Alabama Title & Trust Co. v. Millsap

Decision Date20 June 1934
Docket NumberNo. 7156.,7156.
PartiesALABAMA TITLE & TRUST CO. v. MILLSAP.
CourtU.S. Court of Appeals — Fifth Circuit

E. L. All and Kingman C. Shelburne, both of Birmingham, Ala., for appellant.

White E. Gibson and M. Leigh Harrison, both of Birmingham, Ala., for appellee.

Before BRYAN, FOSTER, and HUTCHESON, Circuit Judges.

HUTCHESON, Circuit Judge.

Pleading and proving eviction by final judgment of a court of competent jurisdiction, from premises described in a title insurance policy, appellee sued on the policy for the losses he had sustained. There were two defenses urged. It was claimed that the defect in the title which caused the eviction was within Schedule B of the policy, "a right or claim of a party in possession (not of record)," and therefore a defect not insured against. It was claimed too that for another reason the loss was one not insured against, because within clause 9 of the policy; one suffered "by reason of the fact that plaintiff was not a purchaser for value."

Plaintiff offered in evidence the eviction record, including pleadings, judgments, and opinions. This is what they showed: On or about September 24, 1923, one Pollak, owning the equity of redemption from a mortgage foreclosure, borrowed the amount necessary to redeem on a one-year note from Brown and Kinney. As security, a deed from the mortgagee to the lenders was escrowed with the bank, to be held "until the debt is paid," and, upon failure to pay the note at maturity, "to be delivered to grantees." The note not being paid on its due date, Kinney, who had Brown's deed, claiming that the right of redemption had been lost, got the bank to deliver the mortgagee's deed to him, and thereafter claimed the property as his own free of Pollak's right to redeem. In October, 1925, he conveyed it to Millsap, plaintiff in this cause. On August 18, 1926, Pollak filed the redemption suit, which, after six years of litigation, resulted in the judgment of eviction here sued on.

It was alleged by Pollak in the redemption suit, and found by the court, that Millsap acquired the title to the property from Kinney with notice of Pollak's right, and that he stood as to the redemption as Kinney did. It was also alleged by Pollak, but as to this no specific finding was made, that at the time Millsap attempted to acquire title from Kinney, Pollak was in the actual, visible possession of the property through his tenant and agent, Mays, and that Millsap was charged by such possession with notice of Pollak's rights. Plaintiff, in addition to offering the eviction record, proved that he had surrendered to the final judgment Pollak got, making his right of redemption absolute, and also proved his losses. He proved too, that immediately upon the filing of Pollak's bill he had advised Savage, the president of the defendant title company, of the suit; that together they went to the courthouse and together read the bill; and that he then advised Savage that he had purchased without notice of Pollak's rights. It was proven that, Savage becoming sick and dying, plaintiff went to the attorneys for the title company to get them to represent him in the suit, and, advised by them that they could not represent him, employed other counsel who defended the suit for him. Defendant proved by Mays that he took possession of the property as tenant of Pollak's before plaintiff purchased from Kinney. He proved too by Mays that though he had subsequently agreed with Kinney to attorn to him rather than to Pollak, he had never notified Pollak that he had done so, or that he had repudiated or abandoned tenancy under him. The only proof plaintiff offered as to Mays was that before he purchased he did not see or talk to Mays, that he did not know there was any connection between Mays and Pollak, and that the talk he had with him was after the suit was brought. Though Kinney was in court at the trial, and pointed out by Mays in connection with his testimony as to his attorning both to him and to Pollak, neither Kinney nor any one else was put on to deny or discredit the unequivocal and circumstantial story Mays told of having attorned to Pollak and then to Kinney, without letting Pollak know that he had done so.

At the close of all the evidence defendant moved for an instructed verdict on the ground that the uncontradicted proof showed the cause of the loss to be not within the policy, both in respect of its being a defect arising out of "a right or claim...

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