Case ID: ala_28/html/0606-01.html
Source: Caselaw Access Project
Author: {"author": "STONE, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

McKENZIE vs. BRANCH BANK AT MONTGOMERY.
    [notice and motion eor summary judgment against bank debtor.]
    1; Bill of exchange', accommodation endorsement of. — If a bill of exchange, which is endorsed for the accommodation of the acceptor, for the special purpose of enabling him to obtain an extension of a debt in bank, is transferred by' him as collateral security for the payment of another pre-existing debt, the creditor takes it with implied notice.of the fact and purpose of the aeeom- • modation endorsement, and subject to any defense which would be available . against the acceptor himself.
    2. Charge assuming facts to he proved, erroneous. — A charge which assumes that a certain fact is proved, when the evidence is conflicting; is erroneous; as where it begins thus, “ When the defendant shows," &c.
    3. Bad to which witness may depose, and which may he inferred by jury. — Where the ' issue involves the application of the proceeds of collateral securities to the payment, ^>ro tanto, of several debts, the amount of a debt being shown, the jury may ascertain from it as a basis the pro rata share to which it was entitled; or a witness may testify what the pro rata share was, as direct and primary evidence, without stating the amount of the debt.
    Appeal from tbe Circuit Court of Montgomery.
    Tried before the Hon. John Gill Shorter.
    This suit was instituted by the appellee, by notice and motion for a summary judgment against John McKenzie, William C. Wright, and Benjamin Gibson, on a promissory note for $1,000, dated September 29,1846, payable five years after date to the Branch Bank at Montgomery, and payable and nogotiable at said Bank. Wright and Gibson having died pending the suit, it was allowed to abate as to them, and proceeded to 'judgment against McKenzie alone. The only plea was the general issue, with leave to give any special matter in evidence. The bill of exceptions shows the following facts:
    After the plaintiff had produced the note sued on, the defendant proved, that he was the surety of one Robert Harwell, on certain debts due to said Bank, and that the note sued on was given by him for this- indebtedness. He then offered in evidence said Harwell's answers to certain interrogatories propounded to him, the substance of wliich was, that some time in 1841, or ’42, he (Harwell) deposited in said Bank, as collateral security for the payment of the debt on which McKenzie was bound as his surety, certain drafts and notes, among which were two drafts for $1,000 each, drawn by Mason Harwell on said Robert Harwell, and endorsed by H. W. ‘Farley, due on the 18th April and 18th May, 1842; that these drafts and notes were deposited in said Bank for the benefit and security of McKenzie, and were never re-delivered to said Harwell. “ He then proved that said draft for $1,000, drawn by Mason Harwell on said Robert Harwell, and endorsed by H. W. Farley, due April 18, 1842, was prosecuted to judgment against said Farley, by plaintiff, and suit instituted against said Farley on the other draft, due May 18, 1842; that said Farley, after judgment had been rendered against him on said first draft, and whilst the suit on the second was pending, filed his bill in chancery against plaintiff, to enjoin the collection of said drafts from him; that while said suit in chancery was pending, plaintiff compromised said claims against Farley, at the sum of $750, and released him from all liability on said drafts.”
    The proceedings in this chancery suit are here made an exhibit to the bill of exceptions, and the bill states these facts: That said Harwell was largely indebted to said Bank, and had given a mortgage on certain real estate to secure the payment of the debt; that said two drafts were endorsed by Earley, at the request of said Harwell, and for his accommodation, in order to make a payment and obtain an extension of said debt; that said Bank, when these drafts were presented to it by Harwell, had notice of this fact, and refused to take them; that Harwell then proposed to deposit them as collateral security, upon the express condition that his debt should be extended through the business season of the year 1842; that no specific answer was at the time given to this proposition, but the drafts were received, and the Bank promised to consider the proposal, and to return an answer through its cashier; that the Bank never did accept said proposal, and never informed Harwell of its acceptance; that in April, 1842, before the close of the business season, the Bank sold the property covered by said mortgage, under a power of sale contained therein; that it afterwards received from Harwell a draft on John Powell, for $8,000, in part payment of. said debt, on which judgment was afterwards recovered against said Powell, who is perfectly solvent; and that the balance of Harwell’s debt has been satisfied by McKenzie.
    “ The defendant then introduced evidence tending to show, and which he insisted did show, that the said Earley, at the time said compromise was made, and for some time thereafter, was solvent, and that the amount of said drafts could have been collected from him by execution.- It was shown, also, that the plaintiff did not apply the whole amount of money received from saijl Earley on said compromise as a payment on the indebtedness of Harwell on which defendant was surety, but only applied the sum of $ — ■ to that indebtedness, and applied the sum of $— in part payment of another debt of said Harwell’s, on which John Powell was surety, and on which McKenzie was not liable. There was some evidence that the collateral securities, deposited by said Harwell with plaintiff, were deposited by him to be collected and applied by plaintiff, not only to the indebtedness on which said McKenzie was surety, but also to the said indebtedness on which said Powell was surety. There was no evidence of the amount of the debt, due by said Harwell to plaintiff, on which Powell was surety. The only evidence of the consideration and purpose for which said drafts were endorsed by Earley, or made, was Farley’s said bill in chancery; and said bill was also the only evidence offered by plaintiff to show the necessity of compromising said drafts with Farley. There was no evidence that plaintiff knew, or had any notice of, the purpose for which, said drafts endorsed by Farley were made, before they were received by plaintiff from said Harwell. It was further in evidence that, after the compromise had been made by plaintiff with said Farley, and the money arising thereon had been applied by plaintiff, p-o rata, to the debts due by Harwell, the defendant was informed of the facts; and the witness who testified on this point stated, that he could not then repeat defendant’s reply, but he recollected that defendant approved plaintiff’s acts; and after this information defendant gave the note sued on, with other notes, in extension of his debt to the Bank.
    “Upon this evidence, the defendant requested the court to instruct the jury, that if Farley endorsed drafts for the accommodation of Harwell, and entrusted them to him, to be used in negotiation with the Bank, and for a special purpose,, but the purpose for which they were made was not known to the Bank, then Farley was liable on the drafts, although Harwell used them for a different purpose than was intended by Farley; the Bank not being informed of the breach of faith by Harwell, and giving him time on his indebtedness to the •Bank in consideration of said drafts. The court refused this charge as asked, but gave it with this qualification: that if Farley was an accommodation endorser merely, then the law would charge the plaintiff with knowledge of the fact, and of the special purpose for which the drafts were endorsed. The defendant excepted to the refusal to charge as requested, and to the qualification given.
    “ The defendant requested the court to charge the jury, further, that when the defendant shows that the collaterals were deposited in the Bank for the benefit of the debt on Which he was liable, and the plaintiff claims, in reply to that evidence, that there were other debts to which the collaterals were to be applied, the onus of proving the amount of those other debts, and the share to which they were entitled, is on the plaintiff; and, unless the plaintiff shows these facts, the jury are authorized to give the defendant the benefit of the collaterals on that point. The court refused this charge, and the defendant excepted.
    “ The plaintiff requested the court to charge the jury, that if these notes and drafts were - deposited with the Bank as collateral security for debts of Robert Harwell on which McKenzie was surety, and also for debts on which John Powell was surety, then, if the jury find that any of the collateral paper could have been collected by due diligence, they must allow McKenzie only the credit to which he is entitled, in proportion to the amount of debts on which he was surety to those on which Powell was surety. This charge the court gave, and the defendant excepted.”
    The charges given, and-the refusals to give the-charges asked, are now assigned as error.
    Nat. HARRIS and ¥a. B. Moss, for appellant.
    Elmore & Yancey, contra.
    
   STONE, J.

There are two fatal objections to the first charge asked by the defendant in the court below, either of which justifies the qualification given by the judge: first, the acceptor of the bills, himself, passed the papers to the Bank, (Saltmarsh v. P. & M. Bank, 14 Ala. 668); and, secondly, the bills were^pot sold to the Bank in payment, but placed there as collateral security to a pre-existing debt. — Boyd & Macon v. McIver, 11 Ala. 822; Thompson v. Armstrong, 7 Ala. 256; Maraton v. Forward, 5 Ala. 347; Bank of Mobile v. Hall, 6 Ala. 639; Wardell v. Howell, 9 Wend. 170; Andrews v. McCoy, 8 Ala. 920. The endorser, Farley, could make the same defense to the bills thus placed in the Bank, as if they still remained in the hands of Robert Harwell, the acceptor; and any charge which assumes the contrary, does not assert a correct legal principle. This charge, as asked, was properly refused. See, also, Wallace v. Br. Bank of Mobile, 1 Ala. 565.

The second charge asked and refused, is somewhat involved. Certainly it was the duty of the Bank, which had assumed to apply a part of the proceeds of the collateral paper to another debt, to furnish to the jury a basis, to enable that body to determine the share to which defendant was entitled. If the charge had asked this instruction, unclogged by other and illegal propositions, we would feel constrained to reverse the case. But in asking the charge, the counsel embarrassed it with other terms, which, taken as a whole, justified its refusal. It sets out with the assumption, -that defendant had shown certain facts to exist. The language employed is, “ When the defendant McKenzie shows,” &c. This language, when used in reference to conflicting testimony before a jury, is always improper. The court cannot predicate, or assume, that any fact, embraced in the issue, has been shown or proven. The jury, under our system, is the' only tribunal which passes on controverted facts in courts of law; and until the verdict is rendered, no such fact is established, or shown to exist. — Ward v. The State, at the present term.

There is another objection to the second charge asked. It was not necessary that the plaintiff should prove both the amount of the debt on which Powell was surety, and the pro rata share, to which it was entitled. Proving the amount of the debt, would have given the jury a basis, from which they could ascertain the pro rata share; or, the testimony might have shown the pro rata share, as direct and primary evidence. That such form of inquiry was permissible, see Douge v. Pearce, 13 Ala. 127; Stanley & Elliott v. The State, 26 Ala. 26; Massey v. Walker, 10 Ala. 288.

The legal correctness of the affirmative charge found ■ in the bill of exceptions, is too clear to admit of elucidation.

There is no error in the record, and the judgment of the circuit court is affirmed.