Arnett v. Willoughby

• Court: Alabama Supreme Court
• Writing for the Court: DE GRAFFENRIED, J.
• Citation: Arnett v. Willoughby, 190 Ala. 530, 67 So. 426 (Ala. 1914)
• Decision Date: 17 December 1914
• Docket Number: 907
• Parties: ARNETT v. WlLLOUGHBY et al.

67 So. 426

190 Ala. 530

ARNETT v. WlLLOUGHBY et al.

No. 907

Supreme Court of Alabama

December 17, 1914

Appeal from Chancery Court, Jefferson County; A.H. Benners Chancellor.

Suit by M.G. Arnett against Pauline P. Willoughby and others. From a decree sustaining a demurrer to the bill as amended complainant appeals. Affirmed.

Richard B. Kelly, of Birmingham, for appellant.

A.C. &amp H.R. Howze, of Birmingham, for appellees.

DE GRAFFENRIED, J.

The facts upon which the complainant rested his right to relief in this case were stated by him in his bill of complaint as amended, as follows:

First. That Lizzie S. Arnett, the wife of H.B. Arnett, was indebted to John P. Willoughby in the sum of $7,383.62, which was evidenced by 17 promissory notes, each bearing date July 1 1910, each for the sum of $400 and drawing interest at the rate of 7 per cent. per annum, and payable at the Birmingham Trust & Savings Bank, Birmingham, Ala., on or before January 1, 1911, July 1, 1911, January 1, 1912, and July 1, 1912, and the others payable on or before six months after July 1, 1912, up to January 1, 1919, and also one note for $383.62. When this last note matures does not clearly appear from the bill.

Second. That on July 5, 1910, in order to secure the above indebtedness, the said Lizzie S. Arnett and her husband, H.B. Arnett, executed and delivered to the said Willoughby a mortgage on certain real estate of said Lizzie S. Arnett which is described in the bill.

Third. That in July, 1911, the second, in the series of notes secured by said mortgage, became due, and that the complainant, at the request of the mortgagors and under an agreement with them that complainant should succeed to the lien of said mortgage for his reimbursement, paid to the said John P. Willoughby, or to some one for him, the amount then due on said note, to wit, $428, and that the said note, indorsed in blank by the said Willoughby, was assigned by delivery to complainant or to some one for him, and that the said mortgagors gave to complainant their note, due one year after date, for said sum, with the said mortgage notes attached thereto as collateral security.

Fourth. That on January 1, 1912, the third note in said series of notes secured by said mortgage became due, and that complainant, at the request of said mortgagors and under an agreement with them that he should succeed to the lien of said mortgage for his reimbursement, paid to Pauline P. Willoughby the amount then due on said note, to wit, $442, and that the said note was assigned by delivery to complainant or to some one for him, and that the mortgagors gave to complainant their note, due six months after date, for said sum, with said mortgage note attached as security therefor; that John P. Willoughby, prior to this time, had died; and that Pauline P. Willoughby, his widow, had become the sole owner of the mortgage and of the mortgage indebtedness secured thereby.

Fifth. That on the 1st day of July, 1913, the sixth note in the series of notes secured by said mortgage became due, and that on November 17, 1913, there remained unpaid on said note $200; that S.E. Thompson, at the request of the mortgagors, paid to the said Pauline P. Willoughby the said sum of $200; that the said note was assigned to him, or to some one for him, by the said Pauline P. Willoughby by delivery; that said mortgagors executed and delivered to said S.E. Thompson their two notes for $100 each, with said mortgage note as collateral security therefor, and that before the filing of this bill complainant paid to the said S.E. Thompson the amount due on said note, under an agreement with the mortgagors that complainant should succeed to the lien of the mortgage for his reimbursement, and that said Thompson assigned by delivery to complainant, or to some other person for him, the said notes so given to him by said mortgagors with said mortgage note as collateral security; that none of the indebtedness evidenced by the notes above referred to as being the property of the complainant has ever been paid.

Sixth. That, subsequent to the execution and delivery of the above-described mortgage, the said Lizzie S. Arnett and her husband, H.B. Arnett, executed and delivered to one Kyser, to wit, on July 13, 1910, a mortgage to secure an alleged indebtedness of $1,000; that Kyser transferred and delivered the said mortgage and the alleged indebtedness secured thereby to the Jefferson County Savings Bank; that said Jefferson County Savings Bank has sold the property under the power of sale contained in said second mortgage; that at the sale the said Jefferson County Savings Bank became the purchaser of the property, and has assumed possession of the same.

Seventh. Complainant alleges in his bill that the mortgage which Kyser transferred to the Jefferson County Savings Bank was fully paid before the property was sold under the mortgage; and the bill alleges that said mortgage was given by Lizzie S. Arnett to secure an indebtedness of her husband, and not to secure her own debt, and that the Jefferson County Savings Bank well knew these facts when it acquired said mortgage from Kyser.

Eighth. Complainant claims that he is entitled to have the amount due him on account of the Willoughby mortgage notes above referred to, including a reasonable attorney's fee for collecting the same, as well as the amount still due to Pauline P. Willoughby from said mortgagors, Lizzie S. Arnett and H.B. Arnett, ascertained; and said mortgage foreclosed. Complainant also claims that he is entitled to be first paid, out of the proceeds of said sale, the amount which it is ascertained is due him on account of the above transactions.

Complainant further prays that the Kyser mortgage and note, and the sale had thereunder, be declared null and void.

1. "The scope and purpose of a bill for the foreclosure of a mortgage on lands is to cut off the equity of redemption of the mortgagor, to obtain a decree for the sale of the estate created and passing by the mortgage, and the application of the proceeds of sale to the payment of the mortgage debt. Such being the scope and purpose of the bill, the general rule in a court of equity applies that all persons whose interests are to be affected or concluded by the decree must be made parties." Wells v. Amer. Freehold Land Mortgage Co., 109 Ala. 430, 20 So. 136.

Under the allegations of this bill, all of the parties to the bill except Kyser are proper parties to the bill. Kyser, so the bill as amended alleges, has no interest to be affected by the bill, and in so far as he is concerned the bill is without equity. Doe ex dem. Duval's Heirs v. McLoskey, 1 Ala. 708.

2. "A transfer by delivery merely of a promissory note secured by a mortgage, if based upon a valuable consideration, operates as an equitable assignment to the transferee of the mortgage by which the debt is secured." Doe ex dem. Duval's Heirs v. McLoskey, 1 Ala. 708; First National Bank of Gadsden v. Sproull, 105 Ala. 275, 16 So. 879; Prout v. Hoge, 57 Ala. 31; Williams v. Cox, 78 Ala. 327; O'Neal v. Seixas, 85 Ala. 80, 4 So. 745.

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