Court Opinion

ID: 6512111
Source: CourtListenerOpinion
Date Created: 2022-07-19 18:23:19.666266+00
Date Added: 2024-06-11T15:54:54.795473
License: Public Domain

STONE, C. J.
Williams, Deacon & Oo. are bankers in the city of London, England, and as snch have been business correspondents-of the Bank of Mobile for more than forty years. The cross-bill makes substantially the following case; One line of the business of the Bank of Mobile has been the purchase by discount of bills of exchange payable abroad, which, when collected, produced and placed a fund, on which the Bank of Mobile drew and sold foreign exchange. It has long been in the habit of remitting its purchased bills, payable abroad, to Williams, Deacon & Oo., indorsed to them for collection, and has also been in the habit of drawing on them in the sale of foreign exchange, which drafts the said foreign bankers honored and met. The practical working has been, that the Bank of Mobile paid out its money in the discount and purchase of such bills, and received it back, plus the profits of the two operations, when it sold exchange against the proceeds of the bills. Williams, Deacon & Oo. realized funds, the property of the Bank of Mobile, when they collected the bills thus remitted to them for collection ; and they discharged the liability and accounted and repaid to the Bauk of Mobile, when they honored and paid the checks or drafts of the latter, in amount equal to the sum of the collections. Strong confidence had grown up between the parties, and. Williams, Deacon & Oo. would and did honor and pay drafts drawn on them by the Bank of Mobile, before the maturity, and consequently before the collection of such bills remitted to them for collection ; and when, in the fluctuations of trade, a surplus of collections accumulated in the bank of Williams, Deacon & Co., not wanted to meet the demand for foreign exchange, the Bank of Mobile would and did transfer such surplus from Williams,' Deacon & Co. to its correspondent bank in the city of New York, U. S., as a fund against which to issue its domestic exchange.
The averred facts in reference to the particular transaction, on which the cross-bill is sought to be maintained, are as follows : There was a private corporation, known as the Danner Land and Lumber Company, engaged in the manufacture and shipment of lumber to foreign markets. A. C. Danner was president of the company, and was the largest stockholder. He was also president of the Bank of Mobile. Shadboldt & Son, wood-brokers in London, England, were brokers for the sale of the lumber and timber shipped by the Danner Land and Lumber Company to that market. They were also in the habit of accepting the bills of exchange drawn by said Lumber Com*304pany. Commencing on the 10th May, 1884, and ending on the 19tli of June next afterwards, the Danner Land and Lumber Company drew its fifteen bills of exchange on Shadboldt & Son, for an aggregate sum which amounted to about one hundred thousand dollars in American currency. These bills became due and demandable at an average of about seventy-five days after their several dates, .beginning July 26, and ending September 5, 1884. They were accepted by Shadboldt & Son. The averment of the cross-bill, as to what was done with these bills, is as follows : “ These bills were lodged in the Bank of Mobile, by A. O. Danner, president of the Danner Land and Lumber Company, and were ordered to be discounted by said Danner as president of said bank, and the proceeds to be placed to the credit of his Land and Lumber Company; and said Danner, as president of the Bank of Mobile, ordered and directed said bills to Williams, Deacon & Co., to be collected at maturity, and at the same time ordered and directed, as .president of said bank, that' bills of exchange be drawn, generally at sixty days, and sometimes at sight, by said bank on Williams, Deacon & Co., to cover amount of said bills: and further ordered that, whenever, by the regular course of the business of said bank, foreign exchange was not sold in sufficient amount to cover these bills, that said bank should then draw exchange in its own favor on respondents [Williams, Deacon & Co.], and send the same to its correspondent bank in New York, in sufficient amounts to cover any balance on said bills, which might at maturity come into the bands of Williams, Deacon & Co., on payment of said bills. This was done, and all such exchange was paid by respondents. Large sums of money were thus drawn from respondents and deposited in New York, on which said bank drew its domestic exchange.” The averments of the cross-bill are not always as specific as could be desired ; but the effect of the foregoing, and other averments not necessary to be copied, is, that, based on these fifteen bills of exchange, accepted by Shadboldt & Son, so remitted by the Bank of Mobile to Williams, Deacon & Co., the remitting bank, in anticipation of the maturity and collection of the bills, had drawn on Williams, Deacon & Co., and thus realized the entire sum to be collected from Shadboldt & Son, on their acceptances of said bills; and this before there was any known trouble in the financial affairs of the Bank of Mobile.
The cross-bill further sets forth that, including these fifteen bills of exchange so discounted by the Bank of Mobile, the Danner Land and Lumber Company owed the bank one hundred and sixty-two thousand dollars, which the Land and Lumber Company, about July 1,1884, paid, satisfied and discharged to the Bank of Mobile, by conveyance of real and personal *305property, in full satisfaction of said entire liability. By this averred transaction, if true, the Land and Lumber Company was no longer liable to pay the said fifteen bills, or any part of them, to the Bank of Mobile; and if the said bills were then the property of the bank, and under its control, with authority to receive payment, the bills were thereby paid, and extinguished as a legal liability.
Williams, Deacon & Co. claim that, before said bills of exchange became due, they became their property by bona fide purchase, and the Danner Land and Lumber Company and the Bank of Mobile had no authority to make and accept said alleged payment to the Bank of Mobile. The indorsement of the said bills by the Bank of Mobile was in the following words : “ Pay to Williams, Deacon & Co., for account of Bank of Mobile.” The cross-bill alleges that, “ accompanying each of said bills, as the same was remitted by the first mail after the discount thereof by the bank, the said bank, by its cashier, R. F. Manly, inclosed the same in its letter of advice, informing complainants that each of said bills was remitted for its crfedit; that complainants agreed to receive them for its credit, and so entered them on their books, and has ever since held them as their property.”
As we understand the averments of the cross-bill, the bills did not pass into the hands of Williams, Deacon & Co. as purchasers, but as agents to collect. Such is the import of the restrictive indorsements placed on the bills. The bills then, if there be nothing else in the transaction, remained the property of the Bank of Mobile, and could have been recovered by it from Williams, Deacon & Co., if it had chosen to assert its right. — Ex parte Pease, 19 Vesey, 25 ; 1 Dan. Neg. Sec. § 698 ; Sweeny v. Easter, 1 Wall. U. S. 166 ; White v. Nat. Bank, 102 U. S. 658 ; Blaine v. Bourne, 11 R. I. 119; Trentel v. Barandon, 8 Taunt. 100 ; Wilson v. Holmes, 5 Mass. 543; Hook v. Pratt, 78 N. Y. 371; Atkins v. Cobb, 56 Ga. 86; Edie v. East India Co., 2 Burr. 1216, 1227; Brown v. Jackson, 1 Wash. Cir. Ct. 512; Tucker Man. Co. v. Fairbanks, 98 Mass. 101; Mech. Bank v. Valley Packing Co., 4 Mo. App. 200 ; s. c., 70 Mo. Rep. 643.
The transaction, however, did not end here, if the averments of the cross-bill be true. Based on the possession of these accepted bills, soon to mature, and, as was confidently expected, soon to be collected, and based on the letter of advice and course of dealing between the parties, Williams, Deacon & Co. had permitted the Bank of Mobile to anticipate the collection, and, through its drafts, to realize the proceeds of the bills before their maturity or payment. Is this distinguishable, in principle, from any other advance of money, procured on the faith *306of collaterals held by, or deposited with the lender? Has not the lender a lien on the collateral, which will maintain his rightful custody against the borrower, until the advance or loan is reimbursed ? Could the Bank of Mobile, after its advance-draft and realization of the proceeds of the bills, have recovered them from Williams, Deacon & Co., without first repaying to them the sum advanced by them on the faith of their collection? And does Winston Jones, the assignee, stand in any better right, than the Bank of Mobile, his assignor ? He is the mere transferree of the title, for the benefit of creditors, and is not a purchaser in the sense which will cut off equities between the parties, although unknown to him. We have asked the questions above, with no intention of answering them. The reason will be stated further on. — Morse on Banking, 42-3 ; Perry on Trusts, §§ 161, 243; Mich. St. Bank v. Gardner, 15 Gray, 362 ; Ullman v. Barnard, 7 Cray, 554; Story’s Equity, § 1265; Patton v. Beecher, 62 Ala. 579 ; Tankersly v. Graham, 8 Ala. 247; Newlin v. McAfee, 72 Ala. 357 ; Powell v. Jones, 72 Ala. 392 ; Ellis v. Amason, 2 Dev. Eq. 273 ; Legard v. Bodges, 1 Vesey, 477.
There is another line of inquiry, cognate to that raised above. Taking the averments of the cross-bill for our guide, the Danner Land and Lumber Company was the principal debtor on the said fifteen bills, which gave rise to the present controversy. To it the consideration moved, and Shadboldt & Son were its accommodation acceptors. On it rested the duty of exonerating all other parties to the bills. Before the alleged payment of said bills by the said company to the Bank of Mobile, Williams, Deacon & Co. had acquired all the right they can assert to the proceeds of said bills, by meeting the advance-drafts of the Bank of Mobile. Danner, president of each corporation, had knowledge of the said lien held by Williams, Deacon & Co. on said bills, for it was under his direction the drafts had gone forward, and the proceeds, thus anticipated, had been turned into the coffers of the Bank of Mobile. Was this knowledge on the part of Danner, notice to each of the corporations of which he was president, of the nature and extent of the claim held by Williams, Deacon & Co. on the said bills? And, we may ask, what right had the Bank of Mobile to receive payment of the bills, incumbered as they then were ? And what right had the Danner Land and Lumber Company to pay the bills to the Bank of Mobile, if chargeable with notice of Williams, Deacon & Co’s, lien ? These inquiries raise the question, whether the Land and Lumber Company has discharged itself from the payment of the bills, by the alleged payment to the Bank of Mobile. It is not necessary we should decide this question.
*307Taken in its broadest aspect — that which best promotes the interest of Williams, Deacon & Co. — the Danner Land and Lumber Company paid, and the Bank of Mobile received payment of said bills, in their joint wrong, when the money was due and payable to Williams, Deacon & Co. If this be the true state of the case, then the Land and Lumber Company is not discharged by such payment from the obligation to pay, unless Williams, Deacon & Co. ratify the bank’s unauthorized collection. [Ratifying it, however, Williams, Deacon & Oo. would be held to have discharged the Land and Lumber Company as their debtor, and to have agreed to look alone to the Bank of Mobile for payment. Considered on this hypothesis, what right or claim have the complainants against the Bank of Mobile, and against the property received in payment from the Land and Lumber Company? Was the property received by the bank charged with a trust? If the payment to the Bank of Mobile had been made in money, then, if ratified, there would have been created only a debt or duty resting on the bank to pay to Williams, Deacon & Co., with no trust or lien on anything to secure its payment, for money has no earmark. The' payment, however, was made in property, which remained in specie, so far as we are informed, when the bank assigned to Jones. It is still undisposed of and unconverted, so far as we know. To the extent this property represents the debt evidenced by said fifteen bills of exchange, if the facts are correctly set forth in the cross-bill, the Bank of Mobile is out nothing. True, it parted with its cash when the bills were discounted, but it received it back, when Williams, Deacon & Co. accepted and paid the bank’s drafts, drawn on the credit the remitted bills furnished. On the averments of the cross-bill, Williams, Deacon & Co., by ratifying the said collection by the bank from the Land and Lumber Company, would become entitled, ex aequo et bono, to so much of the proceeds of the property received by the bank from the Land and Lumber Company, as was in payment of said fifteen bills of exchange. The bank was not entitled to such proportionate proceeds, for it paid nothing for them. If, then, the bank assumed to collect these bills of exchange without authority, and received payment in property, promising, in consideration thereof, to pay the bills, thus relieving the Land and Lumber Company from all liability to pay said bills ; and if the bank, becoming insolvent, fails to pay said bills, and thus leaves the debt resting on the Land and Lumber Company, is there any reason why the said Land and Lumber Company can not hold the bank, and its assignee, trustees of the property thus failed to be applied, and compel them to account for the proportion of the property, which was turned over in payment of the debt *308evidenced by the bills of exchange ? And is not this on the theory, that by the insolvency of the bank, Williams, Deacon & Co., or the Land and Lumber Company, as the case may be, is armed with the option of having the property declared trust property, and applied to the purpose for which it was turned over; or, if renounced by the beneficiary, of having it restored to the grantor?
° All that is said on the point last discussed, must be considered as resting on the hypothesis, that Williams, Deacon & Co. paid the advance drafts of the Bank of Mobile, on the faith and credit inspired by the possession of said bills of exchange accepted by Shadholdt & Son. There need have been no express agreement to this effect. It is enough, if it was in accordance with their usual course of dealings. Of course, if the advance was simply a loan, entirely uninfluenced by the Shalboldt acceptances, then Williams, Deacon & Co. are simple creditors of the insolvent bank, without lien or security, and without any recourse against the Danner Land and Lumber Company, or against the property paid by it to the bank.
We have shown that, in one category, the complainants in the cross-bill have no interest whatever in the fund they are seeking to subject. That category is, that the advance was made as an independent loan, in no manner connected with, or dependent on the Shadboldt acceptances. A second category is that set forth in the cross-bill — -that the advance was made on the faith of the Shadboldt acceptances, and relying on their collection for reimbursement. This, we have intimated, would secure to Williams, Deacon & Co. a lien on those bills and their proceeds, paramount to all right of control and direction the Bank of Mobile might attempt to assert. We have further intimated, if this be the true state of the case, that the Bank of Mobile had no right to receive payment of the bills; but having done so, it rested with Williams, Deacon & Co. whether they would ratify such collection, and claim their proportionate share of the property. We have said that, in the event of ratification by Williams, Deacon & Co., neither they, nor any one else, has any longer any claim against the Land and Lumber Company based on said bills, for they would thereby have become paid. This rests on very simple principles. Ratification of an unauthorized act must be entire. It can not be partial, accepting the good, and rejecting the unacceptable. No one will be permitted to claim rights as conferred by a grant, conveyance, or other contract, without adopting the whole contract, and surrendering any and all- seeming rights which the instrument appoints to another. A claim can not be asserted under, and as conferred by an instrument or contract, in connection with another which antagonizes the instru*309inent or contract, or any of its conferred rights. — Wharton on Agency, § 72; Perry on Trusts, § 596 ; Harrison v. Gardner, 10 Ala. 185; McReynolds v. Jones, 30 Ala. 101; Hatchett v. Blanton, 72 Ala. 423.
The cross-bill in this case sets forth, in unmistakable terms, that Williams, Deacon & Co. renounce and repudiate the alleged settlement and payment of the bills by the Land and Lumber Company to the Bank of Mobile, and that they have instituted suits against Shadboldt & Son as acceptors, and the Land and Lumber Company as drawers of said bills. Those suits, it is averred, were pending when the cross-bill was filed. The bills had been previously protested for non-payment, and notice given to the drawer. Williams, Deacon & Co. have thus shown by their own averments that they repudiate the alleged payment, and seek redress on the bills, as living evidences of debt. This is incompatible with the relief they seek by their cross-bill, and the chancellor did not err in sustaining the demurrer to it. It should be stated that this rule of election would not probably apply, if the Land and Lumber Company had merely conveyed the property as security for the liability. The conveyance was absolute in form, and was made and accepted as payment, not as security.
We have not considered whether appeal is the proper mode of bringing the chancellor’s interlocutory ruling on the cross-bill-before us. Nor have we considered, in the event appeal will not lie, whether appellants could obtain redress by mandamus, if they had shown a right to the relief claimed in their cross-bill. They have failed to show themselves entitled to the relief they pray, and we need not consider whether, in the present stage of the litigation, they are entitled to any, and, if any, to what form of redress.
Affirmed.