Auburn Ins. Agency v. First Nat. Bank of Auburn

• Decision Date: 16 June 1955
• Docket Number: 5 Div. 615
• Citation: 263 Ala. 30,81 So.2d 600
• Parties: AUBURN INSURANCE AGENCY, Inc. v. FIRST NATIONAL BANK OF AUBURN.
• Court: Alabama Supreme Court

Page 600

81 So.2d 600

263 Ala. 30

AUBURN INSURANCE AGENCY, Inc. v. FIRST NATIONAL BANK OF AUBURN.

5 Div. 615.

Supreme Court of Alabama.

June 16, 1955.

Roberts H. Brown, Opelika, Knox M. McMillan, Auburn, Brown & McMillan, Auburn, for appellant.

Walker & Walker, Opelika, for appellee.

PER CURIAM.

This is an appeal by one of the respondents from a decree overruling its demurrer to a bill in equity. The other respondent did not demur but answered the bill admitting the allegations. Appellant is the Auburn Insurance Agency, to which we will sometimes refer as the second mortgagee. The other respondent is the Auburn Manufacturing Company, to which we will sometimes refer as the mortgagor. Appellee is the First National Bank of Auburn, to which we will sometimes refer as the first mortgagee.

The bill seeks the foreclosure of several mortgages and makes the second mortgagee a party. The second mortgagee is a necessary party to affect its rights. Thomas v. Barnes, 219 Ala. 652(3), 123 So. 18; Bank of Luverne v. Turk, 222 Ala. 549, 133 So. 52; Sims Chancery Practice section 148. The bill seeks to enforce an equity of foreclosure and has before the court the proper and necessary parties, and was filed after default had occurred. The demurrer by the second mortgagee to the equity of the bill was properly overruled so far as that ground is concerned.

It is insisted in appellant's brief that grounds 7, 8 and 15 of the demurrer should have been cause to sustain the demurrer to the bill as a whole. Ground 7 is that the allegations of the bill are vague and indefinite, but it does not undertake to point out wherein they are vague and indefinite and serves no purpose in the demurrer. Ground 8 undertakes to set out in what respect the allegations are vague and indefinite by alleging that the bill 'fails to show a complete and accurate statement of the indebtedness allegedly secured by the mortgages and security instruments allegedly held by the complainant'.

With respect to that contention the bill alleges that the mortgagor is indebted to complainant, the mortgagee, in the amount of $87,505.76, to which is to be added interest and solicitors' fees. That the indebtedness is evidenced by numerous documents, therein particularly set out, and a mortgage loan extension agreement dated October 27, 1952, executed by said mortgagee and mortgagor,--a copy of which is attached as an exhibit. It recites an indebtedness as of that date of $36,000, evidenced by numerous notes and mortgages which are later described in the bill, and also the execution on that day by the mortgagor of a promissory note and chattel mortgage for $36,000 due November 27, 1952.

The extension agreement provides that it is a renewal of the earlier notes, that payment is secured by the mortgages particularly described in it, and that if default is made in the payment of said note the bank could foreclose the mortgages forthwith. There was a default, after which this bill was filed.

The bill alleges in paragraph four that when said extension agreement and composite note and mortgage were executed on October 27, 1952 to the bank, the mortgagor executed to the second mortgagee a second mortgage on a part of the real and personal property included in the various mortgages to the first mortgagee given to secure the debt. A copy of the second mortgage was attached. That the second mortgagee knew of said mortgage loan extension agreement and of its terms and knew that the mortgages mentioned in it were to secure said debt to the first mortgagee. Said second mortgage contains a provision that it is a second mortgage and subordinate to the mortgage made by the mortgagor to complainant dated October 27, 1952. The extension agreement, executed on the same day, referred to six notes and mortgages theretofore given by the mortgagor to the bank, or assumed by it, beginning with the first dated October 22, 1951 on real estate; the second dated December 4, 1951 on personalty; the third dated November 30, 1951 on real estate; the fourth dated February 2, 1950 on personalty; the fifth dated October 23, 1951 on personalty, and the sixth dated January 11, 1952 on personalty, and another on personalty, then and there executed, including the entire indebtedness owing at that time.

The chattel mortgage of October 27, 1952 has attached to it an agreement executed at the same time by the bank, the mortgagor and second mortgagee, whereby the mortgagor agreed and covenanted that the chattel mortgage executed October 27, 1952, recorded in Book 384, at page 362, in the probate office of Lee County 'shall be and is in all things superior' to the mortgage executed by the mortgagor to the second mortgagee dated October 22, 1951, and recorded in Book 369, at page 418. Mortgages numbered 1, 2, 3 and 7, supra, each contains the following clauses:

'1. That so long as the indebtedness secured by this mortgage shall remain outstanding and unpaid, in whole or in part, the mortgagor agrees to keep the improvements on said property in as good condition as they now are, and not to permit any waste thereof, and to pay and discharge as the same becomes due all taxes or assessments or other charges that may be levied upon or accrue against said property, and all other debts that may become liens or charges against said property for improvements that may hereafter be made thereon and not permit any lien to accrue or remain on said real property or on the improvements, or any part thereof, which may take precedence over the lien of this mortgage.

'2. The mortgagor herein agrees to cause the improvements on said real property to be insured against loss by fire and tornado for not less than an amount equal to the mortgagor's interest hereunder in reliable insurance companies, satisfactory to the mortgagee, his successors or assigns, until the indebtedness hereby secured is fully paid, loss if any payable to the mortgagee, his successors or assigns, as his interest may appear, and said insurance policies shall be delivered to mortgagee.

'3. In the event the mortgagor fails to insure said property as herein agreed or to pay the taxes which may be assessed against the same, or any liens or claims which may accrue thereon, the mortgagee, or his assigns, are hereby authorized at their election to insure same and to pay the cost of such insurance, and also to pay said taxes, liens and claims, or any part thereof, and the mortgagor hereby agrees to refund on demand the sum or sums so paid with interest thereon at the rate of 6% per centum per annum, and this mortgage shall stand and be security therefor.'

Paragraph 4 of the bill contains the following:

'At the time the Auburn Insurance Agency, Inc., accepted the said second mortgage, it knew of the aforesaid mortgage loan extension agreement and of its terms, knew that the above listed mortgages, which are hereto attached as exhibits, secured the payment of said indebtedness of $36,000.00 to the bank, and knew, as shown on the face of said Exhibit C, that the said above listed mortgages secured the payment to the bank of any additional respective mortgages on account of any future payments, advances or expenditures made by the said mortgagees or transferees. And the complainant avers that the said total indebtedness of $87,505.76 of the Manufacturing Company to the bank consists of the said original indebtedness of $36,000.00; money advanced for the payment of insurance premiums on said mortgaged property; money advanced for the payment of taxes on said mortgaged property; money advanced for the necessary repairs of the machinery and buildings included in said mortgages in order to render the same useable; legal fees incurred in protecting the said property and in drafting legal papers which were necessary to protect the bank's interest in connection with said mortgaged property; money advanced for additional equipment necessary in order to render the mortgaged property useable; interest that has accrued on said mortgaged indebtedness; and other advances made by the bank to the said Manufacturing Company as provided by the terms of said mortgages. The said mortgage to Auburn Insurance Agency, Inc. is second and subservient to the aforesaid mortgages to the bank and subject to the prior satisfaction of the bank's said mortgage indebtednesses against the said Manufacturing Company.'

The question at this point is whether these allegations are so vague and indefinite as to render them subject to demurrer on that ground. We think not.

In a suit of this nature an accounting is incidental and may be had with or without a reference. The bill involving an accounting need not make an itemized statement of the account. Kelly v. Wollner, 201 Ala. 445, 78 So. 823. Here it makes allegation of the total amount of the indebtedness, how it is evidenced as to the $36,000, Palmer v. Sulzby, 185 Ala. 166, 64 So. 368, and the origin and nature of the consideration for the balance of the debt.

The prayer seeks to have the court ascertain and fix the amount of the principal, interest and a reasonable attorneys' fee, all as secured by the mortgage. This is all that good pleading in such a suit requires in connection with the prayer. Taylor v. Shaw, 256 Ala. 467,...