Boyd & Co. v. Jones & Pope , 96 Ala. 305 ( 1892 )

COLEMAN, J.

The action, was instituted by appellants to recover a balance due upon the written obligation of the defendants for the payment of twenty-five hundred dollars, and also for the recovery of reasonable attorneys’ fees, stipulated for in contemporaneous agreement, made to secure the payment of the note or obligation. By the terms of the agreement, the defendants contracted to ship two hundred and fifty bales of cotton to plaintiffs at Memphis, Tennessee, to be stored and sold on their account, and the proceeds to be applied in payment of “the storage which may • be due on said cotton, and 2¿- per cent, on the amount of such sales for commission for selling said cotton, and then to apply the proceeds of so much of said cotton as may be delivered by us to the amount hereinabove specified,” &c. The amount above specified was that contained in the note, and to recover which the present suit was instituted. It was further stipulated that, upon failure to ship two hundred and fifty bales of cotton, the defendants were to pay as “stipulated damages,” $1.25 per bale. The payment of the note was further secured by the transfer of collaterals. The evidence shows that only seventy-two bales were shipped to plaintiffs under this agreement. It further shows that the defendants became largely indebted to plaintiffs for shipment of goods, payment of drafts drawn by defendants, and remittances of money, in excess of the twenty-five hundred dollars evidenced by the note. The defendants were charged for the deficiency in the shipment of the cotton at $1.25 per bale,' as stipulated by the parties. The plaintiffs sold the cotton received, and applied the proceeds, first, to the payment of the open unsecured account, and the balance after paying the unsecured indebtedness, was credited upon the note. The main question of contention was, whether the plaintiffs had the right to make such application of payments, and the errors assigned are upon the correctness of the charges given by .the court to the jury, upon the facts in evidence bearing upon this question.

The law is, “a mortgagee, in the absence of an agreement with the mortgagor, is bound to apply moneys realized from the sales of property covered by the mortgage to the mortgage debt; but as between the mortgagor and mortgagee, such moneys may, by the consent of the mortgagor, be applied to the payment of an unsecured debt.” The consent of the mortgagor in such case becomes a material question. Taylor v. Cockrell, 80 Ala. 238; Strickland v. Hardie, 82 Ala. 414; Mahan v. Smitherman, 71 Ala. 286; Darden v. Gerson, 91 Ala. 324; Levystein v. Whitman, 59 Ala. 345. The burden rests upon the mortgagee to show that the mortgagor has consented that the proceeds of the payment covered by the mortgage might be applied in payment of any other debt than that secured by the mortgage. A mortgagor, if he sees proper, may consent to adopt or ratify an unauthorized application of payment made by his mortgagee creditor of the proceeds of mortgaged property to an unsecured debt. Whether the mortgagor has consented to either is a question of fact to be determined by the jury, and the burden is upon ■ the mortgagee, in either case, to reasonably satisfy the jury of such consent or ratification.

We think the oral charge given by the court to which exception was taken is strictly in accord with these well established principles. As the uncontradicted evidence shows that the proceeds of the cotton amounted to more than sufficient to pay the storage and 2| per cent, commissions and the note, we might consider the giving of the two charges Nos. 6 and 7, at the request of the defendants, as error Avith-out injury; but, as the case must be reversed upon other grounds, we call attention to the fact that the contract does not provide, as asserted in the charges, for the application of the proceeds of the cotton, in the first instance, to the payment of the note, but only after the payment of storage and commissions.

Charge numbered eight (8) given at the request of the defendants is clearly erroneous. Under this charge, the jury Avere required to find for the defendants, if defendants at any time in October, 1889, wrote a, letter to plaintiffs directing tbem to place tlie proceeds of the cotton on the note, although the jury may have been reasonably satisfied from other evidence in the case, that prior or subsequent to that time the defendants did consent that the proceeds of cotton might be applied to the unsecured debt. We can not say there is no. evidence in the record from which the jury would be authorized to draw such a conclusion. There were other letters written during the same month by defendants to plaintiffs advising them of the shipments of cotton, and in the same letter advising plaintiffs that defendants were drawing on them for certain sums or money, and asking for remittances in cash. There is other evidence tending to show that plaintiffs rendered statements of accounts to defendants, in which the proceeds of the cotton had been credited to the open account, and that defendants said the statements and credits as thereon entered were correct, and payments properly made. Charge No. 8 ignores all the evidence offered by plaintiffs to show the consent of the defendants to the payments as applied by plaintiffs. A charge which ignores any material conflicting or qualifying evidence, or a material fact which is the legitimate inference of other proven facts, is necessarily misleading and erroneously faulty. —Ramsey v. State, 91 Ala. 29; Thomas v. State, Ib. 59; White v. Craft, Ib. 142; Fariss v. State, 85 Ala. 1; Thompson v. Duncan, 76 Ala. 334.

There was no error in refusing the charge requested by plaintiffs. It placed the burden upon the defendants to show that the payments as applied were not properly applied. If the proceeds of the mortgaged property were applied to unsecured debts, the burden was upon the mortgagee to .show consent or ratification by the mortgagor.

The provision in regard to the payment of counsel fees, and also for the payment of reasonable storage of cotton is not an unreasonable or illegal stipulation. — Harmon v. Lehman, Durr & Co., 85 Ala. 379. The mere bringing of the suit does not, without other proof, authorize a recovery of reasonable counsel fees. If plaintiffs’ debt was paid before the bringing of the suit, there can be no recovery for attorneys’ fees, under the stipulations in the mortgage contract.

For the error in giving charge No. 8, the case must be reversed, and the cause remanded.

Reversed and remanded.