Judges： Coleman, Walker
Filed Date： 11/15/1890
Status： Precedential
Modified Date： 11/2/2024
The Corbin Banking Company doing business as bankers in New York City, negotiated a loan between the . plaintiff, a corporation under the laws of England, and William B. Sewell, the defendant, a resident citizen of Alabama. The loan was secured by a mortgage on the lands in Elmore county, Alabama.
Under a power of sale included in the mortgage, the land was sold, and plaintiff the mortgagee, became the purchaser.
By the laws of this State, a foreclosure of a mortgage in accordance with its provisions, is a valid, legal foreclosure, and there being no fraud or undue advantage, is absolute and final against all persons, except against the mortgagor or his privies, although the mortgagee himself is the purchaser at his own sale.
A mortgagor (or his privies or assignees who have become such before a foreclosure) has the privilege, if seasonably expressed, to disaffirm and avoid the sale and foreclosure, when the mortgagee becomes the purchaser, no such authority having been granted in the mortgage. The mortgagee, also may by bill in chancery compel the mortgagor to elect whether he will ratify or disaffirm the sale ; and if the sale is disaffirmed, the bill being framed for that purpose upon sufficient proof, the court will decree a foreclosure.
Acting under these principles, the plaintiff, having purchased the mortgaged lands at a sale made in pursuance of the terms of the mortgage, filed the present bill, in which the defendant is required to elect, whether he will ratify or disaffirm, and, in the event he disaffirms the sale, the court is prayed for a decree of foreclosure.
The mortgage and notes are headed at Elmore county, Alabama, and purport to have been dated and signed there. By the averments of the bill, the mortgage is made a part of the bill. It has this provision in it: “It-is further agreed between the parties hereto, that the notes herein described and this mortgage shall be governed and construed by and under the laws of the State of Alabama where the same is made.”
The note bearing 8 per cent, interest on its face, and interest
The defendant ¥m. B. Sewell answered the bill and elected to disaffirm the sale. In his answer he states Hhat the said transaction toas made in the State of Alabama on the oth day of March, NSW, or about that time,” and this admission is followed' with the statement that Gaddis was the agent of the complainant, and acting in its behalf in doing business in this State, and that plaintiff had not complied with the Constitution and laws of the Slate, prohibiting the doing of business by a foreign corporation in the State without having a known place of business and an authorized agent; and further averring there was usury in the transaction, and asked that the answer be taken as a cross-bill, and prayed for affirmative relief. In answer to the cross-bill, the plaintiff denied that the transaction was made in Alabama, but averred that the contract loan was effected wholly in New York ; and for further answer to the cross-bill, the plaintiff averred that defendant, Sewell, after the filing of the original bill and before filing his answer and cross-bill, had sold by release and quit-claim all his interest in the land to one William H. Whetstone. A copy of the conveyance to Whetstone, with the certificate of acknowledgement. is made an exhibit, to the answer to the cross-bill.
Plaintiffs then amended their original bill by adding thereto, an averment that the contract loan was made wholly in New York City, and not in Alabama. To the bill as amended the respondent answered, admitting, the averment of the amendment, to be correct; and by way of answer and plea, set up the New York statute, which prohibits a greater rate of interest than six per cent., and which declares all contracts in which usurious interest is charged to be null and void. The pleadings have been stated at length, in order that we may be the better understood in (Considering the several questions oí law discussed, and insisted upon in argument. The chancellor dismissed plaintiff’s bill, and defendant’s cross-bill, holding that the contract was governed by the laws of New York, and was null and void.
The foreclosure of the mortgage by sale under power given in the mortgage cuts off the equity of redemption, as fully as a foreclosure by a decree by the court. The mortgagor in such a case may come into a court oí equity, and in this court alone, and have the sale set aside, and thus become re-invested with the equity of redemption. But to obtain this relief, he must offer to do equity.— Garland v. Watson, 74 Ala. 324; Harris v. Miller, 71 Ala. 32; Craddock v. Amer. Freehold
The purchaser of the equity of redemption succeeds to 'all the rights of the mortgagor. The court does not set aside the sale on the ground, that the equity of redemption still exists in the mortgagor, but on the theory that the mortgagee stands in the relation of a trustee who has obtained an advantage over his cestui que trust, and out of great caution a court of equity permits the cestui que trust to elect within a reasonable time whether he will disaffirm the sale.—Thomas v. Jones, 81 Ala. 304. After the foreclosure there is no property right in the mortgagor, nothing that can be levied on or sold or assigned. We do not now refer to the statutory right' of redemption, amended by the acts of 1888-9, p. 764, but to the redemption rights of the mortgagor growing out of the transaction under consideration. He has the option to ratify or disaffirm, and. no one who was not the owner of the equity of redemption or his privies at the time of the foreclosure by sale, and who has not in some way estopped himself, can assert this election. The only purpose and effect of a decree setting aside the sale, is to restore him the equity of redemption, and this will be done only upon his doing equity. If, therefore, after the foreclosure of the mortgage, the mortgagor, sells and conveys the lands, to a third person, he is not in a position to ask the court to grant this relief, or to exercise any election in the matter. McCall v. Mash, 89 Ala. 487. If the bill had been amended, under Chancery Rule 48, and averred that after the filing of the bill and before the respondent filed his answer and cross-bill, the respondent had sold and conveyed the lands to Win. LI. Whetstone, and the averments had been sustained by proof, we would hold that defendant was estopped fron^asserting the right of election, and complainant would liave^meen entitled to a decree confirming the foreclosure; or, complainant might have dismissed his bill without prejudice, and the mortgage being valid and fully executed, could have successfully maintained a suit in ejectment for the recovery of the land, without interference by a court of equity at the suit of the mortgagor.
An answer is intended merely to bring forward a defense to the bill or cross- bill as the case may be; and the only relief granted upon a mere answer, is that the defendant be dismissed. If proof had been offered to sustain this ground of defense, which we do not find in the record, not having been charged in the bill, no affirmative relief on this ground could be granted, for the want of proper averment.
It has been settled by numerous decisions that he who comes into a court of equity for relief must do equity ; and this rule
The important qestion is to determine what law governs the contract; and to do this, the first inquiry is to ascertain the place of the contract.
The facts in the case of Farrior v. New FJngland Mortgage Security Company, 88 Ala. 277, were almost identical wjth those in the present' case. In the second paragraph of the opinion, this court said : “The bill shows on its face with sufficient certainty that the notes and mortgage were presumptively executed and delivered in this State. They all bear date April 13th, 1886, the notes and mortgage alike being dated in Alabama. There is contained, moreover, in the body of the mortgage, this declaration : It is further agreed between the parties hereto, that the notes herein described, and this mortgage shall be governed and construed by and under the laws of the State of Alabama, where the same is made. The word made, as here used obviously meaning executed, and the latter word involves the act of delivery. The acknowledgment moreover taken before the notary, imports in express words that the grantor executed the mortgage on the day it bore date. ... It was immaterial, therefore, that the notes were made payable in New York. The loan of the money and the taking of the security by mortgage, wer aprima facie executed in Alabama.”
The averments of the original bill in this suit are substantially the same. Does the proof sustain these allegations, or does it support the amendment to the bill, which alleges the transaction to have been executed in New York? There can be no doubt that the evidence fixes Alabama as the locus contractus. The presumption arising from the written, instruments is fully sustained by the facts testified to by Gaddis, none of which are disputed in any way by the testimony of any other witness. The application for the loan was made in Alabama, the money was paid to the borrower in Alabama, upon the execution of the notes and mortgage which was done
Prior to that time, all that had been done was merely preliminary. Some of these preliminary acts, such as making out the application had been performed in Alabama; others, such as the payment of the money by the loan company to the Corbin Banking Company, was done in New York. The Cor-bin Banking Company did not receive the money from the lender or hold it when received, as the agent of the borrower. As yet, the borrower had no claim upon it, and the Corbin Co. was not responsible to the borrower for its use. The check sent out to Alabama was payable to Gaddis, not to Sewell, the borrower. It was to be paid over to the borrower after he had executed the contract by giving a note and mortgage, upon the property designated in the application, and which were situated in Alabama; but until this was done, there was no contract for the loan to Sewell, which Sewell could enforce against any one. The negotiation ended in a contract when the note and mortgage were executed by Sewell and the money paid to him. The proof shows that the note and mortgage were not made and sent to New York for delivery before the payment of the money, but the contrary is true. The money was sent out to Alabama, before the execution of the notes and mortgage, and then and there paid over, upon their execution. Until then the money was not subject to his order.
Gaddis further testilies that by previous arrangement with the Corbin Banking Company, he was paid in cash by the company for his services in procuring the loan, three per cent, on the amount loaned. He further says: “I received the mortgage and notes from said Sewell at the instance of the Corbin Banking Company of New York, and sent them to the Corbin Banking Company in New York.” “I had the mortgage recorded, after it was delivered to ine.”
Having arrived at the conclusion that the contract was made in Alabama, the stipulation to pay eight per cent, interest was in accordance with the lex loci contractus. If a valid contract where made, it is, as a general rule, valid everywhere. Under a valid contract, parties may agree for the payment of such rates of interest as may be allowed by the law of the place of making, or performance of the contract. This proposition is conceded.—Depeau v. Humphries, 8 Martin’s Rep. 27; Andrews v. Pond, 13 Pet. 78; 2 Kent, § 460; Hanrick v. Andrews, 9 Por. 30; Cromwell v. Sen, 96 U. S. 602; Hitchcock v. United States Bank, 7 Ala. 433.
Proof without allegation, or allegation -without proof, does not authorize relief The allegata and probata must corres
An amendment to a bill is a mere continuation, and the whole is but one bill. In the case of Lockett v. Hurt, 57 Ala. 200, the bill was filed in a double aspect, first asserting a right to redeem lands under a sheriff’s sale, and, second, asserting the invalidity of the sheriffs sale. This court held that the plaintiff was entitled to relief. In the case of Ray v. Womble, 56 Ala. 36, referring to the case of Lockett v. Hurt, supra, it was held that the inconsistency of the bill in thé latter was not inquired into, because, the assignments of demurrer did not embrace the cause of repugnancy in the bill.
We hold that the failure of the defendant to demur to plaintiff’s bill, or otherwise object to it, on account of inconsistent or repugnant allegations, was a waiver of the defect; and if the proof shows that plaintiff was entitled to relief under either aspect of his case, the court below erred in not granting relief. Our conclusion has been that the locus contractus was. Alabama, and that consequently the New York statute was no defense. We are further confirmed in our conclusion that plaintiff is entitled to relief by the leading authorities relied on by both appellaut and appellee to sustain their respective contestations.
The facts in the case of Chapman v. Robertson, 6 Paige, 627, were, that Robertson, a citizen of New York, being in England, applied to Chapman for a loan of 800 pounds sterling, to be secured by bond and mortgage on lands in New Yorlr. It was agreed that Robertson should return to New York, and execute his bond and mortgage, and have the same recorded, and transmit it to complainant in England; and upon receipt of the security, the 800 pounds were to be deposited in London with Robertson’s bankers, for his use. On a bill filed in New York, the same defense was made as in the present case, viz., that the contract was made in England, and the money payable in England and being in violation of the usury laws of England, the contract was void. The court field that, the security being upon land situated in New York, the place of the domicil of the mortgagor, although the money was payable in England, the contract was governed by the laws of New York, and the plaintiff was granted relief. The conclusion of this decision has been followed in other courts, and adopted as a sound construction of the law applicable in
We are aware that the soundness of the reasoning in the decision in 6 Paige, supra,.has been questioned; and Jones, in his work on Mortgages, vol. 1, §>? 660-1, says it has been overruled. Most of the authorities which criticize the principle of law laid down, generally concede the correctness of the conclusion of the learned Chancellor, who rendered the decision in the case of Robertson v. Chapman. Judge Story, in his criticism', § 298c, referring to the case of Chapman v. Robertson, says : “tire decision itself seems well supported in point of principle; for the parties intended that the whole transaction should be in fact, as it was in form, a New York contract, governed by the laws thereof, and the repayment of the debt was there to be madeThe italics are ours. There are no facts in the case, except those which arise from the making of the note and mortgage in New York, which authorize the assumption that the money was to be repaid in New York. The chancellor and Judge Story differ as to the place of payment. The latter holding it to be a New York contract, and consequently the place of payment presumptively was in New York; the former holding that, as no place of payment was fixed, the law fixed it in England; but further held, that although, as a mere personal contract, it would be wholly inoperative until if was received by the lender in England, where the money was then to be deposited with the borrower’s banker for his use, yet, on account of the character of the property, being real or heritable property, and the further fact, that the mortgage was executed in New York, upon property m that State, being valid by the lex situs, which was also the law of the domicil of the mortgagor, it was the duty of the court to give full effect to the security, without reference to the usury laws of England, which neither party intended to evade by the execution of the mortgage upon the lands in New York.
It is insisted by appellants, that the rule declared in Chapman v. Robertson, is fully sustained by principle and authority, and applies in the present case; and on the other hand, it is insisted by appellee, that Chapman v. Robertson, is not based upon sound principles of law, has been overruled, and that Story’s criticisms are well founded. We have cited both authorities because both sustain our conclusion, so far as granting relief to plaintiff.
In the case of Hitchcock v. United States Bank, supra, the
If the principles declared in the case of Chapman v. Robertson are correct, it is the duty of this court to hold the security valid without reference to the usury laws of New York. On the other hand, if the facts of the case in Chapman v. Robertson are sufficient to fix the locus contractus in New York, as held by Story, and by this court in 7 Ala., supra, then the facts of the case under consideration, as we have shown, are much more potent to fix the locus contractus in Alabama, and this being established, it is conceded the parties could contract for either rate of interest, without regard to the usury laws of the place of payment.
The case before us does not require an adjudication of the question, whether, when the locus contractus and locus solutionis is wholly in the same State, and where usurious contracts are declared void by statute, and (he debt is secured by a mortgage upon property in another State, where a higher rate of interest is legal, the parties may legally contract for the higher rate. Anything we might say on this subject would be regarded as mere dictum, inasmuch as we hold the present contract to have been made in Alabama; and in this respect the conclusion of this court differs from that reached in the case of Dugan v. Lewis.
The case of Dugan v. Lewis, 14 S. W. Rep., supra, was very similar to the case under consideration, and if the facts had been detailed literally, probably the two would be identical in all respects. The Texas case regarded New York as the locus contractus and locus solutionis, and followed Chapman v. Robertson, supra, citing other authorities sustaining it. Judge Henry, by whom the opinion in the Texas case was rendered, brings forward ' as an additional argument, this proposition, founded upon the doctrine that the contracting parties have the right to stipulate for the rate of interest legal at either of the two loci. He says there is no reason why their making their contract in one State instead of the other, nor why their making it payable in one instead of in the other, should have
The general rule is, the validity of a contract is determined by the place of the contract, and the intention of the parties is only looked to in construing the contract, or, as forcibly put in the brief of counsel, the “venue of the agreement determines-its validity, and not the venue of the intention.”—Cubbedge v. Napier, 62 Ala. 522.
The necessities of trade, commerce and progress may demand that the principle of mutatis mutandis be expanded, and applied to other things “than names, offices, and the like.”
The evidence fails to establish that the plaintiff charged any higher rate of interest than eight per cent. There is no evidence tending to show that plaintiff knew of, was connected with, or in any manner interested in the commisions paid or agreed to be paid to Gaddis, or the Corbin Banking Company, to procure the loan.—Ginn v. New Eng. Mortg. Sec. Co., supra, 8 So. Rep. 388; Call v. Palmer, 116 U. S. 10.
Under the recent decisions of Nelms v. New Eng. Mortg. Sec. Co., (supra), and New Eng. Mortg. Sec. Co. v. Ingram, 91 Ala. 337, the averments and proof show a compliance with the law which requires that foreign corporations shall have a known place of business, and authorized agent.
Reversed and remanded.