Continental Life Ins. Co. of St. Louis, Mo., v. Brandt

• Decision Date: 17 May 1934
• Docket Number: 6 Div. 506.
• Citation: 154 So. 903,228 Ala. 570
• Parties: CONTINENTAL LIFE INS. CO. OF ST. LOUIS, MO., v. BRANDT.
• Court: Alabama Supreme Court

154 So. 903

228 Ala. 570

CONTINENTAL LIFE INS. CO. OF ST. LOUIS, MO., v. BRANDT.

6 Div. 506.

Supreme Court of Alabama

May 17, 1934

Appeal from Circuit Court, Jefferson County; Wm. M. Walker, Judge.

Bill by Eunice W. S. Brandt against the Continental Life Insurance Company, of St. Louis, Mo., to recover a note, the property of the wife, pledged to secure the husband's debt.

From a decree for complainant, respondent appeals.

Affirmed.

London Yancey, Smith & Windham and J. K. Jackson, all of Birmingham for appellant.

Frank E. Spain, Carl G. Moebes, and Coleman, Spain, Stewart &amp Davies, all of Birmingham, for appellee.

THOMAS Justice.

The question presented by this appeal is the suretyship vel non of the wife for the debts of the husband.

The statute declares: "The husband and wife may contract with each other, but all contracts into which they enter are subject to the rules of law as to contracts by and between persons standing in confidential relations; but the wife shall not, directly or indirectly, become the surety for the husband." Section 8272, Code.

The courts look to the substance rather than appearance or form to uncover the true facts. Smith v. D. Rothschild & Co., 212 Ala. 276, 102 So. 206; Fourth Nat. Bank of Montgomery v. Woolfolk, 220 Ala. 344, 125 So. 217; Lamkin v. Lovell, 176 Ala. 334, 339, 58 So. 258; Hendon v. Hendon, 219 Ala. 159, 160, 121 So. 534; Mitchell v. Sessoms Grocery Co. (Ala. Sup.) 153 So. 282; Sims v. Hester (Ala. Sup.) 153 So. 281; Marbury Lumber Co. v. Woolfolk, 186 Ala. 254, 65 So. 43.

It is as much within the inhibition of suretyship to deposit or pledge the wife's personal property to secure the payment of the husband's debt, as declared by the statute, as it is to mortgage the wife's property for such forbidden purpose. McNeil v. Davis & Son, 105 Ala. 657, 17 So. 101, an indemnity of suretyship; Corinth Bank & Trust Co. v. Pride, 201 Ala. 683, 79 So. 255, husband's note indorsed and pledged as collateral security; First National Bank v. Nelson, 106 Ala. 535, 18 So. 154; Brooks v. Greil Bros. Co., 179 Ala. 459, 60 So. 387, deposit of rent notes as forbidden security; Vinegar Bend Lumber Co. v. Leftwich, 197 Ala. 352, 72 So. 538; Fourth Nat. Bank of Montgomery v. Woolfolk, supra.

The wife may not ratify such an act violative of the statute, or estop herself to assert the provisions of the statute as against such contract. Sims v. Hester, supra; Evans v. Faircloth-Byrd Merc. Co., 165 Ala. 176, 51 So. 785, 21 Ann. Cas. 1164; Trotter Bros. v. Downs, 200 Ala. 158, 75 So. 906; Corinth Bank & Trust Co. v. Pride, supra; Staples v. City Bank & Trust Co., 194 Ala. 687, 689, 70 So. 115; Richardson v. Stephens, 122 Ala. 301, 25 So. 39; People's Bank v. Barrett, 219 Ala. 258, 121 So. 910.

In Elkins v. Bank of Henry, 180 Ala. 18, 23, 60 So. 96, 97, a case where the recitals in the instrument were that the wife was the principal debtor, the court said: "We recognize the fact that a wife may pay her husband's debts, that she may give him her property, and that she may borrow money and give it to him; but the statute above quoted prohibits her from becoming a surety, directly or indirectly, for his debts. In this case there was a plain effort to evade the statute, and this case is completely covered by the rule declared by this court in Lamkin v. Lovell , 58 So. 258." Bell v. Henderson Nat. Bank, 225 Ala. 398, 143 So. 568.

In People's Bank of Greensboro v. Steinhart, 186 Ala. 205, 207, 65 So. 60, where it was held that, "although the transactions were made to appear as loans to the wife, the proceeds being transferred by her to her husband, the mortgages were void under the facts in this case, in view of the provisions of section 4497, Code 1907," Mr. Chief Justice Anderson said for the court: "We think that the evidence in this case shows that it was the purpose and intention of the complainant's husband and the respondent bank that the proceeds of the mortgages in question should be used as an indirect security for the debt of the husband or of his grocery company, although it may in form appear to be a straight loan to the wife and a subsequent placing by her, of the proceeds to the credit of her husband."

To like effect is the case of Vinegar Bend Lumber Co. v. Leftwich, 197 Ala. 352, 72 So. 538, where the wife conveyed her separate property to the husband and joined with him in the mortgage thereof to secure his debt, with the knowledge of the mortgagee of her rights in the premises, and the transaction was held void as violative of section 4497, Code of 1907.

The courts have made the observation that the wife is much under the influence of the affections; and it is this that the law interposes to guard against and prevent her imposition and reduction to beggary and ruin; hence the wisdom of such statutes forbidding the disposition of the wife's property except as permitted by law. Bibb v. Pope, 43 Ala. 190.

In the recent opinion in Rollings v. Gunter, 211 Ala. 671, 673, 101 So. 446, 448, Mr. Justice Bouldin observed: "As we study this case, we are impressed that both provisions of this statute enter into its solution. All parties were present and participating in a transaction which took the form stated. The idea of making the deed to husband and wife jointly was sprung on the moment, suggested by legal counsel, and caught up by the husband. The wife did not become the actor. Human experience is that a nonresisting wife, accustomed to follow the lead of her husband in business matters, was not likely, in the presence then confronting her, to do other than acquiesce and sign what she was expected to sign. It does not appear she had or was expected to have any means to pay the debt or any part of it. For all that appears, the husband was expected to carry out his original promise to get the money and pay the debt." Tennessee-Hermitage Nat. Bank v. Hagan, 218 Ala. 390, 395, 119 So. 4, on suretyship.

A reading of the evidence and exhibits to the testimony convinces us that the transaction, considered as a whole, shows that there was a large indebtedness of the husband to the appellant, Continental Life Insurance Company, incurred in the conduct of its agency in Birmingham, and that there was an inability of the agent, the husband of appellee, to pay and to continue that agency; that the wife of this agent was possessed of valuable property which she sold to David Silverstein, and, as a part of the purchase price, took notes of David Silverstein aggregating $25,000, together with a mortgage on the property securing same; that the husband and the appellant's agent, on representations made, sought (by way of suretyship of the wife) to have the $12,000 note in controversy transferred by the wife to the husband and passed on by him to the appellant with a knowledge of the facts; and that this, in truth and in fact, operated as a scheme and a design on the part of the appellant and the husband to have Mr. Brandt's indebtedness secured by Mrs. Brandt becoming surety for her husband's debts to the appellant; that the Silverstein notes and mortgage on the property sold by her were payable to Mrs. Brandt, were her separate property in which the husband had no interest; and that this was made known to appellant by its agent, the husband.

It may be said for the husband that he appears to have made this his last effort to secure his debt and save his agency; he so stated to appellant in his letter of date of September 14, 1929.

After communication by wire with the appellant to such end and purpose, he was invited to come, and went, to St. Louis to confer with Mr. Mills, who is shown to be a vice president of appellant; and the course of events immediately thereafter eventuating there and here, indicates the purpose and design of the parties-to obtain such security to balance the agency's account. This was done through Mrs. Brandt's property, by the obtaining of the note from the wife by the husband; and its use with the company as collateral security for the previous indebtedness in question. The letter of transmission of the wife's note to Mills and the receipt therefor by its assistant secretary, Miller, show that it was a "collateral note." It is not satisfactorily shown that Brandt purchased the wife's note before it was so pledged to appellant, and under the immediate facts the appellant was not authorized to believe, at the time it received this collateral of Mrs. Brandt from Mr. Brandt, that...