Holczstein v. Bessemer Trust & Savings Bank

• Decision Date: 14 May 1931
• Docket Number: 6 Div. 778.
• Citation: 136 So. 409,223 Ala. 271
• Parties: HOLCZSTEIN ET AL. v. BESSEMER TRUST & SAVINGS BANK.
• Court: Alabama Supreme Court

136 So. 409

223 Ala. 271

HOLCZSTEIN ET AL. v. BESSEMER TRUST & SAVINGS BANK.

6 Div. 778.

Supreme Court of Alabama

May 14, 1931

Rehearing Denied June 18, 1931.

Appeal from Circuit Court, Jefferson County; Wm. Hugh McEniry Judge.

Action by the Bessemer Trust & Savings Bank against Ben Holczstein and another. Judgment for plaintiff, and defendants appeal.

Affirmed.

Renewal note, executed in consideration of forbearance or extension of time granted bankrupt, held not without consideration.

Defendant interposed the following pleas to which demurrer was sustained:

"4. The plaintiff ought not to have and recover thereunder against this defendant, for that the note sued on does not represent his debt, and that said note was executed by the other defendant herein, and was in the hands of the plaintiff in such executed form when it was presented to this defendant by the plaintiff through its duly authorized agent, and this defendant's signature to said note as a surety or endorser thereon was requested, and this defendant executed said note as such surety or endorser and without any consideration therefor, the consideration, if there were any, having prior thereto passed to said other defendant.

"5. The plaintiff ought not to have and recover thereunder against this defendant, for that the note sued on is a renewal note, and the original indebtedness was represented by a note to which this defendant was not a party, other than as an accommodation indorser, and that in a renewal of said original contract of indebtedness this defendant endorsed or become surety on said indebtedness after the original contract had been executed and was in the hands of the plaintiff, and that no consideration moved from the plaintiff or any other person to this defendant, or to any one else for his signature as such endorser or surety, and there was therefore no consideration for his said signature to said contract and the note sued being a mere renewal of said original contract, said plaintiff is placed in no better condition or position and this defendant in no worse then existed under the original contract."

"7. For that the plaintiff ought not to have and recover thereunder for that the note sued on is a mere renewal note of a former note or notes to the plaintiff, the original of which notes evidencing the indebtedness now in the note sued on was dated to-wit: October 1st, 1926, and was executed by Highland Market 'by Ben Holczstein' and after said note was executed, as hereinabove stated, the plaintiff through its duly authorized agent, viz: its president, requested this defendant to endorse said note or contract, and this defendant did so without any consideration and for accommodation or at the request of the plaintiff, and not otherwise, and this note sued on in this case is but one of the renewals of said contract, and while on the face of the note sued on this defendant signed said note, he did so as a mere endorser, and not otherwise and with the understanding between him and the plaintiff that his liability on said obligation was not to be otherwise than that on the said original contract evidencing said indebtedness."

"10. The plaintiff ought not to have and recover thereunder for that on to-wit, October 1st, 1926, one R. H. Shearer, was the owner or proprietor of and was operating a grocery and meat business in the City of Bessemer, Alabama, under the name of Highland Market, and the defendant, Ben Holczstein, was desirous of purchasing said business and to this end interviewed the said Shearer, whereupon the said Shearer referred him to the plaintiff through its president. Thereupon the said Ben Holczstein conferred with the defendant McElhenney and requested him to interview Mr. Ross, the plaintiff's president. Whereupon the defendant McElhenney interviewed the plaintiff, through its said president and was told by Mr. Ross while acting within the line and scope of his authority, as president of the Plaintiff, that he was familiar with said Highland Market and knew it to be in good condition and making money and that it was the best business of its kind in the City of Bessemer, and that the Defendant, Holczstein, could not afford to let it get away from him, but that he should buy it, and instructed the said McElhenney to inform the defendant, Holczstein, that if he did not have the means with which to finance the proposition, that the plaintiff Bank would handle that part of it for him. The defendant, McElhenney, then reported, as instructed by plaintiff's president, to the defendant, Holczstein. Thereupon the defendant, Holczstein proceeded to take steps to and did purchase said business and in and as a part of the transaction executed in the name of Highland Market by Ben Holcztein a note and then endorsed said note personally, and delivered said note to the plaintiff Bank. Thereafter the defendant, McElhenney, was in plaintiff's bank and was requested by plaintiff's said President to endorse said note, and as an inducement procure the defendant McElhenney's endorsement of said note, Plaintiff, acting through and by its said President, while acting within the line and scope of his authority, assured said McElhenney that he, Ross, knew said Highland Market and the business that it was doing and that it was the best business of its kind in the City of Bessemer, Alabama, and that the fixtures alone were worth more than the face of said note, and further assured said McElhenney that it was impossible for him to lose anything, and that his credit would not be in any way affected by endorsing said note. That said representations were made to the defendant McElhenney by the said Ross as facts, and the defendant McElhenney believing that Mr. Ross was his friend, and knowing that he was not only the President of the plaintiff, but was a lawyer, and feeling that he could trust him, did then and there trust him in the matter and was by said misrepresentations induced to place his signature on the back of said note without any consideration moving to him or to any one else at his instance in the matter whatsoever. The defendants say that said representations so made by the plaintiff through its said President were not true, in that said business was not in a good condition and it was not a profitable business and it was not the best business of its kind in the City of Bessemer, Alabama, and that the fixtures alone were not worth the amount of said note, and that the note sued on is but a renewal of the balance due on said note, the said note sued on being the last of a series of renewals of said note. The defendants further aver that the defendant McElhenney's credit was hurt and embarrassed by reason of his signature on said note and that he has suffered great damages by reason thereof to the amount of to-wit, Thirty-five Hundred Dollars, and he offers to recoup said amount against the plaintiff and prays for judgment over for the excess.

"11. The plaintiff ought not to have and recover thereunder against this defendant for that the indebtedness represented by the note sued on is a part of an indebtedness first evidenced by a note dated, to-wit, October 1st, 1926, which last named note and was not paid in full on its due date, but was for the whole or a part thereof renewed from time to time down to the note sued on, which note sued on is the last renewal, and this defendant avers that he placed his name on said first named note merely as an endorser, and before placing his name on said note as such endorser and before entering into such contract of suretyship or indorsement this defendant applied to the plaintiff's president, George Ross, who was then and there acting within the line and scope of his authority for information as to any and all matters materially affecting the risk of the undertaking of this defendant, if he become an endorser of said note, and plaintiff's said President, while so acting within the line and scope of his authority for the plaintiff there and then assumed to answer said inquiry of this defendant and did then and there fail to give full information as to every fact within the plaintiff's knowledge and did then and there mislead or deceive this defendant by then and there stating and representing to this defendant that he, the said President of the plaintiff, knew the facts and that Highland's Market was then to-wit, solvent and the best business of its kind in the City of Bessemer, and was then and there making money and making more money than any business of its kind in the City of Bessemer, Alabama, and that the defendant, Ben Holczstein, who was then and there negotiating for the purchase of said business could not afford to miss the opportunity of purchasing said business, and that the defendant, McElhenney, could not possibly lose anything by endorsing said note, and that by endorsing said note his credit would in no wise be affected, and that the fixtures alone of said Highland Market were worth more than the face of said original note of October 1st, 1926, which was for to-wit, $3,250.00, and that at said time of the making of said representations the plaintiff was this defendant's banker, and this defendant had gone to its said banker to procure advice about the proposition hereinabove referred to and that plaintiff's said President was also a lawyer, and this defendant believed that he was his friend, and that he knew what he was stating to him, and that he did rely on said statement so made to him by plaintiff's said President, so acting within the line and scope of his authority, and was thereby induced to and did place his name on said note of October 1st, 1926 as such endorser, and that no consideration therefor moved to this defendant from any one. And this defendant avers that said

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