Federal Land Bank of New Orleans v. First Nat. Bank
| Decision Date | 27 October 1938 |
| Docket Number | 8 Div. 885. |
| Parties | FEDERAL LAND BANK OF NEW ORLEANS v. FIRST NAT. BANK OF SCOTTSBORO, ALA. |
| Court | Alabama Supreme Court |
Rehearing Denied Jan. 12, 1939.
Appeal from Circuit Court, Jackson County; A. E. Hawkins, Judge.
Suit in equity by the Federal Land Bank of New Orleans against the First National Bank of Scottsboro, Ala., and S. H. Whatley to establish priority of and foreclose a mortgage, in which there was a cross-bill by respondent First National Bank of Scottsboro to quiet title. From a decree granting relief under the cross-bill, complainant appeals.
Reversed and remanded.
Proctor & Snodgrass, of Scottsboro, for appellant.
Douglass Taylor and Thos. J. Taylor, both of Huntsville, for appellee.
The appellee, The First National Bank of Scottsboro, was one of the payees named in the check issued by appellant in consummation of the loan to Whatley, to discharge, among other debts, his indebtedness to the complainant secured by first mortgage, and his indebtedness to appellee secured by a second mortgage. This check was, in due course, delivered to the Scottsboro National Farm Loan Association of Jackson County, through whom the application for the loan was made for the purpose of distributing the proceeds of the loan in accordance with the application.
The check carried on its back the following matter printed or stamped thereon: "The endorsers hereon hereby acknowledge to have received payment in full of all liens or encumbrances of any nature or character whatsoever against the property mortgaged to The Federal Land Bank and the borrower hereby approves distribution of the funds."
The check was first endorsed by J. M. Money, the secretary and treasurer of the Scottsboro Farm Loan Association, and delivered by him to McCutchen, the attorney of Whatley the borrower, who prepared the abstract of title accompanying the application, also one of the payees, to procure the endorsement of all other payees, which he did, including the endorsement of the appellee. All endorsements were written by the said payees under the printed statement above quoted.
The check was delivered to appellee, on June 15, 1927 accompanied by the following deposit slips made by the assistant cashier at the time:
And the proceeds distributed on the check of the cashier or the borrower Whatley.
The check, in due course, was returned to the payor, and honored.
The evidence is without dispute that Miss Wimberly, the assistant cashier, in the absence of the cashier Gay from the bank, had the authority of the cashier to receive and endorse the check, and make deposit thereof. Her acts therefore were, in the absence of fraud, the acts of the appellee Bank. Harris v. American Building & Loan Association, 122 Ala. 545, 25 So. 200; Birmingham Trust & Savings Co. v. Louisiana National Bank, 99 Ala. 379, 13 So. 112, 20 L.R.A. 600.
The appellant's contention, therefore, is that the appellee bank, by endorsing said check, in the manner above indicated, and depositing the proceeds thereof, and aiding Whatley in the distribution thereof, is estopped to claim and assert as against appellant that its, appellee's, mortgage is a first lien on the property embraced in appellant's mortgage and also covered by appellee's said mortgage.
The appellee's first contention, as pleaded, is that the check "was endorsed by it in ignorance of the fact that the land conveyed to it by its mortgage was included in the last mortgage to Complainant, and that out of the proceeds of said check it only received $34.00, which, by agreement with the mortgagor, S. H. Whatley, was applied on another obligation of said mortgagor." That appellee This is but pleading its own ignorance and negligence in respect to the transaction.
The transaction of endorsing and receiving the check for deposit was a transaction between the appellee bank, the mortgagor Whatley, and his agents in respect to the distribution of the proceeds of the loan, and the language of the writing under which it endorsed was, in and of itself sufficient to put it on inquiry. Walker McCutchen, under the undisputed evidence, was the borrower's attorney, and pro hac vice the agent of the Scottsboro National Farm Loan Association, of which the borrower was a member and it, the association, in supervising the distribution of the funds, was not the agent of the complainant Bank, but acted for the borrower, and itself as a guarantor of the loan. Federal Land Bank of Columbia, South Carolina, v. Gaines, 290 U.S. 247, 54 S.Ct. 168, 78 L.Ed. 298; Hinds et al. v. Federal Land Bank of New Orleans, 235 Ala. 360, 179 So. 194.
There is no principle of law more firmly settled than that: "A mortgagee is estopped by any matter which would make it inequitable to assert rights under the mortgage against certain persons, as by recitals or statements contained in the mortgage, by joining in a deed with the mortgagor conveying the mortgaged premises together with another parcel owned by the mortgagee in severalty, by representing that the mortgage had been discharged or otherwise concealing his claim, and thus inducing another to take a mortgage on or purchase the premises." (Italics supplied.) 10 R.C.L. 760, § 77; Fay v. Valentine, 12 Pick.,Mass., 40, 22 Am.Dec. 397; L'Amoureux v. Vandenburgh, 7 Paige, N.Y., 316, 32 Am.Dec. 635; McIntosh v. Hill, 212 Ala. 136, 102 So. 101; Burleson v. Mays, 189 Ala. 107, 117, 66 So. 36.
So also, "When a party negligently and culpably stands by and allows another to contract on the faith of an understanding which he can contradict, he is afterwards estopped from disputing the...
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