Keith & Son v. Ham

Special Action on the Case for Damages, by Mortgagee against Purchaserof Mortgaged Crops.

1. Assignment by partner of interest in partnership assets. — An assignment by one partner, for valuable consideration, of "all the right, title and interest he has in and to the stock of goods, notes and accounts now owned and due" to the partnership, passes to the assignee such an interest in a claim secured by a mortgage on crops, as authorizes him to join with the other partner, as joint plaintiffs, in an action for the conversion of the crops, or a special action on the case for damages in the nature of an action of trover.

2. Mortgage of crops to be raised on rented lands. — When a tenant has made a contract for the rent of land, part of a larger tract, he may make a valid mortgage on the crop to be raised by him on it, although no particular part of the tract is specified in the contract, and he has not selected any particular portion of it.

3. Damages for conversion of mortgaged property; abatement orreduction. — In trover by the mortgagee of crops, against a purchaser with notice, or a special action for damages in the nature of trover, the unauthorized sale and conversion being admitted, the defendant can not be allowed to prove, in abatement or reduction of damages, that a part of the proceeds of sale received by the mortgagor was applied by him to the landlord's claim for rent, the lien of which was superior to the mortgage. (STONE, C. J., dissenting.) It is immaterial what effect the assignment by Collins of his interest in the property belonging to the firm of Collins Ham had upon the partnership, or whether the assignee and Ham constituted a new partnership. The assignment, at least, operated to vest Collins' interest in the assignee, and to make him, jointly with the other partner, the owner of the assets which had belonged to the partnership, among which was the mortgage covering the cotton alleged to have been converted. And this suit was instituted, and properly so, by these joint owners, or owners in common, as such, and not upon any theory of a new and continuing partnership. It was shown that the mortgage, and a note for the amount secured by it, were executed to Collins Ham. The transfer by Collins to P. J. Ham was sufficiently specific to invest the latter with the former's interest. It further appeared that both the note and mortgage came to the possession of P. J. and J. N. Ham. The objections taken in the court below, on the ground of a want of interest in P. J. Ham, were, therefore, properly overruled.

The evidence tended to show that, at. the time of the execution of the mortgage, the mortgagor had made a contract for the rental of the lands on which the cotton alleged to have been converted was subsequently grown. It does not appear that this contract referred, nor was it essential, in our opinion, that it should have referred, to "a definite place," in the sense that term is used in the charge requested by the defendants. A valid contract for the rental of a given quantity of land out of a larger tract, or for the rental of one or another of several tracts, the particular tract or place to be thereafter selected by the tenant, or determined upon in any practical way, would carry such a present interest in the land, afterwards segregated and subjected to the contract, as would give vitality and validity, in equity, to a mortgage of the crops to be planted and grown thereon. The charge requested was misleading, and there was no error in its refusal.

A part of the cotton alleged to have been converted had been, according to some of the testimony, raised on rented land, and was, at the time of the conversion, subject to a landlord's lien, which was, of course, superior to plaintiffs' mortgage. The evidence tended to show, further, that twenty dollars of the proceeds of the sale to defendants was paid by the mortgagor to the landlord, in satisfaction of the claim for rent. The court was requested in writing, and refused, to charge the jury that this state of facts, if found to exist, entitled the defendants to a reduction of damages to the amount so paid. It is insisted that, inasmuch as this is an equitable action, and open to equitable defenses, the payment thus made, not by the defendants, or as a part of the transaction in which the conversion was consummated, but by a third person, and subsequent to the conversion, was in satisfaction of a prior lien, and, hence, enured to the benefit of the plaintiffs, and their recovery, in equity and good conscience, should be mitigated to the extent their security was freed from this incumbrance. Had this action been against the mortgagor, there would be more force in this position, for clearly he not only had the right, but it was his duty, to discharge the landlord's lien for rent. Or, had the case been one involving the general ownership of the property, and it had appeared that the fruits of the conversion had been applied, by the consent, express or implied, of the plaintiffs, or through legal proceedings had at the instance of a third person, to the payment of their debt, or in relieving their property from a lien, the damages recoverable by them in trover might be mitigated by the amount thus paid for them. — Bird v.Womack, 69 Ala. 392; Street v. Sinclair, 71 Ala. 210. Or, had a recovery been had in favor of the landlord against the defendants, it may be that evidence of that fact might go in reduction of the mortgagee's damages. But here, even conceding that the payment was in some sort to the advantage of the plaintiffs, we can not conceive how the fact can avail the defendants in this action. The gravamen of this action is the wrongful purchase and conversion by Keith Son. Their wrong was fully consummated, the injury resulting from it had been sustained, and the plaintiffs' right to sue had attached, before the alleged payment to Motley, the landlord. The payment was not made by the defendants, but by the mortgagor. To hold that they are entitled to a credit for the amount, would be to subrogate them to an equity created, if it exists at all, by an act with which they have no connection, and to give them the benefit of a payment which they have not made. Whatever may be the rule, elsewhere, in Alabama it has long been settled, that this species of subrogation will not be allowed. Thus, in an action of trover against the purchaser of a slave sold by an executor de son tort, it was sought to mitigate the damages by evidence that the purchase-money had been applied by the executor to the debts of the estate, but the right was denied. Chief Justice DARGAN, delivering the opinion of the court, said: "We do not intend to deny the common saying, that trover is an equitable action, and that the plaintiff can recover damages only to the extent of the injuries actually sustained; as, if the mortgagee bring trover against the mortgagor, he can recover only the amount of the debt; or, if goods be sold illegally to discharge a lien, the owner can recover of the purchaser only the value of the goods, deducting the amount of the lien. But we hold that this equity or right must be personal to the defendant himself; that is, it must have existed in him at the time he became liable to the action; or, if acquired afterwards, it must have been acquired by his own act. . . . It is clear that, at the time of defendant's purchase, when he paid the price to the executor de sontort, he was then liable in trover to the extent of the value of the slave, for at that time no equitable defense existed in his favor, or in favor of the executor; and to allow him to set up the subsequent act of Mrs. Woolfolk (the executor) as his equity, would not only be to subrogate him to the rights of another, but would often lead to inquiries so embarrassing and complicated, that a court of law would never be assured that the ends of justice had been attained. . . . I do not, however, intend to decide that such an equity could be asserted at law, even by the executor de son tort himself; but, even conceding that he may, we all concur in this, that his vendee can not by showing payments after his purchase." — Carpenter v. Going, 20 Ala. 587.

We are unable to draw any line of distinction between the case quoted from and that under consideration, on the point involved in the second instruction requested. Its refusal was free from error; and the judgment of the Circuit Court is affirmed.

STONE, C. J., dissenting on point last considered.