Bank of Tupelo v. Thompson , 186 Ala. 600 ( 1914 )

ANDERSON, C. J. —

There is no. controversy over the fact that the plaintiff authorized, the firm of Thompson & Wallace to use the warehouse stock as security for a “margin” to the bank for paying for cotton purchased by said firm. . There was also evidence as to what the •term “margin” meant, and which was to the effect that it meant to secure the bank against a shrinkage or diminution in the value of the cotton from the price paid and the price for which it was subsequently sold. There was evidence from which the jury could infer that the balance due the bank, at the time of the failure, was for “margin.” In other words, there was proof from which the jury could infer that the difference between what was due the bank for paying for the cotton and the amount for Avhich it was sold, or what it was worth at the time of the pretended sale to the Clark Grocery Company, was due to a depreciation in the value of the cotton, and that said difference was secured by the said Avarehouse stock. The trial court therefore erred in giving the general charge for the plaintiff although it might be conceded that the bank held the stock only to secure “margins.”

As to the other theory of the case — that is, whether or not the bank held, or had the right to hold, the warehouse stock as security for any indebtedness of the firm of Thompson & Wallace, other than for margin— was also a question for the jury. It may be true that , the plaintiff delivered the stock for a limited purpose and was bound only by the exercise of the authority so given unless the bank was an innocent purchaser. She indorsed the warehouse stock in blank, which gave upon its face the indicia of authority to the holder to make any disposition of same, and the bank had the right, in dealing with the holder of said stock, to rely upon the authority given by the indorsement, unless put upon notice or inquiry by information gained other than by an inspection of the stock and the indorsement thereon.

The evidence both of Wallace and the cashier, Moore, shows that the bank did not have any notice of the restrictions of the plaintiff to Thompson & Wallace, or of their written obligation to her as to how the stock should be hypothecated. So the rights of the bank to hold said stock for any indebtedness, except for margin, depends upon whether or not it was a holder or purchaser for value, and upon this point there was such a conflict as to make it a jury question. If at the time the stock was hypothecated it was received as a mere security for what was then due the bank by the firm of Thompson & Wallace, and said indebtedness was not extended or no security released, the bank was not such a purchaser for value as to claim protection as against the plaintiff’s restricted authority to Thompson & Wallace, notwithstanding she indorsed the stock in blank.—Hawkins v. Damson & Abraham, 182 Ala. 83, 62 South. 15; First Nat Bank v. Nelson, 105 Ala. 180, 16 South. 707; Spira v. Hornthall, 77 Ala. 137. On the other hand, if the stock was deposited as collateral security for any indebtedness due the bank from Thompson & Wallace, as well as for “margin,” and any future credit was given on the strength of said collateral, though it may not have been the sole security for making the advance, the bank would be a bona fide purchaser, whether anything was due for margin or not.

Wallace testified: “This stock was put up the second time as collateral or margins with the Bank of Tupelo about the 1st of October, 1910.” Again he says: “I left this stock with Mr. Moore, the cashier of the Bank of Tupelo; we did owe the Bank of Tupelo something, and this stock was put up as collateral for that indebtedness.” If the witness referred only to- an existing indebtedness, and the stock was received as collateral for same, the bank was not a bona fide purchaser as for this consideration. The witness Moore said: “This stock was held by the Bank of Tupelo for any indebtednes that the firm of Thompson & Wallace owed the Bank of Tupelo.” Whether or not the witness meant any indebtedness owing on the 4th of October or which might be owing during the cotton season was a question for the jury, as the language of the witness, when taken in connection with his other evidence, is susceptible of either meaning.

We think that the defendant must rely upon the right acquired in the stock upon the original hypothecation of same, and not upon the subsequent consent of Wallace-for it to sell the same and credit it to the indebtedness of Thompson & Wallace, after the failure of said firm, as this transaction would not constitute the bank a bona fide purchaser so as to protect it, under the authority to Wallace by virtue of the indorsement, and which was in violation of the limited authority given him by the plaintiff. Therefore there will be no error upon the next trial in declining to let Wallace testify that Thompson authorized him, after the failure, to tell the bank to dispose of the stock and credit the proceeds to the account of the firm, unless it should appear that the stock was acquired by the wife in a jurisdiction giving the husband the common-law right to dispose of same'. Whether or not the residence of the plaintiff was not sufficiently established when she received the stock from the warehouse company as to compel the application of the common law as to the control of the husband over same (Birmingham Waterworks v. Hume, 121 Ala. 168, 25 South. 806, 77 Am. St. Rep. 43) we need not now decide, as this case must be reversed for other reasons, and the residence of the plaintiff, when she acquired the stock, can be established upon the next trial.

The judgment of the city court is reversed, and the cause is remanded.

Reversed and remanded.

McClellan, Sayre, and de Graffenried, JJ., concur.