Farmers Savings & Building & Loan Ass'n v. Kent & Sabotka , 117 Ala. 624 ( 1897 )

HARALSON, J.

The principle is well settled, that when one mortgages his lands to another, there remains in the mortgagor only an equity of redemption. — Kelly v. Langston, 78 Ala. 203, 204; Bingham v. Vandegrift, 93 Ala. 283, 285.

Again we have held, that a junior incumbrancer, will not be allowed to go into equity to qnforce the incumbrance of the senior, and his own, -for the payment, first, of the demand of the sénior, and, next, liis own. Mims v. Cobb, 110 Ala. 578.

There is a marked distinction, however, between a junior incumbrancer, and a grantee of lands sold subsequent to the mortgage. “The mortgagor can convey the entire mortgaged premises to a single grantee; or he can convey them in parcels to different grantees simultaneously or successively, or he can convey a portion and retain the residue. When a mortgagor conveys by a deed absolutely silent with respect to an outstanding mortgage, the grantee, of course, takes the land encumbered by the mortgage, if he had actual notice of it, or constructive notice by record or other-•• wise.” — 3 Pom. Eq. Jur. § 1205.

The same author in section 1224 of his work, again says : “Whenever the mortgagor has conveyed separate parcels of the mortgaged premises by warranty deeds to successive grantees, and there are no special provisions in any of their deeds, and no other dealings between themselves or with the mortgagor which disturb the equities otherwise existing, a priority results, depending upon the order of conveyance. As between the mortgagor and all the grantees, the parcel in his hands, if any, is primarily liable for the whole mortgage debt, and should be exhaustéd before having recourse to any of theirs; as between the grantees, their parcels arej liable in the inverse order of their alienation, and any; parcels chargeable first in order, must be exhausted be-: fore recourse is had to the. second.” An apt illustration is given by the annotator in the note to this section :■ “A mortgagor divides the lands subject to the mortgage into five lots. He conveys lot 1 by warranty deed to A, and afterwards, by successive deeds, lots 2, 3, and 4, to B, C, and D, and retains lot 5 to himself. Lot 5 is then the primary fund, and .must'be first sold, and if it satisfies the mortgage debt, the four other lots are freed. If the proceeds are not sufficient, then lot 4 must be sold, and only so far as is necessary to satisfy the mortgage debt, lots 3, 2, and 1, are sold in the inverse order of their alienation.” The principle announced is sustained by citations from apparently all the States, — including our own, — except the States of Kentucky and Iowa, where a different rule prevails. In such cases, says Mr. Jones: “It is generally regarded as only equitable, that the mortgagee, when he afterwards proceeds to foreclose his mortgage, should be required to sell in the first place such part, if any, as the mortgagor still retains, and then the parts that have been sold in the same subdivisions, but beginning with the parcel last sold by the mortgagor.” — 2 Jones on Mort. § 1620 ; N. W. L. Asso. v. Harris, 114 Ala. 468 ; Burton v. Henry, 90 Ala. 281; Aderholt v. Henry, 87 Ala. 415 ; Prickett v. Sibert, 75 Ala. 315 ; M. M. D. & M. Ins. Co. v. Huder, 35 Ala. 713.

In this case, the mortgagor, Brewer, after • executing the mortgage to appellant, sold different parcels of the land consisting of several lots and parcels, to different persons, at different times, and gave,them warranty deeds .which made no mention of the mortgage, and contracted to sell another parcel to still another party, the purchase money for all of them, aggregating $1,800, and retained a portion of the lands, which he did not sell and convey. The complainants are grantees ahead, in point of time, to two others of' the defendants.

It should be added, that the twenty shares of stock in the Association, in which the money' borrowed was invested, were also 'embraced in the mortgagé'as a security for the loan, in addition to the mortgaged lands.

The mortgagee Association was seeking to foreclose -its mortgage on all. the lands included in the mortgage, and the bill was filed, to require the sale -to be made in accordance with the principle above announced. Its •equity is manifest, as was held by the chancellor in •overruling the demurrer questioning its equity.

The mortgaged debtremaining upaid, as claimed by the mortgagee, as is alleged, is about $480, and the mortgagor, Brewer, as is averred, claims to have paid it in full. What that debt may be, if anything, will depend úpon a statement of the account between the mortgagor •and the mortgagee, involving an .ascertainment of the payment to said Association by the mortgagor of the fines made against him,' if any, of the interest due on the loan,, the profits accruing to the mortgagor’s stock, etc., etc., as required by the by-laws of said company, and upon the fact, whether the profits of his stock, according to the scheme in which it was placed, have ■ equalled'the loan, and if not, how far they have gone in ■reduction of the same, — facts, as to' which complainants aver their ignorance. There were many conditions as ■ provided in the mortgage, for the maturity of the loan and default of the mortgage, rendering it foreclosable. ■It appears the proceeding by the mortgagee Association to foreclose the mortgage, was not begun for nearly five years after said loan and mortgage to secure it were made, from which it is inferable, that the borrower had complied with its conditions up to a short while before. From this the inference may also be indulged, that much of the loan has- been absorbed in credits by profits, but how much, it is- manifest that the complainants did not know and could not state more fully than they have. It is fair and equitable, therefore, that a statement of the balance, if any remaining, due by the mortgagor shall be ascertained, in doing which, we are unable to see with what right or contract between said company and the borrower, the court will interfere. — McCalley v. Otey, 90 Ala. 302.

' In a case like this, where all indebtedness is denied by the mortgagor, where the account runs through many years, and its statement can be made intelligently .only by the defendant, on answer to interrogatories propounded to him in the bill; where the mortgage security appears to be worth largely more than the largest sum that can be claimed, and where the damaging consequences of a sale, such as it appears the defendant Association is proceeding to make, far outweigh the advantages to be gained by making the sale, the safe rule is to retain the injunction until the account is taken. Hinson v. Brooks, 67 Ala. 491.

The decree of the chancellor is- affirmed.