Dixie Industrial Co. v. Bank of Wetumpka

The plaintiff, appellee, declared on three notes, of the respective dates of execution and of maturity stated in the report of the appeal. There was judgment for the plaintiff for the full amount claimed, the trial being by the court without jury.

It seems to be accepted by both parties that these notes were evidences of but one indebtedness that, aside from payments, had been enhanced by interest, etc., and were, to the extent of their just obligation, renewals, in order, of such original indebtedness. In addition to the general issue, the defendant (appellant) pleaded payment only, in short by consent. The plaintiff discharged, prima facie, its burden of proof by introducing the notes, leaving the actually litigated issue that tendered by the plea of payment (in short by consent), to sustain which the burden of proof was upon the defendant. Read from the evidence, the defendant's theory was that on March 13, 1914, defendant's former president, Benson, since deceased, gave plaintiff, as the payee in Benson's individual note for $2,000 — and which was fully advised of Benson's official relation to defendant — the defendant's check for that amount on defendant's current deposit account with the plaintiff to pay plaintiff Benson's individual debt to the plaintiff. If sustained by the evidence directed to its support, this theory would invoke the application of the established principle that creates in a corporation (as well as in others similarly circumstanced) a cause of action against the thus advised acceptor of corporate funds in payment or discharge of the individual indebtedness of the corporate officer; unless, of course, the corporation validly authorized such an appropriation of its funds or subsequently ratified the act which, otherwise, constituted the corporate officer and the receiptor of such misappropriated funds joint tort-feasors in the premises. Sayre v. Weil, 94 Ala. 467, 474, 10 So. 546, 15 L.R.A. 544; Coleman v. Siler, 74 Ala. 435; Bronaugh v. Evans, 204 Ala. 153, 85 So. 556; Wolffe v. State, 79 Ala. 201, 58 Am. Rep. 590; Nat. Bank v. Ins. Co., 104 U.S. 54,26 L. Ed. 693; C. J. 14 A, p. 111; Wheeler v. Bank, 188 Ill. 34, 58 N.E. 598, 80 Am. St. Rep. 161, 165. See Amer. Bonding Co. v. Bank, 205 Ala. 652, 88 So. 838. The principle is sound; but the primary inquiry presented on this record is whether the trial court erred in law or in finding of fact in respect of the principle's application.

It is to be borne in mind that the action is at law on contracts to pay money; that no element of accounting, between the parties, is involved; and that the plea is payment, not set-off or recoupment, nor accord and satisfaction. The plea, payment, asserted, in effect, that the defendant paid, in whole or in part, the obligations declared on, not, of course, some other obligation or demand. See Burke v. Thorne, 44 Barb. (N. Y.) 363; Bates v. Rosekrans, 23 How. Prac. 98. Voluntary payment, the only character of payment set up in the plea, involves, among other things, the debtor's intention to pay the debt, in whole or in part. Smith v. Pitts, 107 Ala. 461, 468,52 So. 402, quoting definition in 30 Cyc. p. 1181.

"A cross-demand, no matter how clearly established, is not payment, and cannot be treated as such. It can become payment by the agreement of the parties to so treat and liquidate it, and in no other way." McCurdy v. Middleton, 82 Ala. 131, 137,2 So. 721, 724, Stone, C. J., writing.

Viewed with the utmost favor to the defendant (appellant), the evidence relating to the check of March 13, 1914, did not support the plea of payment, in whole or in part, of the obligations here sued on; unless a different conclusion results from considerations referable to the plaintiff's letter to defendant dated May 26, 1917 — a date coincident with the last-dated note declared on — which is reproduced in the report of the appeal. Apart from this letter, the evidence went to show that the plaintiff held Benson's individual note, payable to plaintiff, for $2,000; that on March 13, 1914, Benson, as president of the defendant, gave plaintiff's vice president a check for $2,000 on defendant's current deposit account with plaintiff bank, in payment of that note; that at the time this check was delivered Benson told plaintiff's vice president that the loan represented by that note, signed by Benson individually, was in fact a loan to or for the benefit of the defendant, alone, the transaction being cast in that form because the defendant had already borrowed from the plaintiff bank to the legal limit of loan to one borrower; and that this individual note of Benson's was surrendered to Benson (president of the defendant at the time) upon the receipt of defendant's check — the plaintiff bank making Benson, individually, a loan of $2,000 "at the time he [Benson] paid the $2,000" with the check of March 13, 1914.

The defendant objected to the admission of Benson's statements that the loan to pay which the check of March 13, 1914, was given plaintiff, though apparently Benson's individual debt, was in fact the debt of the defendant, so arranged for the reason indicated. The only grounds of objection were that the questions or matter were "incompetent, irrelevant, immaterial and illegal, and because it called for a conversation or transaction with a deceased person who at the time of such transaction or statement acted in a representative or fiduciary relation to defendant." The first stated grounds of objection were general; and the second ground was untenable because within the exception of the statute (Code, § 4007), and it is expressly waived in the brief for appellant. The objection to the testimony on the special ground stated was a waiver of all other special grounds. Glawson v. Wiley, 35 Ala. 328, among others. The general grounds of objection — if not further qualified in effect by the special ground also interposed — are only sufficient in cases where the testimony is, upon its face, wholly inadmissible; when no extrinsic fact is necessary to disclose its inadmissibility. Richards v. Bestor, 90 Ala. 352, 353, 8 So. 30. What Benson said to plaintiff's vice president at the time defendant's check was delivered to him and the note surrendered to Benson was of the res gestæ of the act, and hence it was not error to receive evidence of the statements attributed to Benson on that particular occasion. Benson's statements on that occasion, though made in immediate connection with his act in giving the check of March 13, 1914, was not the proper means by which to establish that Benson's individual note was, in fact, given for a loan to the defendant, as was the plaintiff's design in bringing out Benson's statements to plaintiff's vice president, since the statement of an officer or agent is not binding on the corporation to which he is so related, where he is adversely interested to the corporation and the other party knows of such adverse interest of the officer or agent to his principal. Moores v. Bank, 111 U.S. 164, 4 Sup. Ct. 345,28 L. Ed. 385; Wheeler v. Bank, 188 Ill. 34, 58 N.E. 598, 80 Am. St. Rep. 161, 165. But this ground of objection was not suggested to the trial court; and it cannot be successfully interposed or invoked for the first time on appeal. 1 Mich. Dig. pp. 351, 352. In the circumstances disclosed by this record, the trial court cannot be held to have erred in overruling appellant's objections, as made, to the matter or statements of Benson on the particular occasion in question.

If, under the very limited issues tendered by the pleading, the plaintiff had had the burden of proof, these statements, as recited by plaintiff's vice president, went to show that in fact the loan the individual note of Benson (the president of defendant) represented was a loan for the use of defendant, from which, under the whole evidence, it was inferable by the court, trying the case without jury, that defendant received the benefit thereof.

The letter (Exhibit A) reproduced in the statement of the case, of date May 26, 1917, is without effect under the limited issues raised by the pleading. In the first place, the testimony of Messrs. Brooks and Gaddis put the material fact in controversy whether this letter was a part of the transaction wherein Mr. Brooks, as defendant's president, gave the renewal obligation of that date, May 26, 1917. The former testified to the immediate relation of the letter to the giving of that note, at a time when the defendant's estate was subject to the bankruptcy court's jurisdiction. The latter, Gaddis, referred it to a subsequent time. This element of the inquiry was in dispute. We cannot affirm on the record, where a material part of the testimony was delivered ore tenus, that a conclusion upon it adverse to appellant was error. Hacket v. Cash,196 Ala. 403, 72 So. 52, among others in its line. Furthermore, the letter, itself, contains nothing which supports defendant's plea of payment on the original indebtedness or its renewals here declared on. It bears no admission of payments thereof. It takes no account of the matter contested, viz., whether the individual note of Benson was for Benson's individual debt or for the defendant's debt.

In view of the evidence by plaintiff's vice president that at the same time the check of March 13, 1914, was given Benson, individually, borrowed a like sum, it is proper to observe that that circumstance, however important it might be otherwise, is not of important or controlling effect in respect of the issue of payment — the sole defense interposed.

No error appearing, the judgment is affirmed.

Affirmed.

ANDERSON, C. J., and SOMERVILLE and THOMAS, JJ., concur.