American Freehold Land Mortg. Co. of London v. Turner

• Decision Date: 23 May 1892
• Court: Alabama Supreme Court
• Parties: AMERICAN FREEHOLD LAND MORTGAGE CO. OF LONDON, LIMITED, v. TURNER ET AL. AMERICAN MORTGAGE CO. OF SCOTLAND, LIMITED, v. SIMMONS ET AL. LAND, MORTGAGE, INVESTMENT & AGENCY CO. OF AMERICA, LIMITED, v. TURNER ET AL.

11 So. 211

95 Ala. 272

AMERICAN FREEHOLD LAND MORTGAGE CO. OF LONDON, LIMITED, v. TURNER ET AL.

AMERICAN MORTGAGE CO. OF SCOTLAND, LIMITED, v. SIMMONS ET AL.

LAND, MORTGAGE, INVESTMENT & AGENCY CO. OF AMERICA, LIMITED, v. TURNER ET AL.

Supreme Court of Alabama

May 23, 1892

Appeal from chancery court, Madison county; THOMAS COBBS Chancellor.

Separate bills in equity by the American Freehold Land Mortgage Company of London, Limited, and the Land, Mortgage Investment & Agency Company of America, Limited, against Daniel H. Turner and others, and by the American Mortgage Company of Scotland, Limited, against Peter Simmons and others, for the appointment of a receiver. From decrees that complainants were not entitled to the relief asked complainants appeal. Reversed.

Humes & Sheffery, for appellants.

David D. Shelby, for appellees.

COLEMAN J.

These several causes were submitted and argued by counsel as one case, and have been so considered and determined. The object of the bill was to have a receiver appointed with authority to collect and hold the rents or mesne profits accruing from certain lands until the final determination of a suit in ejectment, which was then pending, and instituted by the plaintiff against the landlord and tenants for the recovery of the land. The averments of the bill show that in April, 1886, Daniel H. Turner executed his mortgage with power of sale, upon the lands, to complainants, and that by virtue of this power, after the law day had expired, the mortgage was foreclosed on the 6th day of July, 1891, at which sale the mortgagee became the purchaser. There was no provision in the mortgage which authorized the mortgagee to purchase at his own sale. After sale and purchase, possession was demanded of the mortgagor, and also of the tenants, and demand was also made of the tenants that they attorn to the purchaser as their landlord. These demands were refused. Suit in ejectment was then instituted to recover the land. The averments of the bill show that the relation of landlord and tenant between the mortgagor and the other defendants began after the execution of the mortgage, and existed at the time of the foreclosure. It is further averred that the mortgagor and the other defendants are insolvent, and are making away with the crops, and that, unless a receiver is appointed, complainants will lose the rents to which they are entitled as owners of the land by virtue of their purchase at the foreclosure sale. The answer of the defendant Turner to the allegation that he is insolvent is evasive, and wholly insufficient as a denial. The bill was confessed by the tenant defendants.

There are many affidavits in the record as to the value of the land; those offered on the part of the complainant placing the value of the land below the amount of the debt secured by the mortgage, and those by the mortgagor fixing the valuation in excess of the debt. We are unable to perceive the relevancy of these affidavits. The bill is not filed to foreclose the mortgage and for the appointment of a receiver to secure the rents during the foreclosure suit. The foreclosure was effected by the sale under the power given in the mortgage. It is not pretended that the sale was void. The value of the land is not a question in the case. A foreclosure under a power of sale cuts off the equity of redemption as effectually as a decree of the court. When the mortgagee becomes a purchaser at his own sale, the mortgagor may avoid the sale, and redeem in a court of equity, but to do this he must do equity. It is only upon the offer to do equity that a chancery court will set aside the foreclosure sale. A mere averment in the answer that the sale is voidable as to the respondent, and that he elects to avoid it, without more, is wholly insufficient. It requires either an original bill or a cross bill or answer in the nature of a cross bill offering to pay the debt secured by the mortgage to entitle the mortgagor to have the sale set aside. The authorities are collated in Mortgage Co. v. Sewell, 92 Ala. 168, 9 South. Rep. 143. So long as the foreclosure sale stands, and no affirmative legal steps are taken to avoid it, the purchaser, although he is the mortgagee, must be regarded as the owner of the land. Not being competent to make a conveyance to himself, his title as purchaser may be only equitable, and, standing alone, might be insufficient to support ejectment; but by virtue of his title as mortgagee both the legal and equitable title becomes united in him, and constitutes a perfect title, subject only to the right of the mortgagor, seasonably expressed in a court of equity, to be let in to redeem. 92 Ala., 9 South. Rep., supra.

If plaintiff is entitled to recover rents or mesne profits in his ejectment suit, and is in danger of losing them by reason of the insolvency and misconduct of the mortgagor and the tenants, and the law furnishes no adequate protection and remedy to the plaintiff to prevent the loss in the mean time it was the duty of the chancery court to appoint a receiver, with authority to collect and hold the rents until the final determination of the suit at law. Does the statute give the mortgagee or a purchaser at a mortgage sale a right to the writ of attachment against the crops grown on the premises to secure the payment of the rents and mesne profits which are recoverable in a suit in ejectment? It is well settled now that fealty and rent are incident to the reversion, and pass with it. When lands subject to a lease are conveyed, the grantee succeeds to all the rights of the grantor, and the lessee becomes the tenant of the grantee without attornment. This rule resulted from the passage of a statute in the reign of Queen Anne, which abolished the rule that attornment by the tenant was necessary...