Montgomery v. Crossthwait

• Decision Date: 08 December 1890
• Citation: Montgomery v. Crossthwait, 90 Ala. 553, 8 So. 498 (Ala. 1890)
• Parties: MONTGOMERY v. CROSSTHWAIT.
• Court: Alabama Supreme Court

8 So. 498

90 Ala. 553

MONTGOMERY v. CROSSTHWAIT.

Supreme Court of Alabama

December 8, 1890

Appeal from city court of Birmingham; H. A. SHARPE, Judge.

This was an action founded on a promissory note, brought by the appellee, as indorsee, against the appellant, as indorser. The note was in the following words: "Birmingham, Ala Oct. 12, 1887. Sixty days after date we promise to pay to the order of J. A. Montgomery three thousand dollars, value received, at First National Bank of Birmingham, Ala. The right of exemption to personal property is hereby waived, as provided in the 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 costs for collecting above, not less than 10 per cent., on failure to pay at maturity. [Signed] PERCY R. SMITH & CO." This note was indorsed: "Pay to the order of J. D Crossthwait. 10/12/87. J. A. MONTGOMERY." There was no suit against the maker of the note. The defendant demurred to the original complaint on the following grounds: There is no averment that plaintiff had brought action on said note against the maker thereof, Percy R. Smith & Co., to the first term of the court at which suit could properly have been brought after indorsement thereof, or alleging any legal excuse for not so bringing said suit. (2) There is no allegation that plaintiff had complied with the provisions of section 1778, or alleging any excuse for not complying with said section. This demurrer was finally overruled by the court, and the defendant duly excepted.

The first and second pleas deny the allegations of the complaint. The third plea alleges that, after appellant had indorsed the note, the same had been materially changed, with the knowledge of the plaintiff, but without the knowledge or consent of the defendant, by adding to the signature of Percy R. Smith, the words "& Co." The fourth plea alleges that Percy R. Smith, the real maker of the note sued on, came to appellant with said note signed by himself, Percy R Smith, and requested the defendant to indorse the same for his accommodation, and that defendant did so; that, after defendant had so indorsed said note, Percy R. Smith carried said note to the plaintiff, and proposed to borrow money from plaintiff on said note, when the plaintiff said he would not loan him money on his individual note, but would on the note of Percy R. Smith & Co., and thereupon said Percy R. Smith added to his signature the words "& Co.," thereby changing said note from the individual note of Percy R. Smith to that of Percy R. Smith & Co., which was done after the defendant had indorsed the same as aforesaid, and without the consent or knowledge of the defendant; and defendant further avers that this plaintiff acquired said note from said Percy R. Smith for money loaned by him to the said Percy R. Smith at a rate of interest greater than 8 per cent. per annum, and that plaintiff was not a bona fide holder of said note. The fifth plea, which was verified, denied the indorsement of the said note sued on by the defendant. The seventh plea set up usury as a defense. The plaintiff filed several special replications to the several pleas of the defendant. The first, second, and third replications joined issue upon the defendant's first, second, and third pleas. The replication No. 4 was as follows: "For a further replication to defendant's third and sixth pleas the plaintiff says that after the instrument here sued on was written out in full as it now stands, except that no name or signature whatever was signed thereto, the words following were indorsed thereon, to-wit: 'Pay to the order of J. D Crossthwait. 10/12, 1887;' and while the instrument was in this condition, and before any name or signature whatever had been signed to said instrument, he, the defendant, signed his name to said indorsement; and, after indorsing the same as aforesaid, he, the defendant, delivered said instrument to said Percy R. Smith, to be thereafter signed and delivered to the plaintiff, for money to be by plaintiff loaned to said Smith and defendant; the defendant well knowing that said Smith intended to borrow the money from plaintiff on the faith and credit of his indorsement, there still being no named signed thereto when defendant returned the instrument to said Smith; and afterwards, to-wit, on the same day, said Smith signed thereto the signature, 'Percy R. Smith & Co.,' and delivered the same to plaintiff, and thereupon, on the faith and credit of defendant's indorsement, plaintiff discounted said note, paying to said Smith the full value thereof; and plaintiff avers that, defendant having indorsed said instrument before any signature had been signed thereto and delivered it to said Smith in that condition, he is now estopped to deny that he is bound by his indorsement thereon." Replication No. 7, to pleas four 4 and 6, was in substance the same as replication No. 4, just copied. To each of these replications, Nos. 4 and 7, the court sustained demurrers. The fifth replication of plaintiff was as follows: "For a further replication to said third and sixth pleas plaintiff says: On 14th day of December, 1887, defendant with full knowledge of all the facts now averred in and by his third plea, indorsed on said written instrument the words following, to-wit: 'I hereby waive protest and notice of protest on the within note. J. A. MONTGOMERY,'-and at divers times, both before and after the maturity of said instrument, ratified the signature signed thereto, and the supposed alteration of said instrument by said Smith, and promised to pay it; and the plaintiff avers that defendant has waived any right that he may have had to aver and plead the supposed alteration of said instrument, and that by reason of his said waiver and ratification he is now estopped to deny that he is bound by his said indorsement." In addition to other demurrers interposed to the replication, the defendant interposed a demurrer to the fifth replication, and assigned the following grounds: "(1) Because the averment therein that defendant, before and after the maturity of said instrument in writing, ratified the signature by Percy R. Smith of the name of Percy R. Smith & Co. to said instrument in writing, is the averment of a mere conclusion, and not the averment of facts constituting such ratification. (2) Because the promises of payment of said instrument in writing, alleged to have been made by the defendant, appear to have been made without any consideration therefor. (3) Because the waiver of protest and notice made by the defendant and indorsed on said instrument in writing does not, of itself, nor does the promise of payment, alleged to have been made by said defendant, of itself, nor do such waiver and promise of themselves conjointly, operate to estop defendant from denying that he is bound by said indorsement of said instrument in writing, it not appearing from said replication that the plaintiff had been misled thereby to his prejudice." The court overruled each of these grounds of demurrer, and the defendant duly excepted, and this ruling brings up one of the principal points of contention.

On the trial, as is shown by the bill of exceptions, the evidence for the plaintiff tended to show that the said Percy R. Smith was a member of a mercantile firm doing business in Birmingham, and that he applied to the plaintiff for the loan of money; that the plaintiff told him he would lend him the money desired on a promissory note executed by him in the name of Percy R. Smith & Co. as makers, with the defendant as security. This led up to the transaction, as is shown by the pleadings, the evidence for the plaintiff tending to substantiate the case his pleadings make out for him. The evidence for the defendant tended to show that at the time the note was indorsed by the defendant it was filled out and signed by said Percy R. Smith in his individual name, and that, as an accommodation to said Smith, he signed the note as thus executed; but that, after he had indorsed the said note as shown, the same had been materially changed and altered by the addition to the signature of the words "& Co.;" and the evidence for the defendant tended to also substantiate his contention, as shown from the pleadings. But it was proved that there was in fact no appearance of alteration upon the face of the note after the note was signed. It was admitted that the loan was usurious, and that the plaintiff was not entitled to recover interest thereon.

At the trial the said Percy R. Smith was not present, he having left the city and state, and his deposition was therefore introduced in evidence. In this deposition the following cross-interrogatory was propounded to him: "Were you not indebted to Montgomery at the time for more than you let him have on the 22d day of October, 1887? Had not Montgomery loaned you some stock in East Birmingham, or some other company, to enable you to borrow money; and had you not pledged it to one of the banks at the time you let him have the money?" To this cross-interrogatory the said Smith answered as follows: "I was not indebted to Montgomery at the time for more money than I let him have. I didn't owe him anything. Montgomery had loaned me some stock in East Birmingham, I think, or some other company, to enable me to borrow money, and I had pledged it with one of the banks, but whether this was before we got the money from Crossthwait or not I don't remember. At any rate, the loan of the stock was not considered a debt between us. It was a mere matter of accommodation upon his part, and was a favor to me personally, and not the firm of Percy R. Smith & Co." Before the trial was entered upon the defendant moved the court to supress that portion of the...