Montgomery County v. New Farley Nat. Bank

• Decision Date: 15 February 1917
• Docket Number: 3 Div. 254
• Citation: 200 Ala. 170,75 So. 918
• Parties: MONTGOMERY COUNTY v. NEW FARLEY NAT. BANK.
• Court: Alabama Supreme Court

75 So. 918

200 Ala. 170

MONTGOMERY COUNTY v. NEW FARLEY NAT. BANK.

3 Div. 254

Supreme Court of Alabama

February 15, 1917

Rehearing Denied May 31, 1917

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

Action by County of Montgomery against New Farley National Bank. Judgment for defendant, and plaintiff appeals. Transferred from Court of Appeals under section 6, Acts 1911, p. 449. Reversed and remanded.

McClellan J., dissenting.

Suit by the county of Montgomery against the appellee bank for the recovery of $583.75, balance due on the purchase price of certain bonds of date May 1, 1909, issued by the county. The issue aggregated the sum of $150,000, and the bonds were of the denomination of $1,000. The complaint alleges the purchase of the bonds by appellee, and then alleges the delivery of $50,000 of said bonds on May 31, 1909, $50,000 on June 17, 1909, and the remaining $50,000 on July 19, 1909 "all in accordance with the terms of the contract of sale." It then sets forth the amount of payments made showing as a balance due on the purchase price the sum here sued for, representing a balance of accrued interest. The cause was tried upon the single count of the complaint and the plea of the general issue, with leave to give in evidence any matter that might be specially pleaded. Trial was had before the court without a jury, resulting in a judgment for the defendant, from which judgment the plaintiff prosecutes this appeal.

The contract was shown to have been made by way of a proposal on the part of the defendant bank and an acceptance on the part of the board of revenue of Montgomery county. The proposition was, as alleged in the complaint, that the bank should take the bonds, which were to bear interest at 4 1/2 per cent payable semiannually, at a sum equal to their par value, with accrued interest to date of delivery, and a premium of $3,000; the bonds to be delivered on or before June 1, 1909, or as soon as they could be prepared and properly executed, and the premium of $3,000 should be paid. The proposal also required that the county furnish a full, certified transcript of all proceedings leading up to and culminating in the issue of said bonds, together with an original opinion from a certain well-known Boston law firm approving the same.

The bonds were shown to have been delivered in three separate installments of $50,000 each, on the respective dates of May 31, June 17, and July 24, 1909. The following entry from the official record of the proceedings of the board of revenue of Montgomery county on May 22, 1909, was offered by the defendant:

"Upon motion of Mr. Cook the New Farley National Bank was relieved of paying interest on the $150,000 after May 22d. Upon motion of Dr. Duncan, the money at the Farley National Bank is to be delivered to the board as demanded. Upon motion of Dr. Duncan, Mr. David Fleming, president of the board, was authorized and requested to secure from the safety deposit vault at the First National Bank of this city fifty of the road and bridge bonds belonging to the county, and to make delivery of same to the New Farley National Bank of this city upon payment of $50,000 accrued interest to date upon the whole issue of $150,000, and a premium of $3,000, the amount received to be delivered to the treasurer of said county."

The defendant also offered in evidence the following communication, which the defendant delivered to the board of revenue on May 31, 1909, and which was substantially all the evidence in the case:

"State of Alabama, Montgomery County. Whereas, the bid of the New Farley National Bank of Montgomery, Alabama, made March 27, 1909, for the issue of $150,000 county of Montgomery, Alabama, bonds for road and bridge, to be dated May 1, 1909, was accepted by the board of revenue in said county; and whereas, the county of Montgomery has complied with all the conditions imposed by said bid and has done every other thing that was required, and has released the said the New Farley National Bank of accrued interest since the 21st day of May, 1909, on said bonds: Therefore, in consideration of the premises, the New Farley National Bank hereby accepts unconditionally the whole issue of the said $150,000 bond, and agrees to pay the face value of the said bonds upon presentation to the said bank."

John R. Tyson and A.H. Arrington, both of Montgomery, for appellant.

Steiner, Crum & Weil, of Montgomery, for appellee.

GARDNER J.

The foregoing statement discloses that the parties entered into a valid and binding contract in regard to the sale of $150,000 of the bonds of the county of Montgomery at their par value, with accrued interest to date of delivery and a premium of $3,000.

It is the insistence of counsel for appellee that the resolution of the board, of May 22, 1909, set forth in the above statement of the case, relieving the bank from the payment of interest after May 22d, was a modification of the original contract of purchase, supported by the mutual assent of the parties, it being in the nature of an agreement changing the amount of the purchase price named in the original executory contract, and that such agreement was valid and binding and needed no other consideration for its support than the mutual assent of the parties. 2 Dill.Mun.Corp. § 820; Meech v. Buffalo, 29 N.Y. 198; Robinson v. Bullock, 66 Ala. 554; Cooper v. McIlwain, 58 Ala. 296; Prestwood v. Eldridge, 119 Ala. 73, 24 So. 729.

On the other hand, it is insisted by counsel for appellant that the agreement to relieve the bank of the payment of interest after May 22d, as evidenced by the resolution above referred to, was not supported by any consideration, and that it was therefore a nudum pactum, and possessed no binding force. Shriner v. Craft, 166 Ala. 146, 51 So. 884, 28 L.R.A. (N.S.) 450, 139 Am.St.Rep. 19; Mob. & K.C.R.R. Co. v. Owen, 121 Ala. 505, 25 So. 612; Elliott on Contr., § 1857.

The above-cited case of Shriner v. Craft reviews all our authorities upon the question of modification of contracts and the necessity for a consideration in support thereof. It is unnecessary to do more than to cite this authority, to sustain the position that an agreement on the part of the county to relieve the bank from the payment of a portion of the purchase price (represented by the accrued interest),...