Garland v. First Nat. Bank

• Decision Date: 01 March 1934
• Docket Number: 8 Div. 562.
• Citation: 228 Ala. 480,153 So. 743
• Parties: GARLAND v. FIRST NAT. BANK OF SCOTTSBORO et al.
• Court: Alabama Supreme Court

153 So. 743

228 Ala. 480

GARLAND v. FIRST NAT. BANK OF SCOTTSBORO et al.

8 Div. 562.

Supreme Court of Alabama

March 1, 1934

Rehearing Denied April 12, 1934.

Appeal from Circuit Court, Jackson County; A. E. Hawkins, Judge.

Bill by Lucy R. Garland against the First National Bank of Scottsboro and J. N. Garland, to cancel a mortgage and cross-bill by respondent bank for foreclosure. From a decree for cross-complainant, original complainant appeals.

Reversed and remanded.

Proctor & Snodgrass, of Scottsboro, for appellant.

D. P Wimberly, of Scottsboro, for appellees.

THOMAS Justice.

The bill was to cancel a mortgage by the wife alleging that it was a forbidden suretyship for the husband's debts.

The principles of law involved in this case are not complicated and are well understood. The difficulty, if any, is in applying the facts as presented on the trial of the case to the law as established under the statute. Section 8272, Code 1923. It is an elementary principle that the wife shall not directly or indirectly become the surety for the husband, and in the construction of this principle of law, which is statutory, our court has said:

"The statute which declares that 'the wife shall not directly or indirectly, become the surety for the husband' 'is founded upon public policy, which is to protect the wife's estate as against the influence of her husband or other person, or her own inclination, in respect to subjecting it to her husband's debts.' Section 8272, Code; Richardson v. Stephens, 122 Ala. 301, 307, 25 So. 39, 41.

"'It has been liberally construed and zealously applied by the courts for the accomplishment of its obvious design,' and in dealing with transactions to which the statute is applicable, the courts look through the form to the substance of the transaction. Street v. Alexander City Bank, 203 Ala. 97, 98, 82 So. 111, 112; Horton v. Hill, Adm'r, 138 Ala. 625, 36 So. 465." Sims v. Hester et al. (Ala. Sup.) 153 So. 281.

And in Smith v. D. Rothschild & Co., 212 Ala. 276, 277, 102 So. 206, 208, it was observed:

"Equity's invariable process is to look through form to substance. No superficial appearance will be permitted to lead the court away from the truth of the transaction to avoid the statute if such be its effect and purpose. * * *

"'If the debt sought to be enforced against the wife, or any part of it, was infected with this vice in its inception, the infection remains, regardless of renewals or changes of form. And so, with respect to the method by which the proceeds of the loan are returned to the hands of the lender, it is of no consequence whether the payment of the husband's debt is open and direct, or whether the money passes to the creditor through intermediates chosen for the purpose. The law looks to the intention and the result, and not to the means employed."'

See, also, Dewberry v. Bank of Standing Rock (Ala. Sup.) 150 So. 463; Alabama Farm Bureau Credit Corporation v. Helms (Ala. Sup.) 151 So. 589; Mitchell v. Sessoms Grocery Co. (Ala. Sup.) 153 So. 282; Vinegar Bend Lumber Co. v. Leftwich, 197 Ala. 352, 72 So. 538.

It is urged that to an understanding of the situation it is necessary to embrace earlier transactions, beginning with the years 1921 and 1922, when the complainant executed her note to the First National Bank for about $1,223, which the respondent J. N. Garland testifies was executed to reduce his indebtedness to that bank. It is admitted that the indebtedness of respondent Garland to the bank at that time was very large.

It is the contention of complainant that a large part of the indebtedness evidenced by the real estate mortgage of January 24, 1930, was that of a renewal of the balance due on the prior mortgage executed by the complainant to the bank in 1923. It is significant that at the time, and on the same day, that the indebtedness of Mrs. Garland of 1923 was placed on the day book of the respondent First National Bank, other methods were being used by that bank to reduce the indebtedness of J. N. Garland to the bank; that is, on that day the respondent First National Bank received from Mack Garland, a son of the respondent J. N. Garland and the complainant, a note for $4,000 to reduce the indebtedness of J. N. Garland to the bank.

In the testimony of Mr. J. W. Gay, witness for and cashier of the respondent bank, is the admission that the note of Mack Garland was taken by the bank to reduce the indebtedness of J. N. Garland to the bank. The letter of Mr. J. W. Gay, as cashier of the respondent First National Bank, to Mr. Garland, of date of October 17, 1921, referred to "the notes of Mrs. Lucy Garland" for $2,776, as being "your indebtedness to The First National Bank"-the indebtedness of J. N. Garland. It is the contention of the complainant that in the renewals of this indebtedness, a part of the same was carried forward into the mortgage of 1930 by the wife, which is here sought to be canceled.

The court in its final decree found that: "Prior to the 24th day of January, 1930, a settlement of all the dealings between the complainant and the First National Bank of Scottsboro had been made." This conclusion is not borne out by the testimony of the complainant, that of the respondent J. N. Garland, or the tendencies of evidence in the testimony of J. W. Murphree and J. R. Rudder. We have examined the record, and are of opinion that the matter should be referred to the register for an accounting to ascertain the full facts and dealings of the parties under the statute invoked and as eventuated in the mortgage of 19...