Selma Bridge Co. v. Harris , 132 Ala. 179 ( 1902 )

McCLELLAN, C. J.

— The certificates of the Bridge Company’s stock were originally transferred by MaaS to the Commercial Bank on the occasion of his executing a note for fl,500 to the bank for the money then borrowed, and the transfer was. in terms “to secure the payment at maturity of said note and after its payment to secure any other indebtedness” of Maas to the ■bank. This note and this transfer of the stock were made on December 3rd, 1887, and the note matured on April 4th, 1888. It cannot, we think, be 'seriously doubted that this transfer of the certificates of stock made them collateral security at least for any debt from Maas to the bank existing at the time ¡the note should be paid whether such debt, was in existence at the date of the transfer or not; and hence to this extent at least the transfer was to secure indebtedness arising in the future. This $1,500 had not been paid on April 6th, 1889, but prior to that time the note evidencing it had been renewed in one wav or another. So that at that date the bank held the stock as collateral to the $1,500 note, and to any other debt then existing* or which should come into existence against- the time of its payment-, as security for then existing debts and for such future debts as should be incurred by the time of the happening of a specified event. Whether that event has ever happened, we are not advised, probably not. But be that as it may, it is to the last degree unreasonable and improbable that the bank upon a further renewal of the f1,500 debt should without consideration have surrendered this collateral security for future debts of the class referred to, and the conclusion that- it did-so is not ¡to be lightly or without clear indication of such intent arrived at. The renewal of the transfer of the stock made on the date last named, April 6th, 1889, affords no such indication. That transfer, having reference to the $1,500 note and the original transfer, under which it appears to have been written, is as follows: “The above has been renewed from time to time in different shape, and the above stock is security in the hands of said bank for the same and any other indebtedness.” The situation and dealings of the parties were such as would seem ¡to naturally call for a broadening* of the pledge rather than to narrow it ; and certainly there is nothing -in this last transfer or in any circumstance disclosed to afford any ground for an inference that the bank upon further accommodating Maas in respect of the $1,500 debt, surrendered ¡to any extent the security afforded by the transfer of these certificates of stock, and to have taken a transfer as -security only for then existing debts would have been to surrender it as a security for debts to be incurred up to the payment of the $1,500 note. To the contrary, it would seem most reasonable, proper and just for the bank in consideration of the further accommodation it extended to Maas, to require him to broaden the transfer of the certificates so as that they would stand security not only for the $1,500 and for any other debt-owing to the bank when tlie $1,500 should be paid as. they had done from the first, but for all future indebtedness of Maas to the. bank ; and we feel that we are declaring the intention of the parties in holding that under the last transfer of the certificates tbe bank held them as collateral security for the debt Maas owed it at the time of the assignment.

The nthcr question in the case necessary to lie passed upon is whether the Louisville Banking Company through its president, the complainant Harris, or otherwise, had knowledge or notice of the. fact that the assignees of the Commercial Bank held these certificates of stock as ■collateral security at the time [the stock as it stood on the books of the Bridge Company in the name of Maas was levied on under a judgment recovered by said Banking- Company against Maas, and indeed at the time of the issuance of the execution. We shall not discuss ¡the evidence on this issue at any length. The burden of proving notice, we will assume, -was upon the respondents. We think that burden has been discharged. There is direct and affirmative evidence on the part of the respondents, the testimony of one of the assignees that ¡the complainant, representing tin' Banking Company, was informed that the assignees held these certificates as collateral to Maas’ debt to the bank. And this testimony is strongly 'corroborated by the circumstances, that Harris was keenly interested in the affairs, of the Commercial Bank in- the hands of the assignee®, his company being a creditor to a large amount, that he had come to Selma and remained a week endeavoring- to find out what assets had come to the assignees, that after he left there he continued solicitous about- the matter, and wrote to- the assignees that he had heard that a statement of the assets of the defunct hank had been prepared and published in a newspaper, and requesting that the statement so published should be sent to him. It -was sent. He received it. And it showed that among the assets of the hank were these certificates of stock held as col-laterals. He admits receiving this statement. He does not deny reading it. Indeed his. whole testimony, against the positive, affirmative and circumstantial evidence of one of the assignees and the facts as to the statement just referred to, amounts in its last analysis to no -more than that he does not remember to have ever had knowledge or notice of the transfer of the certificates by Maas to tbe Commercial Bank. 'Upon this state of the evidence we reach the conclusion that Harris and the Louisville Banking Co. had, not only notice of the assignees’ rights in the premises when the stock ■was levied upon, but knowledge that certificates for twelve shares of the stock of the Selma Bridge Co, had been transferred by Maas to the Commercial Bank and passed from the bank to its assignees. With this knowledge, (they, upon finding twelve shares of the stock standing on the 'book® of the Biridge -Company in the name of Mans were put upon notice that this was the same stock held by the assignees- of the bank as collateral seeuritjr, especially as the transfer of certificates of stock — and no¡t the stock itself on the books of the issuing company — is a recognized and customary mode of pledging the stock to secure debts.

We are, therefore, of opinion that complainant has no title to this -stock as against the assignees of the Commercial Bank, -and that he is not entitled to have the Bridge Co. recognize him as the owner of said stock, and register the sheriff’s- transfer to him on the books of said company or to a certificate of the same or to the dividends which have been declared upon it. The decree of the city court will be reversed, and a decree will be here rendered denying relief and dismissing the bill.

Reversed and rendered.

Haralson, J., not sitting.