The manifest purpose of section 4624, Code 1907, is to prevent banks from using the character of their business as a cloak to evade the usury laws; and where money is advanced by a bank and the transaction is in substance a loan, though in form a discount of securities, and the amount taken out for the use of the money is in excess of the legal rate of interest, the transaction is usurious. Youngblood v. Birmingham Trust Co., 95 Ala. 521, 12 So. 579, 20 L.R.A. 58, 36 Am. St. Rep. 245; Planters' Bank v. Goetter, 108 Ala. 408, 19 So. 54.
Where, however, the transaction is not in substance a loan, but is a bargain and sale of securities, and the obligation of the person liable on such securities is not made more burdensome, the transaction is not usurious, though the amount of the discount is in in excess of the legal rate of interest. Woodall Son v. People's Nat. Bank, 153 Ala. 576, 45 So. 194; King v. People's Bank of Mobile, 127 Ala. 266, 28 So. 658; Holmes v. Bank of Ft. Gaines, 120 Ala. 493, 24 So. 959; Orr v. Sparkman, 120 Ala. 9, 23 So. 829; Capital City Ins. Co. v. Quinn, 73 Ala. 558; Wildsmith v. Tracy et al., 80 Ala. 258.
The averments of the defendant's third plea, to which a demurrer was sustained, when construed in connection with the averments of the complaint, show that the note in question was either executed by defendant payable to Cadenhead, or made payable by defendant to himself and indorsed by him to Cadenhead in consideration of the sale of stock in an insurance company, sold by Cadenhead to defendant; and after the transaction between defendant and Cadenhead was closed, Cadenhead discounted the note at the plaintiff bank at the rate of 32 per cent. per annum. The transaction, therefore, was not a loan of money, and in no way made the obligation of the defendant more burdensome, and the transaction was not in violation of section 4624 of the Code. The demurrer to this plea was sustained without error.
The replication was a complete answer to the defendant's plea, and the demurrers thereto were properly overruled. Holmes v. Bank of Ft. Gaines, supra.
After the defendant had been given unlimited latitude on cross-examination of the witness Kelly with reference to the bank's dealings, and had failed to elicit any testimony tending to put the plaintiff on notice of the alleged fraud practiced by Cadenhead on the defendant, "the court sustains objections to the questions in regard to the bank being in the habit of handling fake notes, because the evidence offered does not not show it," and to this ruling the defendant excepted. If we concede that the questions were proper, and that it was error to sustain the objection, the ruling was clearly without injury, as the defendant's efforts to bring out testimony beneficial to his defense by such questions were unavailing, and he was denied nothing by the ruling of the court.
Charges 3 and 5, given at the instance of the plaintiff, correctly stated the law as applicable to the issues and evidence, and were properly given. Elmore County Bank v. Avant,189 Ala. 418, 66 So. 509.
On principles herein stated and the evidence in the record, charge X refused to defendant was abstract. Charge 3 was the affirmative charge for defendant, and was properly refused.
If the plaintiff purchased the note in due course of business, for value, and before maturity, without notice of the matters set up in the defendant's pleas, the plaintiff was entitled to recover, whether it paid the "real or supposed value" for the note or not. Charge 4 was therefore properly refused.
We find no error in the record, and the judgment is affirmed.
Affirmed. *Page 103