
buy out said interest and to engage in said business with the
said McKenzie; and, with this purpose in view, he came to
this defendant, and proposed to him that he (defendant)
should buy out the interest of said Eidson in said business,
and continue the same with the said McKenzie, but this
defendant declined so to do; and the said McKenzie thereupon
requested this defendant to accept a bill of exchange for his
accommodation for five thousand dollars, with which to enable
the said McKenzie to buy out the interest of the said Eidson
in said business, and to continue said business alone; but
this defendant declined so to do; and the said McKenzie
thereupon, to wit, on the date last aforesaid, requested this
defendant to accept for his accommodation a bill for five
thousand dollars (the said McKenzie to have the same
discounted, and with the money but additional goods, and put
them into the said business, and make arrangement to buy out
the said Eidson by other means, and to carry on said business
alone); and thereupon, with the distinct understanding and
agreement that the said McKenzie should take said bill of
exchange and have the same discounted, and use the money to
buy additional goods and put the same in said business (the
business to be carried on by the said McKenzie alone, who
should buy out the interest of the said Eidson with other
means), and in consideration of this promise and agreement,
and relying on the same, this defendant did then and there
accept a bill of exchange for the said McKenzie, payable to
the plaintiff, being the same bill of exchange sued on in
this action, and upon accepting the same as aforesaid this
defendant delivered the same to the said J. C. McKenzie, who
thereupon took the same to the Farley National Bank, and, in
violation of his said agreement and promise with and to this
defendant, delivered the same to J. L. Hall, as president of
the Farley National Bank, and for said bank, in payment and
satisfaction of two of the said bills of exchange hereinabove
referred to, so being held by said bank against the said firm
of J. C. McKenzie & Co. That no money was paid to the said
McKenzie by said bank for said bill of exchange, or other
consideration than that above stated, but the same was used
by the said McKenzie and the said Hall, acting for said bank,
in payment for, or substitution of, the said two bills of
exchange which said bank so held against the said firm of J.
C. McKenzie & Co. And this defendant further avers that the
said J. L. Hall, when so acting for plaintiff as aforesaid in
said transaction by which said bank obtained this
defendant's said acceptance sued on in this action, well
knew the facts hereinabove set forth, and that the said J. C.
McKenzie, in so using said acceptance for five thousand
dollars, was diverting and misapplying the same to another
and different use from that to which he had promised this
defendant the same should be applied. And defendant avers
that he had no knowledge or notice of such diversion or
misapplication of said bill of exchange until the date of
maturity thereof, and upon ascertaining the same he at once
notified the said J. L. Hall, as president of said bank, that
he would not pay the same, and was not liable therefor.
Wherefore," etc.
To the
fifth plea, as amended, the plaintiff demurred, among others
upon the following grounds: "(1) Said plea shows that
the said J. C. McKenzie discharged a legal, binding, and
valid obligation against him by the use of said bill in the
manner set up in said plea, and that by the discharge of said
obligation the said McKenzie was not rendered less able to
hold defendant harmless against liability on this acceptance
than if he had purchased the goods, as it is alleged he
agreed to do. (2)...
