Me. Malone, Special Judge,
delivered the opinion of the Court.
This case involves the rights of the holder of a certificate of deposit, fraudulently obtained, as against the banlc issuing the certificate.
A man, calling himself “J. W. Jones,” went to the defendant, Security National. Bank of Jackson, Teim., on December 8, 1919, and stated to the assistant cashier that he had $4,000 on deposit in the First National Bank of Birmingham; that he wished to transfer this money to the Security National Bank, and place $2,000 in a checking account and $2,000 on a time deposit. He thereupon drew a sight draft on the First National Bank of Birmingham for $4,000, and the assistant cashier of the Security National Bank placed $2,000 to the credit of “J. W. Jones” in a checking account, and issued the following certificate of deposit:
“The Security National Bank. No. 1837.
“Jackson, Tenn., Dec. 8, 1919. $2000.00.
“J. W. Jones has deposited in this bank two thousand dollars, two thousand dollars, payable to the order of himself on the return of this certificate properly indorsed
“P. C. Stovall, A. Cashier.
[140]*140“Interest at the rate of three per cent, per annum if left three months.
“Certificate of deposit.
“Not subject to check.”
Indorsed: “J. W. Jones.”
The person who represented himself to be J. W. Jones in this transaction is thus described by the assistant cashier:
“He was a man about forty-five years of age, about 150 or 160 pounds in weight, and appeared to be a laboring man or farmer or trader, and was dressed in working ciothes.”
On December 26, 1919, a man calling himself “J. W. Jones” went to the complainant Corinth Bank & Trust Co., at Corinth, Miss., and was introduced to the assistant cashier as “Mr. Jones,” by some one whom the official thought he knew, but whom he could not afterward specifically describe or identify.
The man thus introduced stated that he was from Belmont, Miss., and that he wished to buy a tract of land and lacked about $550 of the amount he thought the land would sell for; and that he wished to borrow $550 for thirty days. As collateral for the proposed loan he offered the $2,000 certificate of deposit already mentioned.
The assistant cashier of the Corinth Bank, Mr. Anderson, says that he knew the signature of Mr. Stovall, which appeared on the certificate of deposit, and knew his connection with the Jackson Bank, and therefore had no hesitancy in accepting the collateral. After a brief conference with the cashier, Mr. Holley, he informed the applicant that the loan would be made, and the latter thereupon indorsed the certificate of deposit “J. W. Jones,” [141]*141and received the $550, after executing the following note: “$550.00. Corinth, Mississippi, Dec. 26, 1919.
“Thirty days after date I promise to pay to the Corinth Bank & Trust Co., or bearer, five hundred fifty dollars, with interest from date at ten per cent, per annum, payable at Corinth Bank & Trust Co., without defalcation, for value received, and have pledged as collateral security C. of D. Security B. & Tr. Co. Jackson, Tenn. $2000. Due Mar. 8th, 1920.
“And do agree on demand to deposit with the holders such additional security as they may from time to time require, and in default thereof this note shall instantly become due and payable as though it had actually matured, and upon default of payment of maturity, whether such maturity occurs by expiration of time or default in deposing additional security as above agreed, do hereby authorize and empower the holders hereof for the purpose of liquidation of this note, and of all interest, attorney’s fees and costs thereon, to sell, transfer, and deliver the whole or any part of such security, or any additions thereto, or substitutes therefor, without any previous demand, advertisement or notice, either at broker’s board or public or private sale at any time or times thereafter, with the right on the part of such holders to become the purchaser and absolute owner thereof, free of all trusts and claims. And it is further agreed that the securities hereby pledged, together with any that may be pledged hereafter, shall be applicable in like manner to secure the payment of any past or of any future obligations of the undersigned held by the holders of the obligation, and all such securities in their hands shall stand as one general continuing collateral security for the whole of said obligations, so .that the de[142]*142ficiency of any one shall be made good from the collaterals for the rest, hereby remaining responsible for any deficiency in payment, and waiving any benefit, exemptions or privilege under the law now or hereafter to be in force.
J. W. Jones.
“No. 20370. Due 1/25/20.
“Notified Jan. 17, 1920.
“Belmont, Miss. [Revenue Stamps.]”
. Concerning the appearance of “J. W. Jones,” Mr. Anderson testifies:
“Mr. Jones was dressed in a suit of overalls and was not clean shaven, having the appearance of a mechanic.”
Meanwhile the Jackson bank had forwarded the draft on the Birmingham bank in the usual manner and' the draft had been returned unpaid —“the reason given was that the signature did not agree with one on file.” It appears that two depositors of the Birmingham bank bore the name “J. W. Jones,” but the,drawer’s signature did not correspond to either of their signatures. One of these depositors had a balance of |4.72 to his credit when the draft was presented, and the other a balance of $4.05.
The fictitious “J. W. Jones” at the time of his arrangement with the Jackson bank gave his address as “202 N. Missouri St., Bemis, Tenn.” — Bemis being a village some three miles from Jackson. After the draft was returned unpaid, an effort was made by the Jackson bank to locate the drawer, and it was then ascertained that no one by that name lived at that address, or had previously lived there.
The Jackson bank then charged off the $2,000 deposit in the checking account.
The thirty-day note given to the Corinth bank matured [143]*143January 26, 1920, and on January 17, 1920, the hank sent a notice of the maturity to “J. W. Jones” at Belmont, Miss.
No attention was paid to the note at maturity, and, accordingly, “along about the 1st of February, 1920,” Mr. Holley telephoned the Jackson bank asking “if they knew the address of J. W. Jones.”
Mr. Stonewall answered the call and asked how much had been loaned on the certificate. Being informed of the amount, he said (so Holley testifies) :
“The whole transaction is a fraud, but if you will draw draft on us and attach your note and certificate for the amount, we will be very glad to pay the amount that you paid for the certificate.”
Mr. Holley, thereupon, drew on the Jackson bank for the |550 with interest, attaching note and certificate of deposit, but the Jackson bank thereafter refused to pay the draft.
The Corinth bank, haying failed in its effort to secure payment of the money loaned, finally advertised the certificate of deposit for sale, pursuant to the terms of the thirty-day note executed by “Jones,” and sold the same at public auction on November 26, 1920, and itself became the purchaser.
A representative of the Jackson bank attended the sale, and gave public notice that said certificate was issued without consideration and procured by fraud; that the alleged payee was not J. W. Jones; and that the Corinth bank was not an innocent purchaser and had acquired no title theretó.
Thereafter the original bill herein was filed; the Corinth bank claiming the right to collect the full amount of the [144]*144certificate, and, in the alternative, the right to recover the amount of the note, with interest and attorney’s fees.
The chancellor granted the alternative relief, giving a decree for the face of the note with interest and twenty per cent, attorney’s fees; and the Jackson bank appealed.
The Corinth bank filed the record for writ of error and complains of the chancellor’s action in refusing a decree for the full amount of the certificate of deposit.
1. We think the chancellor correctly denied a recovery for the full value of the-certificate.
The Corinth bank, at the time of the auction sale and purchase of this certificate, was fully advised of the fraud attendant upon its issuance. It had only advanced $550 before being informed of this fraud; and it would be inequitable tto allow it to claim more than the amount' of its advancement. Memphis Bethel v. Bank, 101 Tenn., 130, 133, 134, 45 S. W., 1072; Yellowstone National Bank v. Gagnon (1897), 19 Mont., 402, 48 Pac., 762, 44 L. R. A., 243, and case note, 61 Am. St. Rep., 520; Benton v. Sikyta (1909), 84 Neb., 808, 122 N. W., 61, 24 L. R. A. (N. S.), 1057, and case note.
In Ruling Case Law, it is said that — “If a note is valid between the original parties, an indorsee wlio holds it as collateral may recover the face thereof, with accrued interest, retaining any surplus as trustee for the party beneficially entitled thereto, after his own claim is satisfied; but if the note is invalid as between the immediate parties, one who holds it as collateral security may recover only the amount of his claim to which the note is collateral — the reason being that as to any surplus over and above that sum he would be a trustee for his trails-[145]*145feror, ivho is entitled to nothing from the defrauded party.” 3 R. C. L., 1061, 1062.
As stated by Mr. Daniel, the pledgee is “a bona-fide holder, and entitled to stand upon a better footing only pro tanto ” Daniel on Negotiable Instruments, section 832a.
And as said in Memphis Bethel v. Bank supra (a case where an official of a corporation had pledged two negotiable bonds belonging to it to a bank for his personal debt) :
“The principle is that the holder is entitled to recover only the actual amount paid out and legal interest, and to that extent is an innocent purchaser.”
A fortiori the rule should apply where a pledgee is attempting to assert a title which it claims to have acquired by public sale of the collateral, after full notice of the fraud committed by the pledgor.
2. It is insisted by the' defendant,. on several grounds, that the complainant bank is not entitled to recover even the amount of the money advanced, with interest, and in this connection several contentions are advanced.
(a) It is claimed that the Corinth bank is not a bona-fide purchaser for value, in lending the money on the faith of the deposit certificate as collateral; that, by reason of various facts and circumstances surrounding the transaction, it has failed to sustain the burden cast upon it in this behalf, by reason of the fraud which tainted the original transaction. Negotiable Instrument Act (Thompson’s Shannon’s Code, section 3516a58); Stevens v. Barnes, (1919), 43 N. D., 483, 175 N. W., 709, 18 A. L. R., 10, and case note; 3 R. C. L., 1043; Fox v. Cortner, 145 Tenn., 482, 496, 239 S. W., 1069, 22 A. L. R., 1341.
[146]*146In this connection it is said thát the circumstances under which the fictitious “J. W. Jones” obtained the loan from the Corinth bank were highly suspicious.
It is pointed out that the man’s appearance (partially unshaven and dressed in overalls), should have attracted attention' in a transaction of this size; that he claimed to have $2,000 on deposit in a bank only fifty odd miles away, drawing only three per cent, interest, and yet was willing to pay ten per cent, interest for a loan of $550; that he claimed to be engaged in a land trade, and yet wanted actual cash instead of making his payment by check.
It is further pointed out that the assistant cashier must have hád some doubt, for he consulted the cashier; and that the latter in turn must have had some doubt, for he, as disclosed by his deposition, “told Mr. Anderson (the assistant cashier) to satisfy himself that everything was all right.”
It is further insisted that, by the general rule of the bank, two members of the finance committee would pass upon the acceptability of the collateral offered, and that the bank violated this rule in making the loan in question.
It is also claimed that the assistant cashier and the cashier showed no diligence as to the identification of the person calling himself “J. W. Jones;” that Jackson is only some fifty miles from Corinth, and a telephone communication with the Jackson bank (which could have promptly and easily have been had), would have disclosed the fraud, and prevented all loss.
Prior to the enactment of the Negotiable Instrument Law (Acts 1899, chapter 94), this court followed the rule [147]*147of constructive or implied notice in testing the bona-fides of the purchaser of a negotiable instrument. Bank v. Butler, 113 Tenn., 574, 582, 583, 83 S. W., 655.
But, by the terms of that act, as pointed out in the above case, the old rule was abolished, and the question is governed by section 56 of the Negotiable Instrument Act (Thompson’s Shannon’s Code, section 3516a55), reading as follows: “To constitute notice of an infirmity in-the instrument, or defect in the title of the person negotiating the same, the person to whom it is negotiated must have had actual knowledge of the infirmity or defect, or knowledge of such facts that his action in taking the instrument amounted to bad faith.”
It is insisted that, conceding this to be the rule, the circumstances above set forth show actual bad faith on the part of the Corinth bank in advancing money on the faith of this certificate of deposit.
We are unable to agree to this contention.
The Corinth bank certainly used more diligence than did the Jackson bank, when it issued the certificate of deposit. It seems apparent that the same man dealt with each bank, and it was far more negligent for the Jackson bank to give a mechanic or working man a negotiable certificate of deposit, on his bare statement that he. had $4,000 on deposit in Birmingham, than it was for the Corinth bank to advance $550 on an admittedly genuine certificate of deposit, signed by an officer of the Jackson bank, with whose signature and official position the agents of the Corinth bank were familiar. Moreover, the officials of the Jackson bank need only have telephoned to Bemis, Tenn., just three miles away, to have discovered that the so-called “J. W. Jones” was an imposter.
[148]*148In tbe case of Cheever v. Pittsburgh, etc., Co., 150 N. Y., 65, 44 N. E., 701, 34 L. R. A., 69, 55 Am. St. Rep., 646 (quoted with approval in Bank v. Butler, supra, 113 Tenn., at page 584, 83 S. W., at page 657), the court said:
“There is not much difficulty in stating the rule of law defining the duties and obligations of a party to whom negotiable paper is presented for discount or sale before due. He is not bound at his peril to be on the alert for circumstances which might possibly excite suspicion of wary vigilance. He does not owe to the party who puts the paper afloat the duty of active inquiry in order to avoid the imputation of bad faith. The rights of the holder are to be determined by the simple test of honesty and good faith, and not by a speculative issue as to his diligence or negligence. The holder’s rights cannot be defeated without proof of actual notice of the defect in title or bad faith on his part, evidenced by circumstances. Though he may have been negligent in taking the paper, and omitted precautions which a prudent man would have taken, nevertheless, unless he has acted in mala fide, his title, according to settled doctrine, will prevail.”
As stated in Bank v. Chapman, 122 Tenn., 415, 422, 123 S. W., 641, 643, the title of the purchaser will not be de-feate'd where he receives the instrument “under merely suspicious circumstances.”
We assume, of course, in applying the above rule to the case, that the certificate of deposit is a negotiable instrument ; and this proposition, indeed, cannot be controverted. Easley v. Bank, 138 Tenn., 369, 373, 198 S. W., 66, L. R. A., 1918C, 689; Ford v. Brown, 114 Tenn., 467, 88 S. W., 1036, 1 L. R. A. (N. S.), 188.
We think, therefore, that the Corinth bank was not [149]*149guilty of bad faith or willful blindness in making the loan and accepting the collateral offered.
All that the record discloses is a certain amount of carelessness, by no means so great as the negligence of the Jackson bank in issuing the certificate of deposit.
Banking business must be transacted on the assumption that people are acting honestly and in good faith — which in the vast majority of cases is true.- We feel assured that it never occurred to the officials of either bank to suspect that this respectable “working man” was an accomplished criminal — a criminal so adroit that no trace of him had been found when the record in this case was made up.
(b) It is next insisted by the defendant that the Corinth bank could not be an innocent purchaser, because the name of “J. W. Jones” was forged on the indorsement on the certificate of deposit, and that forgery is a defense even as against a bona-fide holder.
But we do not think that the record show's a case of forgery. It is rather a case 'where the negotiable instrument is issued in a fictitious name. The man who came to the Jackson bank gaye the name “J. W. Jones,” and the residence “202 N. Missouri St., Bemis, Tenn.” Subsequent inquiry disclosed that the residence was fictitious, and there is no reason to suppose that the name was genuine. Nor does the fact that the Birmingham bank happened to have two small depositors by that name alter the case. Few banks, it may be surmised, in any considerable town or city, are unable to muster a J. W. Jones among their depositors. In spite of the illustrious individuals wlio have, in some instances, borne them, there is nothing distinctive about the names “Jones” and “Smith.” In law books and in common parlance they are the sup-[150]*150positious names used by way of illustration as freely as “A.” and “BN or “Doe” and “Roe.”
Another circumstance, not previously mentioned, leads us to believe that the name “Jones” was purely fictitious.
It appears from the testimony that on December 6, 1919, just two days before the successful fraud practiced upon the complainant, a man giving .the name “J. H. Johnson” went to another Jackson bank, and asked if there was any way to transfer $2,850 from the “First National Bank of Baltimore.” The man gave his residence as “Bemis, Tenn.,” saying that he had just moved there and knew nobody. The bank official on this occasion was more wary and told him that his draft(for that amount would be received for collection, but that he could not check against it until the draft went through. The stranger thereupon dreAv on the Baltimore Bank, signing the name “J. IT. Johnson,” and the draft was forwarded' for collection; but “in due course of time” (presumably several days thereafter) the draft was returned unpaid — “no such account.”
Asked to describe “Johnson,” thg official replied:
“Well he was a man of about five feet six or eight inches, very ordinary dress, in fact dressed very much like a laborer, very ignorant looking, and sort of hesitated in his speech; that’s about all I know now — I don’t know whether I would know him if I were to see him.”
(c) It may be true, as contended by the defendant, that the mere fact of possession of a negotiable instrument, is not sufficient to show title, or that the indorsement is genuine, where such indorsement is denied. Capitol Hill State Bank v. Rawlins Nat. Bank (1916), 24 Wyo., 423, 160 Pac., 1171, 11 A. L. R., 937, and case note.
[151]*151But conceding the burden of proof to be on the complainant, in view of the SAvorn denial made in defendant’s answer, it seems to us a reasonable inference from the record that the same individual, Avhether he called himself ‘‘Jones” or “Johnson,” obtained the certificate from the Jackson bank, and indorsed it to the Corinth bank. The certificate presented to the Corinth bank was the same one Avhich the Jackson bank issued.
Mr. Stovall, assistant cashier of the Jackson bank, gave his deposition some weeks after the deposition of Mr. Anderson, cashier of the Corinth bank, was given; yet each gives the same general description of “J. W. Jones.” Anderson says' he “was dressed in a suit of overalls” and had “the appearance of a mechanic.” Testifying thereafter, Stovall says:
“I-Ie was a man of about forty-five years of age, about 150 or 160 pounds in Aveight and appeared to be a laboring man or farmer or trader, and was dressed in working clothes.”
These circumstances are, perhaps, slight; but the Jackson bank did not even attempt to show that the signature of the draft differed from the indorsement of the certificate, although it had possession of both instruments for some days.
We are, therefore, of opinion that the name “J. W. Jones” was fictitious, and that the same individual, under that assumed name, dealt with both banks.
In the case of Meridian National Bank v. First National Bank (1893), 7 Ind. App., 322, 33 N. E., 247, 34 N. E., 608, 52 Am. St. Rep., 450, the vendor of stolen cattle used the fictitious name “W. C. Smith,” and a check on an Indianapolis bank was issued to him in that name. Using the [152]*152same name, he procured the check to be certified, and then cashed it at a bank in Shelbyville, Ind., indorsing thereon the fictitious name “W. C. Smith.”
“Under the facts of this case,” said the court, “we think that the indorsement of the check by the man to whom it was actually issued, and by whom the drawer intended that the money should be received, was an effectual indorsement to pass to the Shelbyville bank the title to the check, and the indorsement was not as to it invalidated by reason of the payee’s acting under an assumed and fictitious name, when he was not really impersonating any other individual. The check was intended for a person, not a name. Names possess neither personality nor existence. They but serve to identify individuals. The check was received by the identical person or individual to whom its drawer intended to deliver it, and was by that person indorsed in the name in which it was issued to him.”
It is hardly necessary to observe that this is not a case where a negotiable instrument, issued in a fictitious name, becomes payable to bearer, for this rule applies only where there is an intention to make the instrument so payable.
“The maker’s intention is the controlling consideration which determines the character of such paper. It cannot be treated as payable to bearer, unless the maker knows the payee to be fictitious, and actually intends to make the paper payable to a fictitious person.” 3 R. C. L., 881.
The language of the Negotiable Instrument Act is, indeed, controlling, for by subsection 3 of section 3516a8 (Thompson’s Shannon’s Compilation), it is provided that an instrument is payable to bearer “when it is payable to the order of a fictitious or nonexisting person, and such [153]*153fact Avas known to the person making it so payable.”
(d) The defendant also contends that the complainant bank was put to an election to claim, either as OAvner of the certificate under the sale, or as pledgee of the certificate, and that it has elected to claim as owner. It is further insisted that since this claim cannot be sustained, as we have held, the complainant is precluded from recovering the amount actually advanced.
While it is true, as stated by the defendant, that a man may not at the same time be the absolute owner and the pledgee of a certificate, we do not think that, under the facts of this case, a. binding election to claim solely as owner was made by the complainant, and defendant’s able counsel have cited no authority in point.
We recognize fully the rule established by this court in Phillips v. Rooker, 134 Tenn., 457, 466, 184 S. W., 12, Stamper v. Venable, 117 Tenn., 557, 561, 97 S. W., 812, and other Tennessee cases, to the effect that a litigant may not assume inconsistent positions.
We also recognize the fact that the right of election can be exercised but once. Real Estate Co. v. Kyoleum Co., 142 Tenn., 295, 301, 218 S. W., 821, 14 A. L. R., 944.
In this case, hoAvever, the complainant, so far from electing, Avas evidently uncertain as to its rights, and filed its bill in the alternative. It did not sue merely as owner of the certificate. The fact that it bought in the certificate cuts no figure. The natural way to enforce its rights was by a sale of the collateral, after the Jackson bank had refused to reimburse it the amount advanced Avith interest; and the public announcement made by the representative of the Jackson bank at the sale precluded the possibility of other bidders.
[154]*154We are therefore of opinion that the chancellor’s decree was right, in so far as it allowed the complainant to recover the |550 advanced, together with lawful interest.
3. It is insisted by the defendant that in any event the chancellor should not have taxed it with a, twenty per cent, attorney’s fee, and this contention must be sustained.
The Jackson bank was not a party to the note executed by the fictitious “J. W. Jones.” It had no contractual relations with the Corinth bank.
An agreement to pay an attorney’s fee is a valid and binding stipulation, in so far as the maker of a note is concerned.
If the note in the present case contains such a stipulation (which is doubtful), the defendant bank was not a party to it.
It is, of course, well settled that a litigant ordinarily cannot collect his attorney’s fees from his adversary, however wrongful may have been the suit, or however groundless the defense.
In his work on Damages (9th Ed.), vol. 1. section 229, Sedgwick says: “We have seen that in order to recover complete compensation, the plaintiff should, in case he is successful, be allowed the expenses of litigation. Nevertheless, the general rule is that counsel fees are not recoverable as damages. The law awards to the successful party his taxable costs, but the fees which he pays to counsel are not taken into consideration.”
The decree of the chancellor with be modified by striking out the twenty per cent, attorney’s.fee allowed to the complainant, and, as thus modified, will be affirmed.