Brooks v. Greil Bros. Co.

This case has been here, on demurrer to the bill of complaint, on two former appeals. Greil Bros. v. Brooks,176 Ala. 577, 58 So. 552; Brooks v. Greil Bros., 192 Ala. 235,68 So. 874.

On the last appeal, it was held that the bill was sufficient to show that Greil Bros. Company, the respondent corporation, held the rents as a trustee in invitum in favor of the complainant, and the issue was thus stated by Mr. Justice Thomas:

"Whether the case be decided on the theory of a constructive trust, or on that of an unauthorized sale and transfer of a nonnegotiable rent note by an agent, the transferees of the notes must account therefor to the real owner, unless they can show that they were bona fide purchasers for a valuable consideration, and without notice of the rights of the real owner, or without knowledge of facts that would put a reasonably careful man on inquiry which, if pursued, would lead to a knowledge of the ownership of the rent notes in question."

The evidence shows that Greil Bros. Company was a purchaser for value of the rent notes. It was therefore incumbent upon complainant to show that the purchaser had actual or constructive notice of the equity asserted. Ely v. Pace,139 Ala. 293, 298, 35 So. 877.

It may be conceded, for the purposes of the argument, that Greil Bros. Company was pre-informed that complainant was the owner of the farm; and, further, that, if this were all, it was thereby charged with the duty of inquiring as to the real ownership of the rent notes, and as to the authority of the husband to dispose of them as he was doing in satisfaction of, or as security for, his individual debts.

The question then arises: Were there any other facts known to the purchaser, which reasonably indicated that complainant's husband either owned the rent, or was authorized to dispose of it as he willed, and thereby justified the omission of further inquiry by the purchaser?

The evidence shows that complainant's husband was engaged in business continuously from 1903 to 1910, and that he was all the while buying merchandise from Greil Bros. Company; that in 1903 he leased complainant's farm to one W. A. Crenshaw for five years in his own name, and took rent notes for cotton payable to himself; and that these notes were assigned to Greil Bros Company as collateral security, just as in the present case. These notes were collected by Greil Bros. Company from year to year, and no opposition was ever manifested by complainant to that transaction, although it covered a period of five years. It is inconceivable, to the ordinary mind at least — and must have been so to this respondent — that her husband could have exercised such authority and pursued such a course of dealing with respect to her property, without her knowledge and consent, express or implied. We think the respondent company was fully justified in assuming, in view of its past experience, that complainant's husband was authorized by her to take her rents and use them in his business as he might see fit.

We so ruled in the case of Brooks v. Greil Bros. Co.,179 Ala. 459, 470, 60 So. 389, wherein this complainant was suing this respondent, Greil Bros. Company, in assumpsit, for the rents collected by it as assignee of the W. A. Crenshaw rent notes. In that case the facts were substantially the same as here, with this difference, viz., that here we have superadded the five years' course of dealing with the W. A. Crenshaw notes. It was there said:

"It is true the defendants may have known that the cotton came off of the wife's lands, but they had every reason to believe that the plaintiff had given her husband the authority to do what he did, or was ratifying his act each year; and, unless these defendants knew that the said husband was breaching the trust reposed in him by using the rent instead of paying off the mortgage on the land, they would not be liable in this action. First Nat. Bk. v. Nelson, 106 Ala. 535,18 So. 154."

Our conclusion is that, on the facts here shown, Greil Bros. Company was not chargeable with notice of the trust in favor of complainant, and cannot be required to account for rents collected, nor deprived of their property in the notes.

Taking a broader view of the case, we think that complainant's conduct with respect to her husband's unrestrained control of her property, and his unhindered appropriation of its rents to his own uses, for 15 or 20 years, which her own testimony shows she could not have failed to know and understand, works against her a complete estoppel in favor of those who have dealt with her husband as with one having authority. Brooks v. Greil Bros. Co., 179 Ala. 471, 60 So. 389.

This form of estoppel is usually expressed by the maxim that, where one of two innocent persons must suffer by the act of a third, he who has enabled the third person to occasion the loss must sustain it.

To permit complainant to now deny the right of her husband to do that which she had suffered him to do for many years would violate the maxims of equity, and result in a much greater fraud than that of which she complains. It is of no consequence that she did not definitely know just how he was framing the leases, nor to what persons he was disposing of the rents. She knew that he was not applying them to her mortgage indebtedness, and that he was therefore using them for his own purposes, and presumptively in his own business.

We have no fault to find with the principles of law so ably marshaled by complainant's counsel in support of her claim. Our denial of the relief sought is not based upon any rejection of these principles, but upon the conduct of complainant alone.

Let the decree of the chancery court be affirmed.

Affirmed.

ANDERSON, C. J., and MAYFIELD and THOMAS, JJ., concur.