Weatherwax v. Heflin , 244 Ala. 210 ( 1943 )

The trial was had under the Code of 1940. The old rule 76 of Equity does not obtain. Code 1940, T. 7, Appendix, p. 1095, rule 57. It is:

"A note of submission, signed by each party to the submission or his attorney of record, showing the proof upon which he rests his case, shall be filed by the register at the time of a submission for a final decree; and nothing not noted on the note of submission shall be considered by the Court. But it is not necessary to note any testimony given orally before the judge in open court under Rule 56, if written out and filed in the cause.

"If in any case it becomes impracticable for such note of submission to be signed as above required, the register may make out and sign the note."

The decree of the court among other things recited:

"This cause coming on to be heard, was submitted to the court for final decree upon the pleadings and proof noted by the Register, and was argued orally before the court by the attorneys representing the respective parties and written Briefs were submitted to the court by the attorneys for both complainants and defendants, * *."

The claim of exemption of homestead was filed February 5th, and the motion for rehearing is of the date of May 15, 1942.

The assignment of error in this court is by the attorney who filed the bill. The brief for appellant is by a different counsel, making known to the court that he was not of counsel for appellants-complainants when the cause was submitted for final decree or when the error was assigned in this court. That he was away serving his country in the war of nations.

Adverting to the record where the note of testimony should have been embraced, under the duty imposed on counsel or upon the register, according to the foregoing rules, it should be observed that there is no note of testimony touching complainants' pleading and proof. Hence a large part of the evidence is without the consideration of this court. The note of testimony for the respondents contains, among other things, the following:

"The respondents being called, separately and severally, offer and note the following testimony:

"* * *

"Fourth: Deposition of J. B. Perdue, and Exhibit one thereto.

"Fifth: Deposition of J. P. Miller, and all Exhibits thereto.

"Sixth: Deposition of Mrs. Evie Heflin, and all Exhibits thereto.

"Seventh: Deposition of Josephine Heflin Littrell.

"Eighth: Deposition of Ed Louallen.

"Ninth: Objections and exceptions by respondents to the testimony."

This is in compliance with the rulings touching the duty of respondents and objections and exceptions to testimony noted before the commissioner. Sisson v. Swift, 243 Ala. 289,9 So. 2d 891.

The answers of the respondents are to the effect that the allegations in paragraphs 1, 2 and 3 of the original bill are admitted as true and the respondents further say that:

"* * * the said Complainants herein did execute in the favor of W. I. Heflin, now deceased, on May 4, 1926, a promissory note in the principal amount of $125.00, bearing interest at the rate of 8 per cent per annum from date, payable on demand, and which said note has the following words written on the face thereof: 'payment secured with mortgage on real estate'; that, on December 9, 1929, A. J. Wade as administrator of the estate of W. I. Heflin, deceased, did transfer and assign said note to Evie Heflin and Josephine Heflin, your Respondents; that, on the 11th day of May, 1927, the Complainants did execute to and in favor of A. J. Wade, Administrator, a promissory note in the principal sum of $375.00, bearing interest at the rate of 8 per cent per annum from date, and due on the 11th day of May, 1928, which said note was duly transferred and assigned to Evie Heflin and Josephine Heflin, the Respondents herein on December 9, 1929, by A. J. Wade, Admr.; that respondents further aver that the said note executed on May 11, 1927, contained the following words written on the face thereof: 'payment secured with mortgage on house and lot in Moulton, Alabama.' * * * * *."

In the fourth paragraph the respondents denied the matter alleged as to the services of Weatherwax to them and in paragraph five admit that by and through their attorney they posted notices of foreclosure of said mortgage, and deny that such attempted foreclosure was wrongful.

In the testimony of respondents each, as witness on her own behalf, denied the employment of complainant as alleged and deny payment of said notes has been made other than as admitted in their answers.

When the whole record is looked to, carrying the note and mortgage of complainant and wife of date of February 12, 1926, for $1,000.00, the separate acknowledgment of the wife thereto; the claim of exemptions hereinabove adverted to; the note for $125.00 of date of May 4, 1926, and the note for $375.00 of date of May 11, 1927 (which original documents will be set out by the reporter of decisions), — we are of opinion that the nature and character of the Lot No. 5 (contained in the mortgage) was known on the trial. The description of said lot shows it was a corner lot bounded on the west by Nance Street, on the north by North Street and that a part thereof (South Half of Lot 8) was bounded on the East by Market Street and on the south by the old Methodist Church lot.

The correspondence that ensued after respondents placed the $1,000.00 mortgage in the hands of Perdue and Miller, their attorneys, is embraced in respondents' submission in her note of testimony and contained references to the "loan on his dwelling for the purpose of retiring the outstanding mortgage indebtedness on the same"; that "this dwelling is now in good repair"; that "you state that he wishes this loan to retire an existing indebtedness on the property"; that "Mrs. Weatherwax paid us the sum of $20.00 this morning on their loan from you and under the agreement that we had with them to pay a rental of $20.00 per month which would be applied on the interest accruing on the loan"; that "Mrs. W. I. Heflin and Mrs. Josephine Heflin Littrell, Moulton, Alabama, parties named under No. 4, hold the mortgage which Mr. Weatherwax is asking to refinance"; and that in the letter referring to the loan on his dwelling, "we would like for you to advise whether your bank will make loans at present on old construction houses under this feature of the F. H. A. We enclose herewith photographs of the dwelling and adjoining houses for inspection. This dwelling is now in good repair."

The reporter of decisions will set out this material correspondence.

When the foregoing is considered with the testimony of Mrs. Heflin and her daughter, and the failure of incorporation in the record of the testimony of the complainant and his wife, it indicates that the case should be retried on all of the evidence to ascertain the true amount due on the mortgage indebtedness and the nature of the property being dealt with in the foreclosure and to be awarded and included in the final decree.

There are questions of law that should be determined at this time to guide the trial court in a retrial of the cause.

In Carey v. Hart, 208 Ala. 316, 94 So. 298, 300, it was declared that a void mortgage cannot operate by estoppel or otherwise to transfer title and that a plaintiff in ejectment transferred by defendant to equity need not do equity. The court said:

"He brought his action of ejectment to secure his strictly legal right to the possession of his property. He was brought into equity nolens volens, and improperly as the evidence disclosed. In no event could his property be subjected to a lien on account of the void mortgages. To hold otherwise would emasculate the statute. * * *"

In the application for rehearing counsel say that the authority cited in 76 A.L.R. pp. 579 and 584 is contrary to the view we have heretofore announced. The texts adverted said:

"By the weight of authority, an oral agreement for the extension of the security of a mortgage or deed of trust to cover additional indebtedness is not enforceable for any purpose.

"United States. — Williams v. Hill, 1857, 19 How. 246,15 L. Ed. 570. But see [Board of Com'rs of] Mattamuskeet Drainage Dist. v. [A.V.] Wills [ Sons], D.C 1916, 236. F. 362, infra.

"Alabama. — Hanchey v. Powell, 1911, 171 Ala. 597,55 So. 97. But see McWhorter v. Tyson, 1919, 203 Ala. 509, 83 So. 330, infra. * * *."

We have followed the citation of subsequent cases, and it will be noted that McWhorter v. Tyson, 203 Ala. 509,83 So. 330, was by a divided court with two concurring votes, two justices agreeing with the conclusion and three justices dissenting on the point presently before us, and the judgment does not support the 5th headnote or annotation as quoted in the original opinion.

The case of Hanchey v. Powell, 171 Ala. 597, 55 So. 97, is dealt with in Becker Roofing Co. v. Hanks et al., 228 Ala. 685,155 So. 360, 362, where the court said:

"The letter from Mrs. Hanks to complainant's attorney, Exhibit D to complainant's testimony, written a year after the transaction, cannot be held to be a ratification of any act of her husband, so far as relates to a lien on her property. This letter is in keeping with her testimony, denying the execution of the contract, as well as her consent to the roof being put on; is a begging for time for payment of the husband's debt, and a promise to assist in making payment, when able to do so.

"Merely accepting the status quo after the roof was put on, and recognizing an obligation to pay for it, will not suffice to create a lien on her property. Wadsworth v. Hodge, 88 Ala. [500], 506, 7 So. 194; Hawkins Lumber Company v. Brown,100 Ala. 217, 114 So. 110; Hanchey v. Powell, 171 Ala. 597,55 So. 97."

We believe that our decisions dealing with rights of the original parties to the mortgage are not in conflict. In Rudder v. Trice, 236 Ala. 234, 182 So. 22, 23, this court recently said:

"But in this connection, it is very well settled that if the arrangement by which the term of a lease is extended for more than one year is a contract within itself, it must be in writing. But if such arrangement is not an independent agreement, but is in the nature of a modified manner of performing a valid contract which itself complies with the statute, it need not be in writing, though the statute would otherwise require a writing. Abbeville Live Stock Co. v. Walden, 209 Ala. 315, 96 So. 237; Messer v. Dupuy-Burke Realty Co., 226 Ala. 438, 147 So. 193; 27 Corpus Juris 329, note 60; 25 R.C.L. 564, section 160; 16 R.C.L. 924, section 431; Albert Mackie Co. v. [S. S.] Dale Sons, 122 Miss. 430, 84 So. 453; compare, McKenzie v. Stewart, 196 Ala. 241, 72 So. 109."

In Woolen v. Taylor et al., 241 Ala. 316, 2 So. 2d 413, where the bill was to redeem land sold under mortgage foreclosure and to set aside foreclosure deed and for accounting, the many authorities in this and other jurisdictions are collected, where a party has been released of the oral modification of the terms of a mortgage and has performed the obligations imposed upon him by the agreement that the rights of the parties must be determined by the modified agreement; and the cases where the rights of parties are determined by the modified agreement and where one party has failed to take action called for by the writing in reliance upon the oral modification, that the cases are based upon estoppel, waiver, etc., — reliance being placed upon the action of the party in inducing a departure from the written agreement as working an estoppel against him.

It is interesting to note the many decisions cited and discussions contained in 118 A.L.R. 1511, 1515, note; Zannis v. Freud Hotel Co., 256 Mich. 578, 240 N.W. 83, 80 A.L.R. 539, 540; Lieberman v. Templar Motor Co., 236 N.Y. 139,140 N.E. 222, 29 A.L.R. 1095; Schaap v. Wolf, 173 Wis. 351,181 N.W. 214, 17 A.L.R. pp. 10 and 14.

In 118 A.L.R. p. 1511, the general rule on the subject is stated to the effect that a contract required by the statute of frauds to be in writing cannot be modified by subsequent parol agreement, and finds support in the many authorities from other states, including that from this state of Rudder v. Trice,236 Ala. 234, 182 So. 22.

Adverting to the evidence and the two notes in question, the one for $125.00 containing the endorsement averred in the answers of Mrs. Heflin and her daughter that it was secured by mortgage, and the one for $375.00 also containing the endorsement therein indicated (hereinafter considered) in said answer, — the questions for final decree are: What sums will be added to the consideration recited in the $1,000.00 mortgage of grantors on the homestead? Does that make a difference under the authorities cited below and Green v. Federal Land Bank,236 Ala. 431, 183 So. 418; Coburn et al. v. Coke et al., 193 Ala. 364,69 So. 574? Have the debts evidenced by the mortgage and the two notes been paid? Should the last note, given after the law date of the mortgage, be embraced in such foreclosure?

In brief on rehearing, appellant says that "there is ample evidence in this case, not noted by them, which would, in our judgment, justify a holding that the entire debt had been paid by the honest, hard work rendered by Weatherwax to the Heflins and at their request, and which work they not only fail to deny but they admit it. If this former holding should be modified in any way, it should be to hold that Weatherwax has paid and discharged the mortgage debt in full." However, we cannot consider this phase of the question because of the failure of the note of testimony on submission for final decree on the part of complainant-appellant.

It will be noted that the bill is filed by the husband and the wife. Their interests cannot be separated in the premises under the pleading before us as noted in Coon v. Henderson,240 Ala. 492, 497, 199 So. 704; Id., 242 Ala. 144, 5 So. 2d 397; Hamm v. Butler, 215 Ala. 572, 112 So. 141.

Although the consideration of the mortgage cannot by parol evidence be made to include a debt not within the contemplation of the parties at the time the mortgage was made, the general rule is that equity will require a complainant, seeking its aid, to do equity as a condition on which relief will be granted. Such court will not take jurisdiction to vacate an agreement which does not comply with the statute of frauds (8 Ala.Dig. 443, Equity, 66; McWhorter v. Tyson, supra); or a mortgage on the homestead of a married man which is not duly executed as such (Fies Sons v. Lowery, 226 Ala. 329,147 So. 136; Estes v. Metropolitan Life Ins. Co., 232 Ala. 656,169 So. 316; Green v. Federal Land Bank, 236 Ala. 431, 183 So. 418; Mathews v. J. F. Carroll Mercantile, 195 Ala. 501, 70 So. 143; Butler v. Wilson, 237 Ala. 312, 186 So. 687), without requiring as a condition to relief that complainant do equity by refunding that which was received on strength of the instrument sought to be vacated as affected by subsequent agreement.

The error under the record before us in embracing the notes in the amount necessary to be paid on redemption, resulting from the insufficiency of the memorandum to that effect on the notes, consists in the fact that the evidence does not clearly show an obligation on the part of appellant to pay same as a condition to redemption of the particular mortgage sought to be enjoined in foreclosure and to be redeemed. The burden was upon appellees to show that the money was borrowed on these notes to be secured by the mortgage here involved and no other. There may have been another mortgage which the memorandum had reference to. The burden being on appellees, they must prove by competent evidence that the memorandum on the notes referred only to the mortgage now in question.

We conclude with the further observation as to whether the two notes had been paid or were intended to be added to the $1,000.00 mortgage and call attention to the matter contained on p. 144 of the record which follows:

"Exhibit 'J' to testimony of J. L. Weather-wax

"Exhibit 'A' to testimony of Mrs. Evie Heflin Voucher # 1.

"State of Alabama} 6 Day of Dec., 1929 "ShelbyCounty }

"We, Mrs. Evie Heflin, widow of W. I. Heflin, deceased, and Josephine Heflin, daughter of said deceased, being the sole and only heirs at law of said W. I. Heflin deceased hereby acknowledge that we have received of A. J. Wade, the Administrator of the estate of said W. I. Heflin, deceased, the following:

"James Delashaw, rent note $240.00 credit of $200.00

"T. T. Woodruff, Mortgage $750.00

"Carl Leach Mortgage $1080.00 credit of $592.45

"J. L. Weatherwax Mortgage $1125.00. * * * *."

And on page 145 of the record, the following is observed:

"And we have received of the said A. J. Wade, in addition to the above all notes, mortgages, books and papers and accounts and all other property mentioned by him in his Inventory, and also all other property received by him as such a Administrator belonging to said estate and this acknowledgment of receipt in (is) intended, and shall operate, as a receipt in full for all property received by him as such administrator and we and each of us, as the widow and only child of deceased, hereby release said A. J. Wade from all and further liability from any acts or neglect in or concerning his administration of said estate of W. I. Heflin, deceased.

"Witness:

"J. C. Cowan Evie Heflin, ------------------------- Widow of W. I. Heflin, deceased.

"J. C. Cowan Josephine Heflin, ------------------------- Daughter of W. I. Heflin, deceased."

This would tend to indicate that the intention of the parties at that time was that no other sum than the $1,000.00 was due and unpaid by appellant to respondents when there appeared the recital "J. L. Weatherwax mortgage $1125.00" was due on date of December 6, 1929. The two notes, that of May 11, 1927, for $375.00, and that for $125.00 of date of May 4, 1926, were not included in this inventory or receipt though they bore, respectively, the endorsements "payment secured with mortgage on house and lot in Moulton, Alabama," and "Payment secured by mortgage on real estate."

The case should be retried on all of the evidence and therefore the application for rehearing is denied.

BROWN and LIVINGSTON, JJ., concur.