Alabama Mortgage & Securities Corporation v. Chinery, 6 Div. 330.

• Decision Date: 12 January 1939
• Docket Number: 6 Div. 330.
• Citation: 237 Ala. 198,186 So. 136
• Parties: ALABAMA MORTGAGE & SECURITIES CORPORATION v. CHINERY.
• Court: Alabama Supreme Court

186 So. 136

237 Ala. 198

ALABAMA MORTGAGE & SECURITIES CORPORATION v. CHINERY.

6 Div. 330.

Supreme Court of Alabama

January 12, 1939

Rehearing Denied Feb. 9, 1939.

Appeal from Circuit Court, Jefferson County; J. Edgar Bowron, Judge.

Action on a promissory note by the Alabama Mortgage & Securities Corporation against George Chinery. From a judgment of nonsuit, plaintiff appeals.

Reversed and remanded.

Coleman Spain, Stewart & Davies, of Birmingham, for appellant.

Martin Turner & McWhorter and Edwin I. Hatch, all of Birmingham, for appellee.

BROWN Justice.

This is an action of assumpsit by the appellant, against appellee, on a promissory note made by the defendant on the 16th day of November, 1931, for $1486.12, to Southern Mortgage &amp Securities Corporation, with the interest thereon, alleged to be "due and unpaid" on the filing of the complaint June 12, 1937.

The plaintiff sues as indorsee of the note. The defendant filed, "in open court" on March 7, 1938, six special pleas, lettered from A to F inclusive, in legal effect admitting the indebtedness--the general issue not being interposed--and seeking to invoke the benefits of Act 146, known as the Chichester Act, approved June 24, 1935, entitled "An Act to regulate all actions, now pending or hereafter instituted, during the life of this Act, whether at law or in equity, wherein recovery is sought on any indebtedness, in whole or in part, then or theretofore secured by any mortgage or other lien on real estate, or then or theretofore payable under any contract of sale of real estate." Acts 1935, pp. 184-187.

This legislation has been justified on the theory that its enactment was in the exercise of the police power of the State residing in the Legislature. Mutual Building & Loan Ass'n v. Moore, 232 Ala. 488, 169 So. 1; Birmingham Trust & Savings Co. v. Joseph, 234 Ala. 271, 175 So. 275.

The several pleas invoke the benefits of §§ 3 and 4 of said Act, which provide as follows:

"That in all actions at law now pending or hereafter instituted during the life of this Act, wherein, recovery is sought on any indebtedness, in whole or in part, then or theretofore, secured by any mortgage or other lien on real estate executed contemporaneously with the creating of the original indebtedness or then payable under any contract of sale of real estate, the defendant, in addition to any other defenses thereto, may by plea, set off against said indebtedness an amount equal to the fair market value of the said real estate covered by said mortgage or other lien or contract of sale whether said mortgage or other lien or contract of sale may have been foreclosed or not, said value to be determined by a court, or by a jury, if a jury be demanded by either party; but in no case shall any such set off or credit so determined by the court or the jury be allowed to exceed the amount of the said indebtedness; which said indebtedness shall include (without limiting the same thereto) principal, interest and a reasonable attorney's fee if the instrument or instruments sued on provide for the payment of the same. * * *

"That in any action at law now pending or hereafter instituted during the life of this Act, wherein recovery is sought on any indebtedness, in whole or in part then or theretofore secured by any mortgage or other lien on real estate executed contemporaneously with the creation of the original indebtedness, or then or theretofore payable under any contract of sale of real estate which mortgage, or other lien or contract of sale has been foreclosed either before or after the institution of said suit, the defendant in such suit, in addition to any other defenses thereto, may, by plea allege, in substance, that the property which secured said debt did not upon foreclosure sale bring its fair and reasonable value at the foreclosure sale and that the evidence of the debt is entitled to be credited with the fair and reasonable value, and an issue must be made upon said plea under the direction of the Court."

While it must be conceded that the purpose of the Act is not clearly expressed either in its title or body, it follows in its general scope the provisions of the civil practice Act of New York, as amended at the Extra Session of the Legislature of that State in 1933, c. 794, and interpreted by the Appellate Division of the Supreme Court, Second Department May 3, 1934, and by the Governor of that State in a memorandum of April 24, 1934, on extending the period of its operation to July 1, 1936. Said the Governor: "The purpose of these acts was to 'prevent a mortgagee from foreclosing property and from obtaining, in addition, an exaggerated deficiency judgment...