Clark v. McGinn

• Decision Date: 09 October 1958
• Docket Number: 4 Div. 952
• Citation: 268 Ala. 252,105 So.2d 668
• Parties: G. H. CLARK et al. v. M. E. McGINN et al., d/b/a A. D. Harper Lumber Company.
• Court: Alabama Supreme Court

Page 668

105 So.2d 668

268 Ala. 252

G. H. CLARK et al. v. M. E. McGINN et al., d/b/a A. D. Harper Lumber Company.

4 Div. 952.

Supreme Court of Alabama.

Oct. 9, 1958.

Fleming & Stephens, Elba, for appellants.

C. L. Rowe, Elba, for appellees.

GOODWYN, Justice.

This is an appeal by two of the respondents from a decree of the circuit court of Coffee County, in equity, overruling their demurrer to appellees' bill of complaint.

The bill alleges, to the extent here important, the following:

On August 8, 1950, respondent C. & S. Lumber Company, Inc., a corporation, and complainants (M. E. and M. L. McGinn, partners doing business as A. D. Harper Lumber Company, a partnership) entered into a written contract under the terms of which complainants became said corporation's 'sole and exclusive factor and selling agent for the sale of lumber then on hand and thereafter to be manufactured by the said respondent corporation at an agreed commission per thousand feet on all lumber sold.' The contract provides for advancement by complainants to respondent corporation of $40 per 1,000 feet for lumber manufactured or purchased by it and stacked on its yard at Elba, Alabama, up to $25,000, with complainants' right, at their discretion, to increase both the amount to be advanced per 1,000 feet and the total amount. On December 11, 1951, while the above contract was in full force and effect, respondents G. H. and Mrs. Ruby B. Clark, 'then being owners of the principal amount of the capital stock of the respondent corporation,' executed, 'in their capacity as individuals', to complainants 'a guaranty contract', a copy of which is exhibited to the bill of complaint, marked as Exhibit 1 thereto and made a part thereof. Said guaranty contract, to the extent here pertinent, provides as follows:

'Know All Men By These Presents, That Whereas C. & S. Lumber Company, Elba, Alabama, is engaged in doing a lumber and financing business with the A. D. Harper Lumber Company of Montgomery by which at times it becomes indebted to said A. D. Harper Lumber Company, and being also engaged in borrowing money with or without giving its notes as evidence thereof, and also discounting with said A. D. Harper Lumber Company its customers' notes or accounts with its endorsement and otherwise becoming indebted to said A. D. Harper Lumber Company and it being desired that all of the indebtedness which said C. & S. Lumber Company, Inc., may at present or hereafter from time to time owe or be liable for, to the said A. D. Harper Lumber Company, shall be secured by the individual liability and responsibility of each of the undersigned and the undersigned individually, being willing and desirous of securing said A. D. Harper Lumber Company and it being to their interest to do so.

'Now Therefore, in consideration of the premises and of One Dollar to each of the undersigned in hand paid by A. D. Harper Lumber Company and other valuable consideration we, the undersigned do hereby agree and bind ourselves to be liable for, and we do hereby promise to pay at maturity, any and all indebtedness and liability of every kind and character which the said C. & S. Lumber Company, Inc., may now or hereafter from time to time owe the said A. D. Harper Lumber Company until this agreement is revoked, it being understood, however, that our liability at any one time from said indebtedness shall not exceed, in the aggregate, the sum of Fifty Thousand ($50,000.00) Dollars.

'Should we fail to pay any of said obligations or liabilities at their respective maturities, then at the option of the said A. D. Harper Lumber Company, all such obligations and liabilities shall immediately become due and payable. The object, purpose and intent of this instrument is to make the undersigned liable to said A. D. Harper Lumber Company for all of the indebtedness and liabilities above mentioned in all respects as if they were original makers of said obligations. This instrument shall be construed as an absolute guarantee, and there shall be no duty or obligation resting on said A. D. Harper Lumber Company to proceed against C. & S. Lumber Company, Inc., for the collection of the indebtedness hereinabove referred to, or the collateral deposited or pledged as security before proceeding against us.'

On August 1, 1953, the respondent corporation executed to complainants 'its note secured by a contractual pledge or equitable chattel mortgage in the principal sum of $38,789.52,' it being alleged that when said instrument was executed the two above mentioned contracts were in full force and effect, the respondent corporation was indebted to complainants in said sum of $38,789.52 and 'the respondents Clark were liable to said partnership [complainants] for said sum (Exhibit 1).' And it is alleged 'that at all times since the date of said chattel mortgage and note to and including the filing of this bill of complaint the respondents Clark, in their capacity as individuals, have been and are liable to the said partnership [complainants] for the balance due under said chattel mortgage and note by virtue of said guaranty contract'; 'that there was justly due and unpaid upon said chattel mortgage and note as of 28 February 1957 the sum of $33,329.09,' on which there was a payment of $800 made on April 11, 1957, and that said sum less said $800 credit, with interest thereon, is past due and unpaid. It is further alleged that respondent corporation has disposed of all of the chattels conveyed in said chattel mortgage, except certain items listed in the bill; that said remaining items are in...