Little v. People's Bank of Mobile

• Decision Date: 19 April 1923
• Docket Number: 2 Div. 791.
• Citation: 209 Ala. 620,96 So. 763
• Parties: LITTLE v. PEOPLE'S BANK OF MOBILE.
• Court: Alabama Supreme Court

96 So. 763

209 Ala. 620

LITTLE v. PEOPLE'S BANK OF MOBILE.

2 Div. 791.

Supreme Court of Alabama

April 19, 1923

Rehearing Denied June 14, 1923.

Appeal from Circuit Court, Sumter County; R.I. Jones, Judge.

Action by the People's Bank of Mobile against Lucile E. Little. From a judgment for plaintiff, defendant appeals. Affirmed.

R. B Evins, of Greensboro, and Thomas F. Seale, of Livingston, for appellant.

Stevens McCorvey, McLeod & Goode, of Mobile, and Patton & Patton, of Carrollton, for appellee.

McCLELLAN J.

The plaintiff, the People's Bank, declared on a negotiable instrument for $2,500 (with credits admitted), executed to it on August 2, 1916, by Denton Live Stock Commission Company, a corporation. The note was indorsed by defendant, appellant. In aid of the plaintiff's action, proceedings in garnishment (attachment against the nonresident defendant) were instituted. Besides the general issue, the defendant interposed pleas to these effects: That the note in question was the obligation of her husband, J. R. Little, only, and that by indorsement she could not validly become surety for his debt (Code, § 4497); that the note was given to secure an indebtedness of the Denton Company, in which defendant was not a stockholder; her husband was a stockholder, liable for the corporation's debts to the extent of his stock therein; that the plaintiff, a banking house, breached its duty to apply to the payment of this note the sufficient funds on deposit to the credit of the Denton Company whereupon defendant was discharged from liability as an indorser; and that, as executed, the note was the obligation of her husband, not the obligation of the Denton Company, and that the consequence was to make her the surety for her husband's debt. There was no demurrer to the pleas. Issue was joined upon their averments. The trial was by the court without a jury.

The face of the note in question is in these words and figures:

"$2,500.00. Mobile, Ala., August 2, 1916.

"On demand after date for value received we promise to pay to the order of the People's Bank twenty-five hundred & 00/100 dollars at the banking house of People's Bank of Mobile, Mobile, Ala.

"Each maker and indorser hereof hereby waives all right of exemption of personal property, and agrees that if this obligation is not paid at maturity to pay the cost of collecting, including reasonable attorney's fees. Demand, protest, notice of dishonor and all other requirements necessary to hold them, hereby waived by each and every maker and indorser of this note. Denton Livestock Company,

"By J. R. Little."

According to the bill of exceptions no descriptive abbreviation or word follows the words, "By J. R. Little," on the face of the note. It is manifest through the employment of, " By J. R. Little," following the name of the corporation, the Denton Company, and even though the note was signed with the corporate name, " By J. R. Little, Vice President," that the corporation was the principal in the note, the single payor; J. R. Little, or the vice president, being but the agent of the Denton Company to affix its signature thereto, not individually bound thereby as a maker or as a comaker of the note with the corporation. Richmond, etc., Works v. Moragne. 119 Ala. 80, 24 So. 834; Falk v. Moebs, 127 U.S. 597, 8 S.Ct. 1319, 32 L.Ed. 266. See Briel v. Exchange Bank, 172 Ala. 475, 55 So. 808; Liebscher v. Kraus, 74 Wis. 387, 43 N.W. 166, 5 L. R. A. 496, 17 Am. St. Rep. 171; Sparks v. Transfer Co., 104 Mo. 531, 15 S.W. 417, 12 L. R. A. 714, 24 Am. St. Rep. 351. Had the execution of the note considered in the Briel Case, supra, referred F. C. Briel's signature to an act of agency only, through the use, as here, of the preposition by, a materially different factor would have been present in the question there considered. So far as the face of the note is concerned, the preposition ( by) affirmatively restricted J. R. Little's relation to the note to the service of agency thereby unequivocally imported; Little's signature on the face of the note being given in that capacity only. Since the sole maker of the note was thus unambiguously shown to be the Denton Company, parol evidence could not be admissible to vary that feature of the contract between the parties.

On the reverse side of the note the names of the defendant, Lucile E. Little, and her husband, J. R. Little (who purports to have signed the Denton Company's name to the note), appear as indorsers (Code, § 5018), following, among other statements, this: "Each and every indorser of this note hereby waives demand, protest and notice of protest, and all requirements necessary to hold them as indorsers."

This waiver was effectual for the purposes stipulated. 8 C.J. p. 696.

It is conceded that the defendant was an accommodation indorser (Code, §§ 4984, 5022), who, as therein provided, became "liable on the instrument to a holder for value, notwithstanding such holder at the time of taking the instrument knew her [him] to be only an accommodation party." See Ala. Nat. Bank v. Rivers, 116 Ala. 12-14, 22 So. 580, 67 Am. St. Rep. 95, pronouncing legal principles applicable to such indorsements previous to the enactment of the Uniform Negotiable Instruments Act.

In the hands of a bona fide holder, in due course for value, accommodation paper "becomes precisely what on its face it imports, and is no less binding on the accommodation party because of its character as accommodation paper." Farley Bank v. Henderson; 118 Ala. p. 463, 24 So. 433.

In consequence of the express provisions of Code, § 5021, the indorser, the defendant, warranted that the instrument was at the time of her indorsement valid and subsisting, and also, by appropriating the provisions of subdivisions 1 and 3 of the preceding section (5020), the indorser warranted that the instrument was genuine in all respects it purported to and that all prior parties had capacity to contract. See Brannan's Neg. Inst. Law, pp. 243-250.

The undisputed evidence discloses that the payee made a loan on this note after its indorsement by the defendant, the defendant herself testifying:

"Yes, I indorsed such a note. I presume it is the note sued on in this case, in view of the fact that I have indorsed only one note of the Denton Live Stock Commission Company for $2,500, which was dated August 2, 1916."

It results from these considerations, referable to the theories of defense indicated, that the here impleaded indorser can take nothing either through absence of evidence of authority in J. R. Little to execute this note for and in the name of the Denton Company, or through the assumption that Little as vice president had no such authority to thus bind the Denton Company.

If the statements of the witness Boyles, plaintiff's cashier, that the loan was to the Denton Company, not to J. R. Little, individually, and that the debt was the Denton Company's, not J. R. Little's, individually, were entirely excluded, still the undisputed evidence otherwise invited and justified the finding that the debt, evidenced on the face of this note, was the debt of the Denton Company only, in which event reversal for the admission of inadmissible evidence will not be entered. First Nat. Bank v. Chaffin, 118 Ala. 246, 24 So. 80; Deal v. Houston County, 201 Ala. 431, 78 So. 809.

The statement of the witness Boyles, plaintiff's cashier, that the loan thus made was checked out by the Denton Company in the ordinary course of its business, was not inadmissible on the ground that the checks themselves were the best evidence of the matter recited. The right to the possession of paid checks-as respects the depositor and the bank-is discussed in section 460 of 2 Morse on Banking (5th Ed.). The stated subject-matter of the witness' statement was but collateral to the issues on the trial, not subject to the rule the objection sought to invoke. 22 C.J. p. 978, note 74; 13 Mich. Ala. Dig. p. 1046. The witness' testimony that the money was thus paid out was the statement of a collective fact, which, if unjustified, was susceptible of being disclosed on appropriate cross-interrogation of the witness.

As has been earlier indicated, the defendant's contention that the debt, evidenced by the note sued on, was that of defendant's husband, is not sustained; the burden of proof to that end being upon defendant. Hall v. Gordon, 189 Ala. 301, 66 So. 493. The statute's (Code, § 4997) application is founded upon the essential fact that the asserted suretyship of the wife must be of the husband's debt. Street v. Bank, 203 Ala. 97, 82 So. 111, 112. The debt represented by this note was the debt of the Denton Company, a corporation. In the absence of contractual stipulation to the contrary, the corporation being a distinct entity from its stockholders, "a stockholder is not, merely by virtue of his position, *** a cosurety of the corporation. There is no duty imposed by law upon him to use his own individual means to assist the corporation in its money difficulties. ***" 14 C.J. p. 843. "The fund provided as capital stock becomes the property of the corporation. ***" 14 C.J. p. 381. Hence if there is no stipulation to the contrary, the assumption by the corporation of a corporate obligation operates to charge the corporate assets, not the individual responsibility or property of the stockholder. The promise of the corporation is not the promise of the individual stockholder. So the theory that the defendant was a surety for her husband, J. R. Little, through or in consequence of his relation of stockholder to the Denton Company, is not well founded.

It is insisted, under defendant's fifth plea, that the defendant was discharged as an indorser because upon the maturity of the note (which the plea avers occurred within a...