J.R. Raible Co. v. City Bank & Trust Co.

• Decision Date: 12 April 1927
• Docket Number: 7 Div. 282
• Citation: 112 So. 543,22 Ala.App. 68
• Court: Alabama Court of Appeals
• Parties: J.R. RAIBLE CO. v. CITY BANK & TRUST CO.

112 So. 543

22 Ala.App. 68

J.R. RAIBLE CO. v. CITY BANK & TRUST CO.

7 Div. 282

Court of Appeals of Alabama

April 12, 1927

Appeal from Circuit Court, Calhoun County; R.B. Carr, Judge.

Action by the City Bank & Trust Company against the J.R. Raible Company. From a judgment for plaintiff, defendant appeals. Reversed and remanded.

Miller & Graham and Douglass P. Wingo, all of Birmingham, for appellant.

Hugh Walker, of Anniston, for appellee.

SAMFORD J.

Under section 9513 of the Code of 1923, amendments to the pleadings were properly allowed. Rulings of the court relating thereto were without error.

The issues as formed under the pleadings present every question involving the rights of the defendant. Therefore, if there is technical error in any of the rulings of the court on the pleading, such error is without injury to defendant's rights.

The rule applicable to special findings of fact by a judge in a trial without a jury under section 9501 of the Code of 1923 was declared to be one way in Germania Ins. Co. v Kitchens, 201 Ala. 674, 79 So. 246, followed by this court in American Cast I.P. Co. v. Birmingham Tailoring Co., 16 Ala.App. 583, 80 So. 157, and Johnson v McFry, 14 Ala.App. 170, 68 So. 716, but in Jones v. Hines, 205 Ala. 145, 87 So. 531, the holding in the above-cited cases was held to be error, and a different rule was announced, construing section 9502 of the Code of 1923 to mean that the finding of the court upon the facts is subject to review. From this we conclude and hold that the whole evidence adduced on the trial must be considered by this court to ascertain if the conclusions of fact reached by the trial judge are sustained by the evidence after according to such conclusions the presumption which must arise in favor of the conclusions of the judge where the testimony was taken ore tenus.

Where the trial is had before the judge without a jury, and the evidence is taken ore tenus, there are certain things that cannot be transmitted to the appellate court by record and transcript. Mr. Justice Somerville calls it "the atmosphere of the trial"; others say the manner of the witness in testifying, facial expression, hesitancy, etc. Whatever it is, the trial judge sitting in judgment is in better position to pass upon those things than any appellate court, and hence the presumptions. Hackett v. Cash, 196 Ala. 403, 72 So. 52; Bryan v. Hunnicutt, 16 Ala.App. 187, 76 So. 471; Kiser Co. v. Pope, 18 Ala.App. 54, 88 So. 197.

Before going into a general discussion of the case as made by the evidence, it becomes necessary to pass upon the liability of Raymond Heading Company (plaintiff's assignor of the cause of action) on a note given to defendant in words and figures as follows, to wit:

$1,500.00. Birmingham, Ala., Feb. 26, 1924.

"60 days after date we promise to pay to the order of the J.R. Raible Company, fifteen hundred dollars, value received, payable at Etowah Trust & Savings Bank, Gadsden, Ala.

"The right of exemption is hereby waived as provided in Constitution and laws of the state of Alabama, or any other state in the United States, and it is further agreed that the undersigned shall pay all costs of collection, including a reasonable attorney's fee if not paid at maturity.

"Treadway Cooperage Co., Inc., "[Signed] F.S. Treadway.

"Raymond Heading Co. Inc., "[Signed] F.S. Treadway."

"Witness.

"Two cars of heading as security."

It is contended by plaintiff that Raymond Heading Company, is not liable on this note, for that the consideration therefor passed to Treadway Cooperage Company, a corporation, and that the Raymond Heading Company was merely a surety on the note; that the Raymond Heading Company being a corporation, the attempt to become such surety was an ultra vires act and void. There seems to be no doubt that defendant advanced the money for the note and paid it to Treadway, the president, who was at the time the president and general manager of both the Raymond Heading Company and the Treadway Cooperage Company. There was positive testimony for plaintiff that the loan of $1,500 was made to the Raymond Heading Company. Treadway, testifying for plaintiff, after much "backing and filling," was finally brought to say: "In other words, the borrowing of this money was a borrow by both companies." Treadway does not seem to know how the money was used, but he is sure it was used partly by each company. The court in its special finding of fact on this point finds that the loan of $1,500 by plaintiff was to the Treadway Company and not to the Raymond Heading Company, and that the Raymond Heading Company signed the note as surety, and, being a corporation, this act was ultra vires and void. We have sought in vain for any evidence to sustain the finding of fact that the loan of $1,500 was made alone to the Treadway Company, and that the Raymond Heading Company signed said note as surety. The true facts with reference to this transaction are to be found in the testimony of Treadway, the plaintiff's witness, to wit: He, acting for both the Raymond Heading Company and the Treadway Company, being the principal stockholder and president and general manager of both companies, borrowed from defendant $1,500, for which he executed a joint note of both companies, he received the money as president of both companies and used it for both companies indiscriminately, as their separate needs appeared; and the fact that the Treadway Company signed first raises no presumption that the Raymond Heading Company signed as surety. Summerhill v. Tapp, 52 Ala. 227. The facts are therefore that both corporations intended to sign the note as principal, the consideration for which was paid to them jointly and used for their separate needs. Johnson v. King, 20 Ala. 270; Jackson v. Wood, 108 Ala. 209, 19 So. 312. The legal effect of this joint signature is to bind each for the proceeds of the loan used by it and to become surety for the other for the remainder of the loan. This holding is supported by the well-considered opinion of Gaines, C.J., Texas Supreme Court, but in which he has cited no authority. Northside Ry. Co. v. Worthington, 88 Tex. 562, 30 S.W. 1055, 53 Am.St.Rep. 778; L.R.A.1917A, p. 949, par. 106.

No fraud being shown in the transaction, either actual or implied, each principal is bound on the note for that part of the proceeds of the loan used by it, which under the evidence in this case is left in uncertainty and not from this record ascertainable. Northside Ry. Co. v. Worthington, 88 Tex. 562, 30 S.W. 1055, 53 Am.St.Rep. 778; Thomas v. Brownsville, etc., R.R. Co., 109 U.S. 522, 3 S.Ct. 315, 27 L.Ed. 1018.

As to that part of the loan for which each became the surety for the other, it would appear that the suretyship carried no obligation; it being presumed that such act was beyond the powers of the corporations, was ultra vires and void. The general rule is that corporations may not lend their credit in the form of accommodation suretyships and guaranties, for the very evident reasons that (1) the corporate funds belong to the stockholders, and by the very terms of the law creating it cannot be devoted to any other purpose than those indicated by its charter; (2) that to do so would be to exercise a power not conferred by the state; (3) such obligations rest upon no consideration, and therefore would amount to an unlawful diversion of funds. 3 R.C.L. p. 1091, par. 300; Haupt v. Vint, 68 W.Va. 657, 70 S.E. 702, 34 L.R.A.(N.S.) 518. The foregoing is the general rule, and, further, to fix a liability as such, it is necessary for the party undertaking it to establish, not only authority in the officer or agent to execute the paper, but also power in the corporation to bind itself in that way. It is said:

"This rule is universally applied to banking, insurance, railroad, plank road, *** manufacturing companies, and building and loan associations." Haupt v. Vint, supra.

The rule requiring special pleas setting up ulta vires contracts does not apply in case...