I have given very thorough consideration to the testimony of the defendant's witness Elliott, and of the plaintiff's witness Herring, and I have been driven to the clear conclusion that it cannot, upon any reasonable interpretation or understanding, support the implication of authority, given by the bank to Elliott to release and surrender the note held by it to defendant upon defendant's delivery of the tractor to Elliott. The bank was a creditor of defendant as maker of the note, and of Elliott, contingently, as its indorser. Certainly, Elliott's statement to Judge Herring that he thought the best thing he could do would be to get the tractor back, and that he would get it back and sell it and take up the papers, could not, by the mere silence or acquiescence of Judge Herring, constitute Elliott the bank's agent in that undertaking. It is clear that neither of them contemplated such a thing, and indeed the very language of Elliott's suggestion — to get the tractor back andsell it, and to "take up" the note or papers — refutes the implication of an intended agency to release the obligations of the note. To hold otherwise would be to say, in effect, that a jury question as to agency may arise in every case where a creditor discusses with one joint debtor or his surety any plan of his for the liquidation of the debt, if thereafter the debtor or surety makes arrangements with others for the execution of his plan.
To "take up" a note means to discharge its obligation to the holder, and certainly not to release the holder's claim against the maker without payment of the amount due. The bank in this case had no authority over either the maker or the indorser of the note as to his or their mode of procedure, either in their contractual dealings with each other, or in their handling of the note held by the bank. The bank could neither consent to, nor dissent from Elliott's plan of procedure, in any legal sense of those terms, because as the mere payee of the note it had nothing to do with the mutual relations and obligations of Lee and Elliott. The plain implication is that Elliott was suggesting action on behalf of himself and of Lee in order to take care of the overdue note; and the reason for stating the plan to Judge Herring was presumptively the natural one under the circumstances, simply to assure an active creditor that something was being done to meet and satisfy the obligation.
But, apart from the utter insufficiency of the evidence to generate any implication of agency, as a matter of purely logical aptitude, there is a thoroughly well-settled presumption of law, prima facie, that one who has not the possession of a written security belonging to his putative principal has no authority to receive payment thereof, nor to release the debtor from his obligation. Smith v. Kidd, 68 N.Y. 130, 23 Am. Rep. 157; Security Co. v. Graybeal, 85 Iowa, 543,52 N.W. 497, 39 Am. St. Rep. 311; Campbell v. Gowans,35 Utah, 268, 100 P. 397, 23 L.R.A. (N.S.) 414, and note, 19 Ann. Cas. 660; Neigell v. Gregg, 161 Wis. 413, 154 N.W. 645, L.R.A. 1916B, 856, and note, 860; 2 Corpus Juris, 624. And it must be noted in the instant case that Elliott had never been either a general or special agent of the plaintiff bank, but adebtor merely; and that, being defendant's witness, he testified without objection that Judge Herring never did agree with him to accept the tractor in payment of the note, and never did authorize him to get the tractor back from Lee in settlement of the note, nor to get it back at all.
Another fact of prime significance is that, before Elliott had the conversation with Judge Herring, Lee, according to his own undisputed testimony, had already canceled the sale transaction by agreement with Bice and Redding, Elliott's local agents at Marion, and by their order the tractor was left at Lee's barn for them to get and sell. Again, when afterwards Elliott wrote to Lee to ship the tractor to Gadsden, with a promise to return his notes upon receipt of the bill of lading, and the shipment was made, Lee knew that the note in suit, a negotiable instrument, was held by the bank, and his shipment of the tractor was plainly upon his faith in Elliott's getting the notes and returning them, and not upon any notion that the bank had agreed to release him from liability, or that Elliott was representing the bank for any purpose whatsoever; for he had neither knowledge nor belief as to such a supposition, and Elliott never at any time assumed or pretended that he was acting for the bank, or in any capacity other than as vendor of the tractor merely.
It is worthy of consideration, also, that the bank could gain no advantage by releasing the principal debtor from liability on the note, the person upon whose credit it relied when it bought the note, and the implication that it intended to do so is contrary to common sense and common prudence under the circumstances.
Again, Elliott's promise to Lee was to return to him thenotes on receipt of the bill of lading for the tractor, a departure from the plan stated to Judge Herring, viz., to "get the tractor back and sell it and take up the papers," so radical as to forbid the implication of authoritative association between them.
But, regardless of the numerous other features of the evidence to which we have adverted, a simple analysis of the conversation between Elliott and Herring is enough to condemn the implication authorized by the majority decision. It is not contended, and I think cannot be contended, that Elliott's mere statement of his purpose to take the tractor back and sell it and pay off the note could in *Page 505 itself authorize a finding that he was thereby made theagent of the bank in that behalf, with authority to releaseLee. There was no proposition to release anybody. How then can Judge Herring's reply, if indeed he made any reply, that "itmight be a good idea for you [Elliott] to do that," be tortured into what the majority of the court say is its legal equivalent, viz. "I authorize you as agent on behalf of the bank to take back the tractor and to release Lee from his obligation as maker to pay the note"? Surely this is a violent, and dangerous, and utterly unwarranted paraphrase of a wholly insignificant remark. Even judicial alchemy cannot accomplish such a transmutation.
In another aspect of the case, the bank was clearly under no duty to the maker, this defendant, to warn him that Elliott had no authority to surrender the note to defendant without its prior payment to the bank. Indeed, there was nothing in the conversations between Elliott and Judge Herring to indicate that Elliott intended to overreach or mislead the defendant by assuming authority to release him from liability to the bank without due payment.
Nor do we find anything in the evidence to support a finding that the plaintiff bank afterwards ratified Elliott's agreement with defendant to return the notes to him upon his surrender of the tractor, whether by express action or by the acceptance of the tractor with a knowledge of the circumstances of its return to Elliott. There is nothing to show that the bank received, or agreed to receive, the tractor, or that Elliott intended to turn it over to the bank, in payment of, or as a credit on, the note. The positive evidence is all clearly to the contrary.
I have expressed my dissent from the decision of the majority with thus much of earnestness and effort because of its injustice in this case, but also because in my opinion it sets a radical and dangerous precedent.
On the whole evidence I think the plaintiff was entitled, as a holder of the note in due course, to recover the amount due upon it, and that there was no evidence to support the pleas of accord and satisfaction.
I think that the general affirmative charge for plaintiff was erroneously refused, and that the judgment should be reversed and the cause remanded for another trial.
ANDERSON, C. J., and GARDNER, J., concur in these dissenting views.
On Rehearing.