[Thompson, et al. v. Hudgins, Exec., &c.]

gins, that, after his death, they will pay to his personal representatives the full amount of such surplus fund as shall have been earned, at the time of his death, by said two hundred shares of said capital stock; and such surplus fund so earned, as aforesaid, shall be paid to said personal representative out of the five semi-annual dividends that shall, after the death of said Tarlton L. Hudgins, be first paid to said Thomas C. Thompson and Julia N. Thompson, on said two hundred shares of said capital stock; one-fifth of such surplus fund, so earned, as aforesaid, to be paid out of each of such dividends; and each of such payments shall be made by First National Bank of Birmingham, directly, to said personal representative; and the receipt of said personal representative, to said bank, for such payments, shall discharge and exonerate said bank, for the amount of such dividends, so paid to said personal representative." On the 24th day of December, 1888, the said Thos .C. Thompson and wife executed to said Lucy P. Hudgins, as executrix of said T. L. Hudgins-the latter having died in June preceding-a mortgage on lands, to secure the promissory notes therein described, as will be presently shown, reciting the said deed of gift of the shares of stock, aforesaid, and the said subsequent agreement of June 26th, 1886; and reciting, further, as follows: "and, whereas, the said T. L. Hudgins departed this life on or about the 28th day of June, 1888, and at the time of his death the said 'surplus fund' that had been theretofore set apart from time to time out of the net profits and earnings of said bank amounted to the sum of one hundred and twenty-five thousand dollars; and, whereas, of said 'surplus fund' of said bank, so earned and set apart as aforesaid, the said two hundred shares of said capital stock, at the time of the death of said T. L. Hudgins, had earned the sum of ten thousand dollars; and, whereas, on the 30th day of June, 1888, and after the death of said T. L. Hudgins, the said bank declared a dividend of six per cent on its capital stock, payable to its stockholders on and after the first day of July, 1888 · and, whereas, the undersigned, Thomas C. Thompson and Julia N. Thompson, claim that the said Julia N. Thompson is entitled to such dividend, but Lucy P. Hudgins, the executrix of the last will and testament of said T. L. Hudgins, deceased, claims that she as such

[Thompson, et al. v. Hudgins, Exec., &c.]

executrix is entitled to such dividend; and, whereas, the undersigned, Thomas C. Thompson and Julia N. Thompson, claim that there is no legal or equitable obligation resting upon them to pay to said executrix the said sum of ten thousand dollars, the amount of the said 'surplus fund,' earned as aforesaid by the said two hundred shares of stock of said bank during the lifetime of the said Hudgins, but the said Lucy P. Hudgins as executrix, as aforesaid, claims that the said Thomas C. Thompson and Julia N. Thompson are both bound, legally and equitably, to pay to her as such executrix the said sum of ten thousand dollars; and, whereas, in full settlement and compromise of said matters in controversy and dispute between the said Thomas C. Thompson and Julia N. Thompson and the said Lucy P. Hudgins as such executrix, the said Thomas C. Thompson and Julia N. Thompson do now hereby surrender to Lucy P. Hudgins, as such executrix, all claim they may or can have to said dividend, and in further consideration of such final settlement and compromise the said Thomas C. Thompson and Julia N. Thompson have executed their eight joint promissory notes, payable to the order of the said Lucy P. Hudgins as such executrix, all of even date herewith, each for the sum of eleven hundred dollars, and due and payable as follows, to-wit: One on the 20th day of January, 1889, one on the 20th day July, 1889, one on the 20th day of January, 1890, one on the 20th day of January, 1891, one on the 20th day of July, 1891; one on the 20th day of January, 1892, one on the 20th day of July, 1892; and the said Thomas C. Thompson and Julia N. Thompson have agreed to execute a mortgage upon the real estate hereinafter described to secure the promissory notes, and the said Lucy P. Hudgins, as such executrix, has agreed to transfer upon the books of said bank the said two hundred shares of said stock to said Julia N. Thompson. Now, therefore," &c., proceeding to a conveyance of the land to secure said notes, with power of sale, &c. On the 20th day of March, 1892, the said Thompson and wife executed another mortgage, on the same lands, to said Lucy P., as such executrix, reciting the previous mortgage, and that six of the said eight promissory notes still remained unpaid; the first five of which were past due; and reciting further, as follows: "and, where

[Thompson, et al. v. Hudgins, Exec., &c.]

as, the said Lucy P. Hudgins, executrix, as aforesaid, has agreed with the said Thomas C. Thompson and Julia N. Thompson to extend the time for the payment of said indebtedness, now past due, including the interest accrued thereon, to the date of this mortgage, as hereinafter set out, said indebtedness to be evidenced by five promissory notes, each for the sum of $1,188.00, each bearing date January 20th, 1892, each bearing interest from the date thereof and payable to the grantee herein, respectively, 12, 18, 24, 30 and 36 months from the date thereof, at the First National Bank of Birmingham, Ala., the consideration for each of said notes being the same consideration as is recited in the mortgage hereinabove referred to as securing the eight original promissory notes, and in addition thereto the agreement of the grantee herein to extend the time for the payment of said past due indebtedness as herein above recited and the accrued interest on each of said five original promissory notes to the date of this mortgage; and, whereas, the eighth original promissory note, made and executed by said Thomas C. Thompson and Julia N. Thompson, bearing date December 24th, 1888, for the sum of eleven hundred dollars, due and payable on the 20th day of July, 1892, to the order of Lucy P. Hudgins, as executrix, as aforesaid, at the First National Bank of Birmingham, Ala., is not yet due, said note having been given by the said Thomas C. Thompson and Julia N. Thompson for the consideration recited in said mortgage, given to secure the same, and hereinabove referred to. Now, therefore," &c., proceeding to a conveyance of the land to secure the five notes, with power of sale, &c.

Briefly stated, the bill avers, substantially, that said agreement of June 26th, 1886, was entered into by complainants upon the representation of said T. L. Hudgins to them that the facts and conclusions therein recited, and which will hereafter be stated, were true; and that relying upon the said representation, and being in ignorance of their rights, in the premises, they entered into the agreement; and they aver that there was no consideration whatever for said agreement; that the recited consideration of $5 was nominal and never paid; and they further aver that the agreement was void, also, for that the said Julia N. was at the time a married woman. It is further averred, that immediate

[Thompson, et al. v. Hudgins, Exec., &c.]

ly after the death of said T. L. Hudgins, the said Julia N. Thompson succeeded to the use and possession of said shares of stock, and is now, and has been ever since that time, in the possession thereof; that after that time, being desirous of carrying out the wishes of the said T. L. Hudgins, with respect to such portion of the surplus of the capital stock of the bank, as had been earned by the said 200 shares, up to his death, and supposing that there was an actual surplus of $125,000, and that said 200 shares had earned $10,000, which had been passed to the surplus fund, complainants executed the said notes and mortgage of December 24th, 1888; and also surrendered to the said Lucy P., as executrix, all claim that they might have to the dividend of six per cent., which had been declared, shortly after the death of said T. L. Hudgins; and they aver that there was no consideration whatever for the said notes and mortgage, that the said second notes and mortgage were founded upon no other consideration than those previously given. The complainants voluntarily paid one of the notes for $1,100, and two of those for $1,188, each-the others remaining unpaid. The last mortgage, which was duly recorded, is outstanding and unsatisfied, and is averred to be a cloud on the title of said Julia N. to the land embraced therein-the land being her property.

The complainants further aver, that although they supposed, when the first notes and mortgage were given, that the bank had really earned an accumulated surplus of $125,000, yet, in fact, as they have since learned, the bank really had no surplus, and its capital stock was actually worth not more than the par value thereof. They aver, on information and belief, that the said supposed surplus of $125,000, really consisted of worthless securities; and that all the assets of the bank, on December 24th, 1888, were not worth more than enough to discharge its liabilities and pay off its capital stock; that the books show that at the time of filing the bill, the bank had a surplus of about, and not exceeding, $30,000; and they aver that they have already paid the executrix greatly more than the proportionate share of the real surplus to which said Julia N. was entitled on the 24th of December, 1888, by virtue of being the owner of said 200 shares,

[Thompson, et al. v. Hudgins, Exec., &c.]

The respondents interposed the following grounds of demurrer to the bill:

"1. The complainants seek to have three certain promissory notes and a certain mortgage, which are referred to and described in the prayer of said bill, and which were executed by complainants, delivered and surrendered up to the complainants and satisfied and cancelled upon the ground that there was no consideration for the same, when the bill shows that T. L. Hudgins, Sr., gave the stock referred to in said bill to complainant, Julia N. Thompson, and that before the death of said T. L. Hudgins, Sr., complainants gave the surplus, referred to in said bill, back to said T. L. Hudgins, Sr., and said notes and mortgage are evidences of what complainants owe for said surplus.

"2. That said bill shows that the said gift of said stock by said T. L. Hudgins, Sr., to said Julia N. Thompson was not completed and was not to take effect until after the death of said T. L. Hudgins, Sr., and said bill further shows that complainants took said stock with the condition which complainants attached to and put upon the same by the execution by them before the death of said T. L. Hudgins, Sr., of a certain paper writing, a copy of which is attached as Exhibit B to said bill, which condition required complainants to pay to the estate of said T. L. Hudgins, Sr., the amounts for which said promissory notes and said mortgage are given.

"3. The bill shows that there was a valuable consideration for said notes and mortgage, and that complainants, recognizing such to be the case, executed the same. "4. The bill shows that after the death of said T. L. Hudgins, Sr., complainants took said stock with full knowledge of all the circumstances surrounding the same, and all the conditions attached to the same, and by the execution of said Exhibits "B," "C," and "D,". attached to said bill, settled in full all the matters set up and complained of in and by said bill.

"5. The bill shows that complainants executed said. notes and mortgage for the valuable consideration that they would not be sued by the personal representative of said T. L. Hudgins, Sr.

"6. The bill shows that there was ample consideration for said notes and mortgage in that morality demanded that complainants should execute the same."