Maryland Casualty Co. v. Holmes, 4 Div. 791

• Decision Date: 31 January 1935
• Docket Number: 4 Div. 791
• Citation: 230 Ala. 332,160 So. 768
• Parties: MARYLAND CASUALTY CO. v. HOLMES et al.
• Court: Alabama Supreme Court

160 So. 768

230 Ala. 332

MARYLAND CASUALTY CO. v. HOLMES et al.

4 Div. 791

Supreme Court of Alabama

January 31, 1935

Rehearing Denied May 2, 1935

Appeal from Circuit Court, Geneva County; Emmet S. Thigpen, Judge.

Bill by Bell McDuffie Holmes and others against D.C. McDuffie individually and as guardian of the estate of complainants and Maryland Casualty Company, and cross-bill by respondent casualty company. From a decree sustaining a demurrer to the cross-bill, cross-complainant appeals.

Affirmed.

BOULDIN J., ANDERSON, C.J., and GARDNER, J., dissenting.

O.S Lewis, of Dotham, for appellant.

Mulkey & Mulkey, of Geneva, for appellees.

FOSTER, Justice.

The original bill seeks relief on behalf of minor wards in two alternative aspects. In the second paragraph, one aspect is alleged to result from the fact that the guardian deposited in a bank the money which was lost by the failure of the bank, and that under the agreement the deposit was made subject to the joint control of the guardian and the surety on his bond. This is upon the principle of our case of Bates v. Jones, 224 Ala. 82, 139 So. 242. In the third paragraph, the other aspect is alleged to exist because the money was not deposited as such in bank, but was made a time deposit, and therefore a loan, and was made without security, as required by section 8149, Code. Lee v. Lee, 67 Ala. 406; Barnes v. Clark, 227 Ala. 651, 151 So. 586, 90 A.L.R. 637.

The question here does not arise on the sufficiency of the bill in either aspect; but upon the cross-bill. The answer and cross-bill of the surety on the guardian's bond admit the allegations of the second paragraph, except as to the amount; and admit the allegations of the third paragraph, except also as to the amount, but deny that the loan was without security. It then sets up the liability of the four cross-respondents, not theretofore parties to the cause, upon their written agreement set out in the opinion of Justice Bouldin, not mentioned in the original bill. It prayed that an account be stated allowing the guardian certain credits, and, if anything be found due, cross-complainant offers to pay the same, and prays that the court decree in its favor against said cross-respondents on their guaranty for the amount so found due and paid by cross-complainant, and that it be subrogated to the rights of the guardian against said cross-respondents.

We think the cross-bill is subject to demurrer on a principle well settled in Alabama, and existing under our present statutes (if not on other grounds not now considered). "A cross-bill is, in its nature and purposes, defensive to the original bill. If its object and effect be not to defeat a recovery by complainant, in whole or in part, or to modify the relief the complainant obtains, then it is not defensive in its purpose, and is not germane to the bill." Tutwiler v. Dunlap, 71 Ala. 126; Behan v. Friedman, 216 Ala. 478, 113 So. 538; Denicke v. Davitt, 223 Ala. 69, 134 So. 794; Whitfield v. Riddle, 78 Ala. 99; Davis v. Cook, 65 Ala. 617; Nelson v. Dunn, 15 Ala. 501.

A cross-bill may be not simply defensive, but may set up additional facts relating to the subject-matter of the original bill, not alleged in it, and pray for affirmative relief. It is then not simply defensive. Wilkinson v. Roper, 74 Ala. 140; Bell v. McLaughlin, 183 Ala. 548, 62 So. 798, and cases cited. Denicke v. Davitt, supra. But it may not bring forward new subject-matter, Ashe-Carson Co. v. Bonifay, 147 Ala. 376, 41 So. 816, and must bear upon the issues made by the original bill. Faulk & Co. v. Hobbie Grocery Co., 178 Ala. 254, 59 So. 450; 21 Corpus Juris 508, et seq.; Shelton v. Carpenter, 60 Ala. 201.

These rules have not been affected by any change in the phraseology of the statute, and we find no cases in conflict with them. Since the Code of 1852, § 2916, it has been provided that defendant may obtain relief against complainant for any cause connected with or growing out of the bill by making his answer a cross-bill. The act of 1885 (Code 1886, § 3460) added the right to such relief against a defendant also. Faulk & Co. v. Hobbie Grocery Co., supra; Abels v. Planters' & Merchants' Ins. Co., 92 Ala. 382, 9 So. 423. But there is still no right to bring in one, not already a party, by an answer which is made a cross-bill ( Lamar v. Lincoln Reserve Life Ins. Co., 222 Ala. 60, 131 So. 223), whatsoever the issue might be. We adhere to that rule of pleading. See Gilman v. N.O. & S.R. Co., 72 Ala. 566; Haralson v. Whitcomb, 200 Ala. 165, 75 So. 913.

But no point seems to be made in that respect in this suit, and it is waived. Lehman v. Dozier, 78 Ala. 235; Jones v. Robinson, 77 Ala. 499; Lanier v. Henderson, 227 Ala. 243, 149 So. 674. The cross-bill, in our opinion, sets up matter "wholly foreign to any issue between the parties to the original bill" to the extent that it is predicated on a contract not mentioned in the bill, and brings in parties against whom complainant seeks no relief, and it seeks independent relief on that contract, and against those parties, not for the benefit of complainant, nor to his prejudice, but for its own benefit solely. Its purpose has no bearing on the issues made by the original bill. It comes squarely within the principle of the cases of Behan v. Friedman, supra, and Lowery v. Rosengrant, 216 Ala. 364, 113 So. 237.

The cross-bill is, therefore, subject to the demurrer, and the decree sustaining it is affirmed.

Affirmed.

THOMAS, BROWN, and KNIGHT, JJ., concur.

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

BOULDIN, Justice (dissenting).

The appeal is from a decree sustaining demurrers to a cross-bill filed by Maryland Casualty Company, surety on the bond of D.C. McDuffie, as guardian of the estate of Bell McDuffie Holmes et al., minors.

The original bill was filed by the wards against the guardian and his surety praying a removal of administration of the guardianship into the equity court, the removal of the guardian for incompetence, and a settlement of such trust.

This bill discloses that the trust estate, consisting of $1,250 in money, came into the hands of the guardian in 1929; that by joint control management between the guardian and his surety the money was deposited in the First National Bank of Samson to the credit of the guardian; that under the joint control agreement the money was not to be withdrawn from such bank, except on check countersigned by the surety, the bank concurring in such arrangement; that the money so remained until January, 1930, when the bank failed, was taken over by the comptroller for liquidation, and the fund was lost.

The original bill further avers, in the alternative, that the deposit was made as a time deposit drawing 4 per cent. interest, compounded semiannually; was in legal effect a loan to the bank, made without taking the security required by law, and, therefore, a devastavit, rendering the guardian and his surety liable for interest at the lawful rate, 8 per cent. per annum. The bill alleges the insolvency of the guardian, prays for a decree against him and his surety for the amount of the deposit, with 8 per cent. interest, etc.

The cross-bill admits the deposit of the fund in the bank under joint control, less $100 alleged to have been theretofore lawfully expended for attorney's fees; that it was to draw 4 per cent, interest, compounded semiannually; but denies the loan was made without the security required by law, in that at the time of and as an inducement to such deposit or loan, directors of the bank personally executed a guaranty in writing, reciting: "That we, the undersigned Directors of First National Bank of Samson, Alabama, hereby guarantee to David McDuffie, as guardian, the payment to him as guardian of any and all amounts of money left by him as such guardian in the First National Bank of Samson, said money bearing interest at the rate of 4% per annum and compounded semiannually. 'This guarantee is in compliance with the law regulating the investment by guardian of the estate of ward and is intended as full protection of the said David McDuffie as guardian, of all sums of money so deposited in said bank.' "

The cross-bill brings in these guarantors, as parties respondent thereto, offers to pay whatever sum may be decreed against cross-complainant, as surety on the guardian's bond, and prays that, upon making such payment, it be subrogated to the security or indemnity provided in such guaranty, and a personal decree be entered against the guarantors in favor of the cross-complainant.

The respondents to the cross-bill, the complainants in the original bill, and the guarantors, interposed separate demurrers to the cross-bill, which were sustained.

These rulings are assigned as error.

Under the averments of the original and cross-bills, the loan to the bank represented the estate of the wards in the hands of the guardian, between whom the relation of trustee and cestuis que trust subsisted.

It seems not to be questioned that the personal guaranty executed by the guarantors constituted "good personal security" for the loan of the wards' fund within the meaning of Code, § 8149, if the transaction be treated as a loan. The guaranty agreement, under the averments of the cross-bill, was supported by a valuable consideration; the same consideration which supports all forms of suretyship.

I am clearly of opinion that under the averments of the cross-bill the surety, upon payment of the amount decreed against principal and surety in favor of the wards, would have a right of subrogation to the security given for the loan, the obligation of the guarantors, by way of indemnity to the sureties. This security, representing the trust estate would, in the event the...