Witherington & Co. v. Mason , 86 Ala. 345 ( 1888 )

CLOPTON, J.

On January 5, 1886, appellees, who are husband and wife, executed a mortgage on real and personal property, to secure a note for one hundred and seventy-five dollars, made by the husband to appellants, payable on the first day of October of the same year. A portion of the personal property, and the real estate, which constituted the homestead of the mortgagor, was sold under a power of sale contained in the mortgage. On discovering a mistake in the description of one of the sub-divisions of the land, the sale was disregarded; and the bill is filled by appellants to reform the mortgage, and for a foreclosure. The mortgage was executed and acknowledged in conformity with the statutory requirements to constitute a valid alienation of the homestead. The mistake is admitted in the answer, and also proved. In such case, though the sub-division, in the description of which the mistake occurs, is a part of the homestead, a, court of equity will interpose to reform the mortgage, if it is executed by the husband and wife in conformity with the statute, and the reformation does not increase the quantity of land conveyed. — Gardner v. Moore, 75 Ala. 394. Having reformed the mortgage, the court will . proceed to a foreclosure.

The proceeds of the personal property, sold under the power, should unquestionably be applied to the mortgage debt. The material question arises on the application of the . proceeds of three bales of cotton which were delivered by the mortgagor to the mortgagees, and sold'by them in the fall of 1886. In stating the account on the reference ordered, the register applied the proceeds of the cotton to an open account for advances, which was not covered by the mortgage. The chancellor corrected the report of the register, and applied the proceeds in reduction of the mortgage debt. The mortgage included the entire crops made by the mortgagor during 1886. The application by the register was evidently based on his finding, as matter of fact, that in May of that year an arrangement was made by which the mortgagees agreed to make further advances to the mortgagor; and he agreed, in consideration thereof, that such advances should be paid for out of the first cotton delivered. The preponderance of the evidence sustains the conclusion of the register. The chancellor did not pass on this finding, regarding it, in his view of the case, as immaterial. The question presented for consideration is, can a mortgagor, who is a married man, when the mortgage conveys the homestead and personal property, agree, without the consent of his wife, to apply the personal property to any debt other than the mortgage debt ?

The general rule may be conceded, that when a mortgage is made by a debtor as security for an existing debt, and it does not contemplate or provide for future advances, moneys realized from the mortgaged property must be applied to the payment of the debt secured thereby. They may, however, be otherwise applied by agreement of the mortgagor, no rights of third persons intervening. — Schiffer v. Feagin, 51 Ala. 335; Levystein & Simon v. Whitman, 59 Ala. 345. On the assumption that an agreement was made as found by the register, the question is, has Mrs. Mason, the wife of the mortgagor, any legal right in the homestead, which will be prejudiced by the appropriation of the cotton to the payment of the future advances; or any equity superior to the equity of the mortgagees to have such appropriation made ? "Where a mortgage conveys different parcels of the same kind, or different classes of property, the mortgagee may, in the absence of a stipulation to the contrary, elect for his own benefit the particular property to which he will resort in the first instance. In the absence of some peculiar equity, growing out of other circumstances, the mortgagor, or any person claiming under him, can not compel the mortgagee to exhaust any one of the different parcels or classes of property conveyed by the mortgage, to the exclusion of the other.

By the voluntary signature and assent of the wife to a mortgage of the homestead, the waiver of the right of exemption is in favor of the mortgagee, and all the right and title of the husband to the homestead passes to him, equally with other property not exempted and included therein. Though a judgment creditor cannot compel a mortgagee, whose mortgage includes the homestead and 'other property of the debtor, to exhaust the homestead before resorting to such other property, and thus deprive the debtor of his homestead exemption as against the judgment; the mortgagee may, by his own volition, and for his own benefit, resort, in the first instance, to the homestead; and the mortgagor himself can not compel the mortgagee to exhaust the other property before resorting to the homestead. The mortgagee may release the other property, and retain his lien on the homestead. In Chapman v. Lester, 12 Kan. 592, the mortgage conveyed the homestead and other realty. The mortgagee released a large portion of the last to an assignee in bankruptcy, and then filed a bill to foreclose the mortgage. It was claimed, in defense of the suit, that the mortgage was satisfied and discharged, on the ground that it was the mortgagee’s duty to exhaust the other property before proceeding against the homestead. Brewer, J. says: “We can not assent to the claim as thus broadly stated. It means that when a creditor takes a mortgage on the homestead and other property, though nothing is expressed, there is an implied agreement to consider the homestead as a sort of secondary security, a security for security; that the other property mortgaged is the primary security, and that if that proves insufficient, and only when that proves insufficient, can the lien on the homestead be enforced. But, in the absence of legislation, and of express contract, we do not think the courts are warranted in interpolating such a stipulation. The creditor takes such security for his debt, and with such contract as the parties may agree upon. As between the parties, and without other intervening rights, and in the absence of express stipulation, the mortgagee may release any portion of the mortgaged property, without impairing his lien upon the remainder.”

The homestead right is of constitutional or statutory creation, and its nature,' character and extent depend on the law creating and defining it. The exemption is a personal right conferred on the debtor, the benefit and enjoyment of which enures to his family, through and by the exemption in his favor. The right and estate of homestead are in the husband, in whom the title to the property resides. Neither the constitution nor the statute confers on the wife any right or estate in the homestead during his life, but a mere' power to prevent its alienation. She may occupy and enjoy it with her husband by his permission, but he has the right to abandon it at pleasure. When she voluntarily signs and assents to a mortgage of the homestead- by the husband, in the manner required by the statute, it loses its character of homestead as against the mortgagee, and becomes subject to all his rights and remedies. The homestead is not secondarily liable.— Vancleave v. Wilson, 73 Ala. 387; Seaman v. Nolen, 68 Ala. 463.

Creditors, or incumbrancers, or sureties may invoke the power of a court of equity, to compel a mortgagee to exhaust one of several pieces of property. By signing and assenting to a mortgage of the homestead, the wife does not pledge her property for the payment of the secured debt, nor does she occupy the position of a surety. In this respect, this case is distinguishable from Askew v. Steiner, 76 Ala. 218, where we held that a mortgagee can not appropriate, with the consent of one only of two joint mortgagors, the property or the proceeds to the payment of another debt; and that such appropriation operates a satisfaction pro tanto so far as the rights of the other mortgagor are concerned. In that case, both mortgagors were bound for the mortgage debt. As the husband, to whom the homestead belonged, and in whose favor the exemption is created, has no right to compel the mortgagee to exhaust property other than the homestead, before resorting to the latter; a fortiori, the wife, who derives the benefit of the homestead exemption only through the right of her husband, has no such right. She may have signed and assented to the mortgage because of hex belief that the other property conveyed would be sufficient to satisfy the mortgage, and in the confidence that the mortgagee would exhaust it, and leave the homestead intact.- But, without such stipulation in the mortgage, the mortgagee is under no enforceable obligation to do so. He may, by agreement of the' husband, appropriate the other mortgage property to the payment of unsecured debts', which the wife is without power to prevent. — Brown v. Coyard, 68 Ill. 178; Seale v. Chapman, 121 Mass. 19; White v. Poley, 20 Wis. 530; 2 Jones Mort. § 632. The proceeds of the cotton delivered to, and sold by complainants, should, under the agreement, be applied to the payment of the future advances.

As the decree must be reversed, and the cause remanded, it is proper to call attention to the fact, that Mrs. Mason did not answer the bill, nor was a decree pro eonfesso taken against her.

Beversed and remanded.