118 So. 588 | Ala. | 1928
The appellant insists it was a bona fide purchaser for value of the two drafts, the proceeds of which are here involved, and this is the sole question presented on this appeal.
"A bank does not become a bona fide purchaser for value and without notice of a negotiable paper by simply discounting it for one not its debtor at the time and placing the amount to the credit of the holder by way of deposit. In such circumstance the act of discounting and of crediting only effects to establish the relation of debtor and creditor between the depositor and the bank; but, if the amount deposited to the checking account of the customer is exhausted before maturity or before notice of any defect, then the bank is a purchaser for value." Sherrill v. Merchants' Mechanics' T. S. Bank,
This principle was given full force in the more recent case of National Bank of Commerce v. Morgan,
Here, as in the Morgan Case, no actual cash was paid, but the amounts of the drafts were deposited to the general checking account of the drawer, the Western Alfalfa Milling Company, and these amounts were not absorbed by any existing indebtedness to the bank nor subsequently exhausted by checks of said milling company; but, on the contrary, it affirmatively appears that the balance on deposit to the credit of the milling company in said bank in its general checking account was in excess of the combined total of the two drafts in question, continuously from their negotiations to the service of the garnishment. In addition, it appears the deposit slips contained stipulations to the effect that the items therein were credited conditionally, as was the case in Alexander v. Birmingham Trust Savings Co.,
We have duly considered the various provisions of our Negotiable Instrument Law noted by counsel for appellant and the authorities cited in their brief (among them Elmore County Bank v. Avant,
Upon the principle of the Morgan Case, supra, recognized also in the other cases hereinbefore cited, we are persuaded the judgment of the court below is correct, and it will accordingly be here affirmed.
Affirmed.
ANDERSON, C. J., and BOULDIN and FOSTER, JJ., concur.