72 So. 433 | Ala. | 1916
The bill is primarily to foreclose a mortgage, and incidentally seeks a decree against the sureties, who signed several notes secured by the mortgage, for the balance due after the mortgaged property was sold, and also seeks a decree against parties who had acquired or converted certain property covered by the mortgage.
“The main purpose of the bill is the foreclosure of a mortgage against the defendants, John Mack and Charles Mack, and, in case the proceeds of the sale of the mortgaged property are insufficient to pay the mortgage debt, that a judgment for the deficiency be rendered against the mortgagors as well as against the two sureties, Wm. Schuman and Al. Richter, on the notes, which notes the said mortgage is given to secure. There is a series of the notes, aggregating in amount $10,000, and each note due on a certain date in the future, the due date of each note being different from the others. The mortgage contained a clause providing ‘if said grantors shall fail at maturity of any of said notes to pay the same in full, then all of said notes shall at once become due and payable.’ The sureties claim, and the proof clearly shows, that this provision was entered into between the principals without their knowledge or consent; and in consequence thereof they are discharged.
“The law is well settled that any intentional material change in the terms of the contract by the original parties, without the consent of the surety, will discharge the surety. — Hadan v. Brown, 18 Ala. 643; Anderson v. Bellenger, 87 Ala. 334, 6 South, 82, 4 L. R. A. 680, 13 Am. St. Rep. 46. It has been held that the holder of promissory notes extending time of payment to maker*216 by contract, upon sufficient consideration, discharges an apparent maker that he knows to be a surety, and whose consent to the extension has not been given. This principle has been in effect held so often as to need no citation of authority.
“Will a binding contract as here presented, accelerating the time of payment of the notes, discharge the surety ? Upon principle it seems it would. The only case exactly in point which the court has read is the case, cited by the solicitors for defendants, of Peru Plow & Wheel Co. v. Ward, 1 Kan. App. 6, 41 Pac. 64.
“Furthermore, a surety upon paying the debt to the principal has the clear right to be substituted in the place of the creditor as to all securities held by the latter for the debt. Upon the sureties paying the notes which they signed as same became due, they would have been subrogated to all the rights of the complainant in and to the mortgage and the property therein included. By a clause in the mortgage, complainant had the right to declare all notes due upon default of any one of them and could foreclose the mortgage. Must the sureties, in order to protect their right to be substituted to the rights of complainant in the mortgage, be required to pay the entire indebtedness contrary to their undertaking upon the default of one note? They had the right, they may have prepared, to pay the notes as they matured and have had turned over to them the securities the complainant held; the acceleration clause in the mortgage, by the authority of which complainant has foreclosed or is foreclosing his mortgage, has impaired, or rather destroyed, this right. Were they required to pay these notes as they matured, they would have the right to demand of complainant the transfer of the mortgage unimpaired, which he had already foreclosed. It would be no answer to say that in this particular case it would be better for the sureties that the mortgage was foreclosed. The court is therefore of the opinion that complainant is not entitled to any relief against the sureties on the note.
“The court is further of the opinion that complainant is entitled to no relief against the defendant Kinney. The stock he took, with the exception of one horse, was under prior' mortgages. This horse he took as payment of a debt due him by defendants, Mack Bros. The indebtedness was existing at the time of the execution of the mortgage on which this suit is based. The contract whereby the mortgagors were given the privilege of ex*217 changing and swapping the personal property rendered the mortgage void as to creditors.”
Our cases hold that by reason of our statutes such an agreement must be in writing, in order for it to constitute a mortgage on the property substituted; and all the authorities hold that such a provision is not good as a mortgage upon the substituted property as against a bona fide purchaser of the substituted property, who has no knowledge or notice thereof, and that recording the mortgage or agreement does not serve as constructive notice as to the substituted property, because it cannot be described so as to give notice that it was exchanged for other property in the mortgage. These provisions, however, do not destroy the efficacy
Cases like this are readily distinguishable from those in which the mortgagor incumbers his own property which is then subject to his own debts. Here, the property mortgaged was not the property of the mortgagors, but that of the mortgagee, excepting the rights which the mortgagors acquired by virtue of the purchase, free from the mortgagee, and as a part of the contract of purchase was mortgaged back to the mortgagee to secure the purchase price. The mortgagors themselves therefore never had any right or title to the property mortgaged, which was prior or paramount to that of the mortgagee, and of course their creditors could have none prior to the mortgagee.
It has been frequently held by this court that an .extension of the time of payment of notes, or an agreement so to do, if binding on the parties' — that is, based on a sufficient consideration — has the effect to release the sureties; but, so far as we find, this is the first time the question has been presented to this court, whether or not an agreement to compel payment, before the date fixed in the notes or bonds signed by the sureties, has the effect to discharge the sureties. The exact question here presented, was presented to the Kansas court, and was dcided as we now decide. The decision in that case is thus stated by the court itself, in a headnote: “One, who becomes security for the payment of a debt evidenced by three notes due, respectively, in one, two, and three years, is released from liability, if, without his assent, the principals on the notes and the creditor payee agree, upon sufficient consideration, that, upon the failure to pay either of said notes, they all shall become due and payable, and if, pursuant 'to such agreement, an action is brought within two years against the principals and the surety on the three notes.” — Peru Plow. & W. Co. v. Ward, 1 Kan. App. 6, 41 Pac. 64.
Abundant authority is quoted in the above case to sustain the holding, and we know of none to the contrary. We tajee from the opinion in that case the following quotations which we deem conclusive : “ ‘When he (the surety) has agreed that his principal shall pay money, or perform any other contract, by a specified day, the change of time to a different day is not the agreement into which he entered; and to enforce its performance would be to permit other and unauthorized persons to make for him a contract.’ — Flynn v. Mudd, 27 Ill. 323. ‘If the surety is sued upon the old agreement, to which alone his undertaking was accessory, he has only to show that that has ceased to exist, and no longer binds his principal; and, if he is sued upon the substituted agreement, he is entitled, both in law and equity, to make the short and conclusive answer, “Non hsec in foedera. veni.” ’ — Ide v. Churchill, 14 Ohio St. 372; Mayhew v. Boyd, 5 Md. 102 [59 Am. Dec. 101]. The exact question involved in this case was considered, and thus commented on, in Bacon v. Chesney, 1 Starkie 192: ‘The claim as against the surety is strictissimi juris, and it is incumbent on the party to whom the guaranty is given, and who is enforcing it against the surety, to show that he has strictly complied with
It follows that the decree appealed from should be affirmed-in part, and reversed and rendered in part. The decree should have been against the defendant Kinney for the value of the horse purchased by him, which was shown to be $160, but in all other respects it was correct and should be affirmed. Let a decree be here entered in accordance with this opinion.
Affirmed in part, and in part reversed and rendered.