Hamill v. McCalla

• Decision Date: 11 January 1934
• Docket Number: 6 Div. 376.
• Citation: 228 Ala. 281,153 So. 412
• Parties: HAMILL v. McCALLA et al.
• Court: Alabama Supreme Court

153 So. 412

228 Ala. 281

HAMILL v. McCALLA et al.

6 Div. 376.

Supreme Court of Alabama

January 11, 1934

Rehearing Denied March 15, 1934.

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

Bill to foreclose a mortgage by J. E. McCalla and another, as executors of the will of Mrs. M. A. McCalla, deceased against Hiram Dodd, and others. From a decree overruling a demurrer to the bill, respondent E. N. Hamill alone appeals.

Reversed and remanded.

Irregular indorser, becoming such after delivery of note and mortgage and at time of assignment, who had no interest except to guarantee payment of debt, held not proper party to foreclosure suit (Code 1923, § 6652).

In substance, the bill alleges that respondent Dodd, January 6 1930, executed his promissory note, due three years from date, to the Fidelity Mortgage Bond Company, and at the same time executed a mortgage on certain real estate to secure the same. On January 10, 1930, the Fidelity Mortgage Bond Company transferred and conveyed said note and mortgage to M. A. McCalla, for value. It is alleged that in making transfer and conveyance of said note and mortgage the Fidelity Mortgage Bond Company, by and through its president, E. N. Hamill, indorsed said note, and that E. N. Hamill in his individual capacity likewise indorsed said note; said indorsements being a part of the consideration for the sale and transfer of said note and mortgage to McCalla.

M. A. McCalla is dead, and complainants are the executors of her will.

The indebtedness evidenced by the note, and secured by the mortgage, is due and unpaid, and the mortgage is subject to foreclosure. It is averred that in said notes, and as a part thereof, Dodd waived all rights of exemptions, and agreed to pay an attorney's fee for collection thereof, and Fidelity Mortgage Bond Company and Hamill in indorsing the note likewise waived exemptions and agreed to pay attorney's fee for collection.

The prayer is that the mortgage be foreclosed, and, in event the proceeds be insufficient, for a deficiency judgment against respondents.

J. Wiley Logan, of Birmingham, for appellant.

J. Howard Perdue, of Birmingham, for appellees.

FOSTER, Justice.

This is a bill in equity to foreclose a mortgage on real estate, and incidentally it seeks a deficiency judgment against both the mortgagor, who is the maker of the note, and also against the irregular indorser, who is appellant.

Appellant demurred on the ground that a deficiency judgment could not be rendered against him on his objection, because, in effect, his obligation is separate and distinct from that of the maker; in other words, that they are several and not joint debtors. His demurrer was overruled, and that ruling presents the only question for us to consider on this appeal.

It is undoubtedly true that when the purpose of a bill is single, incidental matters, though unconnected, may be united without causing multifariousness. Such is a creditor's bill, whose single purpose is to collect a debt.

But the purpose of a foreclosure suit is to extinguish the equity of redemption. In our case of Winston v. Browning, 61 Ala. 80, 84, it is said that: "In the absence of statutory provisions, a court of equity could not in a foreclosure suit * * * render any other decree than one barring the equity of redemption, or directing a sale of the mortgaged premises. If after a sale, there was an unpaid balance of the mortgage debt, it was recoverable only in action at law-the court could not direct that execution issue for it"-citing Hunt v. Lewin, 4 Stew. & P. 138; see 42 C.J. 290, § 1974; Tedder v. Steele, 70 Ala. 347.

But since an early date in Alabama, it has been provided by statute, that in all such suits execution may issue on the balance found due after a sale of the property. Section 6652, Code.

Under our statute it has been held that the proper practice is for the court to ascertain the balance due after the sale is made, and after crediting the proceeds, to order execution for such balance. Presley v. McLean, 80 Ala. 309; Johnson v. Ward, 82 Ala. 486, 2 So. 524; Baker v. Young, 90 Ala. 426, 8 So. 59; Perdue v. Brooks, 95 Ala. 611, 11 So. 282; Hastings v. Ala. State Land Co., 124 Ala. 608, 26 So. 881.

While it is not improper to pray for a deficiency decree in the bill (Thompson v. Wilson, 224 Ala. 299, 140 So. 439), the right to enter such a decree, more properly to order execution, exists under the statute without such a prayer, when rendered on motion in a reasonable time. Hall v. Noble, 215 Ala. 444, 111 So. 14; Wells v. Am. Mortgage Co., 123 Ala. 413, 26 So. 301.

Since the execution for any balance due is itself only incidental to the equitable remedy of foreclosure, the collateral incidents to collecting the debt as when that is the purpose of a bill are not applicable. In fact the statute controls the subject in Alabama. Under its provisions, the original conception of an equitable foreclosure remains in all its requirements, with the right to execution added by statute as an incident to the equitable relief thus enforced. The rule affecting the proper parties to a foreclosure proceeding is not thereby changed or affected. The nature of relief in respect to the foreclosure is the same. The statute therefore does not permit the addition of parties not necessary or proper to the rendition of the relief of foreclosure. It is always proper to make the mortgagor or principal debtor a party to such a suit. When a surety is a joint debtor, he stands in such relation to the debt that he may be made a party. Therefore, execution may be ordered against him the same as against the principal debtor. Averyt Drug Co. v. Ely-Robertson-Barlow Drug Co., 194 Ala. 507, 69 So. 931; Tedder v. Steele, 70 Ala. 347.

Unless appellant occupies a position similar to that of a surety by joint contract with the maker, by virtue of his indorsement, with waiver of the statutory conditions to his liability, he is not a proper party, unless made so for some other reason, and execution may not be ordered against him for the deficiency. 42 C.J. p. 58, § 1581, p. 284, § 1963, p.

287, § 1966; Younghusband v. Ft. Pierce Bk. & Tr. Co., 100 Fla. 1088, 130 So. 725.

An irregular indorser is one who indorses for some purpose other than to transfer the instrument. 8 C.J. 74, § 18; Stearns on Suretyship, §§ 8-10; Alabama Nat. Bank v. Rivers, 116 Ala. 1, 22 So. 580, 67 Am. St. Rep. 95; Price v. Lavender, 38 Ala. 389. He may thus indorse prior to delivery (8 C.J. 74, § 121), or afterwards (8 C.J. 83, § 1300), without changing his status as an irregular indorser. Stearns on Suretyship, § 9.

By a waiver of the statutory conditions, his obligation is absolute upon default. Little v. People's Bank, 209 Ala. 620, 96 So. 763; Carothers v. Callahan, 207 Ala. 611, 93 So. 569. He is not subject to the conditions of a statutory indorsement, but his obligation is dependent upon the nature of his undertaking, and controlled by the principles otherwise applicable to contracts. Hullum v. State Bank, 18 Ala. 805.

If his indorsement was before the initial delivery, and contains such a waiver, his liability accrued at the same time as that of the maker, and by the same instrument, and upon the same conditions and consideration, and to the same extent. Holczstein v. Bessemer Tr. & Savs. Bk., 223 Ala. 271, 136 So. 409; Carter v. Long Bros., 125 Ala. 280, 28 So. 74; Long v. Gwin, 188 Ala. 196, 66 So. 88; Carter v. Odom, 121 Ala. 162, 25 So. 774.

An irregular indorser who does so after the initial delivery, though at the time of the transfer, makes his contract separate and distinct from that of the maker. He is not jointly bound with him nor subject to a joint action at law. Schillinger v. Leary, 201 Ala. 256, 77 So. 846; Scarbrough v. City National Bank, 157 Ala. 577, 48 So. 62, 64, 131 Am. St. Rep. 71; 8 C.J. 853, § 1114; 47 C.J. 69, § 144; 13 C.J. 574, § 553.

But if he is a proper party to a foreclosure suit, a deficiency decree may be rendered against him.

In the absence of a joint liability for the debt, and of any interest in the property, or the right which would affect the extinguishment of the equity of redemption, or by which the ownership of the debt or property passed, he is not a proper party, and not subject to a statutory deficiency decree.

Reversed and remanded.

ANDERSON, C.J., and GARDNER and BOULDIN, JJ., concur.

On Rehearing.

FOSTER Justice.

The rule which we quoted from Winston v. Browning, supra, to exist in Alabama, was in accordance with the well-settled practice in equity then in existence. The only procedure to secure a personal judgment for the deficiency after foreclosure was a suit at law. 1 Wiltse on Mortgage Foreclosures, §§ 411, 412; 42 C.J. 58. The statute gave a new right. Teal v. Lewis, 85 Ala. 218, 4 So. 695; Presley v. McLean, 80 Ala. 309. We quote as follows from the latter:

"The effect and operation of the statute are, to confer on the Chancery Courts new and additional power and jurisdiction in the rendition of decrees in the specified classes of suits-decrees having the force and effect of judgments-and to authorize a mode of proceeding for their enforcement not originally and formerly pursued. The rendition of such decrees, and the subsequent proceedings thereon, being of statutory origin, must be in substantial conformity with the statutory provisions and regulations. * * *

"The statute contemplates and provides for a second decree, the rendition of which is dependent on a sale of the property, and its confirmation. The second decree is founded on the first, as a judicial ascertainment of the entire amount of indebtedness, and the sale and its confirmation ascertain the amount of credit, where a decree is rendered, finding the

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