Choctaw Bank v. Gewin

The bill of exceptions does not purport to set out all the evidence, in fact, none of the documentary evidence offered appears in the bill of exceptions, not even the note and indorsement upon which the plaintiff recovered. Therefore the refusal of the affirmative charge by the trial court will not be reviewed. Murphree v. Farmers' Savings Bank, 77 So. 934;¹ Alice Bridgeforth v. State, 77 So. 77;² Alabama Terminal Railroad Co. v. Benns, 189 Ala. 590, 66 So. 589; Warble v. Sulzberger, 185 Ala. 603, 64 So. 361; Southern Ry. Co. v. Kendall Co., 14 Ala. App. 242, 69 So. 328; Southern Ry. Co. v. Herron, 12 Ala. App. 415, 68 So. 551.

The cashier of a bank has prima facie authority, by virtue of his office, to transfer negotiable promissory notes belonging to the bank, in the transaction of the usual business of the bank, and his transfer of such a note to a person who receives it in good faith confers on the transferee a valid title. Everett v. United States, 6 Port. (Ala.) 166, 30 Am. Dec. 584; Davenport v. Stone, 104 Mich. 521, 62 N.W. 722, 53 Am. St. Rep. 467.

While the transfer by the cashier is presumed prima facie to be in due course of business, and binding upon the bank, this presumption may be rebutted, and if the transfer is shown to have been made in a transaction plainly out of the usual course of business, and the transaction on its face shows that the transferee must have known that the cashier was assuming a power and performing an act outside of his duties and for a purpose other than carrying on the business of the bank in the customary and usual way, the transfer will be regarded as unauthorized and not binding on the bank, even though the transferee paid value therefor. Everett v. United States, supra; Farrar v. Gilman, 19 Me. 440, 36 Am. Dec. 766; Smith v. Lawson, 18 W. Va. 212, 41 Am. Rep. 688; 3 Rawle C. L. 452, § 81. However, the mere fact that the indorsement is an accommodation indorsement made in the regular course of business and before maturity of a note is not sufficient to relieve the bank from liability. 3 Rawle C. L. p. 453, § 82.

The general rule of agency, that no person can act as an agent in a transaction in which he has a personal or pecuniary interest, applies to the cashier of a bank. Campbell v. Manufacturers' National Bank, 67 N.J. Law, 301, 51 A. 497, 91 Am. St. Rep. 438; 3 Rawle C. L. p. 445, § 71; Bowdon Lime Wks. v. Moss, 14 Ala. App. 433, 70 So. 292. All these principles are applicable to this case.

There is evidence in the record tending to show that Liddell, who was the cashier of the defendant bank, used his office to aid his kinsmen, the Messrs. Mitchell, in procuring a loan of money from the Bank of Chatham, and to effect this result the note of January 10, 1915, was drawn on one of the blank notes of the defendant, and was executed by M.L. and C.T. Mitchell, and on its face made payable to the defendant. The defendant advanced no money on this note, and so far as appears the matter was not treated as a transaction With the defendant, but Liddell indorsing the note as "cashier" negotiated it to the Bank of Chatham for and in behalf of the Mitchells, who received the money thus obtained. When the note matured, Liddell, who was still cashier of the defendant bank, was notified and arranged with the plaintiff for a loan to take up this note, and executed his personal note to the plaintiff for the amount, agreeing to procure the note in question from the Chatham Bank, and indorse it to plaintiff as collateral to secure the loan. The money thus obtained from plaintiff was paid to the Bank of Chatham, and the note in question was delivered to Liddell, who again indorsed it as cashier, and delivered it to the plaintiff. The evidence tends to show that the defendant received no benefit whatever from this transaction.

The evidence not only tends to show that the advance made by the plaintiff was a personal loan to Liddell, but it further shows that the plaintiff was a stockholder in the bank and had notice of the purposes for which the loan was being procured. The evidence offered by the defendant for the purpose of showing that the transaction with the Bank of Chatham and that the note executed by Mitchell Bros. as not entered upon the books or carried in its records as an asset should have been admitted, and the court erred in refusing to admit this evidence. In view of the evidence showing that plaintiff was a stockholder in the bank, the court erred in sustaining the plaintiff's objection to the minute book kept by the board of directors respecting the authority of the cashier to make loans for the bank. There was also evidence tending to show that Liddell, while cashier of the bank, had made payments on his personal note executed for the loan to the plaintiff, and for which the note in question was deposited as collateral security, by allowing and paying off overdrafts on the bank at plaintiff's request. If this was true, and the bank was liable at all on the indorsement in question, it was entitled to these credits, and the court erred in refusing charge 6 requested by the defendant. The note in question, being indorsed to plaintiff after maturity, was subject to all legal defenses in his hands.

The other assignments of error are treated as waived, but for the errors pointed out the judgment is reversed and the cause is remanded.

Reversed and remanded.

¹ Ante, p. 340.

² Ante, p. 239.