Hendon v. Morris , 110 Ala. 106 ( 1895 )

BRIOKELL, C. J.

A mortgagee, the law day having passed, may resort to a court of equity for a reformation of the mortgage and for foreclosure ; a bill filed for these purposes is not subject to objection for multifariousness. Alexander v. Rhea, 50 Ala. 450. Such was the character and purpose of the original bill filed by the appellee, Morris, and of the cross-bill filed by the appellant, and corresponding relief was granted to each by the chancellor.

Manifestly, by mere inadvertence not of infrequent occurrence, the draughtsman of the mortgage to Morris did not designate the section in which a part of the lands was situate. The correction of the error by the insertion of the number of the section, was the reformation prayed by the original bill. It may be, the omission was supplied by the description in the mortgage, taking it altogether, for it would be a remarkable coincidence, if the mortgagor had two similar subdivisions of.land in any other section from which four acres, more or less, in the same corner had been sold by William Guttery to T. J. King. . However this may be, the evidence is plenary, that the lands are situate in section 18, and that of the mortgage and of the lands it was intended to pass, the appellant had notice and knowledge prior to the execm tion of the mortgage to him, which by the decree is subordinated to the mortgage to Morris.

A subsequent creditor,or mortgagee, or purchaser, having notice of a prior mortgage, or conveyance, can impeach the one or the other only for fraud in fact, mtln fides in the transaction, the burden of proving which rests upon him. The doctrine has been so often announced, and the reasons upon which it rests so often explained, that there can not now be a necessity for a citation of the authorities supporting it. Indeed, it is not now controverted, for the insistence of the appellant is, that the mortgage to Morris was infected with actual fraud, directed against the existing creditors of the mortgagor. The insistence seems to rest primarily on the ground that the mortgagor was insolvent at the time of the execution of the mortgage. But the insolvency is not proved ; the evidence rather disproves it. The aggregate of his debts did not equal five hundred dollars, the value of the lands mortgaged, and he had other lands on which his homestead was situate, and personal property, though not in value equalling the constitutional and statutory exemptions. Insolvency is not imputable, when a debtor has property subject to legal process, sufficient to meet all his liabilities. — Wait on Fraudulent Conveyances, § 273.

It is again said, that the debt described in the mortgage was ficticious; was not a real debt. As described in the mortgage, the debt was a promissory note for the payment of a specific sum of money at a time cer-. tain. The consideration of the note was the promise of the payee to satisfy an outstanding mortgage on the lands held by Boshell, and to make advances to the mortgagor during the current year. It is of no consequence that the promise of the payee was not in writing, or that it was not express; it was involved in the very nature of the transaction, and constituted a valuable consideration of the note and mortgage.—1 Jones Mort., (4th ed.), § 375; Lovelace v. Webb, 62 Ala. 271. Nor is it a circumstance affecting the validity of the transaction, that a crop lien, as it is termed, was taken as additional security for the debt. A creditor may take any number of securities for the payment of a debt, without subjecting himself or the debtor to suspicion, if the debtor be not insolvent; and if he be insolvent, without exciting just suspicion, unless the securities are excessive, indicating not abundant cautiorj, but a purpose to shield the property of the debtor from the reach of other creditors.—Loucheim v. Bank, 98 Ala. 521; Perry Ins. Co. v. Foster, 58 Ala. 502.

Mortgages are not infrequently taken as a security for future advances, not so expressing the consideration, but, as in the present case, expressing as the consideration, a promissory note, or other evidence of a present debt. Such mortgages are of undoubted validity, and when necessary, parol evidence is received to show the real consideration; the real nature of the transaction.—Tison v. P. S. & L. Asso., 57 Ala. 323; Forsyth v. Preer, 62 Ala 443; Wilkerson v. Tillman, 66 Ala. 532. It has never been supposed that these are offensive as reciting a fictitious consideration, or intentionally concealing the real nature of the transaction. In Shirras v. Caig, 7 Cranch, 50, it was said oy Chief Justice Marshall: “It is true that the real transaction does not appear on the face of the mortgage. The deed purports to secure a debt of 30,000i, due to all the mortgagees. It was really intended to secure different sums, due at the time from particular mortgagees, advances afterwards to be made, and liabilities to be incurred to an uncertain amount. It is not to be denied, that a deed, which misrepresents the transaction it recites, and the consideration on which it is executed, is liable to suspicion. It must sustain a rigorous examination. It is, certainly, always advisable fairly and plainly to state the truth. But if, upon investigation, the real transaction shall appear to be fair, though somewhat variant from that which is described, it would seem to be unjust and unprecedented to deprive the person claiming under the deed of his real equitable rights, unless it be in favor of a person, who has been, in fact, injured and deceived by the misrepresentation.” The appellant is a subsequent creditor and mortgagee, dealing with the mortgagor with full notice of the prior mortgage after the prior mortgage to Boshell had been satisfied, and advances made, exceeding in the aggregate the amount of the note. The recitals of the mortgage could not have misled him, for if he knew or had notice of the real transaction, he would be bound by and affected with it, as the mortgagor was bound and affected. If he had not notice, he had notice that the mortgage recited as its consideration a present, absolute debt, and this ought to have awakened inquiry, and inquiry would have led to knowledge of the real facts.

AVithout prolonging this opinion, it is enough to say there is no evidence of actual fraud in the mortgage found in the record. It was supported by a valuable consideration, and the purposes of the parties were free from guile. AYe concur in the conclusions of the chancellor, and the decree must be affirmed.

Affirmed.