McCulloch, O. J.
The Texarkana Trust Company; (now 'defunct), a corporation engaged in the banking business in ¡the city of Texarkana, agreed to sell certain lolts of real estate in Texarkana to the defendants, J. S. Ainsworth and his wife, Jennie Ainsworth, executing a contract in writing covering the Sale, and said defendants ¡executed to the vendor a negotiable promissory note for the sum ¡of $625.00 for the purchase price of ¡said lots, with 8 per cent interest from date until paid. The note was due and payable on its face one year ¡after date, hut the contract of siale ¡contained a ¡stipulation that on payment of ¡as much, as $100.00 per annum the date ¡of payment would he ¡extended from year !to year. The note was ¡dated April 6, 1908, and was sold ¡and transferred hy the payee to the plaintiff, J. S. Calhoun, on Dec. 1, 1910. Plaintiff resided in Memphis, Tennessee, ¡and ¡the negotiations for the purchase of the note, together with ¡other transactions, was ¡conducted by correspondence. The Texarkana Trust Company failed and was placed in the hands ¡of a receiver' hy the chancery court ¡of Miller County on Nov. 12, 1913. Nothing had been paid to plaintiff on the note except the interest, hut there was a credit of $330.16 ¡standing on the books of the Texarkana Trust Company in favor of Mrs. Jennie Ainsworth, which was placed there to he paid ¡on the note hut had never been reported to nor paid over to the plaintiff, Calhoun. It was, according to the testimony, held in the hank to he finally ¡applied ■on the note, hut was never so ¡applied. This is an action hy the plaintiff to recover the ¡amount due on the note ¡and to enforce ¡a lien on the land embraced in the contract ■of sale. The receiver of the bank was joined ¡as defendant and the controversy in the case relates solely to the ¡alleged credit of the amount of money in the hank, ¡which defendants insist ¡should he ¡placed ¡on the note in the; hands of the plaintiff. The chancellor decided the disputed issue in favor ¡of the defendants and rendered ¡a decree in favor of the plaintiff for the ¡balance due on the note after crediting said ¡sum in hank, and enforced a lien on the lots therefor.
(1) The plaintiff was-, -as before ¡stated, ¡a resident of the city of Memphis and was never in Texarkana and had no acquaintance with any of the officers -or employees of the bank ¡except through ¡correspondence concerning this and similar transactions which he had with the bank. The undisputed evidence shows that he purchased the ■note in good faith and paid face value therefor, ¡and ¡according to his own testimony he never authorized the bank to make any collections for him except when he sent the note to the bank for the interest to be collected and credited thereon. He purchased the note after maturity. The point is made that the stipulation in the contract for an extension of time operated as a postponement of the date of payment so that the note was immature at the time of the ¡assignment. We ¡are of the ¡opinion, however, that ¡the ¡contention is not sound, ¡and that this note must be treated as mature upon its face, which carried with it notice to the assignee ¡of any defects or any defences to which the makers were entitled as against the original payee. But treating the note as ¡one ■which had been ¡assigned after maturity, we ¡are ¡of the ¡opinion that the evidence fails to show that the payments made to the bank were authorized by the plaintiff ■or that he was bound by them; and such payments as were made to the bank after it ceased to be the holder of the note, and without having the note in its possession, were not valid as against the true owner.
(2) In the recent -case of Mammoth Vein Coal Co. v. Bishop, 113 Ark. 585, 168 S. W. 1086, we held that the maker ¡of a negotiable note .transferred after maturity would not be protected by payments to the original holder unless the latter was ¡authorized by the true ¡owner to collect it or produce the note ¡at the time ¡of payment. In that case we said: “This was a negotiable note transferred .and delivered to the ¡appellant, it is true, ¡after it became due; but this ¡did not prevent it continuing negotiable, ¡and gave the ¡assignee the right to collect it subject, only to defences existing ,at the time of the transfer.” The ¡authorities ¡on this precise question ¡are meager, but all that has been said and written on the subject is in 'support of the position which 'this court has taken. The rule was thus laid down by Mr. Daniels in his work on Negotiable Instruments (6th ed.) Vol. II, section. 1233A. The Virginia Court of Appeals, in the case of Davis v. Miller, 14 Grat. 1, in 'discussing the subject, referred to paucity .of authority on this particular question and explained it by saying that the proposition was so plain that it had rarely ever been controverted. • The same rule was declared by Chief Justice Shaw in Baxter v. Little, 6 Metcalf 7, in language which appears to be dictum, but it is undoubtedly sound and is in accord with the few authorities on the subject. In a recent case decided by the Missouri Court of Appeals, it was said: “It being a negotiable note, payable to order, though past due, it was the defendant’s duty to demand its production at the bank, as payee, before making payment. The payor of a negotiable note, though he does not know of its transfer, is not protected in paying to the payee who has sold and endorsed it to another.” Powers v. Woolfolk, 111 S. W. 1187.
Now, the evidence in this case is .sharply conflicting as to whether or not the defendants, Ainsworth and his wife, were apprised of the fact that the note had been transferred to plaintiff at the time the money was placed in bank. Mrs. Ainsworth testified positively that she had no knowledge or information on the subject and never received any communication from the plaintiff, 'Calhoun, until after the failure of the bank. The testimony of the officers iand employees of the bank tends to establish a custom in oases of this sort, where they would transfer paper secured by real estate through transactions in that department of the bank, to open up a savings 'account with the vendees and allow payments to be made in installments, Which were credited but not allowed to be drawn against, and at intervals the amounts would be 'Credited on the notes. The bank officials claim that these payments received from Mrs. Ainsworth were treated in that Way, but Mrs. Ainsworth denied that she had any information of that method of doing 'business, and says that they were straight payments on the note. On the other hand, the testimony of the plaintiff is that he had no information whatever of the bank’s method of doing business and never authorized the 'bank to make any collections except when he sent the note to the bank for the 'Collection of interest, supposing at the time that the bank was representing the makers of the note. At all other times he says that he kept the note in his possession at Memphis. He testified also that he generally wrote to Ainsworth and wife, giving notice of the approaching date for the payment of interest, and he exhibits a carbon copy of á lei.teir dated March 30, 1911, notifying the Ainsworths that the interest would he due on April 6th of that year. Mrs. Ainsworth testified that she did mot receive that letter or any other letter from plaintiff on the subject. Her husband’s testimony on the subject is somewhat equivocal.
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McCulloch, O. J.
The Texarkana Trust Company; (now 'defunct), a corporation engaged in the banking business in ¡the city of Texarkana, agreed to sell certain lolts of real estate in Texarkana to the defendants, J. S. Ainsworth and his wife, Jennie Ainsworth, executing a contract in writing covering the Sale, and said defendants ¡executed to the vendor a negotiable promissory note for the sum ¡of $625.00 for the purchase price of ¡said lots, with 8 per cent interest from date until paid. The note was due and payable on its face one year ¡after date, hut the contract of siale ¡contained a ¡stipulation that on payment of ¡as much, as $100.00 per annum the date ¡of payment would he ¡extended from year !to year. The note was ¡dated April 6, 1908, and was sold ¡and transferred hy the payee to the plaintiff, J. S. Calhoun, on Dec. 1, 1910. Plaintiff resided in Memphis, Tennessee, ¡and ¡the negotiations for the purchase of the note, together with ¡other transactions, was ¡conducted by correspondence. The Texarkana Trust Company failed and was placed in the hands ¡of a receiver' hy the chancery court ¡of Miller County on Nov. 12, 1913. Nothing had been paid to plaintiff on the note except the interest, hut there was a credit of $330.16 ¡standing on the books of the Texarkana Trust Company in favor of Mrs. Jennie Ainsworth, which was placed there to he paid ¡on the note hut had never been reported to nor paid over to the plaintiff, Calhoun. It was, according to the testimony, held in the hank to he finally ¡applied ■on the note, hut was never so ¡applied. This is an action hy the plaintiff to recover the ¡amount due on the note ¡and to enforce ¡a lien on the land embraced in the contract ■of sale. The receiver of the bank was joined ¡as defendant and the controversy in the case relates solely to the ¡alleged credit of the amount of money in the hank, ¡which defendants insist ¡should he ¡placed ¡on the note in the; hands of the plaintiff. The chancellor decided the disputed issue in favor ¡of the defendants and rendered ¡a decree in favor of the plaintiff for the ¡balance due on the note after crediting said ¡sum in hank, and enforced a lien on the lots therefor.
(1) The plaintiff was-, -as before ¡stated, ¡a resident of the city of Memphis and was never in Texarkana and had no acquaintance with any of the officers -or employees of the bank ¡except through ¡correspondence concerning this and similar transactions which he had with the bank. The undisputed evidence shows that he purchased the ■note in good faith and paid face value therefor, ¡and ¡according to his own testimony he never authorized the bank to make any collections for him except when he sent the note to the bank for the interest to be collected and credited thereon. He purchased the note after maturity. The point is made that the stipulation in the contract for an extension of time operated as a postponement of the date of payment so that the note was immature at the time of the ¡assignment. We ¡are of the ¡opinion, however, that ¡the ¡contention is not sound, ¡and that this note must be treated as mature upon its face, which carried with it notice to the assignee ¡of any defects or any defences to which the makers were entitled as against the original payee. But treating the note as ¡one ■which had been ¡assigned after maturity, we ¡are ¡of the ¡opinion that the evidence fails to show that the payments made to the bank were authorized by the plaintiff ■or that he was bound by them; and such payments as were made to the bank after it ceased to be the holder of the note, and without having the note in its possession, were not valid as against the true owner.
(2) In the recent -case of Mammoth Vein Coal Co. v. Bishop, 113 Ark. 585, 168 S. W. 1086, we held that the maker ¡of a negotiable note .transferred after maturity would not be protected by payments to the original holder unless the latter was ¡authorized by the true ¡owner to collect it or produce the note ¡at the time ¡of payment. In that case we said: “This was a negotiable note transferred .and delivered to the ¡appellant, it is true, ¡after it became due; but this ¡did not prevent it continuing negotiable, ¡and gave the ¡assignee the right to collect it subject, only to defences existing ,at the time of the transfer.” The ¡authorities ¡on this precise question ¡are meager, but all that has been said and written on the subject is in 'support of the position which 'this court has taken. The rule was thus laid down by Mr. Daniels in his work on Negotiable Instruments (6th ed.) Vol. II, section. 1233A. The Virginia Court of Appeals, in the case of Davis v. Miller, 14 Grat. 1, in 'discussing the subject, referred to paucity .of authority on this particular question and explained it by saying that the proposition was so plain that it had rarely ever been controverted. • The same rule was declared by Chief Justice Shaw in Baxter v. Little, 6 Metcalf 7, in language which appears to be dictum, but it is undoubtedly sound and is in accord with the few authorities on the subject. In a recent case decided by the Missouri Court of Appeals, it was said: “It being a negotiable note, payable to order, though past due, it was the defendant’s duty to demand its production at the bank, as payee, before making payment. The payor of a negotiable note, though he does not know of its transfer, is not protected in paying to the payee who has sold and endorsed it to another.” Powers v. Woolfolk, 111 S. W. 1187.
Now, the evidence in this case is .sharply conflicting as to whether or not the defendants, Ainsworth and his wife, were apprised of the fact that the note had been transferred to plaintiff at the time the money was placed in bank. Mrs. Ainsworth testified positively that she had no knowledge or information on the subject and never received any communication from the plaintiff, 'Calhoun, until after the failure of the bank. The testimony of the officers iand employees of the bank tends to establish a custom in oases of this sort, where they would transfer paper secured by real estate through transactions in that department of the bank, to open up a savings 'account with the vendees and allow payments to be made in installments, Which were credited but not allowed to be drawn against, and at intervals the amounts would be 'Credited on the notes. The bank officials claim that these payments received from Mrs. Ainsworth were treated in that Way, but Mrs. Ainsworth denied that she had any information of that method of doing 'business, and says that they were straight payments on the note. On the other hand, the testimony of the plaintiff is that he had no information whatever of the bank’s method of doing business and never authorized the 'bank to make any collections except when he sent the note to the bank for the 'Collection of interest, supposing at the time that the bank was representing the makers of the note. At all other times he says that he kept the note in his possession at Memphis. He testified also that he generally wrote to Ainsworth and wife, giving notice of the approaching date for the payment of interest, and he exhibits a carbon copy of á lei.teir dated March 30, 1911, notifying the Ainsworths that the interest would he due on April 6th of that year. Mrs. Ainsworth testified that she did mot receive that letter or any other letter from plaintiff on the subject. Her husband’s testimony on the subject is somewhat equivocal. He first said positively, in response to the question of his attorney, that he did receive the letter from plaintiff in 1911 informing him of the fact that plaintiff held the note, but after being pressed on the subject he retracted that statement and stated that he meant to say he received a letter from the plaintiff in 1914, and that was the first notice he had of the assignment of the note. It is unimportant to decide whether or not the defendants or either of them did in fact receive notice of the assignment before the disputed payments were made to the bank, for we are of the opinion that in either event the evidence fails to show any authority on the part of the bank to collect the money for plaintiff, and that the latter is not bound by those collections which were not in fact paid over to him.
It is thoroughly established by decisions of this court that the assumption of 'authority, under such circumstances as shown in this case, is not binding upon the holder of a note, and in order to bind him they must show actual authority or acceptance of the payments with knowledge of the assumption. In Koen v. Miller, 105 Ark. 152, we said: “Authority of tan agent to collect interest on a mortgage does not afford ground for inferring authority to collect (the principal,- where (the agent iis not intrusted with the possession of the securities.” There is testimony in this ¡cáse on the part of the bank employees tending to show that in transactions between plaintiff and the bank the plaintiff 'authorized the bank to oollect notes which baid been transferred, but this is positively denied by the plaintiff'and we are of the opinion that the record fails-to show enough to sustain the decree on that point. The testimony adduced on this subject by the bank officials is far from convincing on account of the fact that every transaction- was carried on ¡by correspondence and they fail to produce a single line from the plaintiff which would tend to show that he gave the bank any authority to collect. There is a letter, which relates ¡to 'another transaction, which might have some tendency to show authority to Collect in that particular matter, but it does not go to the extent of showing iany ¡authority to Collect in other transactions. There is, too, testimony of a custom on the part of that particular bank to make collections for its customers, to whom notes had been assigned, but the usage of that bank is not sufficient to establish a general ¡custom, and unless notice of it was ¡brought home to the plaintiff he was not bound by ¡any such usage. Exchange National Bank v. Little, 111 Ark. 263.
It is unfortunate that as between two innocent parties, the -plaintiff on the one hand and the defendants, Ainsworth and wife, on the other, ¡one or the other must be the loser on account of the wrong done by the officials of the bank either in ¡accepting the money -from Mrs. Ainsworth in the first instance or failing to transmit it to the plaintiff on the other hand; but plaintiff can not be made to bear the loss if he did nothing to 'cause it and •was a bona fide holder of the note. We think that the plaintiff made out his case ¡and is entitled to -a decree for the amount -of the note, less the payments which were made to him. He should also be decreed a lien on the land, for he is entitled to subrogation to the rights of the original vendor. St. Peter’s Lit. Association v. Webb, 31 Ark. 140; Martin v. O’Bannon, 35 Ark. 62.
The decree is therefore reversed and the cause remanded with directions to the chancellor to enter a decree in favor of the plaintiff in ¡accordance with this opinion.