Moseley v. Selma Nat. Bank

• Decision Date: 19 December 1911
• Citation: 57 So. 91,3 Ala.App. 614
• Parties: MOSELEY v. SELMA NAT. BANK.
• Court: Alabama Court of Appeals

57 So. 91

3 Ala.App. 614

MOSELEY v. SELMA NAT. BANK.

Court of Appeals of Alabama

December 19, 1911

Appeal from Circuit Court, Dallas County; B. M. Miller, Judge.

Action by the Selma National Bank against L. H. Moseley. From a judgment for plaintiff, defendant appeals. Affirmed.

Arthur M. Pitts, for appellant.

Pettus Jeffries, Pettus & Fuller, for appellee.

PELHAM, J.

The rulings on the pleadings in the trial court raise the question on this appeal as to whether or not the maker of a negotiable note that is void because of having been made and delivered on Sunday, but which is dated by the maker on a secular day, is estopped from pleading the illegality of the note in bar of recovery in a suit brought by an indorsee who acquired the note before maturity, and for a valuable consideration, without notice of its illegality.

The appellee brought an action of detinue against the appellant based on a mortgage given by the appellant to the Schwarz Commission Company on personal property sought to be recovered in this suit. The commission company, a firm doing an advancing business, transferred the mortgage, and note secured by it, to the appellee bank as collateral security along with other notes and mortgages to secure a loan made by the bank to the commission company. The note was indorsed to the bank in blank by the payee at the time of its hypothecation, together with the mortgage, and both note and mortgage were delivered to the bank before maturity, for a valuable consideration, under a hypothecation agreement together with other collateral securities, not connected with this suit. The note and mortgage were executed and delivered on Sunday, January 2, 1910, but were dated by the maker, or payee, with the maker's knowledge and consent, on a secular day, to wit, the following Monday, January 3, 1910. The mortgage was recorded several days after its execution and, after being recorded and before maturity, was transferred to the appellee in the due course of business. The complaint is in the code form for the recovery of specific property. The defendant filed pleas of the general issue, made a suggestion, under the statute, that the suit was based on a mortgage, with request to ascertain the amount due on the mortgage, and also filed a plea of payment and three special pleas, setting up the fact that the mortgage and note were executed and delivered on Sunday, and therefore were void. To these special pleas, the plaintiff filed replications, averring, in substance and effect, that plaintiff purchased the note and mortgage in the due course of business from the original payee for a valuable consideration, before maturity, and without notice or knowledge of any defense existing between the original maker and payee, and that the defendant was estopped from pleading that the note was executed and delivered on Sunday and void, for the reason that it had been falsely dated by defendant on a secular day, for the purpose of holding it out as a valid transaction to induce persons to deal with it as such, and that plaintiff had so dealt and purchased it in good faith, believing it to have been executed and delivered on a secular day, as on the face of the paper purported to be the fact. Demurrers to these replications were overruled, and the court's action in overruling the demurrers is assigned as error.

It has been the settled law in this state for many years that a note made and delivered on Sunday cannot be enforced; nor will a subsequent ratification validate it, as it was originally void. Shippey v. Eastwood, 9 Ala. 198. Chief Justice Collier, however, in referring to such contracts in rendering the opinion of the court, in Saltmarsh v. Tuthill, 13 Ala. 390, 406, says: "It has been repeatedly determined that a penalty inflicted by statute upon the doing of an act is equivalent to a prohibition, and a contract relating to it is void. See Shippey and Another v. Eastwood, 9 Ala. 198, 200. Under the influence of this rule, it has been decided that a contract made on a Sunday is void, and a security founded on it is not recoverable at the suit of a party to the illegal consideration. But, as the act does not declare that both the contract and security are void, the authorities clearly indicate that a bona fide indorsee of negotiable paper, founded upon such a contract, who acquires it before maturity, without notice of the illegality, for value, may enforce its payment."

The case of Saltmarsh v. Tuthill is cited by the court in rendering its opinion in the case of Cranson v. Goss, 107 Mass. 439, 9 Am. Rep. 45, in support of this proposition, declared by that case to be the law: "But it is also agreed that the note bears date of a secular day; and that the plaintiff is a bona fide holder of the note, for a valuable consideration, and took it before it came due, without notice of any defect, illegality, or other infirmity in the same. The plaintiff, therefore, not having participated in any violation of law, and having taken the note before its maturity, for good consideration, and without notice of any illegality in its inception, may maintain an action thereon against the maker. To hold otherwise would be to allow that party, who alone had been guilty of a breach of the law, to set up his own illegal act as a defense to the suit of an innocent party. This view is supported by the judgments of all the courts, English and American, that have considered the question."

The opinion in the case of Saltmarsh v. Tuthill is criticized in Burns v. Moore, 76 Ala. 339, 52 Am. Rep. 332, and Anderson v. Bellinger, 87 Ala. 334, 338, 6 So. 82, 4 L. R. A. 680, 13 Am. St. Rep. 46, and the statute in force at the time of the prior decision pronounced less "sweeping and vitiating in its effect"; but the distinction drawn in the latter case is placed on the adjudication in the first case having been related to a negotiable instrument, which "depended for the result reached on

the general principle which frees commercial paper from infirmities of which subsequent holders have no notice." Anderson v. Bellinger, supra.

On the proposition of estoppel as applied to the holder of commercial paper, it is said by the justice rendering the opinion of the court in Knox v. Clifford, 38 Wis. 651, 20 Am. Rep. 28: "We hold this rule: That, when a party makes and puts in circulation a negotiable note purporting to be made and bearing date on some secular day, he is estopped, as against an innocent holder, from showing that it was actually executed and delivered on Sunday. We cannot well conceive of a stronger case for the application of the doctrine of estoppel than such a case presents."

We find the following holding in Johns v. Bailey, 45 Iowa, 241: "In the case before us, the plaintiff caused the contract to be dated as though it had been executed on a secular day. By this act, the defendants may have been misled and induced to believe that the defense now made to the contract did not in fact exist. While giving all the appearance of legality to his contract, plaintiff cannot set up its illegality to protect himself against the instrument, when in the hands of a good-faith holder, without notice. He is estopped to deny the validity of the instrument, when he, by his own act, has given it such character." The last-mentioned case is cited approvingly in Leightman v. Kadetska, 58 Iowa, 676, 12 N.W. 736, 43 Am. Rep. 129, where the court, in passing on a case involving the same principle, uses this expression: "It is only against a person in equal fault that a defendant can be allowed to allege his own turpitude."

In the case of Vinton v. Peck, 14 Mich. 287, the court says: "This note bore upon its face a legal date, which was placed upon it for the express purpose of obtaining credit for it as a lawful instrument; and it would certainly be valid in the hands of a bona fide holder." And, referring to the rule protecting a bona fide holder, the court further says: "And, apart from this rule, where steps are taken to induce a belief that a note was not made on Sunday, we should not be prepared to hold that a party could assert his own fraud in his defense."

In Love v. Wells, 25 Ind. 503, 87 Am. Dec. 375, the court held that, assuming that a deed was delivered on Sunday, and void, the party who executed it and gave it a secular date could not set up the invalidity of the deed against a subsequent vendee, who purchased the land for a valuable consideration, in good faith, without notice of the transaction having been had on Sunday. To allow the defendant such a defense would "be permitting him, by his own unlawful act, to perpetrate a gross fraud upon innocent purchasers. To such an act the law will not lend its aid, or give its sanction." Love v. Wells, supra.

Many authorities support the proposition that, notwithstanding promissory notes and other instruments executed on Sunday are void, yet, if they are falsely dated as of another day, and an innocent person takes them for value and without notice, the maker is estopped from setting up that defense in a suit by an innocent purchaser without notice. See Ball v. Powers, 62 Ga. 757; Harrison v. Powers, 76 Ga. 218; Bank v. Mayberry, 48 Me. 198; Bank v. Thompson, 42 N.H. 369; Trieber v. St. Louis Bank, 31 Ark. 128; Clinton v. Graves, 48 Iowa, 228; Gray Tie Co. v. Bank, 109 Ky. 694, 60 S.W. 537; Bank v. Furman, 4 Pa. Super. Ct. 415; Heise v. Bumpass, 40 Ark. 545; Greathead v. Walton, 40 Conn. 226; Bank v. Butler, 157 Mass. 548, 32 N.E. 909; Gordon v. Levine, 197 Mass. 263, 83 N.E. 861, 15 L. R. A. (N. S.) 243, 125 Am. St. Rep. 361.

The great weight of authorities seem to hold that one who gives to an instrument a legal date, thereby authorizing innocent parties to deal with it as such, cannot be...