Cotton v. First Nat. Bank

• Decision Date: 18 January 1934
• Docket Number: 4 Div. 709.
• Citation: 228 Ala. 311,153 So. 225
• Parties: COTTON et al. v. FIRST NAT. BANK OF OPP.
• Court: Alabama Supreme Court

153 So. 225

228 Ala. 311

COTTON et al. v. FIRST NAT. BANK OF OPP.

4 Div. 709.

Supreme Court of Alabama

January 18, 1934

Rehearing Denied March 22, 1934.

Appeal from Circuit Court, Covington County; Emmett S. Thigpen Judge.

Bill for accounting, etc., by Mrs. A. E. Cotton and others against the First National Bank of Opp. From the decree, complainants appeal.

Reversed rendered, and remanded.

C. B Fuller, of Andalusia, for appellants.

E. O. Baldwin, of Andalusia, and Frank J. Mizell, Jr., of Florala, for appellee.

BROWN Justice.

The appeal is from a final decree allowing the complainants to exercise the statutory right of redemption of 490 acres of farm lands, including the homestead of the mortgagor, sold under the power of sale embodied in a mortgage purporting to have been executed by M. E. Cotton and his wife on the 6th day of December, 1926, to the defendant, the First National Bank of Opp, to secure an indebtedness of $4,561.57, evidenced by a promissory note of the same date, and due and payable on January 1, 1927, together with any additional amounts furnished the mortgagor "on any account and at any time." The note and mortgage were silent as to interest on the indebtedness.

In addition to the land, the mortgage covered "all household and kitchen furniture, all crops of every description raised or caused to be raised by me [the mortgagor] or under my direction during the years 1926, 1927 and 1928, in Covington County, Alabama; all my farming tools and implements; all my live stock, personal property and choses in action, not herein otherwise named; all rents or advances due or to become due to me as landlord from any tenant in said county or elsewhere, for 1926, 1927, 1928, and the following additional property: One black mare mule 9 years old; one mouse colored mare mule 9 years old, one bay horse mule 10 years old, two two-horse wagons and harness, one red pied milch cow and calf, 32 head of stock hogs; also all of our farming tools and implements; one mouse colored mule 4 years old; one hickory one-horse wagon and harness." Also a note, secured by a mortgage executed by one Alpha Johns to the mortgagee for $6,016. The mortgage recites: "This mortgage is given in extension of and to better secure all prior notes and mortgages given by us to said bank."

In addition to the security afforded by the property covered by the mortgage, the mortgagor had assigned to the mortgagee a policy of life insurance on the mortgagor's life for $5,000.

The power of sale is in the following language: "But if the said indebtedness, or any installment thereof is not paid at maturity, then the entire debt secured hereby shall become due and payable; and in such case, the mortgagee is authorized to seize the personal property herein conveyed and to sell the same either at public or private sale, and with or without notice, as may be determined upon; and the said mortgagee is authorized in such case to sell the real estate conveyed herein by giving notice of said sale by posting in three public places in the town of Opp, Covington County, Alabama, for a period of five (5) days which sale shall take place at any public place in the town of Opp, Covington County, Alabama, and shall be for cash." (Italics supplied.)

On January 21, 1928, the defendant acting by its cashier, prepared a writing, in the form of a letter, to which it procured the signatures of some of the complainants, including Mrs. Cotton, two of her sons and a daughter, in words and figures, following:

" In re Mortgage Indebtedness of M. E. Cotton.

"We wish to acknowledge the mental incompetency of M. E. Cotton at the present time, and further, to acknowledge that we have examined carefully the status and amount of his indebtedness to you at this time, and that we find $5321.79 to be the correct balance due at this time.

"Because of the mental incapacity of M. E. Cotton at the present time to attend to his business, we wish to request an extension of this indebtedness until fall-October 1st, 1928-and consent for you to add lawful interest thereto, and also any other lawful charges by the payment of any lien which would supersede your security. We have particular reference to taxes, and instalment to the Federal Land Bank of New Orleans, La." (Italics supplied.)

This paper was witnessed by H. L. Cummins, notary public, and Lillian McDavid, and a notarial seal affixed thereto.

The mortgage, the foreclosure of which is in question, purports to have been signed by the mortgagor and his wife making their marks, witnessed by two witnesses, and also acknowledged before a notary, and is a junior mortgage, subordinate to one held by the Federal Land Bank; the indebtedness secured thereby, as complainants contend, being, in round numbers, $7,000.

On August 15, 1928, the defendant, after posting notices of the time, place, and terms of sale-one "on the telephone post at the intersection of Hart Avenue and Main Street, one on the telephone post in front of Jacob's Drug Company at the corner of North Railroad Avenue and Main Street, and the other on a telephone post near the store of Benton Mercantile Company, all in the town of Opp"-foreclosed the mortgage and bid in the property for itself for the sum of $500, and for this foreclosure it charged on the mortgagor's account $655.93 as attorney's fee, computing the attorney's fee, not on the price at which the property was sold, but on the alleged balance due on the mortgage debt, $6,559.30, increasing the alleged balance to $7,215.24. The amount of the bid, so far as appears, was not even credited on the mortgage debt.

The evidence shows that the mortgagor died on Thanksgiving Day 1928, and the defendant collected $5,000 on the life insurance policy, out of which the defendant paid the expenses of his burial, amounting to $187.85, leaving a balance of $4,812.15, which, with certain payments made by Mrs. Cotton, amounting to $90, was applied in reduction of the alleged indebtedness of $7,215.24, reducing the amount to $2,313.09. To this amount was added what is termed in the statement of account, "Lawful charges against above indebtedness since 8-15-28," involving numerous items, including interest at 10 per cent. per annum, charged on January 15, 1930, from January 15, 1929, and again from January 15, 1930, to August 15, 1930-bringing the alleged total indebtedness up to $5,830.60.

The decree of the circuit court ascertains the last stated amount ($5,830.60) as the correct amount due, and requires the complainants to pay said sum, with the costs of the suit, into the registry of the court as a condition upon which complainants may redeem.

On February 13, 1928, by arrangement with the Federal Land Bank, brought about by Mr. Mizell, the president of the mortgagee bank-for at this time Cotton, the mortgagor, was confessedly a non compos mentis-a part of the debt due the mortgagor from Johns was credited on the Federal Land Bank mortgage, and the defendant took a mortgage to itself for $1,883.22 from Johns, and which, according to Mizell, the defendant bank held as collateral "to the mortgage of M. E. Cotton on the 489 acres of land." Thereafter, on the 18th of December, the defendant procured from Johns a deed to the land covered by the last above mentioned mortgage, in lieu of foreclosure, and the evidence goes to show that the value of said land was approximately $4,000. The mortgage debt of Cotton was in no way credited with the $1,883.22 and interest thereon.

The evidence shows that both the mortgagor and his wife were illiterate, unable to read or write; that the mortgagor during the time of the transactions was a paralytic; that the mortgage of 1926, here involved, was one of several overlapping mortgages, taken for money advanced in which interest was computed and added to the indebtedness secured, without any provision in the paper as to the rate, and that 8 per cent. or more was exacted without regard to time; that the mortgagor kept no account, but relied upon the defendant bank and its officers to keep the account, and that in their dealings through several years a relation of trust and confidence, if not in law, in fact, existed between the parties; that some, if not all, of the transactions between the parties were tainted with usury, and this was carried into and increased the debt secured by the mortgage, rendering it usurious and void as to the interest. The dealing in respect to the sale of fertilizer is clearly within the influence of the decisions of this court. Davis et al. v. Elba Bank & Trust Co. et al., 216 Ala. 632, 114 So. 211; Elba Bank & Trust Co. v. Davis et al., 212 Ala. 176, 102 So. 117; Sewell v. Nolen Bank et al., 204 Ala. 93, 85 So. 375; Blue v. First Nat. Bank of Elba, 200 Ala. 129, 75 So. 577.

Another matter to be noted is that debts for advances to others than Cotton, the mortgagor, and for which he was only liable as surety, were charged on the mortgage debt, and these were clearly not within the blanket provision of the mortgage-"together with any additional amounts furnished me by the mortgagee on any account and at any time before the debt herein is fully paid, in money or otherwise." (Italics supplied.)

Now to state, in short, the nature of the case as appears from the averments of the original bill and its amendments, so far as material to the questions presented by the appeal.

The original bill was filed by Mrs. A. E. Cotton, the widow of the deceased mortgagor, against the defendant...