Butler v. Olshan, 6 Div. 113

• Decision Date: 13 October 1966
• Docket Number: 6 Div. 113
• Citation: 280 Ala. 181,191 So.2d 7
• Parties: Mary Margaret BUTLER et al. v. Melvin H. OLSHAN.
• Court: Alabama Supreme Court

Page 7

191 So.2d 7

280 Ala. 181

Mary Margaret BUTLER et al. v. Melvin H. OLSHAN.

6 Div. 113.

Supreme Court of Alabama.

Oct. 13, 1966.

Dominick, Fletcher, Taylor & Yeilding, Birmingham, for appellants.

Sirote, Permutt, Friend & Friedman, Birmingham, for appellee.

COLEMAN, Justice.

Plaintiffs appeal from a judgment of voluntary non-suit induced by the action of the trial court sustaining demurrer to the complaint.

Plaintiffs seek to recover from defendant, Melvin H. Olshan, for loss of real estate allegedly caused by the wilful and intentional act of defendant in signing his name, as notary public, to a certificate of acknowledgment on a deed and thereby certifying that plaintiffs had acknowledged the execution of the deed when, in fact, plaintiffs had never acknowledged the execution before the defendant. Plaintiffs also seek damages for loss allegedly caused by defendant's false certification that plaintiffs did acknowledge to defendant that they had executed a mortgage on their homestead. As last amended, the complaint contains two counts.

One-B.

In Count One-B, plaintiffs allege that on October 12, 1949, plaintiffs acquired a tract of land which they have since occupied as their homestead, except for a small portion which was conveyed to Bette R. Cohen as hereinafter set out.

On May 19, 1960, plaintiffs made a contract with Seymour L. Cohen whereby he undertook to make certain improvements on a residence located on the property. The contract price for the improvements was stated as $7,550.00. A first mortgage was to be arranged for the unpaid balance.

On August 31, 1960, Cohen requested plaintiffs to execute a conveyance of part of their homestead for a reduction of the debt to be due in the amount of $1,800.00.

Plaintiffs aver that 'Cohen, falsely and fraudulently represented to Plaintiffs' that the part of their homestead so conveyed would be reconveyed to plaintiffs by Cohen and his wife, Bette R. Cohen, 'at any future time' upon payment of $1,800.00 to the Cohens by the plaintiffs, and that Cohen's representation was false, was made with no intention at the time 'to carry out said representation,' and was made intentionally to deceive and defraud plaintiffs and to induce them to execute the conveyance.

Relying on Cohen's representation, on August 31, 1960, plaintiffs signed the deed which bears that date. The grantee in the deed was Cohen's wife, Bette R. Cohen, who was named as grantee by Cohen for convenience, with no consideration passing from the wife to the husband.

Plaintiffs aver that the consideration for the deed was inadequate in that the property conveyed was worth more than $3,500.00.

Plaintiffs aver that defendant, Olshan, at some later time, signed his name as notary public on the deed and affixed his seal thereto, but he did not witness the signatures of plaintiffs, did not see or speak to plaintiffs at the time they signed the deed or at any subsequent time, and plaintiffs did not acknowledge to defendant the execution of the deed.

Plaintiffs aver that defendant's act of executing the certificate of acknowledgment was a wilful and intentional act in violation of defendant's duty as a notary public.

On November 28, 1960, plaintiffs discovered defendant's violation of his duty. On that date, one Kirchler informed plaintiffs that he and one Hamner owned the property described in the deed of August 31, 1960, to Bette R. Cohen. Plaintiffs found that on September 9, 1960, Cohen and wife had conveyed the property to Jerome B. Davis for a recited consideration of $2,200.00 by deed recorded in office of the judge of probate; and Davis had conveyed the property to Kirchler and Hamner for a stated consideration of $3,500.00 as shown by recorded deeds dated October 8, 1960.

'Plaintiffs aver that the said Jerome B. Davis, Herman L. Kirchler and Walton Hamner have been judicially determined by the Circuit Court, Tenth Judicial Circuit of Alabama, in Equity, Case No. 121-359, to be bona fide purchasers for value without notice.'

Plaintiffs aver that defendant's act proximately injured plaintiffs in that 'it validated a deed which, but for the acknowledgement, could not have passed a merchantable title to the grantee thereof .... but for the said acknowledgement, Plaintiffs could have been able to resist any equitable action by the grantee to enforce' the deed and 'could have successfully invoked a number of defenses including fraud as alleged herein or the doctrine of clean hands,' and 'these defenses were not, as a matter of law, available to Plaintiffs against bona fide purchasers for value without notice.'

Plaintiffs aver that, as a proximate result of defendant's act, they have suffered the loss of their property described in the deed of August 31, 1960.

Two-B.

In Count Two-B, plaintiffs aver that they owned and have occupied their land, except the lot conveyed to Bette R. Cohen; that plaintiffs made a contract with Seymour L. Cohen for improvements; that Cohen agreed to arrange for financing the cost of improvements at an interest rate not to exceed six per cent per annum.

On August 31, 1960, Cohen presented to plaintiffs a note and mortgage covering plaintiffs' homestead for $8,500.00 with interest at eight per cent per annum. On that date, the improvements were about seventy-five per cent completed. Cohen represented to plaintiffs that the note and mortgage were only temporary and he would 'secure' for them permanent financing at six per cent. Cohen's representation was false, made with no intention 'to carry out said representation,' to deceive and defraud plaintiffs, and to induce them to execute the note and mortgage, which they did, relying on Cohen's representation.

At some later time defendant signed his name and affixed his notarial seal to the mortgage. Defendant did not witness the signature of plaintiffs, was not in the place where plaintiffs signed the mortgage, and did not see or speak to plaintiffs at the time of their signing or subsequent thereto. Plaintiffs did not acknowledge execution of the mortgage to defendant.

Defendant's act in executing the certificate of acknowledgment was a 'wilful and intentional act in violation of his legal duty as such officer.'

On or about September 16, 1960, plaintiffs discovered that the note and mortgage had been transferred by Cohen to Olshan Realty Co., Inc., a corporation, and by the corporation to one Jack Talyor. The transfers were made on the same day on which plaintiffs signed the note and mortgage.

Plaintiffs aver that the improvements contracted for have not been completed and much of what was done was of poor workmanship.

Plaintiffs aver that Talyor is a holder in due course or bona fide purchaser for value without notice and the mortgage is a valid first mortgage on plaintiffs' homestead.

Plaintiffs aver that defendant's act damaged plaintiffs in that they were deprived of equitable relief against the mortgage in the hands of Talyor; that but for the acknowledgment plaintiffs would have been able to resist any equitable action to enforce the mortgage; that equitable defenses are not available to plaintiffs against bona fide purchasers or holders in due course; that plaintiffs have not been able to obtain financing at a lesser rate of interest; and plaintiffs will have to pay a sum in excess of the value of the work done by Cohen.

Ruling on One-B.

Grounds 23 and 24 of demurrer raise the defense against Count One-B that the final decree in Case No. 121-359 is res judicata of the issues tendered in Count One-B with reference to the deed to Bette R. Cohen dated August 31, 1960.

Defendant asserts that, because plaintiffs refer in Count One-B to Case No. 121-359, the trial court was bound to take judicial notice of the record of the prior case and that the record in the prior case shows that the prior decree is res judicata of the issues tendered by Count One-B with reference to the deed to Bette R. Cohen. Defendant says that the defense of res judicata may be raised by demurrer and was so raised here, and that the record of the prior case sustains the defense of res judicata. Defendant concludes, therefore, that the trial court cannot be put in error for sustaining the demurrer to Count One-B.

By the weight of authority, as is stated in 96 A.L.R. at page 945, where a judgment of the same court is pleaded as a bar or as conclusive on an issue, the existence and contents of the judgment must be proved by offering the record in evidence. In the same annotation at page 952, however, Alabama is shown as following the minority rule and holding that the trial court properly took judicial notice of a prior judgment in the same court where the prior judgment was referred to in the pleading. Such is the rule followed by this court as shown by the cases next referred to.

When a bill in equity, together with its exhibits, affirmatively shows on its face that the claim sought to be decided and enforced by the bill has already been adjudicated by a court which had jurisdiction of the same parties and same subject matter, the defense of res judicata is a complete answer to the bill and may be interposed by appropriate demurrer. Williams v. Williams, 202 Ala. 539, 81 So. 41; Cogburn v. Callier, 213 Ala. 38, 104 So. 328; Crowson v. Cody, 215 Ala. 150, 110 So. 46; United Baptist Church, etc. v. Gautney, 250 Ala. 216, 34 So.2d 1.

With respect to judicial notice by a court of its own records, the rule in Alabama is not that in all cases the court may notice the record of other proceedings therein, even between the same parties and involving the same subject matter; but, where a party refers to such other proceeding or judgment in his pleading for any purpose, the court, on demurrer by the other party, may and should take judicial notice of the entire proceeding in so far as it is relevant to the question of law presented. Cogburn v. Callier, supra; Crowson v. Cody, supra, 215 Ala. at page 156, 110 So. 46; Le Furgey...