B. C. Bynum Mercantile Co. v. First National Bank

SOMERVILLE, J. It is well settled by the authorities that a mortgage or pledge given as security for the pre-existing debt of the mortgagor or pledgor is valid and binding upon that consideration alone, and requires no new or additional consideration to support it.—Tur [284] ner v. McFee, 61 Ala. 468; Spencer v. Sloan, 108 Ind. 183, 9 N. E. 150, 58 Am. Rep. 35; National Bank v. Dakin, 54 Kan. 656, 39 Pac. 180, 45 Am. St. Rep. 299; Jewett v. Warren, 12 Mass. 300, 7 Am. Dec. 74; Jones on Pledges, § 107; 31 Cyc. 795, 796, notes 20 and 21. It is equally well settled that such a mortgage or pledge by a stranger to the original obligation given upon that consideration alone is not binding for want •of a valid consideration.—Johnson v. Washburn, 98 Ala. 258, 13 South. 48; Savage v. First Nat’l Bank, 112 Ala. 508, 20 South. 398; Holland v. Barnes, 53 Ala. 83, 25 Am. Rep. 595; Jackson v. Jackson, 7 Ala. 794. The demurrers in this case present for decision the question whether the binding obligation of a surety or guarantor to contingently pay the debt of his principal will alone support his subsequent transfer of collateral securities for the payment of the original debt; no new or additional consideration intervening. We are not referred by counsel on either side to any authority in point, nor have we discovered any. While for some purposes of the law a contingent liability is distinguishable from a direct and unconditional obligation to pay, we are unable to discover any valid reason why, for the purpose in hand, there should be any material distinction. Upon due consideration, we hold that any subsisting liability to pay his principal’s original debt, whether absolutely or only upon the condition that his principal fails to pay, is a sufficient consideration for a subsequent pledge of collaterals by a surety or guarantor as security for the original debt. As to the enforcement of Bynum’s transferred landlord’s lien against Handley, complainant is not required to resort t'o an attachment at law.'—Code, § 4829. The bill of complaint contains equity, and is not subject to the objections urged. The decree of the [285] chancellor overruling the demurrer will therefore be affirmed. Affirmed. Anderson, C. J., and Mayfield and Gardner, JJ., concur.