Elba Bank & Trust Co. v. Blue

A careful analysis and consideration of the testimony and documentary evidence in this case convinces us that the conclusions of the trial court are sound, and that the decree appealed from should not be disturbed.

The issues presented are issues of fact, and we entertain no serious doubt that the aggregated debt, for the security of which the mortgage in question was given, was in fact the debt of the husband alone, with the exception of the item of $300, which is properly held to be a valid joint obligation, for which complainant is bound. We are satisfied, also, that the shifting of the debt, until then carried by the respondent bank, to Mrs. Lee, under the guise of a new and independent security, was in fact a collusive arrangement, designed to fasten the original debt upon complainant, the wife, and at the same time to purge it of its usurious taint in the hands of the bank.

[1] In the face of these clear conclusions of fact, the contention of the appellant bank, founded upon the theory that it was a bona fide purchaser of the security, for value, from Mrs. Lee, and that Mrs. Lee is ostensibly liable to the bank as indorser of the mortgage note, is without force. So, also, as to the theory of the wife’s liability for that part of the debt which covered the purchase price of three shares of the drug store stock, transfer-, red to complainant by her husband, or at his instance, after its purchase by him. If complainant had executed a separate and distinct obligation, with her husband, for the purchase price of the drug store stock, this contention would perhaps be of considerable weight.

[2] One of appellant’s insistences is that complainant is not entitled to the relief sought *525 and decreed, unless she does equity by restoring to the bank a certain mortgage deed and certain shares of drug store stock, which were held by the bank as collateral security for the joint obligation of complainant and her husband—amounting, in balance, to $1,-219.32—and which were surrendered to them when they paid that balance to the bank out of the proceeds of the loan made to them nominally by Mrs. Lee. The principle invoked is sound enough, and is frequently applied in courts of equity. Walker, Supt., v. Baker, 74 South. 368; 1 Coburn v. Coke, 193 Ala. 364, 69 South. 574. But we do not think it can be applied to a transaction of this character. The collateral securities referred to were surrendered by the bank with knowledge of the circumstances attendant upon the giving of the mortgage to Mrs. Lee, and in consideration of the payment of the debt for which they were held, not in consideration of the execution of the Lee mortgage. An equitable right to have the collaterals restored cannot arise out of the wife’s assertion of the invalidity of her obligation to pay or secure the payment of the Lee mortgage.

Moreover, it appears that the mortgage collateral was delivered to the husband, and is not now in the custody or control of the wife, and that the stock collateral has been rendered wholly worthless by the bankruptcy of the drug company and the liquidation of its assets. Under these circumstances it would be vain to order or enforce a restoration as a measure of equitable relief. ' It results that the decree of the circuit court was without error, and must be affirmed.

Affirmed.