Oates v. First National Bank of Montgomery. quarter per cent per month, upon the different classes of the com'pany's paper by it held. These conditions were complied with, and the extension was accordingly made for the periods stated. The required interest was not carried into the extension bills but was paid in advance. Among the collaterals placed with the bank, under this arrangement, was the note for $5,200 already described, indorsed in blank, " B. H. Micow, Prest.” The evidence was somewhat conflicting as to whether the officers of the bank, at the time of receiving the note in question, had actual notice from Oates as to its consideration. It was however conceded, that its president had reason to believe the note was given for stock of the company. Oates, although residing at Eufala, was a stockholder and director of the bank. No inquiry was made of him by the officers of the bank, before receiving the note as collateral security, as to any defense which he might have against its payment. But it was proven by them that when the extension was given to the company, they had no notice of any defect in, or defense to, the note, or of any equities, except such notice as might be implied from the foregoing facts and the relations of the parties. It is not claimed that the bank had, at that time, any notice of the separate written obligation of the manufacturing company to which we have already referred. On the 24th of November, 1873, the bank gave written notice to Oates that it held his note as collateral security for the indebtedness of the company. A few days thereafter he transmitted to the bank the company's agreement or obligation, under which he had purchased the stock and given his note, informing its officers that he had, by the same mail, returned his stock-certificate to the company, and demanded the surrender and cancellation of his note. The bank, replying to this notification, stated that it had purchased the note as negotiable paper, in good faith, for a valuable consideration, and without notice of any private understanding between Oates and the company, its officers or agent. These are the essential facts developed in the record. We are to inquire whether the court below committed any error of law to the prejudice of the plaintiff in error. 1. The first contention of the plaintiff in error is, that by the Oates v. First National Bank of Montgomery. terms of the contract under which he purchased the stock and gave his note, and in view of the false and fraudulent representations of the company's agent as to its financial condition, he was entitled, as of absolute right, to surrender the certificate of stock and have his note returned or cancelled; and further, that his defense, upon that ground, was secured to him by the statutes of the State of Alabama, in force when the contract was made. It is clear that, as between the Tallassee Manufacturing Company and Oates, the defense of the latter is perfect. And it would undoubtedly be sustained, even against the defendant in error, were it true, as claimed, that by the statutes of Alabama, the transfer of the note was without prejudice to any defense which the maker might assert against the payee. This renders it necessary that we should ascertain to what extent, if at all, the rights of parties are affected or controlled by the statutes of Alabama. By section 1833 of the Revised Code of that State it is declared that "bills of exchange and promissory notes payable in money, at a bank or private banking-house, are governed by the commercial law, except so far as the same is changed by this Code." Section 1839 declares that "all contracts or writings, except bills of exchange, promissory notes payable in money at a bank or private banking-house, and paper issued to circulate as money, are subject to all payments, set-offs, and discounts had or possessed against the same previous to notice of the assignment or transfer." Thus stood the law of Alabama until April 8, 1873, when, by statute of that date, entitled "An act to amend section 1833 of the Revised Code of Alabama," it was enacted that section 1833 (copied in full in the act) "be so amended as to read as follows: 'Bills and notes payable at a banker's, or a designated place of payment, are negotiable instruments; bills of exchange and promissory notes payable in money, at a bank or a certain place of payment therein designated, are governed by the commercial law." Acts 1872-3, p. 111. By the same statute, section 1833, as it then stood in the Revised Code, was expressly repealed. It should be observed that the words "except so far as the same is Oates v. First National Bank of Montgomery. changed by this Code," in section 1833 as it originally stood, are omitted from that section as remodelled by the act of 1873. The argument of the plaintiff in error is, that although by the explicit declaration in the act of 1873, bills and notes payable in money at a "certain place of payment therein designated,” are negotiable instruments, to be governed by the commercial law, such bills and notes are nevertheless, under section 1839,"subject to all payments, set-offs and discounts had or possessed against the same previous to notice of the assignment or transfer." We concur with the court below in holding that construction to be wholly inadmissible. It seems that upon this precise point there has been no direct adjudication by the Supreme Court of Alabama, to which primarily belongs the duty of giving authoritative construction of the statutes of that State. The only case in that court to which we are referred, that has any bearing upon this question, is Cook v. Mutual Ins. Co., 53 Ala. 37. Jones, it seems, gave to Cook, in 1871, a promissory note, payable to the order of the latter at the office of W. H. Roberts, Mobile, and indorsed by the payee to the insurance company. In an action instituted by the insurance company against Cook, the question arose as to whether the note was commercial paper, protected, in the hands of a bona fide holder for value, against defenses resting upon payment, set-off, or discount. The inferior State court, ruled that it was paper of that kind, but the Supreme Court of Alabama held that the note, when made, was not commercial paper, and that the rights and liabilities of the parties were to be determined by the statute in force at the date of its execution. That court, speaking by its chief justice, said: "Since the making of the promissory note, on the indorsement of which this suit is founded, the statute of April 8th, 1873, has converted promissory notes, payable in money at a designated place, into negotiable instruments governed by the commercial law. It operates on the nature and obligation of the contract of the parties to such notes, and cannot be construed as affecting notes made and indorsed prior to its passage. The law of force, when the note is made and indorsed, regulates and defines the liability of the parties." No other reasons are assigned in support of the conclusion that the Oates v. First National Bank of Montgomery. act of 1873 did not control the case. It is quite manifest, from the language employed by the Supreme Court of Alabama, that had the note there in suit been executed subsequent to the act of 1873, it would have sustained the ruling of the inferior State court, and excluded all defenses inconsistent with the established doctrines of the commercial law. Such, in our opinion, nfust have been its determination upon any proper construction of the act of 1873. It is true that that statute does not in express words amend section 1839, whereby only bills of exchange and promissory notes, payable in money at a bank or private banking-house, and paper issued to circulate as money,' are, in terms, protected against payments, set-offs, and discounts, which the maker might assert in the case of all other contracts and writings. But it is perfectly evident that the object of the act of 1873 was to place bills of exchange and promissory notes, payable at a certain designated place of payment, upon exactly the same basis, as to immunity from set-off, discount, or equities, as the statute prescribed in reference to bills and notes payable at a bank or private bankinghouse. In declaring that bills and notes of the former class were negotiable instruments, to be governed by the commercial law, the legislature necessarily intended to throw around such paper the same protection that had previously been given by statute to bills and notes payable at banks or private banking-houses. If such was not its object, then, confessedly, the act of 1873 was both meaningless and illusory. The duty of the court, being satisfied of the intention of the legislature, clearly expressed in a constitutional enactment, is to give effect to that intention, and not to defeat it by adhering too rigidly to the mere letter of the statute or to technical rules of construction. Wilkinson v. Leland, 2 Pet. 662; Sedgw. on Const. and Stat. Const. 196. And we should discard any construction that would lead to absurd consequences. 7 Wall. 486. We ought, rather, adopting the language of Lord HALE, to be "curious and subtle to invent reasons and means to carry out the clear intent of the law-making power when thus expressed. The defense of the plaintiff in error would be good under section 1839, if no regard was had to the act of 1873, but since that statute expressly included notes payable at a Oates v. First National Bank of Montgomery. certain designated place in the class of negotiable instruments to be governed by the commercial law - which could not be if section. 1839 be enforced according to its literal import - the judiciary must respect the latest expression of the legislative will, and not permit it to be eluded by mere construction. "A thing which is within the intention of the makers of a statute is as much within the statute as if it were within the letter; and a thing which is within the letter of the statute is not within the statute unless it be within the meaning of the makers." 15 Johns. 338, 380. For these reasons we are of opinion that the statutes of Alabama do not permit, as against a bona fide holder, for value, of a promissory note, payable in money at a certain place of payment therein designated,' defenses which are disallowed in cases where the note is payable at a bank or private banking-house. 2. Giving to the Alabama statute the construction indicated, our next inquiry is whether the bank, under the circumstances disclosed in this case, became, according to the recognized principles of commercial law, a bona fide holder for value of the note in suit. That it acquired the note in good faith, without fraud, we are not permitted by the evidence to doubt. Its officers were not bound to inquire of the plaintiff in error, before they took the note, whether he had any defense or set-off. They rightfully supposed, as the face of the note imported, that he had undertaken absolutely to pay the amount specified at the time and place designated. That the president of the bank had reason to believe it was given for stock of the Tallassee Manufacturing Company is a fact of no significance whatever in determining the question of good faith. Having no knowledge or notice of the private agreement between Oates and the company, as set forth in the separate obligation of the latter, which was withheld from the public, the bank officers justly assume that there was no circumstance attending the sale of the stock which could lessen the obligation of Oates to pay the note according to its tenor and effect. But it is contended that by the rules of commercial law, as recognized by the Supreme Court of Alabama, one who receives a promissory note as collateral security for a pre-existing debt does not become a purchaser for value, in the course of business, so as VOL. II-6 |