Bay Minette Land Co. v. Stapleton, 1 Div. 685.

CourtSupreme Court of Alabama
Writing for the CourtTHOMAS, J.
Citation139 So. 342,224 Ala. 175
Decision Date21 January 1932
Docket Number1 Div. 685.

Appeal from Circuit Court, Baldwin County; F. W. Hare, Judge.

Bill in equity by the Bay Minette Land Company against W. D Stapleton and Henry D. Moorer. From a decree sustaining report of special master, complainant appeals.

Reversed and remanded.

Harry T. Smith & Caffey, of Mobile, for appellant.

Hamilton & Jones, of Evergreen, for appellees.


The bill was by a mortgagor to prevent foreclosure, and sought injunction and accounting.

The review was of the final decree sustaining the report of the special master. It has the effect of a verdict of a jury. Bidwell v. Johnson, 195 Ala. 547, 70 So. 685; Ex parte Jackson, 212 Ala. 496, 499, 103 So. 558; Bailes v Bailes, 216 Ala. 569, 114 So. 185; Adalex Const. Co v. Atkins, 214 Ala. 53, 106 So. 338.

The appeal is to correct the disallowance of two credits claimed by appellant on the mortgage sought to be foreclosed by sale under its powers. The two findings under the application of the law as understood by the special master were the disallowance of $3,000 claimed by appellant on the contract or sale of properties to one of the mortgagees, as to certain of the lands mortgaged, and other lands, and the allowance of the sum of $550 as reasonable attorneys' fees incurred in the ascertainment of the mortgage debt.

The circuit court declined to consider the exception as to the disallowance of the $3,000 credit, on the theory that the testimony relied upon was not sufficiently noted under Chancery Rule 93.

It will be observed that rule 93 merely authorized the trial judge to ignore such testimony that was not sufficiently noted-that the "Chancellor need not examine testimony not thus noted." It is held that under the rule it is within the discretion of the chancellor to consider evidence not noted on exceptions to the register's report. Faulk & Co. v. Hobbie Groc. Co., 178 Ala. 254, 59 So. 450. The right to ignore any testimony not sufficiently noted, and the duty to consider that so noted, and the legal principles involved in an exception to a master's report, are not to be confused.

There are cases where exceptions are supported, because of error in the law laid down and applied by the special master to the facts (as distinguished from exceptions to conclusions or findings of fact) to which the rule does not apply. McCollum v. McCollum, 218 Ala. 500, 119 So. 232; Ex parte Cairns, 209 Ala. 358, 96 So. 246; Lunsford v. Shannon, 221 Ala. 207, 128 So. 215; Id., 208 Ala. 409, 94 So. 571; Id., 215 Ala. 465, 111 So. 22. This exception as to the application of the law to the undisputed facts falls within these cases. The contract of one of the mortgagees with the mortgagor as to a part of the mortgaged lands and other real property rights in adjacent or contiguous lands was not denied, and in fact admitted in answer (and as for that shown by evidence sufficiently indicated, and it appears from the record that the deed was tendered in open court by the mortgagor in the presence of the special master, and there was no dispute about the fact of possession or the exercise of the rights of possession by one of the mortgagees. The question of law was presented as to the disallowance of the claim of $3,000, the purchase price of these lands, and rights by that mortgagee and his right and interest in the mortgage that can be covered by a decree in equity.

As to the $3,000 item, the mortgage in question was executed to Stapleton and Moorer; its purpose was to secure the repayment of moneys advanced, and mortgagees were jointly and equally interested therein. It is shown by the testimony of Moorer and Stapleton that they were equally interested in that subject-matter and the consideration of the mortgage. Thus was it the mortgagor's duty to account to the mortgagees and each of them for his interest in the debt so secured, and the right to have the respective credits, or set-off in equity, on the mortgage as against the complainant's indebtedness, and as to each of the mortgagees.

The cases on mutuality cited by appellee were at law (First Nat. Bank v. Capps, 208 Ala. 207, 94 So. 109; Drennen v. Gilmore Brothers, 132 Ala. 246, 31 So. 90, 90 Am. St. Rep. 902; Cannon v. Lindsey, 85 Ala. 198, 3 So. 676, 7 Am. St. Rep. 38); in a court of equity its decree could have been so molded as to protect Moorer, the comortgagee, and not injure him by the allowance of set-off as against his comortgagee under the special equities and new consideration of the mortgagor. Brown v. Scott, 87 Ala. 457, 6 So. 384.

This is the status shown by the pleadings and evidence. It is further shown that after execution of the mortgage to Stapleton and Moorer, Stapleton entered into a written contract with the mortgagor-appellant to purchase certain of the mortgaged property and other property not embraced therein, consisting of mortgagor's title and interest in a spur and side track on a branch line of the Louisville & Nashville Railroad Company on the opposite side of the addition to the town of Bay Minette. This contract of date of June 19, 1929, was between "Bay Minette Land Company as seller" and "W. D. Stapleton as purchaser." It is shown that such "purchaser" entered into the possession, and authorized the acts of ownership by his agent over those lands covered by the contract; that he has not paid the purchase price therefor, or credited on this mortgage debt the purchase price thereof; that he thereafter transferred and assigned a portion of the property covered by that contract (and that not embraced in the mortgage in question) to the Louisville & Nashville Railroad Company, and placed it beyond his control or return to plaintiff.

The contract made with the railroad company of date of January 20, 1930, contained many special provisions dealing with the construction of tracks under contracts made by the railroad company dated January 10, 1913, and May 3, 1923, and concludes as follows:

"(22) Whenever, and as often as, the payment of any sums of money due by second party to first party, under any of the provisions of this contract, shall become due, a lien to secure said sums shall forthwith become fixed upon said track material, which lien shall become extinguished only by the payment of the sum or sums due.
"(23) It is expressly understood and agreed that this contract is personal to the second party, and can be assigned only with the written consent of the first party; and that as a condition precedent to such consent, first party will require the assignee to assume any indebtedness due from second party, arising under any of the provisions of this contract."

Unless complainant is so allowed the set-off, in a court of equity, against his debt to Stapleton on the mortgage, the statu quo as to certain of the mortgaged lands, and that granted to the Louisville & Nashville Railroad Company cannot be returned to complainant. It is but just and equitable that there should be an accounting in this suit for its purchase price as sought in the bill. This is necessary to effect a clear equity or to avoid irremediable injustice as to these properties and between the parties indicated. 47 Am. St. Rep. page 590, note; 34 Cyc. 633; Cosgrove v. Cosby, 86 Ind. 511.

The agreement between Bay Minette Land Company and W. D. Stapleton of date of June 19, 1929, contained among others the provision, "That in consideration of the sum of One Dollar to it in hand paid by purchaser, receipt whereof is hereby acknowledged and of the mutual covenants, herein contained, seller agrees to convey to purchaser, by full warranty deed, the real property hereinafter described, and to transfer and assign to the purchaser the other rights herein described, at and for the total purchase price of Three Thousand Dollars ($3,000.00), same to be paid in cash upon delivery of deed conveying fee simple title to the said real estate, free of all encumbrances, and the delivery of proper transfer and assignment for the other rights, the property covered hereby and to be conveyed and transferred hereunder," describing the property, and further providing: "Also all and the entire right, title and interest of the seller in and to the oil track spur and that portion of the side track along the B. M. & Ft. M. Branch of the L. & N. Railroad Company lying opposite the Ft. Morgan Addition to the Town of Bay Minette, lands of Peoples Fertilizer Company, and the land adjoining Peoples Fertilizer Company on the North, in so far as such tracks are North of the South line of the real estate hereinabove described, together with all rights and monies to become due under rental agreement with the Pan-American Petroleum Corporation after the date hereof. Upon transfer of such track rights hereunder, purchaser may make a new trackage agreement with the L. & N. Railroad Company in the purchaser's name with respect to the portion of the tracks covered hereby, purchaser being entitled to all benefits seller may have under original contracts in so far as same relate to portions of track covered hereby, including refund of any monies." The agreement concludes as follows: "The purchaser agrees to purchase the above properties under the terms and conditions hereof, same to be consummated upon presentation of proper conveyances and transfers by seller which shall be done within thirty (30) days from this date."

The appellant, in the presence of the special master, tendered to such "purchaser" the deed called for in the contract; that tender was refused upon the ground that complainant had failed to comply with or live up to the terms of the agreement or contract.

Upon this item of credit by way of set-off against...

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