Bank of Mobile v. Mobile & Ohio Railroad

STONE, J. When the town of Starkville issued its bonds, and placed them with the Mobile and Ohio Railroad Company as guaranty and security for the payment of the twenty-five thousand dollars stock it had subscribed in said -railroad corporation, there can be no question that the railroad company retained the control of the stock, in the nature of a lien, to secure'the payment of the bonds. In other words, the town of Starkville could not compel the railroad company to issue the certificates of stock, except as it first made payment of the bonds. And it may be conceded that when the railroad company traded and transferred the bonds to the bank of Mobile, the latter corporation succeeded to the equitable rights and lien of the railroad company ; and, if necessary to the collection of the debt evidenced by the„ bonds, could have successfully asserted its right to the security the railroad company had retained on the stock subscribed by the town of Starkville, not then issued. That is not this case. After the default of the town of Starkville in not paying its interest coupons, the bank brought suit to compel their payment, as it had a clear right to do. Pending that suit, the bank and the town agreed.on the terms of a compromise, reduced it to writing, and executed it with their several corporate seals, which agreement is made part of the bill. A judgment was thereupon entered up in said cause pursuant to said compromise, and carrying its stipulations into execution. The effect of that compromise and the judgment thereon, was to merge the town’s bond liability in the judgment —to destroy the bonds as a cause of action, and to leave the judgment as the only legal evidence of indebtedness from the "town to the bank, growing out of that transaction. Any effort to collect the alleged balance of that bond debt, would have been defeated by a plea of former recovery ; for a judgment 'inter partes, not reversed, and not successfully assailed for fraud, or on some other ground, is conclusive against each party, who is properly before the court; against the defendant, that the amount adjudged is due, and against the plaintiff, that no more is due on account of the contract or liability sued on. Crawford v. Simonson, 7 Por. 110; Trustees v. Keller, 1 Ala. 406; Herndon v. Givens, 16 Ala. 261; Mervine v. Parker, 18 Ala. 241; Wittick v. Traun, 25 Ala. 317; Chamberlain v. Gaillard, 26 Ala. 504; Lyon v. Odom, 31 Ala. 234; Moore v. Appleton, 34 Ala. 147; Bobe v. Stickney, 36 Ala. 482; Durr v. Jackson, 59 Ala. 203. [310] The present case is stronger even than this. An express term of the compromise and judgment thereon was, that the bank of Mobile was to take judgment in conformity with the figures and dates agreed on and''specified, “in full satisfaction of the bonds and coupons thereto attached . . . and now held by the bank of Mobile.” The effect of this agreement and judgment was, to leave the parties as if the bank had never owned or asserted a greater claim against the town of Stark-ville, than that shown by the judgment recovered. —Masser v. Strickland, 17 Amer. Dec. 668; Coit v. Tracy, 20 Amer. Dec. 110. •We need not and do not declare .what would be the bank’s rights against the stock still held by the railroad company, should it become necessary to resort to it as a means of enforcing the' collection of the judgment it recovered against the town of Starkville. That is not the purpose of this bill. On the contrary, the present hill prays that the bank be subrogated to the railroad’s lien on the stock, to secure the payment of the residue of the bonds not embraced in the judgment, when by the solemn agreement of the parties and judgment of the court, no such unpaid balance of indebtedness exists. There being no debt, there can be no ground for subrogation of securities. Only a creditor, or one under liability, can invoke the doctrine of subrogation. — 1 Sto. Eq. Jur. § 635 ; McMullen, v. Neal, 60 Ala. 552, and authorities cited. There is an averment in the bill, not very distinctly made, that one of the considerations moving to the bank in acceding to the compromise, was that it should receive eighty of the two hundred and fifty shares of stock the town of Starkville had subscribed fof. This number of shares properly represents the proportion of the stock, which corresponds with the percentage of the bonds the bank surrendered in the compromise. The averment continues: “ Mr. Caruthers, representing said town as their attorney in said compromise,. fully agreed with said! bank of Mobile, that said town, as a matter of law and justice,, would relinquish to said bank of Mobile stock to be issued under said subscription to the amount cancelled by the compromise ; that the latter proposition was not incorporated in said written agreement, because the latter was intended as the basis of said judgment; that said proposition and agreement for this complainant to have said stock, being simply part of the consideration moving the latter to the compromise, and being so obviously reasonable and just, it was not considered necessary to reduce the same to writing; and complainant avers it was fully understood at the time of making said compromise, by all the parties thereto, that the stock to be issued to said town would be reduced in proportion to the principal of the bonds [311] cancelled by the compromise.” It will be remembered tliat the written agreement of compromise is made part of the bill, and that it contains, the stipulation that the judgment to be rendered pursuant to its terms, was to be taken and received “in full satisfaction of the bonds and coupons” held by the bank of Mobile, and embraced in that suit. Not a word is said in the written agreement of compromise about the issue of any stock to the hank of Mobile, or of its right to claim the same. It requires the aid of liberal intendments, to reach the conclusion that what is stated in the bill amounts to an averment that the obligation was ever' entered into by the town of Starkville to have any of the railroad stock issued to the bank of Mobile. But if there was such outside oral agreement or understanding, can it he enforced ? The written contract says the sum of the judgment to be confessed (specifying the exact amount), was to be in full satisfaction of the bonds and coupons. The oral agreement, if sufficiently averred, shows there was to. be a transfer of stock in addition, amounting to eight thousand dollars. This would vary, and add a very important term to the written contract, which the authorities do not allow.— Clark v. Hart, 57 Ala. 390; Hart v. Clark, 54 Ala. 490; Dupuy v. Gray, Min. 357; Somerville v. Stephenson, 3 Stew. 271; Mead v. Steger, 5 Por. 498; Hair v. La Brouse, 10 Ala. 548; Bryant v. Stephens, 58 Ala. 636; Winston v. Browning, 61 Ala. 80; Couch v. Woodruff, 63 Ala. 466; Broughton v. Mitchell, 64 Ala. 210; Skinner v. Hendrick, 1 Amer. Dec. 43; 1 Chit. Contr. 140. Affirmed.