Denson v. Gray

113 Ala. 608
CourtSupreme Court of Alabama
DecidedNovember 15, 1896
StatusPublished
Cited by7 cases

This text of 113 Ala. 608 (Denson v. Gray) is published on Counsel Stack Legal Research, covering Supreme Court of Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Denson v. Gray, 113 Ala. 608 (Ala. 1896).

Opinion

HAPALSON, J.

The appellants, Denson and Smith, defendants below, sold lands to Whatley and McKnight in trust for the Attalia Land & Improvement Company. Part of the money was paid in cash. Eight notes were executed by George W. Haskell for the remainder of the purchase money, four of them in different amounts, falling due at different dates payable to defendant, Smith ; an equal number, in amounts and dates were given, payable to defendant, Denson; another for $553.23 was payable six month after date, to Francis M. Gray; another for $1,070.26, to Sylvester and F, A, Gray, payable six [612]*612months after date, with interest from date, and still another, — the one here sued on, — to said Sylvester and F. A. Gray, in the same amount as the one last mentioned, payable twelve months after date, with interest from date. Each of said notes, the one to said Francis M. Gray, and the two to Sylvester and F. A. Gray, bearing the same date, as seems, were indorsed by the defendants, Denson and Smith ; and Sylvester and F. A. Gray indorsed their two notes, including the last one named and here sued on, with the indorsements on them, to the plaintiff, Allen Gray. The note in suit was payable at the bank of Attalla, and not having been paid at maturi-was, as is-alleged, protested for non-payment, of which defendants were notified.

The deed of defendants, Denson and Smith, by which they conveyed these lands as above stated, contains the following provision: “And whereas, said Smith and Denson have indorsed the notes herein mentioned, as executed to Francis M. Gray and Sylvester and F. A. Gray, it is understood, that if said Smith and Denson, or either of them, have to pay said notes, then they are subro-gated to all claims and liens the said Grays may have to subject the land herein described to the payment of said note, (notes), and a lien is hereby created on said lands in favor of said Smith and Denson, to secure them from all loss, because of the indorsement of said notes, and the vendor’s lien is hereby reserved to pay all the notes herein mentioned; the privilege of a lien is reserved to W. H. Denson and W. H. Smith for- the payment of their notes over and above all other notes. ”

What Haskell and the Grays had to do with the sale of this land by defendants to Whatley and McKnight in trust, is not disclosed, further than is indicated from the foregoing statements. It is manifest, however, that the Grays held a prior and superior lien on these lands, which had to be discharged before a complete title could vest in the trustees for the Improvement Company; and by their deed to Whatley and McKnight for that company, Denson and Smith, reserving a vendor’s lien to themselves, provided in substance, that if Geo. W. Haskell, the maker of said notes, failed or refused to pay them at maturity, and they, as the indorsers, had to do so, then, in that event, they should be subrogated to all claims and [613]*613liens the said Grays, (Francis M. and Sylvester and F. A. Gray), might have to subject the land to the payment of said notes.

The defendants pleaded the general issue, and another plea numbered 2, in which they set up their release as indorsers of plaintiff.

Denson and Smith as appears by their deed, a part of-said 2d plea, held the legal title to these lands, subject to the prior liens, to which, by the terms of the deed, they were to be subrogated, in the event, as indorsers of said notes, they had to pay the same.

The purchase money for these lands as shown by the deed, amounted to $8,435.61, seventeen hundred and sixty-six and 66-100 dollars having been paid in cash, and notes were given for the residue, amounting to $6,668.95. The plea states, that all the notes mentioned in the deed have been paid except the one in this suit, for $1,070.26. It further avers, “that G. W. Haskell was the maker of and executed all of said notes, and defendants indorsed the three notes made payable to the said Grays, mentioned in said deed,” which includes the note sued on to Sylvester and F. A. Gray, and which was indorsed by them on the 14th September, 1891, to plaintiff before maturity, — on the 3d of December, 1891. It plainly appears that defendants indorsed the notes at the time they were executed. It is also averred, that the plaintiff was present when defendants executed the said deed ‘ ‘and knew and fully understood the terms of said deed and conditions under which defendants indorsed said notes.” The plea, then, makes it appear, that defendants being the owners of the land, sold them to Haskell and associates, retaining a lien on them for the whole unpaid purchase money, first to secure the payment of the four notes to defendants, — two of them to Smith, and two to Denson, for $496.90, each, aggregating $1,987.60. But, inasmuch as the Grays held a prior lien on the lands, in order to secure the discharge of the same, notes for the amounts due them, respectively, were made payable to them and indorsed by Denson and Smith, with the understanding, that if Haskell did not pay these notes, and Denson and Smith had them to pay, they should be subrogated to all claim and liens the Grays had to subject the lands to the payment of the same, and a lien was reserved to Denson [614]*614and Smith on the lands to secure them from all loss because of their indorsement of said notes to the Grays. The indorsement of the note by defendants created an implied contract on their part that the note should be duly honored; and if not, upon due protest, and notice, they would pay the amount to the indorsee, or to any subsequent holder.-McGhee v. Importers & Traders Nat. Bank, 93 Ala. 194; Story on Bills of Exchange, §§ 108, 109, 111, 225, 323; Story on Prom. Notes, §135; 1 Daniel on Neg. Instr., § 669a. An indorser, as to his obligation to pay, is that of a surety to all who stand before him on the paper, and is entitled to all the benefits that relation confers, so that most acts that will discharge the one also discharge the other.-Bates v. The Bank, 2 Ala. 691; Stodder v. Caldwell, 20 Ala. 225; 1 Brandt on Suretyship, §§ 2, 127. When Denson and Smith indorsed these notes, therefore, at the- time they were executed, being irregular indorsers, they became sureties for the maker, that the notes should be paid at maturity, and if not, and they were duly protested and notice of their dishonor was given, they would pay them ; and when Sylvester and F. A. Gray, to whom the one in suit was made payable, indorsed the same to the plaintiff, Allen Gray, whatever interest they had in it, was transferred by their indorsement of the note to plaintiff, and defendants were sureties to him, with the same rights and liabilities as they had, and were under to the said original payees, Sylvester and F. A. Gray.-2 Am. & Eng. Encyc. of Law, 384.

The question is presented, then, whether, on the aver-ments of the plea, the plaintiff has done anything to impair the obligation of the surety indorsers, or to release them from their obligation as such. The plea avers, that F. M. Gray, to whom one of the notes for $553.23 was payable, filed his bill in chancery, on the 19th January, 1892, to enforce the lien on the lands mentioned in the said deed, for the payment of the same, to which suit, Sylvester and F. A. Gray, were made parties; that on the 17th June, 1892, following, the plaintiff, Allen Gray, filed his bill in the chancery court also, to enforce the lien mentioned in said deed, on the lands therein described, for the payment of the note on which this suit is founded, said note having been transferred to him by the indorsement of said Sylvester and F. A,

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Bluebook (online)
113 Ala. 608, Counsel Stack Legal Research, https://law.counselstack.com/opinion/denson-v-gray-ala-1896.