Coats v. Mutual Alliance Trust Co.

McCLELLAN, J. Action by the assignee (appellee), by indorsement, of a promissory note, which was payable at a designated banking house in Demopolis, Ala. Under the letter of Code, § 2489, the holder of the “legal title” to such an obligation is the proper party to institute the action. — Hanna v. Ingram, 93 Ala. 482, 9 South. 621; Berney v. Steiner, 108 Ala. 111, 19 South. 806, 54 Am. St. Rep. 144; Bibb v. Hall & Farley, 101 Ala. 79, 95, 14 South. 98. In emphasis of the distinction taken by the statute cited, certain other characters of promises to pay must be sued on by the beneficial owner, the party “really interested.” “The legal title” to such an obligation as is here declared on is a distinct conceit from the right to the proceeds thereof. One may be the holder of the “legal title,” though the proceeds belong to another.- Berney v. Steiner, supra; Hanna v. Ingram, supra; Hirschfelder v. Mitchell, 54 Ala. 419, 423, 424; Carmelich v. Mims, 88 Ala. 335, 6 South. 913; Bibb v. Hall & Farley, supra. Independent of all other considerations, the pleas (E to L, inclusive) possessed this common fault, pointed out by the demurrers, viz., that it was not alleged therein that the principal debt, to secure which the note in suit was assigned, by indorsement, as a collateral security, was paid in full before this action was commenced. Whatever may be the status, under our statute, of right of an assignee to institute an action on a note held as collateral security after the debt it is assigned to secure has been fully paid — a question not at all necessary to be here considered — there can be no doubt that such payment of the principal debt-, pending the action to enforce payment of the collateral note, will not defeat the action, or divest the assignee plaintiff of the right to continue to prosecute the action, to enforce payment of the collateral. — Logan v. Cassell, 88 [568] Pa. 288, 32 Am. Rep. 453; Houser v. Houser, 43 Ga. 415; 2 Rnd. on Com. Paper, § 796; 2 Parsons on Notes & Bills, 437; First Nat. Bank v. Mann, 94 Tenn. 17, 27 S. W. 1015, 27 L. R. A. 565, 568. In such case, equities available to the payor defendant, had the action been by the payee, may be pleaded by the payor defendant. First Nat. Bank v. Mann, supra; Logan v. Cassell, supra; Houser v. Houser, supra. The amount of the recovery is not to be affected by the amount due the assignee by the assignor upon his loan. The recovery by the assignee plaintiff, in such case, is for the use and benefit of the payee in the collateral note. Author, supra. The indicated ground of the demurrers was well taken and the judgment is accordingly affirmed. Affirmed. All the Justices concur. Dowdell, C. J., not sitting.