Corinth Bank & Trust Co. v. Pride

The proposition urged in the application for rehearing is this: That the indorsement of the rent note by Mrs. Pride and its delivery by her to her husband, L. T. Pride, and its subsequent deposit with the appellant by L. T. Pride as collateral security for his loan from appellant, the appellant having no knowledge or notice that the note was the property of L. T. Pride's wife or that the payee, Mary M. Pride, was the wife of the payor, L. T. Pride, requires the application to the appellant's advantage and protection, of the doctrine of First National Bank v. Nelson and Brooks v. Griel Bros. Co., noted in the original opinion. The element of the stated proposition that would accord particular effect to the absence of knowledge or notice on the part of the appellant that the payee in the rent note was the wife of the borrower, L. T. Pride, is referable to principles of law whereby protection is extended a bona fide purchaser for value and without notice. Independent of that reference, the absence of knowledge or notice is ineffectual to avert the application of the statute. Bley v. Lewis, 188 Ala. 535, 542, 66 So. 454, treating charge *Page 685 A. Code, § 4497, provides: "* * * But the wife shall not, directly or indirectly, become surety for the husband." It has been repeatedly ruled that the statute operates to render absolutely void all efforts, direct or indirect, to subject or appropriate the wife's property to the discharge of the debt of her husband through contracts or processes that constitute a suretyship, the single exception recognized being that illustrated in Scott v. Taul, 115 Ala. 529, 22 So. 447, that conclusion being "based," as noted in Evans v. Faircloth Co.,165 Ala. 176, 179, 51 So. 785, 21 Ann. Cas. 1164, "upon the principles of the commercial law with regard to negotiable instruments." Otherwise the effect of the statute (Code, § 4497) cannot be averted or avoided through the principles protective of the rights of bona fide purchasers for value and without notice. Furthermore, it has become thoroughly established that not even an estoppel arises to restrain the wife, who has become the surety for the debt of the husband, from invoking the courts to apply the statute (section 4497) and avoid the obligation in so far as she and her property are concerned. Richardson v. Stephens, 122 Ala. 301, 25 So. 39; Threefoot v. Hillman, 130 Ala. 244, 30 So. 513, 89 Am. St. Rep. 39; Price v. Cooper, 123 Ala. 392, 397, 26 So. 238, expressly reaffirming Richardson v. Stephens, supra; Evans v. Faircloth, supra; 8 Michie, Ala. Dig. p. 521 et seq. These decisions, and others in their line, rest upon the premise that, where the statute (section 4497) applies, the transaction is violative of public policy, is void, is incapable of ratification, and will not afford the basis for an estoppel. The pledge or deposit of the wife's property to secure the payment of the debt of the husband is as much within the influence and effect of the statute (section 4497) as is the mortgage of her property. McNiel v. Davis, 105 Ala. 657,17 So. 101. Transactions within its purview are annulled by force of the statute. Richardson v. Stephens, 122 Ala. 306,307, 25 So. 39. The statute is applicable and effective notwithstanding the security her agreement or property affords is given to indemnify another to become cosurety with her husband, notwithstanding she is not a party to the original contract. McNiel v. Davis, 105 Ala. 657, 17 So. 101. There Davis and son sued Pauline McNiel and her husband in statutory ejectment. The defense was that the property sought to be recovered was the property of Mrs. McNiel, and that the mortgage, on which plaintiffs, as transferees thereof, relied, was made to secure the debt of the husband. The facts were that Brantley procured a loan of money from the plaintiffs; that McNiel Co., and one Purcell were the sureties on Brantley's note to plaintiffs; that Pauline McNiel's husband was a member of the firm of McNiel Co.; that "to induce Purcell to sign the note as surety, Pauline McNiel and her husband executed the mortgage to him [Purcell] to indemnify [Purcell] against all loss or damage by reason of his [Purcell's] said suretyship on the note to plaintiffs." On those facts the court pronounced as follows:

"A pledge or mortgage by the wife of her property to one who is surety for her husband or cosurety with him on a debt for which he may be held liable as a principal is as much within the influence of the statute (section 2349, supra) as if she had signed the obligation herself, or directly pledged the property for the security of the debt for which her husband is liable. We are of opinion that the mortgage to Purcell leads to this result, and contravenes the provision of the statute which declares that 'the wife shall not, directly or indirectly, become the surety for the husband.' "

The soundness of this decision has not been doubted by this court. It was delivered in 1894, and, impressed with that interpretation and application, the statute (now Code, § 4497) has been twice readopted without change in its terms. In response to the insistence of solicitors for appellant, the Nelson Case and the Brooks Case, noted in the original opinion, have been re-examined. Those decisions are without influence or application to the circumstances presented in this cause. There the wife's property was sold by the husband as the agent of the wife. Here the husband deposited the wife's note (not negotiable paper) as security for his debt to the appellant. If the wife herself had made the deposit of this note with this appellant as security for the loan to her husband, the statute (Code, § 4497) would have applied; she would not have been estopped to assert and avail of the statute's invalidating effect. Authorities supra.

Under the statute and the decisions of this court, the transaction that undertook to give security for this husband's debt through the deposit of the wife's property was void as to her and her property.

Rehearing denied.

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