First Nat. Bank v. Elba Hardware & Furniture Co. ( 1931 )

Suit by appellant as assignee of a promissory note alleged in plaintiff's replication to be as follows:

"Elba, Alabama, January 12, 1929.

"State of Alabama, Coffee County.

"On the 12th day of July, 1929, I or we promise to pay to Elba Bank Trust Company, or order, the sum of Fifteen Hundred Dollars at their office in Elba, Alabama, for value received, with interest from maturity and I or we agree to pay the cost of recording this instrument, together with reasonable attorney's fees and all other expenses incident to the foreclosure of the same, whether by suit or otherwise incurred in any manner; and to secure," etc., and the further description of the note shows incorporated therein a mortgage of crops, live stock, and other personal property, and the following: "All or any of which property the mortgagee or assigns may after or before maturity hereof and with or without taking possession and for the payment thereof, sell as they may deem best," etc., and the further allegation of the replication is that plaintiff purchased the said note in good faith, for value, before maturity, in the ordinary course of trade, and without notice of the defense, etc.

The foregoing replication was pleaded in reply to several pleas which had set up the fact that plaintiff's assignor, the payee named in the note, was at and before the commencement of the action indebted to defendant in a sum in excess of the amount made payable by the note, and that, since the making of the note, said payee had become insolvent and gone into liquidation — this we state in brief. Demurrer to plaintiff's replication was sustained, and thereafter there were jury and verdict for defendant.

The question presented for decision is whether the note in suit, as shown by plaintiff's replication, was negotiable according to the law of negotiable instruments.

The fact that a mortgage is attached does not destroy the negotiability of the note. Sandlin v. Maury National Bank,210 Ala. 349, 98 So. 190; Singer v. National Bond Investment Co.,218 Ala. 375, 118 So. 561.

The fact that the mortgage attached to the note, otherwise negotiable, secures also an indebtedness other than that represented by the note, does not render the note nonnegotiable. Federal Land Bank v. Corinth Bank, 214 Ala. 146,107 So. 88.

The fact that a mortgage is attached to a promissory note authorizing the payee to take and apply on the indebtedness, prior to maturity, property conveyed by the mortgage, does not destroy the negotiability of the note. Louisville Banking Co. v. Gray, 123 Ala. 251, 26 So. 205, 82 Am. St. Rep. 120. And, in general, we quote the following apt statement from F. M. Bank v. Davies, 144 La. 532, 80 So. 713, 715: "Wherever the additional stipulations are merely in aid of the collection of the note, and do not constitute an undertaking to give or do something else foreign to that end, they do not destroy negotiability." They render "neither the amount, the time of payment, the payee, nor the engagement to pay, uncertain." Daniel Negot. Inst. (6th Ed.) vol. 1, p. 67. Stipulations of the mortgage incorporated into the note and providing means for the collection thereof in the event its due date passes without payment do not change the fact that the note is negotiable within the meaning of the decision in Louisville Banking Co. v. Gray, supra, announced by this court more than thirty years ago. There are cases in other jurisdictions holding to the contrary; but the opinion here and now is that the precedent of our cases should be followed. Nor did the Acts of 1907, p. 660, entitled an act to define and regulate negotiable instruments, affect the question here in hand. Rather, that act, in keeping with the decisions to which we refer, enlarged the negotiability of paper in the general class with this.

To the same effect in general is the decision in Ex parte Bledsoe, 180 Ala. 586, 61 So. 813.

The trial court held the note in suit to be nonnegotiable, and therein, according to the previous decisions of this court, committed reversible error.

Reversed and remanded.

All the Justices concur, except BROWN, J., who dissents.