Fielder v. Varner

45 Ala. 429 | Ala. | 1871

PETERS, J.

On the fourth day of March, 1868, the appellant sued the appellees in the circuit court of Bullock county, by summons and complaint. The cause of action was a promissory note, in the following words, to-wit:

“$478 67. — On or before the 25th day of December next, we, or either of us, promise to pay James H. Fielder, or bearer, the sum of four hundred and seventy-eight dollars and fifty-seven cents, for value received, in gold or its equivalent. This the 3d day of January, 1866.

(Signed) J. W. Scott,

Isaac Sanders,

K. M. Yarner, s. o.,

Thomas Youngblood.”

On the trial, the defendants pleaded the general issue, and payment, with leave to give in evidence any matter which might be specially pleaded. On these issues the plaintiff read the note above said to the jury in evidence, and rested. It was then shown by the defendants, Yarner and Youngblood, who were the only parties defendant then before the court, that they were accommodation sureties on said note; that said Scott & Sanders had executed a mortgage to Sessions & Fielder on the 23d of March, 1867, to secure its payment, with that of several other debts named in said mortgage. This mortgage included a conveyance of all the property of said Scott & Sanders which was not exempt from execution, except what was mortgaged to other parties; the mortgage was executed to Sessions & Fielder, but the debt mentioned in the above note was one of those also mentioned in the mortgage, and secured by it; there was no preference allowed in favor of any of the debts secured in the mortgage ; the property conveyed was all. turned over to the mortgagees, and sold by them for the satisfaction and payment of the debts therein mentioned. It was also admitted that certain advances made by Fielder & Sessions to Scott & Sanders, mentioned in the mortgage, were, $1,000 at the date of the mortgage, $1,000 in April, 18o7, and $1,000 in May, 1867; and that for these several advances notes were taken, all of which fell due on October 1,1867. To the sums thus advanced, the gross sum of 25 per cent, was added to each note. It also appeared that the law day of the mortgage fell upon the first day of October, 1867. It Vas also shown that the mortgaged property sold for money enough to pay all the debts secured in the mortgage, except the usurious interest of 25 per cent, on the $3,000 mentioned as advances; and that, if the money realized on the sale of the property conveyed in the mortgage had been applied to the payment of all the debts secured in the mortgage, exclusive of the usurious interest, all would have been paid. And among the rest, the one here sued for. There was also testimony tending to show that Scott & Sanders, the mortgagors, consented to the appropriation of the moneys raised upon the mortgage to the payment of said usurious interest, to the exclusion of the debt in suit mentioned in said note.

Upon this evidence the said plaintiff below, the said Fielder, asked the court to charge the jury as follows, to-wit:

“ If the jury believe from the evidence, that there was usurious interest in the notes given by Scott & Sanders to Sessions & Fielder for advances made to them, at the time of and subsequent to the execution of the mortgage, and that Scott & Sanders made a general payment, then Sessions & Eielcler had the right, with the consent of Scott & Sanders, to apply such general payments to the payment of such usurious interest, to the entire exclusion of the note sued upon, although said application may have been made without the knowledge or consent of the defendants.”

This charge was refused, and the said plaintiff excepted. And the defendants below then asked the court to charge the jury that—

“If the jury believe from the evidence, that there was illegal interest included in the notes given by Scott & Sanders to Sessions & Fielder for advances made to them at the time of, and subsequent to the execution of, the mortgage, then Sessions & Fielder, in the absence of any appropriation by Scott & Sanders, could not apply a general payment made by Scott & Sanders to the payment of such illegal interest, to the entire exclusion of the note here sued upon, if said note is included in said mortgage, and the defendants are accommodation sureties on said note.”

This charge the court gave, and the plaintiff excepted. And in consequence of these rulings of the court, the plaintiff took a non-suit, and now appeals to this court for the decision upon the points raised upon the foregoing charge and refusal.' — Rev. Code, § 2759.

A mortgage is a security for all the debts included in it. 4 Kent, p, 136, marg. If these debts are in different rights, and the mortgage contains a power of sale, as is the case with this mortgage, then the mortgagee becomes the trustee of the creditors and of all those interested in the appropriation of the funds raised upon a sale of the mortgaged property. And as such trustee, he is bound to see that the funds made upon the mortgage sale are legally applied. And where there is no preference given to one creditor whose debt is so secured, over another, then all must share equally in the application of the moneys raised upon a sale of the mortgaged property. — Steele v. Mealing, 24 Ala. 285. Here, the mortgagors were the principal debtors, and Yarner and Youngblood were their sureties on the note sued upon in this action. And the mortgage, which the principal debtors executed, was for the indemnity of their sureties. This placed the property conveyed beyond the control of the mortgagors or the mortgagees, so as to prejudice the rights of the sureties. The mortgage was pro tanto for their benefit. It was a deposit for their use. In such a case, neither the creditor nor the principal debtor can defeat their rights. — 1 Story Eq. § 499, and cases there cited. If the creditor is supplied with the means to pay the debt by the principal debtor, it is the right of the surety to have the means thus supplied appropriated to his discharge, and if the creditor fails in making the proper appropriation, to that extent the creditor will be released. — Perrine v. Fireman’s Ins. Co. of Mobile, 22 Ala. 575; Allen v. Greene, 19 Ala. 34. And this release may be insisted on either at law or in equity.— Henderson v. Elrod et al., Jan. T. 1871.

The mortgagor may himself pay usurious interest, and he may convey his property to secure its payment. And he alone can avail himself of the defense of usury. This is a personal privilege to him. If he does not interpose it, no one else can, unless it is so exhorbitant as to induce the belief that the debt itself is simulated, and consequently fraudulent as to bona fide creditors. — Baskin v. Calhoun, Adm’r, Jan. T. 1871; Cook et al. v. Dyer, 3 Ala. 643. If, then, the mortgagor chooses to secure a debt bearing usurious interest in the same conveyance with another bearing only simple and legal interest, it is his right to do so. And if, upon a sale of the mortgaged property, he consents to an appropriation of the funds thus raised to the payment of the usury; a surety on the debt paying legal interest cannot complain of it. The surety gets what was intended for him on the execution of the mortgage, and this is all that he is entitled to. But the charge of the court which was given, and excepted to by the appellant, was not in conformity with this declaration of principle. It was therefore erroneous.

The decision of the court below is reversed, and the cause is remanded, and a new trial is ordered in the court below.