Crawford v. Chattanooga Savings Bank

On a former appeal in this case (Crawford v. Chattanooga Savings Bank, 78 So. 58¹), it was held, on demurrer to the bill, that the mortgage sued on was assignable, since its conditions could be fully met and legally discharged by an assignee.

It was also held that, upon the defaults shown by the bill, the mortgagors became absolutely and unconditionally liable for the payment to the mortgagee, or her assignee, of $1,350 of the indebtedness of C. C. Crawford, as evidenced by his note to Mrs. Rawlings.

When the terms of the contract of guaranty render the guarantor absolutely liable for the payment of the principal obligation upon the default of the principal, it results as of course that the guarantee need not notify the guarantor of the principal's default, and is not bound to proceed against the principal, with diligence or otherwise, as a condition to enforcing the liability of the guarantor. 12 R.C.L. § 42, p. 1089, and cases cited; Crawford v. Chattanooga, Savings Bank, supra.

It necessarily results that Mrs. Rawlings' failure to proceed against C. C. Crawford, the principal debtor, is no bar to the present proceeding, even though the statute of limitations has run against the note, and though the maker has become insolvent and execution-proof in the meantime. McBroom v. Governor, 6 Port. 32; Minter v. Branch Bk., 23 Ala. 762, 58 Am. Dec. 315; Willis v. Chowning, 90 Tex. 617, 40 S.W. 395,59 Am. St. Rep. 842. In such cases the guarantor may protect himself by paying the debt, and himself proceeding against his principal. Payment is what he promised, without condition, and if, forgetful of his own obligation, and neglectful of his own interest, he remains supine, he can have no complaint, either legal or moral, because of the creditor's omission to diligently enforce payment by the principal. And, indeed, it may well be presumed that the very purpose of exacting from the guarantor an absolute undertaking to pay the debt, if the principal failed to do so, was to avoid the necessity of compulsory process against the principal — in the instant case, the son-in-law of the guarantee.

The question of laches, therefore, is eliminated from consideration, since it is not, and cannot be, contended that there was any laches in filing this bill after the liability of the guarantors became complete.

Some of the matters recited in the answer may be persuasive to show that the guarantors did not contemplate any assignment of their mortgage contract; but, even so, the right of assignment given by the statute (Code, § 5158) cannot be thus defeated. Under this statute, the right to assign a contract for the mere payment of money has been upheld even in the face of a stipulation in the instrument forbidding any assignment. Perry v. Merchants' Ins. Co., 25 Ala. 355; C. Ober Co. v. Phillips-Burttoff Co., 145 Ala. 625, 40 So. 278. It is at least clear that no implication of a contrary understanding can defeat the exercise of a right which is stamped by law upon the contract itself.

This disposes of the main questions of merit presented by demurrers to the bill and to the cross-bill, and, with respect to these, the rulings of the trial court are free from error.

We think, however, that there is equity in the cross-bill by reason of the allegations in the fourth and twelfth paragraphs that the principal debt has been satisfied or paid; and also in the twelfth paragraph that the debt was extended by Mrs. Rawlings for a valuable consideration, without the knowledge or consent of the guarantors. If the latter allegation is true, the guarantors were thereby discharged from liability. Cox v. Mobile, etc., R. R. Co., 37 Ala. 320; Howle v. Edwards, 97 Ala. 649,11 So. 748; 12 R.C.L. § 36, p. 1048.

If the note has been previously satisfied, or if the guarantors have been discharged, the mortgage given by respondents has become functus officio, and they are entitled to its cancellation. This is affirmative relief which can be had only by means of a cross-bill, for which purpose the cross-bill in this case may clearly be maintained.

In this aspect, the demurrers to the cross-bill as a whole for want of equity, and to paragraph 12 on other grounds, were improperly sustained, and they will be here overruled.

As to all other grounds of demurrer to the bill and cross-bill the decree of the circuit court will be affirmed, and the costs of appeal will be apportioned equally.

Affirmed in part, reversed and rendered in part, and remanded.

ANDERSON, C. J., and MAYFIELD and THOMAS, JJ., concur.

¹ 201 Ala. 282.