Sherrill v. Merchants' & Mechanics' Trust & Sav. Bank

• Decision Date: 16 December 1915
• Docket Number: 8 Div. 859
• Citation: 70 So. 723,195 Ala. 175
• Parties: SHERRILL v. MERCHANTS' & MECHANICS' TRUST & SAVINGS BANK.
• Court: Alabama Supreme Court

70 So. 723

195 Ala. 175

SHERRILL v. MERCHANTS' & MECHANICS' TRUST & SAVINGS BANK.

8 Div. 859

Supreme Court of Alabama

December 16, 1915

Rehearing Denied Feb. 3, 1916

Appeal from Circuit Court, Morgan County; D.W. Speake, Judge.

Action by the Merchants' & Mechanics' Trust & Savings Bank against S.L. Sherrill. From a judgment for plaintiff defendant appeals. Transferred from the Court of Appeals under section 6, Acts 1911, p. 449. Reversed and remanded.

Tidwell & Sample, of Decatur, for appellant.

E.W Godbey, of Decatur, for appellee.

McCLELLAN J.

This suit is brought by the appellee against the appellant upon a negotiable promissory note executed by the appellant to the Varley-Bauman Clothing Company, a corporation, and indorsed by the payee to the appellee. This note was taken in renewal of a previous note for the same amount. The appellant's theories of defense were that the note sued on had been paid by him to the appellee after maturity and before notice of the assignment, and that the note was executed with the understanding with the payee that it should be settled by the surrender of certain stock in the corporation, and that on surrender of this stock the note would be canceled by the payee, the appellant asserting that he surrendered the stock to the payee after maturity of the note and before any notice was given to him of appellee's claim or title to the note.

When the case was called for trial the defendant (appellant) presented to the court a notice to produce certain books papers, records, and memoranda said to have been served upon the president of the plaintiff bank, and thereupon moved the court, after an extended statement of pertinent facts indicating the materiality of the books, papers, records, and memoranda demanded to be produced, to require the plaintiff to produce this documentary matter, and, if plaintiff failed to produce said books and papers, to grant defendant a continuance, and to make an order requiring the production of said books and papers. The court correctly ruled that the only effect the notice could have under the circumstances shown in this record was to allow the defendant to offer secondary evidence of the contents of the books and papers referred to in this notice which the plaintiff had not produced. It was not made to appear that the subjects of the notice to produce were in the court or in the possession of any one before the court. Golden v. Conner, 89 Ala. 598, 8 So. 148; McDuffee v. Collins, 117 Ala. 487, 23 So. 45. No benefit of section 4058-9 was due the defendant on the showing made, since the plan of the statute was not followed. Rarden v. Cunningham, 136 Ala. 263, 266, 34 So. 26.

The undisputed evidence in the case is to the effect that the plaintiff bank discounted the note in due course of business, and credited the amount thereof to the checking account of the payee. While there is a statement in the testimony of the witness Sparkman that it was customary to charge back unpaid notes to customers whose balances with the bank would justify it, the positive testimony of the witness Porter that this note was not charged back to the account of the transferor established the fact that the note was not recharged to the transferor's account. It was also shown without dispute that the proceeds of the note as discounted were checked out by the transferor. It was further shown without dispute that the note was not taken as collateral security for an indebtedness of the transferor. It is further shown without dispute that the note was discounted, and the proceeds credited to the account of the transferor before any claim of an infirmity came to the attention of the plaintiff. There was no evidence of any infirmity in the plaintiff's title or of any defense against the note existing at any time before its maturity. There was no evidence that the transaction of which the assignment of the note was a part was affected with usury.

The complaint describes the subject of the action to be a promissory note for $250, "made by him [defendant] on, to wit, August 22, 1910, payable to the order of the Varley & Bauman Clothing Company 90 days after date," and avers that said note "was, before maturity, indorsed by the payee, and sold to the plaintiff for a valuable consideration." The obligation thus described was a negotiable instrument. Code 1907, § 4958. The word, "indorsed," as here employed in this complaint, imports a delivery of the instrument. Clark v. Sigourney, 17 Conn. 511, 522; Louisville Mining Co. v. Int. Trust Co., 18 Colo.App. 345, 71 P. 898; Young v. Harris, 14 B.Mon. (Ky.) 556, 61 Am.Dec. 170, 171; 7 Cyc. p. 814; Code 1907, § 4985 et seq. The complaint accordingly shows by its averments that the plaintiff came into possession of the negotiable instrument; whereupon the law assumes prima facie that such a one is a holder in due course, meaning that he took the note in good faith, for value, and without notice of any infirmity in the instrument or in the title of the negotiator. Code 1907, §§ 5007, 5014; Bruce v. Bank, 185 Ala. 221, 64 So. 82, 84; Drinkall v. Bank, 11 N.D. 10, 88 N.W. 724, 57 L.R.A. 341, 95 Am.St.Rep. 693, 700, 701; Collins v. Gilbert, 94 U.S. 753, 24 L.Ed. 170. Under such a complaint the plaintiff assumed the burden of proving the indorsement and delivery and the payment of value before maturity as alleged.

To avoid the plaintiff's right to recover on proof of the matters averred in the complaint it was incumbent upon the defendant to appropriately affirmatively plead notice to the plaintiff of an infirmity in the payee's right to negotiate the note at the time that was done. None of the pleas stricken on demurrer effectually asserted any such matter. The...