Patrick v. Kilgore

• Decision Date: 11 January 1940
• Docket Number: 6 Div. 589.
• Parties: PATRICK v. KILGORE ET AL.
• Court: Alabama Supreme Court

193 So. 112

238 Ala. 604

PATRICK v. KILGORE ET AL.

6 Div. 589.

Supreme Court of Alabama

January 11, 1940

Appeal from Circuit Court, Walker County; Ernest Lacy, Judge.

Suit in equity by Mrs. D. A. Patrick against John N. Kilgore, J. M Patrick and James B. Little, as superintendent of banks liquidating the affairs of the Central Bank & Trust Company to cancel a mortgage on real estate, in which there was a cross-bill by the superintendent of banks to foreclose said mortgage. From a decree denying relief under the original bill and granting relief under the cross-bill, complainant appeals.

Affirmed.

Norman Gunn, of Jasper, for appellant.

Curtis & Maddox, of Jasper, for appellees.

BOULDIN Justice.

The bill was filed by appellant, a married woman, to cancel a mortgage upon her real estate upon the ground that it was given to secure her husband's debt.

The mortgage was executed in 1926 to John N. Kilgore, to secure a recited indebtedness of $600.00 evidenced by negotiable promissory note of even date, which, admittedly, was assigned before maturity to Central Bank & Trust Company, which, several years later, failed and its assets passed to the Superintendent of Banks under the State Banking Laws. The litigation is between the mortgagor and the Superintendent of Banks as liquidating agent.

The trial court held the Bank a holder in due course free from defenses as between the original parties.

One point here insisted upon is that the Bank acquired the note and mortgage merely as collateral security for the debt of Kilgore, the payee.

Passing over the agreed fact that the Liability Ledger Sheet in evidence "shows a discount of the mortgage in question to the Bank on September 8th, 1926, which amount was placed to the credit of Kilgore and used by him," we observe that under the Uniform Negotiable Instruments Law in force in Alabama, Code 1923, § 9029 et seq., a negotiation of commercial paper by indorsement before maturity as collateral security, for the debt of the indorser, constitutes the indorsee a holder for value, whether there be any extension of the time of payment or not. Vogler et al. v. Manson, 200 Ala. 351, 76 So. 117; Fortson et al. v. Bishop, 204 Ala. 524, 86 So. 399; Walden v. Warren, 215 Ala. 94, 109 So. 749; Reliance Equipment Co. v. Sherman, 216 Ala. 214, 112 So. 822.

This is in harmony with the construction of this statute generally. Note, 80 A.L.R. 676 et seq.

Complainant's evidence tended to show the consideration of the mortgage was an indebtedness in like amount then owing by the husband to the Bank, that complainant was not indebted to Kilgore, and received nothing from him at the...