Opinion
4 Div. 867.
October 15, 1936.
Appeal from Circuit Court, Covington County; Robt. S. Reid, Judge.
Theodore J. Lamar, Walter S. Smith, and Walter S. Smith, Jr., all of Birmingham, for appellant.
The bill was subject to demurrer. Moseley v. Ritter, 224 Ala. 58, 139 So. 94; Roney v. Dothan Produce Co., 217 Ala. 475, 117 So. 36. Appellant has the right to challenge the appellee's right to recover. Halfman's Ex'x v. Ellison, 51 Ala. 543; Harper v. Raisin Fertilizer Co., 158 Ala. 329, 48 So. 589; Stoutz v. Huger, 107 Ala. 248, 18 So. 126. The note sued on was not negotiable; failure of appellee to bring suit at first term of court against the maker discharged the indorser and appellee had no cause of action against Whaley as an indorser when it brought its suit against appellant. Stone v. Goldberg Lewis, 6 Ala. App. 249, 60 So. 744; Morrow v. Shuff, 219 Ala. 395, 122 So. 635; Murphy v. Farley, 124 Ala. 279, 27 So. 442; First Nat. Bank v. Henry, 159 Ala. 367, 49 So. 97; Sacred Heart Bldg. Committee v. Manson, 205 Ala. 256, 257, 82 So. 498; First Nat. Bank v. Elba H. F. Co., 223 Ala. 493, 137 So. 173; National Bank v. Feeney, 9 S.D. 550, 70 N.W. 874, 46 L.R.A. 732; Id., 12 S.D. 156, 80 N.W. 186, 46 L.R.A. 732, 76 Am.St.Rep. 594; Fralick v. Norton, 2 Mich. 130, 55 Am. Dec. 56; Code 1923, §§ 9626, 9627; Thomason v. Cooper, 57 Ala. 560; Bank of Luverne v. Sharp, 152 Ala. 589, 44 So. 871; Caulfield v. Finnegan, 114 Ala. 39, 21 So. 484. The adjudication of bankruptcy of Whaley altered the rights of appellee to claim a lien on the lands involved. Lacy v. Rockett, 11 Ala. 1002; Andrews v. Mather, 134 Ala. 358, 32 So. 738. The trustee in bankruptcy was a necessary party. McDougald v. Reid, 5 Ala. 810; 7 C. J. 396; Dickens v. Dickens, 174 Ala. 305, 56 So. 806; Cartwright v. West, 173 Ala. 198, 55 So. 917. The conveyance assailed was not shown to be void. Cromelin v. McCauley, 67 Ala. 542; Alabama L. I. Co. v. Pettway, 24 Ala. 544; Pollak v. Searcy, 84 Ala. 259, 4 So. 137; Allen v. Riddle, 141 Ala. 621, 37 So. 680.
Mulkey Mulkey, of Geneva, for appellees.
The bill was not subject to demurrer. Whaley v. First Nat. Bank, 229 Ala. 153, 155 So. 574. A note which is negotiable on its face may not be shown to be non-negotiable by proof of further or additional agreement. Sacred Heart Church Bldg. Committee v. Manson, 203 Ala. 256, 82 So. 498; First Nat. Bank v. Elba H. F. Co., 223 Ala. 493, 137 So. 173; Blackman v. Lehman, Durr Co., 63 Ala. 547, 35 Am.Rep. 57; Strand Amusement Co. v. Fox, 205 Ala. 183, 87 So. 332, 14 A.L.R. 1121; People's Bank v. Moore, 201 Ala. 411, 78 So. 789. Requirement as to bringing suit against maker was waived. Brown v. Fowler, 133 Ala. 310, 32 So. 584; Caulfield v. Finnegan, 114 Ala. 39, 21 So. 484. The bankruptcy occurred four months after the bill was filed. The filing of the bill created a lien on the property embraced in the mortgage, which continued and remained such in event complainant succeeded in its bill. The lien was not displaced by the bankruptcy. Appellant had the option of making or not the trustee a party, and the trustee alone could raise the question. North Birmingham A. Bank v. Realty Mortg. Co., 223 Ala. 30, 134 So. 796; Cortner v. Galyon, 223 Ala. 405, 137 So. 30; Metcalf v. Barker, 187 U.S. 165, 23 S.Ct. 67, 47 L.Ed. 122; Pickens v. Roy, 187 U.S. 177, 23 S.Ct. 78, 47 L.Ed. 128; Code 1923, § 6143; Booker v. Adkins, 48 Ala. 529. Appellant has not sustained the burden of overcoming the presumption of mala fides in the transaction assailed Brunson v. Rosenheim Son, 149 Ala. 112, 117, 43 So. 31; Gamble v. Aultman Co., 125 Ala. 372, 28 So. 30.
This cause, in varying phases, has been heretofore considered by this court. Whaley v. First Nat. Bank of Opp, 229 Ala. 153, 155 So. 574; Lanier v. Henderson et al. 227 Ala. 243, 149 So. 674; Whaley v. Henderson, 227 Ala. 158, 148 So. 848.
While the appellant has argued many questions, and which will be treated in the order of presentation, the real question involved in this appeal is the bona fides of a certain mortgage given by J. A. Whaley and his wife to appellant, Lawler Watson, and which was held by the trial court to be fraudulent and void as to this appellee, a creditor of the said Whaley.
It is first urged that the complainants' bill was subject to the appellant's demurrer. It is sufficient to say that Whaley interposed in substance the same demurrers which were held to be without merit and we see no reason to recede from our former ruling. Whaley v. First Nat. Bank of Opp, 229 Ala. 153, 155 So. 574. The bill sufficiently designated the instruments involved as to put respondent on notice and was not bad for not setting them out as exhibits.
The appellant contends that the appellee bank was not a creditor of his grantor, Whaley, for the reason that he was but an indorser on a note which was not negotiable and, as suit was not brought upon said note as required, the said indorser, Whaley, was discharged. We think the note on its face is a negotiable instrument and is for a sum certain, $12,000. It is contended that it was not for a sum certain because the deposit slip to the credit of the maker of the note, the American Bank Trust Company, provided that the fund so deposited was to be used exclusively in paying off the depositors of the last-named bank and, if not entirely exhausted, the residue was to be applied as a credit on the note. It may be questionable if this deposit slip should be considered in determining the negotiability of the note, which is negotiable upon its face. Sacred Heart Church Building Committee et al. v. Manson, 203 Ala. 256, 82 So. 498; First Nat. Bank of Dothan v. Elba Hardware Furniture Co., 223 Ala. 493, 137 So. 173. Moreover, if the note be treated as nonnegotiable, the appellant has failed to show that Whaley, as indorser, was entitled to a discharge by a failure of the appellee bank to have brought suit on the note as required, as subdivision 7 of section 9228 of the Code of 1923 provides: "The holder of such indorsed or assigned contract is excused from bringing the suit, obtaining the judgment, and issuing the execution thereon * * * (7) When by any act or promise of the indorser, the plaintiff is induced to delay bringing such suit."
The undisputed evidence of Mizell, the president of the appellee bank, shows that the indorsers requested an extension and that no suit be brought and made an unconditional promise to arrange its payment. Brown et al. v. Fowler, 133 Ala. 310, 32 So. 584; Caulfield et al. v. Finnegan, 114 Ala. 39, 21 So. 484. Whether necessary or not for this waiver to appear in the pleading, it was set up in the answer of the appellee to the amendment of Henderson and the cross-bill of Whaley.
The bankruptcy of the respondent Whaley more than four months after the bill to set aside the conveyance and the service of the summons did not affect the appellees' lien, which, when the decree was rendered, related back to the service of the summons. Evans v. Welch, 63 Ala. 250; Hines v. Duncan, 79 Ala. 112, 116, 58 Am. Rep. 580; Heard v. Murray, Dibbrell Co., 93 Ala. 127, 131, 9 So. 514; Barnes v. Bell, 231 Ala. 84, 163 So. 616, and cases there cited; Metcalf Bros. v. Barker, 187 U.S. 165, 23 S.Ct. 67, 47 L.Ed. 122; Pickens v. Roy, 187 U.S. 177, 23 S.Ct. 78, 47 L.Ed. 128.
We do not think that the record discloses that the trustee in bankruptcy was a necessary party, as it affirmatively appears that the appellee had a superior lien which was in effect adjudged by the bankrupt court and as to which said trustee seems satisfied. Moreover, the decree of the circuit court did nothing more, as to Whaley, than to impress the lien upon the property fraudulently conveyed, rendering no personal judgment against him.
It is unnecessary to enter into a detailed discussion of the evidence as to the bona fides of the mortgage given by Whaley to the appellant, Watson. It is sufficient to say that we fully concur in the holding of the trial court that the appellant has not met the burden of showing a bona fide consideration for said mortgage and that the same was fraudulent and void as to the appellee.
The decree of the circuit court is affirmed.
GARDNER, BOULDIN, and FOSTER, JJ., concur.