Merchants Bank v. Head, 161 So. 3d 1151

In March 2008 David and Elizabeth Head executed a $400,000 promissory note (secured by their home) for a business loan; David completed the loan application and the bank relied on his financials.
The note and several renewals (2009–Feb 2011) were signed by both Heads on the signature line (page 3); a box on page 2 (for granting a security interest but not promising payment) was left blank on those versions.
In July 2011 an initial renewal bore Elizabeth’s signature both in the page‑2 box and on the page‑3 signature line; the bank later produced a corrected July 2011 note leaving the page‑2 box blank and showing Elizabeth as a co‑maker on page 3.
The Heads defaulted in April 2012; Merchants Bank sued. The bank mistakenly attached the initial July 2011 note to the complaint, but the corrected note was admitted at trial without objection.
The trial court entered judgment for Elizabeth; Merchants Bank appealed. The Alabama Supreme Court reviewed whether Elizabeth signed as a maker and whether the note was supported by consideration.

Issue	Plaintiff's Argument (Merchants Bank)	Defendant's Argument (Head/Elizabeth)	Held
Whether Elizabeth signed the July 2011 renewal as a co‑maker	The corrected July 2011 note (admitted at trial) reflects Elizabeth signed as a maker; her page‑2 signature on the initial note was a scrivener’s error later corrected	Elizabeth signed page 2 only to grant a security interest and did not agree to pay; corrected note was invalid or improperly executed	The corrected note is the operative instrument; Elizabeth signed as a maker — reversed trial court
Whether the July 2011 renewal was supported by consideration	The original $400,000 loan to David and Head Companies was consideration supporting the note signed by both spouses	Elizabeth received no proceeds directly and therefore lacked consideration to be bound	Consideration existed: benefit to David/Head Companies with Elizabeth’s assent sufficed; note enforceable against her
Whether a spouse's nonreceipt of proceeds defeats liability when both signed	Joint signing and note language make parties jointly and severally liable regardless of who received proceeds	Nonreceipt by Elizabeth means no consideration flowed to her; she should not be liable	Under Alabama law (and persuasive authority), joint makers are liable even if one signatory received proceeds; nonreceipt does not avoid liability

Bockman v. WCH, L.L.C., 943 So.2d 789 (Ala. 2006) (promissory notes are contracts and must be enforced as written when unambiguous)
Ex parte Grant, 711 So.2d 464 (Ala. 1998) (elements of contract; consideration requires act, forbearance, detriment, or return promise)
Seier v. Peek, 456 So.2d 1079 (Ala. 1984) (a promissory note is prima facie evidence of sufficient consideration)
Kittle v. Sand Mountain Bank, 437 So.2d 100 (Ala. 1983) (spouse who signs to secure a preexisting debt may lack consideration if she neither signed the note nor received proceeds)
Dalo v. Thalmann, 878 A.2d 194 (R.I. 2005) (joint makers are jointly and severally liable even if one maker received the loan proceeds)
Lawson v. Harris Culinary Enters., LLC, 83 So.3d 483 (Ala. 2011) (explaining ore tenus standard and when de novo review applies)