Court Opinion

ID: 6503539
Source: CourtListenerOpinion
Date Created: 2022-07-19 18:16:00.95832+00
Date Added: 2024-06-11T15:54:40.457969
License: Public Domain

DARGAN, J.
This cause has been tried before this court, and the rules applied to it then, is the law of it now. It was decided in 11 Ala. Rep. 388, that this note, although given as an indemnity against the note held by the company, could be sued, before the securities had paid the note' on which they were bound.
It was further held, that the handing over of the note sued on, to the company, for the purpose of collection, and when collected, to be applied to the note held by the company, was an admission by the plaintiff, of his indebtedness on said note, and that the statute of limitations of six years, would commence running from the time such admission was made.
The rule laid down in this case then, must govern it now, and under the decision before referred to, the original debt to the company is now barred, notwithstanding this suit. The handing over of this note, on the day the suit was brought, was an admission of the indebtedness at the time; suit could have then been commenced on such admission, or promise, but the plea avers, that since then six years have elapsed, and that the statute bar is perfected; and the only question is, if the note sued on was handed over as collateral security merely, can it be recovered after the original debt is barred by the statute ? If the suit had been brought by Russell on his own account, as he had the right to do, could he now recover ? He has paid nothing, and the debt on which he is security, is now barred by the statute; can he now revive the debt so as to bind the principal ? This question is settled in this court, in the case of Lowther v. Chappell, 8 Ala. Rep. 356. If he could not revive the original debt by a new promise, and is now protected by the statute, which he cannot waive, as to the defendants, he could not recover on this collateral security. If, then, the suit had been brought by Russell on his own account, the bar to the debt, on which he is security, would defeat his recovery in this suit.
Does the plaintiff stand in a better condition, having handed it over to the company, merely as collateral security ? The company holds the note, in the same plight and condition that Russell held it, and cannot recover, if Russell could *152not. See Bank of Mobile v. Hall, et al. 6 Ala. Rep. The court therefore did not err, in sustaining the demurrer to the fourth replication.
I at first was inclined to think, that the company held it in a different, or a better right than Russell did, although Russell handed it over as collateral security merely; but on reflection, we are satisfied, that their rights are equal, and no more, to the rights of Russell. They gave up nothing for it; they did not even promise to indulge Russell, in consideration of the transfer to them.
But the fifth replication avers, that the note was handed over to the company, in payment and discharge of the note held by the company, and the demurrer to this replication was sustained. This was clearly erroneous. The note sued on was given as a protection to Russell; he had a right to use it for that purpose, and if he handed it over to the Company in extinguishment of the liability he had incurred, as the security of La Roque, it then answered the purpose for which it was intended, and he had the right so to use it. For this error, the judgment must be reversed, unless it appear, that the error worked no prejudice to the plaintiff.
The evidence is not set out on the record, and we do not know what it was, nor what proof the plaintiff could, or would have introduced, if the defendant had been compelled to take issue on this replication. We cannot therefore say that he has suffered no injury by the error; and with the view of ending the litigation in this cause, we will lay down three rules, by which this suit should be tried.
1. If the note sued on, was handed over to the company, or its agent, as collateral security merely, for the debt on which Russell was liable, the note cannot be recovered, if the original debt is barred by the statute.
2. But if the note was handed over, in extinguishment or payment of the debt on which Russell was security, then the plaintiff ought to recover.
3. The original debt is barred by the statute of six years, from the time this note was handed over, unless there was an express agreement between Russell and the company, that he should not be sued, during the pendency of this suit.
If the issue shall be finally found for the defendant on the *153plea puis darrein continuance, the plaintiff will recover cost up to the time of filing that plea, and the defendant will recover his cost subsequently accruing.
Let the judgment be reversed, and the cause remanded.