Court Opinion

ID: 8798636
Source: CourtListenerOpinion
Date Created: 2022-11-26 14:21:46.255807+00
Date Added: 2024-06-11T17:03:46.490395
License: Public Domain

MAXEY, District Judge
(after stating the facts as above). [1] Referring to the section of the act of the Alabama Legislature, quoted in the statement of the case, counsel for appellee declare in their brief that the obvious purpose of section 28 was to prevent the manufacturer from becoming a retailer of liquors in Alabama, in his own or another person’s'name, or from furnishing money or fixtures for that purpos.e. We are not disposed to, differ with counsel as to their construction of the statute. But do the facts disclose that the money evidenced by the notes of appellant was lent or furnished in good faith by it, or was it a loan made in fact by the Lexington Brewing Company to the hotel company in the name of the bank to conceal the identity of the transaction? It may be admitted that if the bank actively participated in, or lent itself to, any unlawful purpose on the part of the brewing company, such participation would preclude its recovery on the notes. The question to be determined is therefore one o,f fact, and after a very careful examination of the record we are unable to say that the facts sustain the contention of the appellee. ' We regard the loan of the bank to the hotel company as one made in the ordinary course of business. And while it may be indirectly'connected with the business transaction between the brewing company and the hotel company, assuming that the transaction was illegal, still the notes of the bank are supported by an independent consideration and require no aid of such transaction to sustain them.
The general principle of law applicable to a case of this character is clearly stated by the Supreme Court in the following language:
“An obligation will be enforced, though indirectly connected with an illegal transaction, if it is supported by an independent consideration, so that the-*985plaintiff does not require the aid of the illegal transaction to make out his case.” Armstrong v. American Exchange Bank, 133 U. S. 469, 10 Sup. Ct. 401, 33 L. Ed. 747.
The bank had the right to lend money to the hotel company notwithstanding it conducted a bar in connection with the hotel business, and the brewing company had, under the Alabama statute, the right to sell it beer, provided it did not violate the exclusive provision of section 28. And although the bank knew that the hotel company sold beer and the brewing company was engaged in its manufacture, and although the loan to the hotel company was made on the recommendation of the president of the brewing company, who was a director of the bank, and notwithstanding the bank took the guaranty of the brewing company to secure the notes, yet these circumstances fall short of tainting the notes with illegality, since the president of the ba.nk, according to his testimony, the truthfulness of which we see no reason to question, states positively that the bank was in no manner a party to any agreement between the hotel company or Mr. Frank, its president, and the brewing company for the sale of any portion of the beer products of the brewing company, and that he knew nothing of any such agreement. He further testified that the loan was made regardless of the sale of beer, and that Mr. Frank informed him he needed the money to make improvements on the hotel and to liquidate its indebtedness.
[2] The burden of impeaching the notes held by the bank for illegality rested upon the appellee, and our conclusion is that he failed to sustain it. The notes, therefore, should be allowed as a claim against the estate of the bankrupt. It follows that the order of the trial court should be reversed, and the cause remanded, for further proceedings in accordance with law and the views herein expressed; and it is so ordered.