Dilworth v. Holmes Furniture & V. Co.

McCLELLAN, J.

— The propriety of the court’s action in striking, in response to plaintiff’s (appellee’s) motion, pleas 10, 11, 12, 13, and 14 is confirmed when it is concluded, as doubtless the trial court did, that the instrument executed by A. Y. Parker to the appellee is a mortgage and not the evidence of a conditional sale. While in the printed part of the instrument (the original of which has been certified here) it is provided that the title should remain in the appellee company until payment of the “mortgage” was made, other features of the instrument unmistakably show that the employment of that provision was without the intent of the parties to constitute a conditional sale. The instrument recognizes a debt, to be paid by a definite time. It denominates itself a mortgage. It provides for a foreclosure sale, under a power of sale in the usual form, and stipulates for authority of the mortgagee to purchase at the foreclosure sale. It covers crops to be raised during the year 1911, and provides for the payment of an attorney’s fee for the collection thereof, “this mortgage.”

The pleas indicated proceeded on the assumption that a conditional sale was the legal effect of the instrument, whereas the declaration makes material averments to the effect that a mortgage was the creation and result of the instrument involved. If the legal effect of the instrument had constituted the transaction a conditional sale instead of mortgage, manifestly the defendants (appellants) would and could have had the full benefit of the matter under the general issue.

The plaintiff’s action rests upon an asserted guaranty indorsed by defendants (appellants) on the back of a note and mortgage executed by A. Y. Parker to the plaintiff (appellee). It reads: “We hereby guarantee the payment of the within note & mortg., when same is due.” The indorsement is without date. The note referred to was due November 1, 1911. The defendant set up, in pleas 4, 5, 6, and 8, the statute of frauds, alleging in each of them that the guaranty described was not executed contemporaneously with the execution of the note and mortgage or that it was subsequently executed, and that it did not express the consideration therefor. To each of these pleas separately the plaintiff replied, in replication 3 as follows: “The contract of guaranty executed by defendants was and is indorsed on the back of a note and mortgage executed by A. Y. Parker, which said note and mortgage expresses a valid consideration, in law, and plaintiff avers that the guaranty of defendants was made to secure the debt of said A. Y. Parker as evidenced by said note and mortgage.” The grounds of demurrer to this replication (3) were as follows: “ (1) Said replication does not show that said guaranty contract was executed contemporaneously with the execution of said note and mortgage on which the same were written. (2) Said replication shows on its face that the guaranty contract was executed to secure the debt of A. Y. Parker, and that no consideration for such guaranty was expressed in the same.” The demurrer was overruled, and that action is assigned and urged for error here.

Since pleas 4, 5, 6, and 8 expressly negative the points of objection taken in the grounds of demurrer to replication 3, it may be that no prejudicial error attended the action of the court in overruling the stated grounds of demurrer to the replication. However, counsel have not discussed this possibility in their briefs but have treated the questions involved as upon their merits. Plea 7 asserted summarily the want of consideration for the.execution of the contract of guaranty sued on.

Where the contract of guaranty, against the default, miscarriage, or failure to pay, of another, is executed before the delivery of the contract, the performance of which the guaranty is intended to assure, and though indorsed thereon the consideration moving between the principals to the principal contract and therein appearing on its face will support the contract of guaranty, no other consideration is necessary, and the contract is not within the statute of frauds. But, where the guaranty is executed after the delivery of the principal contract, it is void under the statute of frauds unless the contract of (iu.ara.nly is supported by a distinct consideration and that consideration is expressed in the contract of guaranty. Moses v. Lawrence County Bank, 149 U. S. 298, 13 Sup. Ct. 900, 37 L. Ed. 743; Rigby v. Norwood, 34 Ala. 129; White v. White, 107 Ala. 417, 18 South. 3; Foster v. Napier, 74 Ala. 393; Lindsay v. McRae, 116 Ala. 542, 22 South. 868.

Special replication 3 was defective in that it omitted to aver that the contract of guaranty was executed before the delivery of the note and mortgage, the payment of which it purported to assure, or that its execution was contemporaneous with the execution of the note and mortgage.

Under the evidence, the court erred in giving the af firmative charge for the plaintiff. If the guaranty contract was executed after delivery of the note and mortgage, the plaintiff could not recover according to the doctrine of our cases, ante, interpreting and applying the statute of frauds. The evidence was, to state its effect most favorably to plaintiff, in conflict with the vital issues of when, with reference to the time of delivery of the note and mortgage, Dilworth and Finney signed the indorsements. The affirmative charge, of course, took from the jury the conclusion upon this phase of the issue and hence invaded the jury’s province.

It is suggested in brief for appellee that the rulings of the court were thought to be in conformity with the holding in Merritt v. Coffín, 152 Ala. 474, 44 South. 622. Reference to that opinion will disclose that this court concluded that the principal and guaranty contracts Avere contemporaneously executed. That decision is Avithout bearing upon the case at bar.

The judgment is reversed, and the case is remanded.

Reversed and remanded.

All the Justices concur, except Doavdell, C. J., not sitting.