Montgomery Bank & Trust Co. v. Jackson

• Decision Date: 07 November 1914
• Docket Number: 108
• Citation: 190 Ala. 411,67 So. 235
• Parties: MONTGOMERY BANK & TRUST CO. v. JACKSON.
• Court: Alabama Supreme Court

67 So. 235

190 Ala. 411

MONTGOMERY BANK & TRUST CO. v. JACKSON.

No. 108

Supreme Court of Alabama

November 7, 1914

Rehearing Denied Dec. 17, 1914

Appeal from City Court of Montgomery; Gaston Gunter, Judge.

Suit by William Jackson against the Montgomery Bank & Trust Company to determine priority of debt and to subject the property and assets on which the company has a lien for the payment of its debts other than the stock held by complainant and for an order of sale of the stock and the payment of complainant's debt out of the proceeds of the same. From a decree for complainant, defendant appeals. Reversed and rendered.

Ball &amp Samford, of Montgomery, for appellant.

W.A Gunter, of Montgomery, for appellee.

McCLELLAN J.

This bill sought, and the decree below made effective, a lien, in favor of complainant (appellee Jackson) upon shares of the capital stock of the appellant banking company superior to that asserted by the banking company, another creditor of the common debtor, Lasseter, as upon the right provided by Code § 3476, which, as presently important, reads:

"All such corporations have a lien on the shares of its stockholders, for any debt or liability incurred to it by a stockholder, before a notice of a transfer or levy on such shares. ***"

The conclusion there prevailed:

"That there was a complete novation of the original contract of indebtedness of Lasseter to the bank when the bank took his (Lasseter's) liability as an indorser to the note in question and discharged him of his primary liability as a maker of the note February 28, 1912. The novation of the contract of indebtedness of Lasseter to the bank was made after notice to the bank of the hypothecation of the stock by Lasseter to Jackson. ***"

An essential factor in novation is the discharge from liability, under the original contract, of him who is bound by the original obligation of which novation is asserted. The "extinguishment of the old contract" must be a result of the new, independent contract. 29 Cyc. pp. 1130, 1131, 1133-1136; McDonnell v. Ala. Ins. Co., 85 Ala. 401, 413-415, 5 So. 120. Whether in a given case this essential feature, viz., substitution of a new contract for the old, was present, is a question of intention, to be deduced from the facts and circumstances. McDonnell v. Ala. Ins. Co., supra; 29 Cyc. pp. 1134, 1135.

In order to sustain the view prevailing below, it must be found from this record that there was an intent, common, at least, to the banking company and the original debtor, that the original contract of February 27, 1912, was extinguished by the dealings of March 28, 1912, in which dealings the banking company accepted notes of the Hill Crest Land Company, indorsed by Lasseter.

By the agreed statements of facts the presence of that intention is affirmattvely denied. That agreement contains these recitals:

"That the Montgomery Bank & Trust Company held, as collateral security for these loans, the various items as set out in the answer to the first interrogatory, and on the 27th of January, 1913, foreclosed its several collateral mortgages and all of the collateral held, except as hereinafter stated, buying in the same itself, at and for the sum of seven thousand one hundred forty-six dollars ($7,146), which said seven thousand one hundred forty-six dollars ($7,146) was at that time due to the Montgomery Bank & Trust Company by the Hill Crest Land Company, for the principal, interest and attorneys' fees on three notes due October 1st, November 1st, and December 1st, 1912, which three notes were a continuation and extension of the amount due to the Montgomery Bank & Trust Company before that time, extending back to December, 1910; the said debts being originally contracted by L. Lasseter & Company. That, in addition to the amount above set out, the Hill Crest Land Company was and is still indebted to the Montgomery Bank & Trust Company, upon a note dated March 28, 1912, and indorsed by L. Lasseter, payable on demand, which said note is an extension of a note given by L. Lasseter for money loaned him on the 27th day of February, 1912, payable on demand, to secure which there was deposited at the time warehouse receipts representing forty (40) bales of cotton, which cotton subsequently, without the consent or knowledge of the bank, was sold and disposed of by G.L. Harden &

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