Montgomery v. Yarbrough

• Decision Date: 23 February 1942
• Docket Number: 34848.
• Citation: 6 So.2d 305,192 Miss. 656
• Court: Mississippi Supreme Court
• Parties: MONTGOMERY v. YARBROUGH.

6 So.2d 305

192 Miss. 656

MONTGOMERY v. YARBROUGH.

No. 34848.

Supreme Court of Mississippi

February 23, 1942

Suggestion of Error Overruled March 23, 1942.

See 6 So.2d 925.

In Banc.

J. A Cunningham, Sr. & Jr., of Booneville, A. H. Carmichael of Tuscumbia, Ala., C. A. Gober, of Iuka, and Gettys Lee, of Booneville, for appellant.

Lyle V Corey, of Meridian, for appellee.

McGEHEE Justice.

This is a suit by attachment in chancery against the appellant as a nonresident to subject his lands to the payment of two certain promissory notes on which he is an endorser, and which are held by the appellee as assignee of the Bank of Tuscumbia, Alabama. The notes were executed and delivered in the State of Alabama, and therefore the liability of the appellant is controlled by the substantive law of that state.

One of the notes was executed by J. W. Stockton as principal maker for the sum of $395, due March 8, 1932, and the other was executed by D. M. and D. C. Hand as principal makers, for the sum of $330.30, due October 15, 1932. Each of the notes were secured by chattel mortgage on agricultural products and certain livestock belonging to the said Stockton and Hand respectively, and which collaterals were more than ample in value to take care of the indebtedness due in each instance on the notes to which the same were pledged, when the appellant called at the Bank of Tuscumbia in the Fall of 1932 and stated to the officer in charge that "the collateral was there and worth what they had against it and to collect it, that he collect it now," and when he says that the officer replied: "Don't you worry about the collateral-We will get it out of the collateral."

It was further shown that the appellant had several conversations in regard to these notes with the officer of the bank during the three years immediately following their maturity, but he did not recall just what was said in particular on these occasions except "that the collateral was there and it was ample to pay all against it and that they should go ahead and get it;" that in February, 1935, the Hand note, though long past due, was extended by written agreement of all the parties until November, 1935, and the collateral was still in existence when this note again fell due, no payment having ever been made thereon. Subsequent to November, 1935, all of the livestock conveyed by the chattel mortgage securing the notes had died or had been disposed of by the mortgagor, also the agricultural products grown each year had been disposed of.

The effect of the testimony offered by the appellant as a defense to his alleged liability as endorser on the notes was that his conversations with the officer of the bank amounted to a request that the chattel mortgages be foreclosed, not that suit be instituted on the notes, and that although he knew in November, 1935, and long prior thereto that nothing had been done in response to his several requests in that behalf during the three preceding years, he did not at any time tender payment of the notes to the bank and request an assignment to him of the collateral in order that he might foreclose the same, but assumed that the failure of the bank to foreclose the mortgages following the due dates of the notes, when there was ample collateral to satisfy the same, had the effect of releasing him as an endorser thereon.

It appears that Stockton was a tenant during the years 1932 and 1933, and that during those years the appellant made four separate payments aggregating $86.30 on this note from the proceeds of cotton grown by the tenant, the last of which payments was on November 20, 1933, within six years prior to the date of the filing of this suit.

The question presented for decision on the direct appeal is whether or not the demand made of the holder of the Hand note to proceed and foreclose on the collateral security, its alleged agreement to do so, and subsequent failure in that behalf, relieved the appellant as endorser from any further liability thereon; and the question for decision on the cross-appeal is whether our statute of limitation, § 2292, Code of 1930, is applicable, or whether the above mentioned payments made on the Stockton note by the appellant, with the funds of his tenant Stockton, as principal maker, served to toll the running of and render applicable the six-year statute of limitations of the State of Alabama, §§ 8941, 8944, 8964, Code of 1923, Code Ala. 1940, Tit. 7, §§ 18, 21, 40 the latter section providing that "no act, promise, or acknowledgment is sufficient to remove the bar to a suit created by the provisions of this chapter, or is evidence of a new and continued contract, except a partial payment made upon the contract by the party sought to be charged before the bar is complete, or an unconditional promise in writing, signed by the party to be charged thereby",-the decree of the court below having granted a recovery in favor of the appellee for the full amount of the Hand note, including principal, interest and a reasonable attorney's fee, as provided for therein, together with all cost of the suit, and having denied a recovery in favor of the appellee on the Stockton note on the ground that the partial payments made thereon by the appellant during the years of 1932 and 1933, before the bar of the statute of limitations was complete, did not prevent the statute from beginning to run from the due date of said note.

In the case of Howle v. Edwards, 97 Ala. 649, 11 So. 748, decided on December 2, 1892, it was held that where a defendant was sued as surety on a note, and alleged as a defense that he requested the holder of the note to bring suit thereon; and that at that time, and long afterwards, his principal had personal property from which the note could have been collected, but that the creditor failed to bring suit as requested, and permitted the principal debtor to dispose of his property, a demurrer to the plea should have been overruled, since § 3153 of the Code of Alabama then in force (brought forward and amended as § 9555, Code of 1923, Code Ala.1940, Tit. 9, § 89) which provided that a surety may require a creditor by notice in writing to bring suit against the principal debtor, and, if he does not do so the surety is discharged, does not abrogate the common law rule that such request of the holder of a note, though not in writing, discharges the surety when, by negligence of the creditor to sue, the means of recovery against the principal are lost.

But the Supreme Court of Alabama has...