First National Bank v. Nelson

HARALSON, J. — 1. The doctrine of staleness of demand relied on as a defense in this case, cannot, under the facts shown in the bill, be sustained. Laches, as has been well said, does not, like limitation, grow out of the mere passage of time, but it is founded upon the inequity of permitting the claim to be enforced — an inequity, founded upon some change in. the condition or relation of the property or the parties. — Galliher v. Cadwell, 145 U. S. 368. Whenever such manifest inequity does not appear, “a case does not fall within the operation of the rule, if the suit is for the recovery of property, real or personal, unless it is apparent on the face of the bill, that for the period prescribed as a bar to the corresponding legal remedies, there has been a possession hostile to the title the complainants asserts.” — Shorter v. Smith, 56 Ala. 208; Scruggs v. Decatur M. & L. Co., 86 Ala. 173. 2. The defendant relies on a written transfer to it by complainant of the notes- and mortgage, the suit is instituted to enforce. It is contended, that complainant cannot make defense against such a transfer of these papers to defendant, without denying their execution under oath. The statutes on this subject (Code, §§ 2770-2771) are rules.of evidence, and relate to a denial of the execution of the paper, the foundation of the suit, — in the one, or of an instrument offered in evidence under the plea of set-off, in the other, — to debar their admission in evidence without ' proof of execution; but they have never been construed to mean, that when execution of the paper offered is not denied, or if so, when proved, and read in evidence, the party against whom offered, may not make any. possible defense against it, except that he signed it. Besides, the written transfer of the notes and mortgage, is not the foundation of the suit, but an instrument of defense, collateral to the instruments on which the suit is based. [543] 3. The bill shows on its face that complainant is not a very young person. She speaks of her long married life with her lately deceased husband. It is shown, that she was a person who could read and write, and it is not shown that she was suffering from any mental incapacity, rendering her more liable to imposition than married women ordinarily are. She avers in section 5 of her bill, that said notes and mortgage, after their execution, were delivered into the possession of her husband, and never came into her actual possession. The property sold was hers, and the notes were payable to> her, and the mortgage given by the purchaser to secure them was made to her. The possession by the husband of these papers, was that of an agent of the wife, and not because they belonged to him, or that he asserted any right or title to them, so far as appears. She states, that.she never made any sale, transfer or assignment or other disposition thereof, nor has she ever authorized the sale, transfer or other disposition thereof, nor authorized the collection of said notes or any part thereof. But this denial receives immediate qualification in the succeeding section, six, of the bill, wherein she states, that a short time after the execution of said mortgage and the making of said notes — the possession of them being still in the possession of her husband and agent — he presented the said notes to her, to write her name on the back thereof, and she so wrote her name, without reluctance or hesitation, her husband taking possession of the notes and mortgage thus indorsed. On the effect of these indorsements complainant avers, she was without knowledge or information; that during their long married life, she had trusted and relied upon him in all matters of business, never inquiring into them, — doing what he desired or wished, and in this trust and confidence she left the notes in the possession of her said husband, not doubting he would hold them for her. This indorsement of-those papers means something. It was not a mere meaningless performance, in the eye of the law, which meant nothing at all. It meant everything that could fairly come out of such an indorsement. There was in it, under the facts averred, no element of a contract between the husband and the wife. He stipulated for no advantage to himself in getting her to indorse, and she did so freely and voluntarily, without re [544] quiring anything from him. The whole transaction finds reasonable solution upon the one idea, made prominent by the complainant herself, that as her agent her husband held and kept the notes; that he had been in the habit of attending to all her business, all their lives; and she did what he suggested with unquestioning confidence, as being best for her. He was her agent, and as such, she empowered him by the indorsement to do as he deemed best. 4. But, to avoid the effect of this indorsement by her of said papers, complainant, in the seventh section of her bill alleges, that since the death of her husband,— which occurred on the 21st of May, 1892, said notes and mortgage bearing date the 29th May, 1890, — she caused inquiries to be instituted for said notes and mortgage, and learned for the first time, that the defendant, the First National Bank of Montgomery, had and claimed to own them, and that they had been indorsed to said bank by her and her husband, and that said bank had accounted to her husband for the notes. She avers, that the bank knew that said notes were her separate estate and property: knew the consideration of them; that their payment was secured by said mortgage ; that the consideration paid by the bank to her husband had been applied to his own uses and purposes, and that the bank had given her no information or notice of its claim to said notes, or its dealings with her husband. The appellant, — the First National Bank, — answered the bill and alleged in substance, that complainant had executed a writen transfer of the notes and mortgage to it, with the written consent of her husband, executed in the presence of and attested by two witnesses; that on the delivery of the notes, mortgage and transfer, it paid complainant the sum of $20,000, the price agreed on; that at the time the first of the notes matured, on May 30, 1891, complainant and her husband, by an indorsement in writing signed by them, consented that the bank might grant an extension of time on the note to the maker — which was sought — without waiver of liability on their indorsement of said note. Confessedly, for the purpose of meeting the facts averred in the answer, the complainant amended her bill by stating, that if such instruments existed, “and she signed the same, of which she has no distinct remembrance or recollection, [545] she signed the same at the instance and request, and under the influence of her husband, and in his presence, without- being informed of its character or purposes, and without the same being read or explained to her, and without her having independent advice, or the opportunity of such advice in reference thereto.” The facts set up in the answer, except as brought out in the original and amended bill, we are not permitted, of course, to consider, in passing on the demurrer. The amendment was made to the bill, as admitted by counsel,‘‘to meet the facts averred in answer.” The effort in the amendment is in the nature of a confession and avoidance. The complainant, not denying the allegations she would meet, states that she has no distinct recollection of having sold and transferred said notes and mortgage to the First National Bank of Montgomery, but if she did so, it was under the influence of her husband, without the opportunity of independent advice. She seeks to bring the transaction under section 2349 of the Code, providing that ‘‘The husband and wife may contract with each other, but all contracts into which they enter are subject to the rules of law as to contracts by and between persons standing in confidential relations,” &c. But, as we have seen, this was no contract between husband and wife. The contracts referred to in. said section are such as the husband takes an interest in, personal to himself, as where he is a grantee or obligee under the contract, and where the wife is supposed to acquire from him some .enforceable obligation or advantage. We hold, therefore, that when complainant indorsed these notes and placed them in the hands of her husband, under the circumstances stated by her, she armed him with the authority by indorsing them himself, to sell and transfer them to the bank, and pass the legal title thereto to it, and she is estopped to deny the validity of the transfer, unless she can show that she was deceived and defrauded by her husband, with the knowledge and connivance of the bank. — Code, § 2348. So far as the allegations of the bill go, there is nothing to show that Mr. Nelson acted as the agent, or in the interest of the bank in the transaction, or that the bank ever had a cent of interest in the money it paid 'him for •the notes. If Nelson, as agent Of his wife, disposed of the notes and appropriated the money to his Own uses, [546] in the absence of fraud participated in by the bank, who is to blame, Mrs. Nelson who armed him with the capacity to make sale of the notes, or the bank who bought and paid its money for them? It cannot be the law, that if a married woman — as she may legally do — gives her husband the. authority, as her agent, to dispose of her property and he does so, and misappropriates the money received therefrom, that such a misappropriation will be ground for annulling the sale, and recovering the property. — Hubbard v. Sayre, 105 Ala. 440. Under the allegations of this bill, fraud is not directly imputed to the husband, unless it be implied in the allegation that he collected the money and used it for his own purposes, and this she put him in position to do, by indorsing and entrusting him with the notes, as she had done with all her business. 5. This case is notin conflict with Lockwood v. Tate, 96 Ala. 354. There, when the wife indorsed the note and mortgage, it was with an agreement with her husband, that they were not to be used in paying the debt of the husband to Lockwood, of which understanding Lockwood was informed. With such information, the court held, that he was not warranted in imposing unquestioning reliance upon the husband’s possession of the note with his wife’s indorsement upon it, as evidence of her consent to such a disposition of it as was then made. The demurrer reached the vices in the bill, and should have been sustained. Reversed and remanded,