Court Opinion

ID: 3231154
Source: CourtListenerOpinion
Date Created: 2016-07-05 16:06:38.678384+00
Date Added: 2024-06-11T09:22:36.049077
License: Public Domain

It was averred in substance in appellants' bill that their sons, M. L. and J. C. Brown, became indebted to Scheuer, Wise Co. and others in the sum of $6,000; that at the same time complainants executed a mortgage on real estate to secure $2,000 of the indebtedness due from their sons to Scheuer, Wise Co., so for convenience to refer to the creditors as a whole; and that at the time it was agreed between complainants, their sons, and Scheuer, Wise  Co. that their sons would make what payments they could from time to time without waiting for the due date of their $6,000 indebtedness, and that such payments were to be first applied in discharge of the mortgage indebtedness of complainants. Complainants averred that payments by their sons had been made, sufficient, if applied according to agreement, to discharge the mortgage executed by them, of which they prayed to be relieved, or, if mistaken as to the amount of such payments, then that said mortgage be credited with the amount so paid.
Nothing of the alleged agreement as to the application of payments to be made appeared in the mortgage, and the demurrer to the bill was sustained upon the theory, evidently, that complainants should not be permitted to prove an agreement which had been merged into the mortgage contract.
Numberless cases might be cited to the general effect that, while a contract may be explained consistently with its terms, parol evidence of a term not shown by the writing is not admissible in actions ex contractu, where no fraud is charged, because its effect would be to vary the terms of the written instrument by superadding another term or condition not expressed by the parties. Bush v. Bradford, 15 Ala. 317; Tabor v. Peters, 74 Ala. 90, 49 Am. Rep. 804; Griel v. Lomax, *Page 48 86 Ala. 137, 5 So. 325. In the recent case of Bissell Motor Co. v. Johnson (Ala. Sup.) 97 So. 49,1 we referred to the work of Prof. Williston on Contracts, vol. 2, §§ 631-638, as authority for the proposition that, when the court sees that a separate collateral agreement was probably intended by the parties, evidence of it is admitted, but that such collateral agreement must relate to a subject distinct from that to which the written contract applies. The mortgage exhibited with the bill evidenced a conveyance of realty with defeasance upon the payment of the debt therein described. The alleged agreement as to the application or appropriation of payments to be made was collateral to the mortgage contract but related to a subject distinct therefrom. To the mortgage contract complainants and defendants Scheuer, Wise  Co. were the parties; to the contract sought to be enforced in this cause, the contract touching the appropriation of payments to be made, the sons of complainants were additional parties. We incline to the opinion that the rule of evidence referred to would not stand in the way of proof of the agreement alleged, and that equity will enforce it when proved.
Another view: The mortgage from complainants to Scheuer, Wise Co. cannot suffice to exclude evidence of a collateral agreement between complainants and their sons. The general rule is that the debtor may direct the application of his voluntary payment, and that, in the absence of direction by the debtor, the creditor may make the application. Petty v. Dill, 53 Ala. 645. We see no reason why, in the absence of an agreement to a different effect, this rule should not operate as between debtor and creditor in the case of a contract such as is here averred. It must be conceded, too, that, if no application is made by either party, the law will apply a payment in the manner most beneficial to the creditor. McCurdy v. Middleton,82 Ala. 131, 2 So. 721. The mere fact, therefore, that there is a surety for one of the debts, or — adapting the statement to the peculiar facts of this case — for a part of the debt, will not preclude the creditor from applying a payment to the debt for which he has no security. Harding v. Tifft, 75 N.Y. 464. But on the facts averred there is, as between complainants and their sons, for whom they are sureties to the extent of $2,000, a clear equity that payments first made upon the debt due from the sons to defendants shall be applied in discharge and satisfaction of the mortgage. Defendants Scheuer, Wise 
Co. had knowledge of this equity in favor of the sureties — an equity based on the contract relations between complainants and their sons and affecting the considerations on which complainants bound themselves to pay a part of the debt due from their sons to Scheuer, Wise  Co. — and in our opinion if the averments of the bill be sustained by the proof, Scheuer, Wise  Co. should not be permitted, even with the consent of their principal debtors, to misapply payments made by them. Harding v. Tifft, supra.
Reversed and remanded.
ANDERSON, C. J., and GARDNER and MILLER, JJ., concur.
1 Ante, p. 38.