McAllister v. Catchings , 210 Ala. 392 ( 1923 )

The question of redemption under the statute has been given recent consideration by this court. Allison v. Cody, 206 Ala. 88,89 So. 238; Hamilton v. Cody, 206 Ala. 102, 89 So. 240; Crowson v. Cody, 207 Ala. 476, 93 So. 420; s. c.209 Ala. 674, 96 So. 875; Owen v. Kilpatrick, 96 Ala. 421,11 So. 476. A discussion of the equity and statutory rights of redemption is to be found in Dinkins v. Latham, 202 Ala. 101,106, 79 So. 493; Grace v. Montgomery, 209 Ala. 386,96 So. 430.

In the Allison-Cody Case, supra, it is stated that a valid foreclosure extinguishes the equity of redemption (Dinkins v. Latham, 202 Ala. 101, 79 So. 493; Baker, Lyons Co. v. Eliasberg Co., 201 Ala. 591, 79 So. 13); thereafter the privilege of the statutory right of redemption must be exercised in accordance with the statute (Snow v. Montesano Land Co., 206 Ala. 310, 89 So. 719); and where a third mortgagee has redeemed, a second mortgagee cannot redeem or hold said third mortgagee as trustee "for the benefit of himself and the second mortgagee, in the absence of special equities." And a conveyance to a junior mortgagee from the purchaser on foreclosure of a mortgage given the purchaser at the foreclosure of the first mortgage is, in effect, a statutory redemption (Hamilton v. Cody, 206 Ala. 102, 89 So. 240), so far as affects the parties to such conveyance.

The writer did not participate in the decision of Grace v. Montgomery, 209 Ala. 386, 96 So. 430. However, after a careful consideration of that decision, I am of opinion that it is well founded and supported by authority. It is true that a deed from the mortgagor and the first mortgagee of record, or his assignee, to a third party in the execution of a private foreclosure of the senior mortgage of record, is binding to that end between the parties to the conveyance where the same is free from fraud or oppression. Yet it is also true that a subsequent incumbrancer cannot be affected by such private agreement between the mortgagor and the senior mortgagee or his assignee that would impair the obligation of his contract if given superior or controlling effect. Such mortgagee or his assignee, in taking a deed from the mortgagor in lieu of foreclosure of the equity of redemption, was subordinated to the record notice that the junior mortgagee had of the senior mortgage and its terms, and the equitable right of redemption by the second or subsequent mortgagee is not barred, although such redemption may have been sought "two years after execution of the deed by the mortgagor to senior mortgagee (or his assignee) in lieu of foreclosure." Grace v. Montgomery, 209 Ala. 386, 96 So. 430, 432; Rothschild v. Bay City Lbr. Co., 139 Ala. 571, 36 So. 785. The junior mortgagee had acquired his interest in the mortgagor's equity, and with reference to the existing liens as they appear of record, "his rights cannot be prejudiced by private arrangements between the parties." 2 Jones on Mortgages (7th Ed.) § 830. See, also, Baker, Lyons Co. v. Eliasberg Co., 201 Ala. 591, 592, 79 So. 13; Butts v. Broughton,72 Ala. 294.

If the foreclosure of the Foreman mortgage by the conveyance had terminated the equitable right of redemption of the junior mortgagees, the result urged by appellants' counsel would obtain; but such foreclosure of the equity of redemption, as to the interest of the junior mortgagees, was not the result of the private agreement or of the arrangements of the mortgagor and assignee of the senior mortgagee — and contrary rulings on demurrer to the cross-bill are in error.

It should be said that Mrs. Martin had the right to acquire the title of Foreman, the senior mortgagee, and the fact that she may not have paid full value for the same, or that of the lands secured thereby (Ward v. Ward, 108 Ala. 278, 19 So. 354), or the intention with which she acquired the same, are immaterial (Rudisill Co. v. Eastham Co. [Ala.] 97 So. 219;¹ Hunter v. Mellen, 127 Ala. 343, 28 So. 468; Hodge v. Coleman, 76 Ala. 103), and will not impair her lien or right, as the assignee of the senior mortgagee, and prevent her from asserting the same to the extent of the senior mortgagee's interest so assigned to her (Fouche v. Swain, 80 Ala. 151; First Ave. Coal Lbr. Co. v. King, 193 Ala. 438, 69 So. 549) . A bill by a junior mortgagee to redeem, against a senior mortgagee, is a recognition of its seniority, and he must offer to pay the amount due on it. Fouche v. Swain, 80 Ala. 151. The superior claim will prevail to the extent of its seniority. Woodruff v. Satterfield, 199 Ala. 477, 74 So. 948; Cook v. Kelly, 200 Ala. 133, 75 So. 953; Hampton v. Counts, 202 Ala. 331,80 So. 413.

A purchaser pendente lite is bound by the proceeding, under the principle of lis pendens Rudisill Co. v. Eastham Co. (Ala.)97 So. 219;¹ Malone v. Marriott, 64 Ala. 486; Owen v. Kilpatrick, 96 Ala. 421, 11 So. 476; Gidley v. Bellenger,204 Ala. 160, 85 So. 374. And purchasers pendente lite may be brought before the court by a proper cross-bill, that all parties in interest may be heard and all equities settled and determined by the final decree. For this purpose a defendant may bring in all persons not brought in by the plaintiff. Bell v. McLaughlin, 183 Ala. 548, 551, 62 So. 798; Davis v. Cook,65 Ala. 617; Coster v. Bank of Georgia, 24 Ala. 37; Paulling v. Creagh, 63 Ala. 398; Sims, Ch. Pr. p. 421, § 641; Storey's Eq. Pl. p. 373, notes. There was error in sustaining demurrer of Mrs. Maude Martin filed to the cross-bill, as duly challenged by assignment of error. The subject of necessary and proper parties to a suit in equity was discussed in Hodge v. Joy,207 Ala. 198, 207, 92 So. 171. It follows from the foregoing that Mrs. Kate Catchings and Mrs. Maude Martin were necessary parties to the suit, and there was no error in bringing in, as proper parties, Joseph Catchings and H. L. Martin, in order that all parties in interest might be heard, and all equities determined by the final decree when rendered. There was error in sustaining demurrer to the cross-bill challenging the right to make Mr. and Mrs. Martin parties thereto.

Under the facts averred in the original and cross bills, a complete and adequate remedy, as affecting the respective interests of the parties, does not exist at law — a court of equity only can fully determine the respective contentions of the parties and enforce their respective interests or equities in the lands in the order and amounts of the priorities after a declaration thereof and after a just and true accounting and ascertainment of the same. There was error in sustaining the demurrer of respondents (complainants in original bill) in the cross-bill challenged by the fourth and fifth grounds of assignment. The complainants in the cross-bill (respondents in the original bill) had the equitable right of redemption from the senior mortgagee or assignee, upon paying all just sums and lawful charges due thereon. This it is duly alleged that "they are ready, able and willing to pay the debt and all lawful charges and hereby offer to do so." The averment of fact in the cross-bill and in the whole prayer thereof does not attack the validity of the Foreman mortgage or the superiority of the lien thereunder in the assignee, but only the subsequent proceeding, and conveyances are sought to be defined and limited as tending to give any right, title, or interest in the properties that would prevent redemption of the equity and foreclosure thereof by the junior mortgagee. Fouche v. Swain, 80 Ala. 151. The prayer, when considered as a whole, was to such limited effect, and this would not justify the ruling of the trial court in sustaining the demurrer of Kate Catchings directed to that portion of the cross-bill by the executors which sought to set aside the conveyance of Kate and Joseph Catchings and Maude Martin (assignee of the Foreman mortgage) to H. L. Martin. This transfer, while it was efficacious as to parties thereto, was not such as to prevent the assertion of the right of equity of redemption sought by the junior mortgagee. Wiley v. Ewing,47 Ala. 418; Fouche v. Swain, supra.

It is conceded by counsel for appellants that there was no error in sustaining demurrer to that phase of the cross-bill seeking recovery of attorneys' fees for foreclosing the mortgage; for if the property is sold it will be under the original bill to the satisfaction of the respective debts and liens securing the same, and as to this the decree of the chancellor is affirmed.

The decree of the circuit court, in equity, is affirmed in part, reversed in part, and the cause is remanded. The appellants are taxed with one-third of the costs of the appeal, and appellee is taxed with two-thirds of the costs of the appeal.

Affirmed in part, reversed in part, and remanded.

ANDERSON, C. J., and SOMERVILLE and BOULDIN, JJ., concur.

¹ Ante, p. 145.