Mobile Towing & Wrecking Co. v. First Nat. Bank

• Decision Date: 18 April 1918
• Docket Number: 1 Div. 25
• Citation: 78 So. 797,201 Ala. 419
• Court: Alabama Supreme Court
• Parties: MOBILE TOWING & WRECKING CO. et al. v. FIRST NAT. BANK OF LAKELAND, FLA.

78 So. 797

201 Ala. 419

MOBILE TOWING & WRECKING CO. et al. v. FIRST NAT. BANK OF LAKELAND, FLA.

1 Div. 25

Supreme Court of Alabama

April 18, 1918

Rehearing Denied May 30, 1918

Appeal from Circuit Court, Mobile County; Claude A. Grayson, Judge.

Bill by the First National Bank of Lakeland, Fla., against the Mobile Towing & Wrecking Company, and Harry T. Hartwell, to fix a lien upon 60 shares of stock, and have same issued and delivered to complainant. Decree for complainant, and respondents appeal. Reversed and rendered.

The bill alleges that on April 13, 1915, defendant Harry Hartwell, having for some time been indebted to the bank executed and delivered to the bank his certain promissory note for $6,250, dated as of that date and payable six months after date, and also indorsed and delivered to his bank the promissory note of one Arthur Bailey for the same amount, and of the same date, and payable six months after date to the order of the bank, and also delivered to orator certificate No. 40, for 60 shares of the capital stock of the Mobile Towing & Wrecking Company, as collateral security for said note, and that said stock so delivered stood on the books of the Mobile Towing & Wrecking Company, in the name of said Harry T. Hartwell, and that no part of said amount so secured and evidenced by said note has ever been paid by said Harry T. Hartwell to the bank, and that the said sum of $13,355.38 principal and interest, is now due from Hartwell to orator.

The second paragraph deals with the notice marked "Exhibit A," which is set out in the opinion, and alleges further, that in October, 1915, the bank's attorneys notified the Mobile Towing & Wrecking Company in writing that "your orator held as collateral security to the notes above set out certificate No. 40, for 60 shares of the capital stock of respondent Mobile Towing & Wrecking Company."

The third paragraph sets up the notice and sale of the certificates of stock, and the purchase by defendant, and a demand upon the Mobile Towing & Wrecking Company to transfer to the bank on the books of the corporation the said shares of stock, and to issue in the bank's name a new certificate for said capital stock.

The fourth paragraph sets up the refusal of the Mobile Towing & Wrecking Company to issue said certificate, and to transfer said stock on the books of the company, and the assertion of a lien by the respondent on the shares of stock for a debt due it by said Harry T. Hartwell.

The fifth paragraph sets up that the Mobile Towing & Wrecking Company has given notice by publication that it will sell in June, 1916, the 60 shares of stock standing in the name of the said Harry T. Hartwell, and which was purchased by the bank at the said sale aforesaid, to satisfy an alleged indebtedness of said Hartwell to the Mobile Towing & Wrecking Company.

The sixth paragraph alleges that whatever right or lien said Mobile Towing & Wrecking Company may have on or to said stock, such right or lien is subordinate to the right of orator to said stock, and orator is entitled to have said stock transferred in its name upon the books of the Mobile Towing & Wrecking Company. Defendant answered and made his answer a cross-bill. It admits the ownership by Harry T. Hartwell of certificate No. 40 for 60 shares of the capital stock of respondent. It denies the indebtedness of Harry Hartwell to complainant, as evidenced by the note, and that the respondent corporation in writing advised the bank that it was in receipt of complainant's notice relative to said shares of stock, and that proper notification had been made on its books that such certificate had been given as collateral security for said note, and that there was no other pledge on the stock registered on the books of the company It admits that Hartwell was secretary of the respondent company, but denies that he has authority as such to make such communication in behalf of the company. It alleges that by reason of the relation of the transaction notice to Hartwell is not notice to defendant, and that the statement contained in Exhibit A that respondent corporation had no claim against the stock was false, and that said Hartwell had no power or authority, individually or as secretary of the company, to bind it by such papers; for in truth and in fact said Hartwell on said date was indebted to respondent corporation in the sum of more than $40,000, and has ever since been so indebted to this defendant, and this defendant had a lien upon the stock for the payment of such indebtedness. It neither admits nor denies the allegations of the third paragraph, except that it admits a demand by complainant to have the certificate of stock issued to complainant. It admits the allegations of the fourth paragraph. It admits the allegations of the fifth paragraph, and further alleges the sale thereof. It denies that its lien is subordinate to the claim set up by defendant, and denies that complainant is entitled to have said stock transferred in its name upon the books of the Mobile Towing & Wrecking Company. It is then alleged that on March 16, 1914, said Hartwell was indebted to respondent in a sum exceeding $40,000, and said indebtedness is still due and unpaid on April 13, 1915, and has ever since remained due and unpaid, except for the partial payment thereof that has been affected by the sale of the stock standing in his name on the books of the Mobile Towing & Wrecking Company, as hereinafter shown. Said Hartwell owned and there stood in his name on the books of the respondent corporation 199 shares of the capital stock of the Mobile Towing & Wrecking Company, and the value of the entire stock that so stood upon the books of respondent in the name of said Hartwell was much less than the amount of his indebtedness to it. On May 23, 1916, this respondent demanded payment of said indebtedness of said Hartwell, and notified him that said stock would be sold at public outcry on June 26, 1916, for the enforcement of the lien of said respondent thereon. In the meantime said Hartwell paid no part of said indebtedness, and that this respondent, on June 26, 1916, sold said 199 shares of stock, including the 60 shares owned by complainant, at public auction to the highest bidder (here follows the notice), and at such sale this defendant was the highest bidder, and became the purchaser of said stock and is the lawful owner thereof.

Gregory L. & H.H. Smith, of Mobile, for appellants.

Inge & Kilborn, of Mobile, for appellee.

ANDERSON C.J.

Certain stock originally belonged to Guy Hartwell, who delivered it to Harry T. Hartwell indorsed in blank, and which was surrendered and canceled and new stock was regularly issued in lieu thereof in the name of and to Harry T. Hartwell,...