Opinion
No. 31381.
November 5, 1934. Suggestion of Error overruled December 3, 1934.
1. GUARANTY.
Where guarantors of notes, called on to pay debt in full, knew there was collateral to be credited but made full payment with knowledge that payee of notes did not intend to apply collateral to notes, guarantors cannot recover proceeds of collateral, since their payment was voluntary.
2. GUARANTY. Payment. Principal and surety. Voluntary payment cannot be recovered back, even by guarantors and sureties.
"Voluntary payment" is payment made, without compulsion or fraud and without mistake of fact, of demand which payor does not owe, and which is not enforceable, instead of invoking remedy or defense afforded by law, and when there has been no agreement that excess will be repaid.
3. GUARANTY.
Threat to sue guarantor is not "compulsion" which will prevent his payment from being "voluntary."
4. EQUITY.
Basic purpose of judicial courts in civil cases is to extend aid to those not able by lawful means to aid themselves, and, therefore, equity makes no exertion to extend relief to those who have neglected to take care of their interests, and thereupon find themselves in predicaments which ordinary care would have avoided.
APPEAL from chancery court of Hinds county.
HON. V.J. STRICKER, Chancellor.
Suit by J.N. McLean and others against J.S. Love, superintendent of banks, and others. From an adverse decree, plaintiffs appeal. Affirmed.
Thomas S. Bratton, of Jackson, for appellants.
Neither the promise to do nor the actual doing of that which the promisor is by law, or subsisting contract bound to do, is sufficient consideration to support a promise made to the person upon whom legal liability rests, either to induce him to perform what he is bound to do, or to make a promise so to do. For this reason if one does or promises to do merely that which the law required of him, it is no consideration for a return promise.
1 Elliott on Contracts, 366 and 369; Keith et al. v. Miles, 39 Miss. 442; Marinovich v. Kilburn, 143 Cal. 638; 13 C.J. 351; Owens Tie Company v. Bank of Woodland, 136 Miss. 114; Empire State Surety Company v. Hanson, 184 Fed. 58; Clark v. Miller, State Revenue Agent, 105 So. 502; Shiner v. Craft, 51 So. 884; Barlow v. Copulla, 173 S.W. 874.
Distinction must be made between cases where the contract is totally executory, or where the parties agree to abandon the original contracts and enter into a new one.
6 R.C.L. 917.
We can see no elements of estoppel in this case.
10 R.C.L. 696, 691; Yazoo Lumber Co. v. Clark, 95 Miss. 244; Scottish American Mortgage Co. v. Buckley, 88 Miss. 641; Meyer v. Meyer, 106 Miss. 638; Crawford v. Ingram, 157 Ala. 314; 6 R.C.L. 918.
A reading of the record clearly shows that the bank instead of co-operating with the guarantors as it insisted it was doing, to try to save them as much money as possible on their liability under the guaranty, started out with the fixed idea and intention to divert the security and apply it on the later dated notes which were not guaranteed by the guarantors and thus defraud the guarantors of their securities. J.B. Hutton, Jr., of Jackson, for appellants.
The appellant, J.N. McLean, brought this action to recover an alleged overpayment, as a guarantor, under the following provision of a contract with the appellee, Merchants Bank Trust Company and under the following letters of tender written by the attorney for the appellant:
"Whereas we, J.N. McLean, J.C. Hood, in consideration of the Merchants Bank Trust Company's accepting the note of the Hiawatha Milling Company maturing February 1, 1930, as aforesaid, do now contract and agree that Burns Brothers under said contract of sale will on or before February 1, 1930, sell and dispose of the five hundred shares of preferred and two hundred fifty shares of common stock in the Hiawatha Milling Company deposited with the Merchants Bank Trust Company, trustee, under this agreement, and that the Merchants Bank Trust Company shall receive, on or before February 1, 1930, from the sale of said stock or from other collateral held by it not less than fifteen thousand dollars ($15,000) in cash; otherwise, each for himself and not one for another agrees to purchase from the Hiawatha Milling Company sufficient units of the undisposed part of said stock the proceeds of which are pledged to said bank — so that the Merchants Bank Trust Company shall receive on its said indebtedness, on or before February 1, 1930, not less than fifteen thousand dollars.
"We further bind and obligate ourselves that Burns Brothers will sell on or before July 1, 1930, a sufficient portion of said stock to fully discharge said indebtedness to the Merchants Bank Trust Company, whether evidenced by the original or a renewal note, or that said bank will collect said sum from other collateral held by it; otherwise, each for himself and not one for the other will purchase sufficient units of said stock as aforesaid . . . to discharge said indebtedness with interest thereon, each of us to acquire separately one-tenth thereof."
"March 22, 1930."Merchants Bank Trust Co. "Jackson, Mississippi.
"Gentlemen:
"Kindly let me know for Mr. J.N. McLean the exact amount inclusive of interest that Mr. McLean should pay on his written guaranty in your favor in the Hiawatha Milling Company matter.
"It is his understanding that he is a guarantor or obligor in your favor under written instrument of guaranty; and that installment payments on such obligation come due at certain times, the first being on March 1st, and the next on April 1st.
"On receiving desired information, I will at once notify Mr. McLean, who is anxious to uphold his credit in the matter, irrespective of the loss which the Hiawatha Milling Company may have sustained.
"Yours sincerely, "H. Chalmers Alexander."
"April 7, 1930.
"J.M. Hartfield, "Merchants Bank Trust Co., "Jackson, Mississippi.
"Dear sir:
"Pursuant to the recent conversations had with you and with Mr. G.W. Green, attorney, I now beg to enclose herein check of Mr. J.N. McLean payable to the Merchants Bank Trust Company for seven thousand nine hundred fifty-three dollars and fifty-three cents, amount stated by you to be now the sum which Mr. McLean is obligated to pay under his executed guaranty held by you, account Hiawatha Milling Company.
"Yours very truly, "H. Chalmers Alexander, attorney."
The action by Mr. McLean was based on the foregoing instruments of writing. The opinion contains a further statement of the facts.
A guarantor is a debtor secondarily liable upon the inability of the principal debtor to pay. His undertaking is cumulative and collateral and is designed to give security. It is an independent and separate contract governed by its own terms, as any other independent contract is.
Bishop v. Currie McGraw, 97 So. 886; Marberger v. Pott, 16 Pa. 9, 55 Am. Dec. 479; McMillan v. Bulls Head Bank, 2 Am. Rep. 323; Saint v. Wheeler Wilson Co., 95 Ala. 362, 36 Am. St. Rep. 210.
Since the guarantor's contract is an independent contract, its construction is according to the natural and reasonable meaning of the language used.
Cahn v. Wright, 80 So. 494; Maryland Casualty Co. v. Corley's Estate, 139 So. 391; Lipscomb v. Postell, 38 Miss. 476; Hessign Ellis Co. v. Parks, 116 So. 435; Stone's Estate v. Central Republic Bank Trust Co., 248 N.W. ___.
In the present case there is no term in the guaranty contract, J. or Q., which provides that the guarantors shall assure the payment of future advances.
The guaranty stipulates the notes that were guaranteed, their dates, and amounts, and fixes a time when these sums were to be paid. The guaranty did not extend to the future loans of the Hiawatha company.
The express contract clearly requires the application of the collateral to the guaranteed notes for the benefit of the guarantors.
McMullen v. Hincle, 39 Miss. 142; Smith v. Clopton, 48 Miss. 66; Chafee v. Taliferro, 58 Miss. 544; Clopton v. Spratt, 52 Miss. 251; Barkwell v. Swann, 69 Miss. 907; Chism v. Thompson, 73 Miss. 410; Solomon v. First National Bank, 72 Miss. 854; Mayhew v. Crickett, 2 Swans. 183, 36 Eng. Rep. Full Reprint 585; Pearl v. Deacon, 1 de Gex Jones 461; Duncan Fox Co. v. The North South Wales Bank et al., 43 L.T. (N.S.) 706; Dixon v. Steele, 85 L.T. 404; Smith v. Wood, 139 L.T. 350; 1 Rowlett, Principal Surety, 266, 267.
A release of the security of a guaranteed note releases the guarantor.
Donally v. Wilson, 5 Leigh 329; Smith v. Day, 23 Vt. 656; Hidder v. Bishop, 5 R.I. 29; Montgomery v. Martin, 21 S.E. 613; Fidelity Casualty Co. of N.Y. v. Van Dyke, 27 S.E. 709; Foerderer v. Moors, 91 Fed. 476; Loos v. McCormick, 95 N.Y.S. 1141; State Bank of Slayton v. Edwards, 177 N.W. 677; Miller v. Lilly, 105 S.E. 826; New Netherlands Bank of N.Y. v. Dernburg, 206 App. Div. 212; Mechanics Metals Nat. Bk. of N.Y. v. Pingree, 232 P. 5; National Discount Corporation v. Hasper, 247 N.W. 725.
A surety who pays the principal's debt is entitled to indemnification against the principal debtor, has a provable claim against the debtor, and this claim will be barred by the statute of limitations, or in case of bankruptcy by the bankrupt's discharge the claim being scheduled. The same is true of guarantors. It follows that appellant McLean was correct in law when he said he understood the dividends were paid to him because he had paid one-tenth of the guaranteed notes under his contract of guaranty.
Wainwright v. Atkins, 61 So. 454; U.S.F. G. Co. v. White, 63 So. 329; Fidelity Deposit Co. of Md. v. Deposit Guaranty Bank Trust Co., 144 So. 70; Scott v. Nichols, 27 Miss. 94; Dumont v. Fry, 14 Fed. 293; Fidelity Casualty Co. v. Van Dyke, 99 Ga. 542, 27 S.E. 709; Kimmel v. Lowe, 28 Minn. 265; Lipscomb v. Grace, 26 Ark. 231, 236; Smith v. Kinney, 6 Neb. 447, 454; Hayer v. Comstock, 115 Iowa, 187, 88 N.W. 351, 353; In re Dillion, 100 Fed. 627, 629; Sec. 2958, Miss. Code 1930.
Money paid to a private individual or corporation under a mistake of fact may be recovered.
Cavendish v. Middleton, 4 Car. 1, Roll 243, 77 Eng. Rep. Reprint 725; Pritt v. Clay, 6 Beav. 503, 49 Eng. Rep. Reprint 920; Gethering v. Keighley, IX Chan. 547; Vernon v. Vawdray, 2 Atk. 119, 26 Eng. Rep. Reprint 474; Mills v. Alderburg Union, 3 Ex. 154, 154 Eng. Rep. Reprint 980.
H. Chalmers Alexander, of Jackson, for appellants.
Only by some later acceptance by Mr. McLean of a condition changing the written status of the parties (Hiawatha Milling Company, the bank, Mr. McLean) could Mr. McLean lose his right to insist that the bank, before demanding any payment from him under the guaranty, must first apply the inanimate and valuable collateral security listed on the back of the note, to payment of the note.
In desperate but unsuccessful attempt to show that Mr. McLean did allow a change in such written status, the bank has sought to show erroneously: First, that Mr. McLean, like the other guarantors, signed the typewritten receipt form which bore the signature already of Mr. Hartfield, president of the bank; and, secondly, failing in this, that Mr. McLean received of Mr. Laird, and failing in this, that Mr. Alexander, attorney, received from Mr. Green, some weeks later by mail this receipt so signed by Mr. Hartfield; and, thirdly, if failing in either of the two foregoing theories then lastly that Mr. McLean through act of bankruptcy court has been adjudicated out of any rights to make prompt demand for repayment of the two thousand dollars to him on ascertainment of his being overcharged.
There was no acceptance by Mr. McLean of the assignment issued by the bank.
There was never any adjudication in court of bankruptcy to estop the guarantors by act de jure.
There is no right in the bank to make election or application of payment of collateral on collecting in the same.
Solomon v. First National Bank of Meridian, 72 Miss. 854.
Flowers, Brown Hester and Green, Green Jackson, all of Jackson, for appellees.
Hood, when Hiawatha failed, adopted a suggestion originated by Hon. W.H. Watkins, whereby it was thought all creditors would be paid in full, and thereupon bought and paid for from the bank and paid to it for a one-tenth interest in those notes whereto his contract for stock purchases was appended, and in consideration of so doing, was relieved of responsibility under said stock contracts by the bank, and having so done, may not herein complain.
Love Mfg. Co. v. Queen City Mfg. Co., 74 Miss. 300; King v. Woolrich, 78 Miss. 182; 14 C.J. 280; Brown v. Reed Co., 31 Idaho, 535; Koeppler v. Crocker Chair Co., 228 N.W. 131; Medical, etc., Co. v. Southern, etc., Co., 29 F.2d 969, 6 C.C.A.; Barden v. Heller Sawdust Co., 240 Mich. 549, 215 N.W. 326; Schulte v. Land Company, 44 L.R.A. (N.S.) 156, 164 Cal. 464, 129 P. 582; Hall v. Henderson, 61 L.R.A. 621; McGregor v. Fitzpatrick, 25 L.R.A. (N.S.) 50, 65 S.E. (Ga.) 859; Tiger v. Rogers Cotton Cleaner Gin Co., 30 L.R.A. (N.S.) 694, 130 S.W. (Ark.) 585; Whaley v. King, 206 S.W. 31; Wolf v. Excelsior, etc., Co., 113 A. 569; First Trust Co. v. I.C.R. Co., 8 C.C.A., 256 Fed. 831; Coleman v. Tepel, 3 C.C.A., 230 Fed. 63; Martin, etc., Co. v. Kelley, etc., Co., 126 A. 697; Texas Pac. Ry. Co. v. Portorff, 78 L.Ed. 515; Marion v. Sneeden, 78 L.Ed. 521.
Hood having made voluntary payments, may not under the finding of the chancellor, wherefor there is ample support in the evidence, recover that thus paid.
21 R.C.L., sec. 135, p. 1098; Seelbinder v. American Surety Co., 115 Miss. 21, 119 So. 357, 359; 13 C.J. 399; 50 C.J. 238, 71 Miss. 426.
The pledge made May 1, 1929, which was recognized by Hood, expressly provided "the securities pledged with this note are also pledged to secure any other obligation of the maker — due or hereafter to become due to the holder, and Hood being only a purchaser of stock could not control the application of payments.
21 R.C.L. 108; Heller v. Levy, 66 Miss. 30, 5 So. 226.
Alleged fraud was neither sufficiently averred nor adequately proven.
West v. Wright, 98 Ind. 339; Ware v. Luneen, 25 Ill. App. 161; Cosgrove v. Fisk, 90 Cal. 77; Dundee v. Connor, 12 A. 713; Willoughby v. Pope, 101 Miss. 808, 58 So. 705; Life Ins. Co. v. Hall, 152 Miss. 413; McCain v. Cawthorn, 153 Miss. 237; Georgia Pac. Ry. v. Brooks, 66 Miss. 583, 593, 6 So. 467; Edwards v. Roberts, 7 Sm. M. 555; Hanson v. Field, 41 Miss. 712; Horn v. Beatty, 85 Miss. 504, 37 So. 833; 9 C.J. 1198, 1207.
Hood, pursuant to his claim of title, interposed in bankruptcy, and was therein given participation in virtue thereof. The executor still holds this amount so received and did not object to the payment of the amount probated against the estate of said Hood, and therefore, in Mississippi there was an election of remedies, which is conclusive.
Quitman County v. Miller, 117 So. 262, 150 Miss. 841; Murphy v. Hutchinson, 93 Miss. 646, 48 So. 187, 21 L.R.A. (N.S.) 786, 17 Ann. Cas. 611; Miller v. Phipps, 137 So. 479, 161 Miss. 564; Wales v. Cooper, 24 Miss. 227, 228; Deson v. Taylor, 53 Miss. 701; Spellman v. McKeen, 96 Miss. 693, 698, 51 So. 914; Baldwin v. Anderson, 103 Miss. 462, 60 So. 578; Anderson v. Telegraph Co., 77 Miss. 851, 854, 27 So. 863.
Admitting, which the pleadings do not show, that the equity of subrogation might be claimed, yet it never arises until the original creditor is paid in full.
Brandon v. Barnett, 3 Eng. Rul. Cas. 606; Sparhawk v. Drexel, 22 Fed. 862; Wood v. Boylston National Bank, 129 Mass. 239; Garrison v. Union Trust Co., 111 Am. St. Rep. 411; Raynes v. Dumont, 130 U.S. 390; 32 L.Ed. 944; Bank of Metropolis v. Bank, 1 How. 239, 11 L.Ed. 115; Central National Bank v. Insurance Co., 104 U.S. 54, 71; 26 L.Ed. 693, 700; Hanover National Bank v. Suddoth, 215 U.S. 110, 54 L.Ed. 115; Smith v. Dennison, Receiver, 101 Ill. 532; Buchanan v. Bank, 78 Ill. 500; Magee on Banks Banking, 580; Jones on Liens, 167; Gillett v. Bank, 160 N.Y. 356, 21 App. Div. 394.
Full payment to the bank of the entire one hundred thousand dollars, with attorneys' fees was a condition precedent under settled Mississippi decisions to the accrual of any right in the subrogee to participate in the pledged collateral.
Magee v. Leggett, 48 Miss. 139; Lee v. Griffin, 31 Miss. 632; Loughridge v. Bowland, 52 Miss. 646; Bank of England v. Tarlton, 23 Miss. 173; Cheeseborough v. Millard, 1 John. Ch. R. 412; Union Bank of Maryland v. Edward, 1 Gill J. 363; 25 R.C.L. 1314; 9 A.L.R. 1596, 32 A.L.R. 568, 46 A.L.R. 857, 53 A.L.R. 295; Knaffl v. Knoxville Banking Trust Co., 133 Tenn. 655, 182 S.W. 232, Ann. Cas. 1917C, 1181; American Surety Co. of New York v. De Carle, 25 F.2d 18; Jenkins v. National Surety Co., 72 L.Ed. 874, 277 U.S. 258; Maryland Casualty Co. v. Fouts, 11 F.2d 71; United States v. National Surety Co., 65 L.Ed. 143, 254 U.S. 73; Receivers v. Wortendyke, 27 N.J. Eq. 661; Erwin v. Brooks, 126 S.E. 777; Sheldon on Subrogation (2 Ed.), p. 5, sec. 4, secs. 70 and 115; O'Brien v. Perkins, 276 S.W. 315; Merchants Bank v. Bushnell, 218 S.W. 710; Spire v. Spire, 104 Kan. 501, 180 P. 209; Bartholomew v. First Nat. Bank of Salina, 47 P. 521; Sheldon on Subrogation (2 Ed.), p. 170, sec. 117; Frazer v. Fleming, 157 N.W. 269; Gawthrop Co. v. Fibre Specialty Co., 101 A. 761; 27 Am. Eng. Ency. of Law (2 Ed.), subsection a, 1 and 2; Magee v. Leggett, 48 Miss. 139; Lee v. Griffin, 31 Miss. 632; Pool v. Ellis, 64 Miss. 555, 1 So. 725; 37 Cyc. 379.
Hood was precluded from recovery by express contract.
Trust Co. v. Peters, 72 Miss. 1058, 1070, 18 So. 497; Berry v. Bullock, 81 Miss. 463, 465, 33 So. 410; Good v. Golden, 73 Miss. 91, 19 So. 100; 55 Am. St. Rep. 486; Howell v. Bush, 54 Miss. 445; McCowan v. Brooks, 113 Ga. 537; Aetna Ins. Co. v. Middleport, 124 U.S. 547, 549, 8 Sup. Ct. 625; 31 L.Ed. 537; Meeker v. Larson, 90 N.W. 958, 57 L.R.A. 901; Baker v. American Surety Co., 181 Iowa, 638; Makell v. Hotchkiss, 190 Ill. 311, 83 Am. St. 131; 37 Cyc. 370; Fort Dodge B. L. Ass'n v. Scott, 86 Ia. 431; Vaughan v. Jeffreys, 119 N.C. 138, 26 S.E. 94; Musgrave v. Dickson, 172 Pa. St. 629, 51 Am. St. 765; Acer v. Hotchkiss, 97 N.Y. 395.
McLean by accepting the assignment became bound to a claim in accordance with its terms.
Washington v. Soria, 73 Miss. 675, 19 So. 485; Marqueze v. Caldwell, 48 Miss. 23.
McLean does not come into this court with clean hands, when he brings forward a contract with an insolvent corporation to take off of his hands stock which he was compelled to purchase, and that which opposite counsel never fully appreciate is that McLean was bound to purchase the stock from Hiawatha, and that if he so did the money therefrom arising was by Hiawatha assigned to the bank.
Wilkinson v. Light, Heat Water Co., 78 Miss. 389, 28 So. 877.
Argued orally by H.C. Alexander, J.B. Hutton, Jr., and Thos. S. Bratton, for appellants, and by Garner W. Green, for appellees.
On December 4, 1929, the Hiawatha Milling Company was indebted to the Merchants' Bank in the sum of fifty thousand dollars, for which a note was executed secured by collateral among which was eighty-eight thousand dollars of first mortgage bonds of a certain cotton oil company. On January 3, 1930, the milling company was indebted to the bank in an additional fifty thousand dollars, evidenced by a note and secured by the same collateral. In addition to the collateral mentioned, there were two separate contracts of guaranty by which appellants and eight others of the stockholders of the milling company bound themselves to pay the bank any balance of said notes after application thereto of the collateral above mentioned.
On January 31, 1930, the milling company borrowed from the bank fifteen thousand dollars, and on February 12, 1930, a further sum of ten thousand dollars. Both these loans were evidenced by notes and secured also by the said cotton oil company bonds, but were not guaranteed by the ten stockholders as were the two fifty thousand dollars notes. In March, 1930, the milling company was thrown into bankruptcy, and thereupon the bank demanded that the ten guarantors come forward and pay the entire of the balance due on the two fifty thousand dollar notes, which balance, including interest to April 5, 1930, amounted to seventy-nine thousand five hundred forty dollars and forty cents. None of the collateral above mentioned had been applied by the bank to the reduction of the stated balance, and the conduct of the bank at the time was such as to put the parties on notice or at least on guard that the bank expected to credit the collateral first and exclusively to the last two notes of fifteen thousand dollars and ten thousand dollars. In fact, by a letter by the bank to the guarantors dated March 28, 1930, and by a document tendered to the guarantors for their signatures at the time of their respective payments, the aforesaid purpose of the bank was openly disclosed, and thus it is immaterial so far as this case is concerned whether the document last mentioned was signed by the guarantors or not. The guarantors, after this notice, paid, nevertheless, each his one-tenth part of the demanded full balance of seventy-nine thousand five hundred forty dollars and forty cents, including the two guarantors who are appellants here; and although it may be said that one of the appellants paid under what may be fairly said to be a protest on his part, he took no receipt reciting the acceptance of payment under protest; so that the fact that payment was unwillingly or protestingly made fades out of the picture so far as any legal effect is concerned (48 C.J., pp. 751, 752), even if a protest acknowledged by receipt could save the case, which here it probably would not (21 R.C.L. 149, and citations under note 20). Later the collateral, the cotton oil company bonds, were sold and brought twenty thousand dollars, and appellants now demand that there be returned to them each one-tenth of the last-mentioned amount; in other words, that the twenty thousand dollars brought by the collateral should be credited to the seventy-nine thousand five hundred forty dollars and forty cents, making that balance fifty-nine thousand five hundred forty dollars and forty cents, and that their respective payments in April, 1930, should have been five thousand nine hundred fifty-four dollars and four cents instead of seven thousand nine hundred fifty-four dollars and four cents, the sum then paid by each of appellants.
Accepting as correct the theory of appellants that in any event they were not liable for or due to pay more than five thousand nine hundred fifty-four dollars and four cents each instead of seven thousand nine hundred fifty-four dollars and four cents, we are unable to see how appellants are to escape the defense made by the bank, among other defenses, that the payment was voluntary and is, therefore, not now recoverable. It is the general rule in this state (Union Land Co. v. Pearl River County, 141 Miss. 131, 106 So. 277; Menge Sons v. Gulf S.I. Railroad Co., 97 Miss. 810, 53 So. 424; Graham McNeil Co. v. Scarborough, 135 Miss. 59, 99 So. 502, 503), as elsewhere, that a voluntary payment cannot be recovered back; and a voluntary payment within the meaning of the rule is a payment made, without compulsion or fraud, and without any mistake of fact, of a demand which the payor does not owe, and which is not enforceable against him, instead of invoking the remedy or defense which the law affords against such demand (48 C.J., pp. 736, 756; 21 R.C.L., pp. 141-144), and when there has been no agreement between the parties at the time of payment, that any excess will be repaid (48 C.J., p. 741). And the stated rule applies to payments made by guarantors and sureties. 50 C.J., p. 238; 12 R.C.L., p. 1099; Seelbinder v. American Surety Co., 155 Miss. 21, 119 So. 357; Pass v. Granada County, 71 Miss. 426, 14 So. 447. Here the parties knew all or a sufficiency of the material facts. There was no agreement to repay; on the contrary, the parties knew or had knowledge of sufficient facts to put them on notice that the bank did not intend to repay; and the only compulsion suggested was a threat to sue, which is not compulsion, as was held in Pass v. Grenada County, supra.
Appellants seek to avoid the rule by the argument that they are not seeking to recover back a voluntary payment, but are demanding an accounting for, and a restitution of, the proceeds of the collateral improperly diverted by the bank subsequently to the payment by appellants. But we have already called attention to the fact that appellants knew, or should have known, at the time of payment that the bank intended to divert the collateral to the two subsequent notes held by it, instead of applying the collateral first to the two notes which appellants had guaranteed, and, if the course of the bank in so doing was illegal or unjust, the duty of appellants was to effectively resist at the threshold and before making payment. 21 R.C.L., p. 143. If the bank had at the time said nothing whatever about what it expected to do with the collateral, a different case might, or might not, be presented.
There is no hardship in the rule in regard to voluntary payments; on the contrary, its foundation rests among the fundamentals of judicial procedure. This court in Graham McNeil Co. v. Scarborough, supra, says of it that, it "precludes the court being occupied in undoing the arrangements of parties, which they have voluntarily made, and into which they have not been drawn by fraud or accident, or by any excusable ignorance of their legal rights and liabilities." And we may add that the basic purpose of judicial courts, so far as civil cases are concerned, is to extend aid to those who have not been able by lawful means to aid themselves. Thus it is axiomatic in equity jurisprudence that a court of equity makes no exertion to extend relief to those who, being able to take care of their interests, have neglected to do so, and thereupon find themselves in predicaments which ordinary care would have avoided. And for the stronger reason, where an unjust demand has been made upon a party, a demand for a debt which he does not owe, or for more than he owes, he must, when he knows or ought to know the facts, avail of the means which the law affords him to resist the demand, and if he do not, and make the payment demanded, he has not taken due care. And to state the case here before us, when a party has been called on to pay a debt in full when he knows that there are credits, or collateral to be credited, which would reduce the amount of the debt or payment to be made, and without having the credits or collateral first applied, and doing nothing to resist the demand by invoking his lawful remedy or defense, he makes the full payment, knowing or having notice that the other party does not intend to repay, he has placed himself voluntarily in a predicament from which he has no right to call upon a court to disentangle him, since, by standing upon his rights, he could have relieved himself. It is apparent from his written opinion that this was the view taken by the learned chancellor, and the decree will be affirmed.
Affirmed.