103 Ala. 497 | Ala. | 1893
Lead Opinion
This is an action of detinue-, prosecuted by Randall Crenshaw against the Commercial Bank of Selma, for the recovery in specie of a certain note and mortgage executed by said Crenshaw to the H. C. Keeble Co., and by said company assignbd and transferred to said bank for value before maturity. The note was executed January 21st, 1890, for $150, and payable October 15th, 1890, to £<H. C. Keeble Company at the Commercial Bank of Selma.” The mortgage, cotemporaneously executed, covered certain live stock and farming implements, a wagon &c., and all the crops grown &c., by the said Crenshaw on the J. L. Crenshaw place in Dallas county, Alabama, or on any other land in said county or State, and was conditioned for the payment of said' note and the other indebtedness thereafter to be incurred for plantation supplies. The mortgage contains also the following, among other stipulations : “And the undersigned does hereby covenant and agree to and with the said H. C. Keeble Co. as follows, namely : * * * * * * * * * * 2nd. That the undersigned will deliver all the cotton grown, raised, received or controlled by him during said,-year to the H. C. Keeble
The important question presented for our consideration on this appeal manifestly is, as to the negotiability of the note executed by plaintiff to the Keeble Co., and assigned to the defendant. In determining this question tifo note and mortgage are to be construed and looked to as one instrument-, and the bank must be holden on the facts we have stated to a knowledge of every stipulation in the mortgage — and, among the rest, that quoted above — affecting or having reference to the note to all intents and purposes as if such stipulation had been embodied in the note itself. — 1 Rand. Com. Paper, § 197 ; 1 Dan. Neg. Instr., § 156 ; Chambers v. Marks, 93 Ala. 412.
Of course the mere fact that the note is secured by a mortgage exerts no influence upon the question of its commercial character. Leaving that circumstance out
Is the requisite certainty as to the time of payment affected or eliminated from the contract by the additional stipulation? I think not. There is in truth and in fact but one stipulation entered into by the parties in this connection, and that is that payment should be made on the 15th day of October, 1890. This is the express provision of the note and there is, I undertake to say, nothing. in the mortgage to the contrary. And the sum then to be paid was the amount of the note in full. There is no intimation, no stipulation in the note or in the mortgage from which it can be inferred, or which affords any
This right to pay the note before October 15th out of the proceeds of cotton, conceding its existence for argument, does not involve a right to make partial payments on the note any more than there would be a right to make partial payments before maturity on a note payable absolutely on a specified day. The special agreement, granting its effect to be that Crenshaw could pay the note prior to October 15th with proceeds of cotton, would operate to mature the note, in the sense of giving him the right to discharge it, when the necessary funds from this source were in hand to pay it in full.
Not only so, not only is the contract of the parties, evidenced by the note and mortgage, without any stipu
But it is insisted, that the rights and duties of the parties under these writings are to be determined by reference to the customs of the country in which the contract was made, common knowledge thereof and of the course of the seasons and habits of husbandry of the people. It is said that the court judicially knows that the cotton crop is harvested in the latitude of Perry county for the most part at least prior to October 15th ; that the mortgage requires the delivery of cotton as rapidly as it can be gotten ready for market; and that, therefore, it must have been the intention of the parties that this note should be paid off in instalments as cotton was received, at uncertain times before that date. Conceding the facts thus assumed to be within common knowledge, shall such knowledge of the customs and habits of a country, the course of the seasons and the maturity of crops, the supposition that contracting parties meant this or that because this or that would best fit in with the habits of the people, be looked to or indulged against the words they have used to express their meaning? Shall we take what they say, the plain terms they have expressly agreed upon, or some vague and shadowy idea evolved out of their surroundings as to what they meant, to reach, fix and declare their intention? The law is too well settled and too obviously supported by every just consideration obtaining in the premises, to require discussion or citation of authority to the establishment beyond cavil of the proposition, that a plain and unambiguous contract can not be controlled, varied, modified, construed or interpreted by reference to the customs, habits or surroundings of the contracting parties, whether such customs, habits and surroundings be within the judicial knowledge of courts, or be brought to their knowledge through the mouths of witnesses. But if this contract were ambiguous, I deny that deductions from common knowledge lead to the conclusion insisted upon as to the intention of the parties. It is manifest from the-mortgage that it was in contemplation of the parties that Crenshaw’s whole crop of cotton would be about five bales. He binds himself to deliver only five bales.
But it is said the Keeble Co. was by the same instrument both the factor and creditor of Crenshaw, and entitled in the latter capacity to the net proceeds of sales of cotton as soon as realized. This is the assumption of the point in issue. That Keeble Co. was not the creditor of Crenshaw in respect of the amount evidenced by the note after that had been transferred to the Commercial Bank seems to me to be too clear for discussion. That company was paid its debt in consideration of the transfer of the note. Thereafter the company had no claim on this note against Crenshaw, but the latter owed the amount of it to the bank, and the bank, not Keeble Co. at all, was entitled to receive from Crenshaw, or from his agent, the net proceeds of the sale, not indeed as realized, but at the maturity of the note whether that was, as I think, absolutely on October 15th, or, as I have conceded for the discussion, at such prior day as should find a sufficiency of the proceeds of cotton applicable to this debt in the hands of Crenshaw or his agent, Keeble Co., to pay the note in full. The mortgage in
I am miable to interpret the special stipulation otherwise than as creating the relation of principal and agent or factor between Crenshaw, on the one hand, and the Keeble Co., on the other, both in respect of the cotton to be, and which was, delivered and in respect of the net proceeds of the sales thereof. By the express terms of the agreement the Keeble Co. was to receive and sell 'the cotton as Crenshaw’s agent and factor, and not as his creditor. The sales being made as agent and factor, the proceeds necessarily came to the - hands of the company, and were held by it, not in its own right as creditor, for in respect of this note it had long ceased to be Crenshaw’s creditor, but in the right of Crenshaw and as his agent. Taking the matter at this point, we have money in the hands of the Keeble Co. held for and as the agent of Crenshaw. Then follows the agreement between the parties — between Crenshaw, the principal, and the Keeble Co., the agent — as to the disposition the agent shall make of the money to the effect that it shall be applied — by the agent necessarily and obviously, since the company no longer sustains any other relation to Crenshaw so far as the note is concerned, and in that capacity — to the debts secured by mortgage, first the advances, and afterwards the debt evidenced by the note. The delivery of the cotton was not a payment; it was delivered for the purposes of sale and was to be sold at the usual commission of one dollar per bale. The receipt of the net proceeds of sale by the agent was not intended to be and was not a payment. After such receipt the contract required that the proceeds should be applied to the debts, and such application alone constituted payment. The act of applying the proceeds to the debts, of payment thereof on the debts, was essentially the act of Crenshaw, whether intended to be performed and performed by his own hand or by the hand of the company; and this is equally true, and mani
This conclusion gains ' support when the futility or inutility of notice to Crenshaw is considered. The mortgage recites in the paragraph next succeeding that we have quoted, “that the H. C. Keeble Co. is engaged in the business of selling cotton on commission ; and the main purpose of the above advances is to promote that business by securing the sale of cotton.” The stipulation for the delivery of cotton to the company was in promotion of this commission business. Crenshaw had contracted to deliver cotton in consideration of advances, and to pay the company the usual commission of one dollar a bale for selling it. He had received the advances in consideration of which he had thus obligated himself. There is no intimation of a condition in this contract to the effect that it should not hold in the event the note in question was assigned. The fact that the note was assigned to the bank could not possibly have relieved him from the obligation to deliver the cotton to the company, nor have taken away the company’s right to sell it, receive the proceeds and charge for its services in that behalf. Of what avail, therefore, would notice of the transfer have been to him? None whatever that we can conceive of. With or without such notice he had no choice but to deliver the cotton-as he did do, and with or with-, out notice to him of the transfer, the company had precisely the same right to sell the cotton and receive the proceeds. A notice which involves no legal consequences can not be a notice which the law requires. Confessedly, if after notice of transfer he had delivered the cotton to the company and allowed it to receive the proceeds of sale, he would be liable to the bank for the face of the note. The whole case was tried below on the assumption of the correctness of that pxtoposition. Then how can the absence of such notice protect him froxxx liability, when had it been givexi him, he would still have rested under precisely the same duty and obligation as without it to deliver cotton to the company fox-sale axxd receipt of proceeds by it? Manifestly, I think, no x-ight or obligation of Crenshaw ixxvolved in this case depoixded on his knowledge of the transfer of the note to the Commercial Bank, and he is liable now oxx that note just as he woxxld be had he been fixlly advised of its transfer'from the moment it was made<
The only other matter necessary to be considered arises on the sufficiency of the plaintiff’s replication (No. 7) to defendant’s 4th plea. The complaint claims “one mortgage and note executed by Randall Crenshaw [the plaintiff] to H. C. Keeble Company for the sum of one hundred and fifty dollars, and.due on, towit, October 15th, 1890, and dated January 22d, 1890; said mortgage being on one bay mule, one two horse wagon and two cows with the value of the' hire thereof,” &c., &c., without more. Defendant’s 4th plea alleged, inter aim,the purchase of said note for value before maturity by it, that the same was commercial paper being payable at a bank, and that said note has not been paid to the defendant. To this was replied facts which, according to the opinion of my associates, rendered the note non-negotiable, and further that the plaintiff prior to notice of transfer to defendant had paid, to the H. C. Keeble Co. one hundred, thirty-one and 56-100 dollars of the amount evidenced by the note, and “that plaintiff, as' soon as informed of the transfer and delivery of the note and mortgage to the defendant and before the commencement of this suit, tendered the defendant in legal tender of the United States eighteen and 44-100 dollars, which sum the plaintiff has paid the clerk of this honorable court, which sum together with the amount paid Ii.'C. Keeble Co. is the amount of said mortgage. ” This replication was filed June 12, 1891, a cousiderable time after
The judgment of the city court- must therefore be reversed. The cause is remanded.
Reversed and remanded.
Concurrence Opinion
I concur in the opinion of Justice McClellan that the judgment of the city court should be reversed on account of the failure of the plaintiff to pay into court, at the institution of the suit, the sum admitted to be owing on the note and mortgage sued for ; but, upon due investigation and study, I am impelled to a
It is a cardinal rule that in enforcing a written agreement the court will seek to ascertain and give effect to the intention of the contracting parties. That intention will be gathered from the terms of the agreement itself, and, when necessary, a consideration of the situation and circumstances of the contracting parties, known to them at the time the agreement was entered into, and to the party claiming under them, at the timé his rights accrued. What then was the intention of the parties, to the present contract, fairly deduced from the two instruments read together as one? It is maintained in the opinion of my brother McClellan , that this contract contains the four statutory requisites of a commercial paper, good against all equities and defenses existing between the original parties, in the hands of a bona fide purchaser for value without notice, viz., a promise in writing to pay, (1), a certain person ; (2), a certain sum of money ; (3), at a certain time ; and, (41, at a certain designated place of payment; and that neither of these requisites or elements is, in any wise, affected or impaired by any other stipulation of the contract. I do not controvert the proposition as to the first and second elements stated ; but, as to the third and fourth, I maintain that the intention of the parties, fairly deduced from the agreement itself, was, that the note might be paid, before maturity, in uncertain partial payments, at uncertain times, to be determined and made certain by deliveries and sales of cotton to, and by, the Keeble Co., which the promissor, Crenshaw, obligated himself to deliver as rapidly as the same could be prepared for market; hence, that the note would not be put in circulation, but would be retained by the Keeble Co. whereby the maker was entitled to notice of any transfer thereof, as in case of other nonnegotiable securities. ' The mortgage shows that the Keeble Co., the payee of the note, was a cotton factor
Crenshaw delivered to the Keeble Co., in the fall, five bales of cotton without notice that the note axxd moxhgage had beerx transfex’red.
I think it can not be questioned that,-under this agree
On the contrary, I maintain that the rights secured by the contract to the Keeble Co. to demand, and to Crenshaw to deliver, grow out of, and have reference to, the mortgage security of which the cotton is the subject; and that the stipulation that the cotton shall be sold and the proceeds applied to the payment of the secured debts means that it shall be sold, as delivered, and the proceeds at once so applied. The issue is thus squarely presented. Unless one or the other of these propositions, viz., that the Keeble Company was to hold the proceeds until the maturity of the note and \ hen apply them; or until a sufficient sum accumulated, and then apply them, is successfully maintained, I will undertake to demonstrate that the note cannot be regarded as commercial paper. It will not be supposed that the parties intended by the special stipulation, under consideration, authorizing the company to sell as a factor, to ignore the right and title of the Keeble Co., under the mortgage, to the cotton delivered to it, and its unquestionable right to have it made available for the payment of the secured indebtedness ; and contemplated that only the relation of principal and agent existed between the parties, in respect of the cotton delivered and its proceeds, prior to the maturity of the note, whereby the dominion and control of the cotton and its proceeds, in the hands of the company, were retained by Crenshaw, just as would appertain to any other principal, in reference to property in the’ hands of his factor; hence, the proposition is, that the intention was that the proceeds should be held by the Keeble Company as Crenshaw’s agent, until the maturity of the note, at the latter’s risk; and yet, by virtue of the interest the company bad in them as mortgagee, free from any power on the part of Crenshaw to direct or control the manner or means of their deposit or safe-keeping. In other words, the parties agreed that the cotton should be prepared for market as rapidly as it could be done, and delivered as rapidly as prepared, and then sold, and the proceeds ap- ■
If I am correct in this conclusion, it follows, unavoidably, that the contract, in question, was not governed by the commercial law, touching the rights of bona fide purchasers without notice. In that event, a fair statement of its terms would be : A promise by the maker to pay a certain person, a certain sum, at a certain time and place, but subject to the binding stipulation that the maker might discharge the same, in whole or in part, before maturity, by making thereon partial payments, at uncertain times and in uncertain sums, to be rendered certain by the deliveries and sales of cotton, as the same could be prepared for market.
Upon the postulate that the note was intended by the parties to be and remain what, on its face it purported to be — a negotiable promissory note governed by the commercial law — let us notice the practical operation of the contract, if effect be given (as it must as against appellant) to the qualifying stipulation, above mentioned. The note, then, was given to perform the office of money to be used and to pass as money in the business of the country, for such is the nature of commercial paper. The Keeble Co., by the endorsement of its name thereon, could put it in circulation, and, in that condition, it would pass from hand to hand and place to place, through as many successive holders aDd places as the exigencies of commerce, in respect to it, might demand. The indorser, the Keeble Co., who put it in circulation, was under no duty or interest, and possessed of no power, to keep track of it, so as to locate, at any given time, the place or person where or by whom it might be held. It could never return to charge or affect that company, until after maturity, and formal notice to it of dishonor by the maker. The obligation of the maker, Crenshaw, was that he would be ready at the stipulated place of payment, on the day of maturity, to pay the note upon its due presentation there, by the then holder and owner thereof; or have'funds provided, at that time and place, for its payment, on presentation. Meanwhile, it did not concern him by whom or where the note was held. Unless by some accident
Applying the special qualifying stipulation, as I interpret it, and the logic of the argument in support of the commercial character of the note, must force its advocate to the position, that when the Keeble Co. received and sold a bale of cotton,'the company (or Crenshaw, seeing to it, as he must have had the right to do, that his agent was faithful) must have set forth upon the world of commerce, and through its unknown labyrinths, traced and located the holder of the note and there ef
“A note or bill must be free from contingencies or conditions that would embarrass it in its course.” — Chitty on Bills, Marg. p. 134, note. As I have endeavored to show, this note must be read, as against appellant, as if it contained, on its face, the special stipulation, in question, authorizing the maker to make undefined, uncertain partial payments before maturity, the times and amounts to be determined by the sales of cotton, as aforesaid. Let us then suppose the stipulation to be incorporated in it, and it is perfectly apparent that it. would represent to the person to whom offered, in commercial dealing, no certain sum whatever which could be collected upon it at maturity. It could not pass from hand to hand and be accepted as a paper which, at maturity, would represent and entitle the then holder absolutely to a certain sum of money freed from all payments, discounts or defenses, for the reason that, on its face, it shows the maker reserved the right to make partial payments, before maturity, and it could be known, at no time after the cotton season bégan, what payments may have been made thereon. It cannot be doubted that such a stipulation would destroy the commercial character of a note, otherwise negotiable.
I do not deny that the negotiable quality of a paper
The view I have taken that the parties intended the securities to remain in the hands of the Keeble Co. and be paid as I have indicated, is strongly fortified by the emphatic provision that the purpose of making the advances was to promote its business as a cotton factor, and that the cotton conveyed by the mortgage should be sold by it, as factor, at the usual commission of $1.00 per bale. It can not, of course, be disputed that it was not the intention of the parties that the note should be transferred without the mortgage, for the reason that it was legally impossible to do so, and preserve the integrity of both instruments. The mortgage was inseparable from the debt, and a transfer of the debt necessarily carried the mortgage with it, in equity. Nor can it be denied that if the debt had been transferred and notice thereof given to Crenshaw, the debtor and mortgagor, he would have been bound to deliver the cotton to the transferee. By no sort of construction of the contract could a conclusion be tolerated that he was bound to deliver the cotton to the Keeble Co., knowixig that it had divested itself of all light, title and interest therein, and invested thexn in another. Thus, we see, upon the mere statement of the case, a transfer of the debt, ünder circumstances binding Crenshaw to a knowledge of it, necessarily destroyed the possibility of carrying into effect the controlling purpose with which the contract was xnade, to-wit, that the Keeble Co. should have the sale of the cotton as a factor, and earn the usual commission for that service. Considering that all parties intended to act in good faith; that the person entitled thereto, when the time should come for action, should enjoy the benefits of the security the mortgage afforded, how was
It is very clear that the provision that the mortgage should stand as security for any additional advances which might be made, and which, if made, should be first paid, exerts no influence upon the case, as it comes before us. There was no obligation on the part of the Keeble Co. to make aditional advances. There was no debt, when the contract was entered into, except the note. It was but a precautionary provision to the effect that if, in the future, a further indebtedness should arise the mortgage should stand as security for the same. Such an indebtedness might or might not have arisen. It is immaterial, as.far as concerns the question we have in hand, that it so turned out that it did arise.