People's Bank v. Mobile Towing & Wrecking Co.

The evidence in this case shows without dispute that the complainant company has a lien on the 45 shares of its capital stock issued to, and standing on its books in the name of, its debtor, Harry T. Hartwell. It shows also, without dispute, that the respondent bank has a lien on the same stock for a large indebtedness for which it was pledged by Hartwell. The question at issue between the parties is upon the priority of their respective claims.

Under Code, § 3476, "corporations have a lien on the shares of its stockholders, for any debt or liability incurred to it by a stockholder, before a notice of a transfer or levy on such shares." Under the statute, therefore, complainant's lien was superior to the lien of respondent, notwithstanding the latter's priority in point of time, unless complainant had notice of the pledge before the accrual of its lien. Bank of Florala v. Am. Nat. Bank, etc., 199 Ala. 659, 75 So. 310.

On October 17, 1907, Richard Spencer was authorized, by resolution duly shown by the minutes, "to perform all of the duties of secretary." Spencer testified that his best recollection was that, when the $20,000 note of Hartwell to the bank fell due, he knew the stock was at the bank; and further, "I would state that I knew it when the note matured, or, if the note matured before the stock was issued, then I would say that I knew it when the stock was issued." On cross-examination he testified: "I can recollect that as soon as that stock was issued it was sent to the People's Bank"; and "Hartwell told me that as soon as this stock was issued he wanted it issued that way, that is, in two certificates for 35 shares, in order that he could give it to the People's Bank."

There is nothing in this, however, nor in any of Spencer's testimony, to show the circumstances under which he acquired his information, or under which Hartwell made the statement to him about the issuance of the stock. He testified that he and Hartwell were intimate friends, and that he attended to many of Hartwell's business transactions for him, and was in touch with his personal transactions with various banks; and also that the certificates of stock issued to Hartwell were signed by Walsh, the president, and by Hartwell himself — that they were not signed by him (Spencer), and that he, as acting secretary, did not sign any stock till later on.

Under this testimony it would be straining inferences to conclude that Spencer acquired his information as to the pledging of this stock by Hartwell while in the discharge of his duties as secretary. Rather, the presumption is that he acquired it in and by virtue of his personal relations with, and service of, Hartwell. And, it must be noted, though Spencer was authorized to perform the duties of secretary he was not in fact the secretary, and did not supersede Hartwell, and was not, so far as appears, the keeper of the transfer book, and at that time was not issuing or signing stock certificates, if he ever did; hence it cannot be said that the ownership of stock was prima facie within the scope and line of his duty to know and record. Our judgment is that constructive notice of Hartwell's pledge of the stock cannot be fastened on complainant through the knowledge of Spencer. Hall, etc., Co. v. Haley, etc., Co., 174 Ala. 190, 56 So. 726, L.R.A. 1918B, 924.

The principle is stated in that case that a rebuttable presumption arises that an agent, who has acquired knowledge at any time bearing on the subject of his agency, which may affect the interests of his principal, has communicated his knowledge to his principal. But, as we have seen, this knowledge did not relate to the duties Spencer was performing at the time for his principal; and, apart from that, it clearly appears that he did not in fact make any disclosure to the president or other officer of the company.

It is further insisted that Hartwell's own knowledge of the pledging of the stock by himself became constructively the knowledge of the company — the theory being that Hartwell's transactions were between the company and himself; that the company charged his commissions of its money on its books as debts due from him to the company, and charged in the original bill of complaint in this cause that Hartwell "was indebted to complainant" in the sum claimed; and that thereby complainant ratified and adopted the acts of Hartwell in the premises, creating contractual relations between him and the company, and constituting him as the agent of the company in those dealings with himself.

The authority cited in support of this theory of the case is Bank of Florala v. Am. Nat. Bank, etc., 199 Ala. 659, 75 So. 310. In that case, the controversy being identical with the one in the instant case — contrary to the provisions of the act of March 2, 1911 (Gen. Acts 1911, p. 71, § 20), the cashier of the Florala bank made loans to himself without submission to, or approval of, the board of directors or the finance committee. The bank, with full knowledge of the facts, elected to hold Mann to his obligations, thus ratifying the loans, as it had a right to do, and necessarily ratifying also the acts of the cashier in making them. And it was held that this made the cashier the agent of the bank in those transactions with himself, and charged the bank with imputed notice of the cashier's previous pledge of his bank stock to the complainant bank, which he must have had in his mind at the time.

That theory of notice cannot, however, be applied in this case for two reasons: (1) The complainant company had no power to lend money, and it could not in any case, nor by any sort of corporate action, ratify loans made by its secretary to himself. Ala. Red Cedar Co. v. Tenn. Valley Bank, 200 Ala. 622,76 So. 980. Whereas, in the Florala Bank Case, supra, the bank, having the corporate power to make loans to its officers by the action of its board of directors, necessarily had the power by the same authority to ratify such loans, though made without the proper authority in the first instance. (2) Hartwell's unauthorized appropriations of complainant's money to his own uses were not loans to him by complainant in any sense of the word, but were in fact simple embezzlements. They cannot be given a contractual character upon any theory of ratification, whether expressed or implied. Certainly, charging the amounts of his embezzlements against Hartwell on complainant's books as items of indebtedness was not a waiver of their tortious quality and status. Nor can such a waiver be predicated upon the mere allegation of the original bill that Hartwell was "indebted" to complainant.

In order to assert its statutory lien complainant was not bound to show a contractual indebtedness from Hartwell, since the lien is given for any debt or liability; and it may be noted that, before proceeding to a submission for final decree, complainant amended the bill of complaint by striking out the charge of indebtedness, and substituting the charge of unauthorized conversions of money as the basis of Hartwell's liability.

The evidence does not reasonably satisfy us that complainant had notice of Hartwell's prior pledge of the stock to respondent bank, either actual or constructive, and our conclusion is that complainant's lien under the statute must be accorded priority over the lien of respondent bank.

Let the decree of the circuit court in equity be affirmed.

Affirmed.

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