Phillips v. Taylor , 96 Ala. 426 ( 1892 )

THOKINGTON, J-

Appellant filed lxis bill of complaint on tlie equity side of tbe City Court of Decatur, averring tlie following state of facts: Ap>pellee, being indebted to appellant in tlie sum of nine hundred dollars, executed and delivered to tlie latter, on December 29fell, 1889, twenty-two ju'omissory notes, each for forty 90-100 dollars, payable, respectively, each and every month thereafter, beginning with the 18th day of March, 1891, and ending January, 1893; and to secure tlie payment of said notes, appellant and his wife executed a mortgage on certain city lots therein described, a copy of which mortgage is attached to the bill, and by its terms the mortgagee is given the right to foreclose on default in the payment of either of the notes. At the time the bill was filed, seven of said notes had fallen due and were unpaid, and on two of them a judgment was obtained, but nothing realized, for the reason that the defendant interposed ' a claim of exemption. Appellee, as mortgagee, being entitled to possession of the property and the rents, upon the law-day of the mortgage, demanded the same of appellant, who thereupion refused to surrender either, and furthermore instructed his tenants not to pay rent to appellee. Appellant and his tenants are insolvent. The property rents for ten or twelve dollars per month; and if it should' be sold at the present low price of real estate in Decatur, and the vicinity thereof, would be sacrificed, and would probably realize no i; exceeding one-third or one-half of appellee’s debt. The tenants have been notified by appellee to pay the rents to him, but have refused to do so, and have paid the same to apjiellant, and will continue to do so unless they shall be intercepted by the appointment of a receiver. The rents are due on the 18th day of each month, and the installment of rent falling due September 18th, the day after the filing of the bill, would be paid to appellant, and lost to the appel-lee, unless prevented by the appointment of a receiver as aforesaid.

The prayer for relief is, that a receiver may be appointed to collect the rents, hold and rent out the property, as may be necessary, until the maturity of the last note, and apply the rents to the payment pro tanto of the mortgage debt; that the cause may be retained in the court for that purpose, until the maturity of the last note; and if the debt is not then satisfied, that the court may decree a foreclosure. There is also a prayer for general relief. The bill was filed on the 17th day of September, 1891, and the last note does not mature until January, 1898.

A receiver was appointed by the court on the filing of the bill, before answer, and without notice. Appellant filed a motion on that ground to discharge tbe receiver, and also filed a demurrer to tbe bill, and a motion to dismiss for tbe want of equity. But, on tbe motion to discharge tbe receiver, there was no denial of the mortgage debt, nor were there any affidavits controverting tbe averments of fact or urgency as grounds for tbe appointment of a receiver. Appellee filed a demurrer to tbe motion of appellant to discharge tbe receiver, and tbe cause was submitted on tbe motions of each party and tbe demurrer of appellant to tbe bill. Tbe court denied both motions, overruled tbe demurrers, and sustained tbe bill.

Tbe bill, as above shown, does not seek a present foreclosure of tbe mortgage, but prays for a receiver to collect tbe rents and apply them to tbe mortgage debt, and to bold and rent out the property, when necessary, until tbe last note falls due in January, 1893, which will be about fifteen months from tbe time tbe bill was filed.

By tbe terms of tbe mortgage, all tbe notes became due .for all tbe purposes of a foreclosure, on default in payment of part of the notes; and tbe case, when tbe bill was filed, was in every respect as ripe for that purpose as it will be in January, 1893. Tbe maturity of tbe entire debt by tbe terms of tbe mortgage, on default in tbe payment of part of tbe notes, is tbe only basis of complainant’s right to file a bill at this time for the foreclosure of tbe mortgage for tbe satisfaction of tbe entire debt. — Chambers v. Marks, 93 Ala. 412. It is a general rule which prevails in equity, as well as at law, that no suit can be maintained before a cause of action has accrued, and that a bill can not be maintained by a creditor to subject property to the payment of bis debt before its maturity. — Freider v. Lienkauff & Strauss, 92 Ala. 469; Bragg v. Patterson, 85 Ala. 233; Jones v. Massey, 79 Ala. 370. Appellee, therefore, must either avail himself of tbe provision in the mortgage which ex vi termini matures the entire debt on default in payment of part of tbe notes, and foreclose tbe mortgage for tbe entire debt, or be must proceed for a present foreclosure only for tbe notes which were due at tbe time tbe bill was filed. — McGhee v. Importers & Traders Nat. Bank, 93 Ala. 192.

There is no doctrine of tbe courts of equity which justifies tbe attempt of appellee to base bis foreclosure suit on all tbe notes and yet seek to postpone tbe foreclosure until tbe last note falls due according to its tenor, when all tbe notes are now due according to tbe mortgage. This would put upon tbe mortgagor all tbe risk of further depreciation in the value of the property, as well as the burden of the accruing interest. There is also no guaranty that the property will appreciate in value, and consequently realize more to the mortgage debt, by the time the last note matures by its terms, than it would if the mortgage were foreclosed now. That is the merest speculation, and might operate as a hardship on the mortgagor, who has no means oi providing against further depreciation of the value of the property in the event of such postponement of the sale. On the other hand, complainant, notwithstanding the condition of the real estate market in Decatur, can protect himself from a sacrifice of the mortgaged property under a present decree of foreclosure by obtaining from the court authority to bid and purchase under the decree of sale. The cases are probably rare where mortgaged property brings its full or market value at a forced sale under the mortgage, and perhaps more often than otherwise it becomes necessary for the mortgagee to buy at such sale in order to prevent a sacrifice of the propertjr. The reasons alleged for the postponement of the sale, therefore, are not sound if it were conceded that the court was vested with the power to grant the prayer of the bill in that particular.

The logic of the ■ matter is, that the cause is either ripe for a foreclosure for the satisfaction of the entire debt or it is not. If it is, then it must proceed in regular course, and there can be no postponement of the decree of foreclosure as prayed in the bill. If it is not, then there can be no foreclosure at all except as to the notes already due. Nothing herein said is intended in any way to modify the decision of this court in the case of Levert v. Redwood, 9 Porter, 79, or as intimating that appellee may not avail himself of the course of proceeding indicated in that case if he should so desire.

Generally, the mortgage debt must be already due to entitle the mortgagor to have a receiver appointed. At any rate, there must have been such default as entitles him to commence an action to foreclose the mortgage, and the bill must be actually filed for that purpose. — 2 Jones on Mortgages, 1530-31. It would be an anomaly in the law to permit appellant’s property to be taken out of his possession, and turned over to the Chancery Court, to be held and managed by it for appellant’s benefit until he may conclude a favorable time for the sale has arrived, when all the conditions authorizing a sale now exist.

The averments of fact in the bill of complaint are sufficient to show a proper case for the foreclosure of the mortgage for tlxe payment of tbe entire debt, and also to warrant tbe appointment of a receiver. Tbe bill, however, will bave to be so amended as to make it one for tbe present foreclosure of tbe mortgage, either for tbe payment of tbe entire debt, or for that part of tbe deb.t which was due when tbe bill was filed.

Tbe demurrer filed by appellant reached this defect, and tbe lower court erred in sustaining tbe bill in its present frame. Its decree must be reversed, and a decree will be entered here directing tbe bill of complaint to be. dismissed, and that tbe receiver be discharged, unless appellee shall within thirty days from tbe date of this decree so amend bis bill as to seek a present foreclosure of tbe mortgage therein described for tbe satisfaction of the entire mortgage debt, or that part thereof which was due when tbe bill of complaint was filed.

Reversed and rendered.