Arnold v. Black , 204 Ala. 632 ( 1920 )

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] The effect of the foreclosure of the mortgage held by Perdue was to cut off the equity of redemption, which passed to the complainant through the deed executed to her by Eula C. Beck and her husband, leaving in complainant the statutory right of redemption from the sale under foreclosure. Am. Mtg. Co. v. Pollard, 120 Ala. 1, 24 So. 736; Hunter v. Mellen, 127 Ala. 343,28 So. 468; Childress v. Monette, 54 Ala. 317; Lehman v. Shook, 69 Ala. 487; Otis v. McMillan, 70 Ala. 46; Harris v. Miller, 71 Ala. 26; Bailey v. Timberlake, 74 Ala. 221.

The appellant contends that this statutory right of redemption, not being property or the right of property, is not subject to mortgage, and therefore, by the executing of the mortgage by complainant and her husband to Eula C. Beck, subsequent to the foreclosure of the Perdue mortgage, the relation of mortgagor and mortgagee was not created between complainant and Beck, and, in exercising the right to redeem from Harsh, Beck was not exercising the right of a junior mortgagee.

This contention finds support in the authorities. In Francis v. Sheats, 153 Ala. 477, 45 So. 241, 127 Am. St. Rep. 61, it was said:

"Furthermore, if Francis' mortgage from Sheats was executed subsequent to the foreclosure of the Scott mortgage, no relation of mortgagor and mortgagee ever existed, under Sheats' mortgage to Francis, because Sheats was deprived by the foreclosure of any right or interest in the property which he could convey by mortgage to Francis."

See, also, Brannan v. Adams, 202 Ala. 442, 80 So. 826; Whitman v. Taber, 203 Ala. 496, 83 So. 595.

Therefore, for the purpose of this case, this contention of the appellant may be conceded.

By the deed executed to the complainant by Mrs. Beck on May 15, 1917, she conveyed to complainant the equity of redemption in the land — the only interest she then held; and when the Perdue mortgage was foreclosed the statute conferred on the complainant, not her vendor, Mrs. Beck, the right to redeem, and, unless the mortgage executed by complainant and her husband to Mrs. Beck subsequent to the foreclosure of the Perdue mortgage can be treated as an assignment of the right of redemption under the statute, then Mrs. Beck had no right to redeem, and in claiming and exercising the right of redemption recognized as outstanding by the deed from Perdue to Harsh, and the lease from Black to Perdue, and taking the deed from Harsh, she destroyed the right of complainant to redeem from Harsh; for certainly Harsh could not upon complainant's offer to redeem subsequent to that time transmit the title to complainant, as he had already parted with this title. Mrs. Beck by the act of claiming and exercising the right of redemption that belonged to another, to wit, the complainant, and acquiring property in which she had no interest, and destroying the right of complainant to redeem from Harsh, at least committed a constructive fraud as against complainant, and for the purpose of meting out justice equity will seize upon this fact and raise a constructive trust or trust in invitum in favor of the complainant, and upon complainant doing equity, as she has offered to do, will enforce the trust by vesting her with the legal title to the property. Pom. Eq. Jur. (4th Ed.) § 1044; 26 R. C. L. p. 1236, par. 83.

Viewing the case from another angle; If the mortgage given by the complainant and her husband to Beck after the foreclosure of the Perdue mortgage operated as an assignment of Black's statutory right of redemption to Beck, the assignment was conditional, was given as a security for a debt, and when Beck, as the assignee thereof, exercised the right of redemption and took the title to the property, the debt from Black to Beck not having then matured, she took the title in trust for the benefit of her assignor, the complainant; and the complainant, by reimbursing her and paying the debt secured by the assignment, is entitled to the property. So, taking either horn of the dilemma, Mrs. Beck took the title to the property in trust for the complainant.

"Wherever property, real or personal, which is already impressed with or subject to a trust of any kind, express or by operation of law, is conveyed or transferred by the trustee, not in the course of executing and carrying into effect the terms of an express trust, or devolves from a trustee to a third person, who is a mere volunteer, or who is a purchaser with actual or constructive notice of the trust, then the rule is universal that such heir, devisee, successor, or other voluntary transferor, or such person with notice, acquires and holds the property subject to the same trust which before existed and becomes himself a trustee for the original beneficiary." 3 Pom. Eq. Jur. (4th Ed.) § 1048.

The appellant, Arnold, is well within this rule, and under it he succeeded to no greater rights than were held by his vendor. On these principles the bill is not without equity, and the decree of the court below will be affirmed.

Affirmed.

ANDERSON, C. J., and SAYRE and GARDNER, JJ., concur.