Durr Drug Co. v. Acree

• Decision Date: 07 March 1940
• Docket Number: 5 Div. 306.
• Citation: 194 So. 544,239 Ala. 194
• Parties: DURR DRUG CO. v. ACREE ET AL.
• Court: Alabama Supreme Court

194 So. 544

239 Ala. 194

DURR DRUG CO. v. ACREE ET AL.

5 Div. 306.

Supreme Court of Alabama

March 7, 1940

Appeal from Circuit Court, Tallapoosa County; W. B. Bowling, Judge.

Suit in equity by Durr Drug Company (second mortgagee) and Gertrude A. Tucker (mortgagor) against Clyde Acree, Reconstruction Finance Company, and others to redeem real estate from Acree and others as purchasers at mortgage foreclosure sale and to cancel a deed to predecessor in title of respondent Reconstruction Finance Corporation; wherein there was a cross-bill by respondent Reconstruction Finance Corporation to have said deed declared valid and for redemption in virtue thereof. From a decree denying relief to original complainants and granting relief under the cross-bill complainant Durr Drug Company alone appeals.

Reversed and remanded, with instructions.

Richard H. Cocke, of Alexander City, for appellant.

Harris & Brown, of Birmingham, and Sam W. Oliver, of Dadeville, for appellees.

FOSTER Justice.

The primary question in this case is whether the complainant Durr Drug Company, has come into a court of equity with clean hands. It is the appellant here, and the trial court held that it had no standing in court because of said maxim.

The theory is that it is in the same attitude in this respect as Gertrude A. Tucker who mortgaged the land to it, and is therefore in privity with her, since it is not claiming any rights superior to hers.

The controversy so far as here material is between appellant and Reconstruction Finance Corporation to determine which of them may exercise the statutory right of redemption of certain land from a mortgage foreclosure sale. The mortgage was made to the Federal Land Bank in 1918, and no question is presented as to it or its foreclosure. The Reconstruction Finance Corporation claims under the Bank of Camp Hill while in liquidation. That bank claimed under a deed from Mrs Tucker dated October 20, 1928, soon thereafter recorded.

Appellant claims under a mortgage from Mrs. Tucker dated May 17, 1937, prior to the foreclosure of the Federal Land Bank mortgage. It is subordinate to the deed under which Reconstruction Finance Corporation claims insofar as that deed is effective. Appellant claims that it is not effective because it was given as security for the debt of the husband of Mrs. Tucker to the bank.

In response to that, Reconstruction Finance Corporation points out that appellant's answer to its cross-bill declares that the deed was not given so much as security for the debt, but that it was not intended to be effective at all, but was set up as scenery to defraud and appease the banking department, with the secret agreement that as soon as the financial stringency of the bank was relieved, the bank was to return the title of the property to her. Upon the basis of the admissions of appellant in its answer, Reconstruction Finance Corporation claims that to permit her to come into equity and vacate the deed would be to permit her to take advantage of her own fraud, and to have unclean hands; and that since appellant occupies the position which she does in that respect its right to equitable relief is subject to the limitations under which Mrs. Tucker labors. Boone v. Byrd, 201 Ala. 562, 78 So. 958.

The trial court held that on account of the admission in appellant's answer to the cross-bill, Mrs. Tucker and appellant, who join as complainants in this suit, will not be heard on the merits of their contention, since it gives them the advantage of a positive fraud.

The principles of law and equity sought to have application are not disputed and are repeated here so as to apply them to the facts and contentions.

Appellant stands in privity with Mrs. Tucker and can have the deed made by her to the bank vacated as in violation of section 8272, Code, because it was given as security for her husband's debt, if she can do so in a court of equity. Evans v. Faircloth-Byrd Merc. Co., 165 Ala. 176, 51 So. 785, 21 Ann.Cas. 1164.

A married woman who has made such a conveyance can come into a court of equity to have it vacated on that account, and is not deprived of that right and remedy on the usual principles of waiver or estoppel. Ex parte Lacy, 232 Ala. 525 (10), 168 So. 554; Corinth Bank & Trust Co. v. Pride, 201 Ala. 683 (4), 79 So. 255; People's Bank v. Barrett, 219 Ala. 258, 121 So. 910.

When the owner of property makes a conveyance of it with the intent to hinder, delay or defraud his creditors, in which the grantee may participate, and who may pay no consideration for it, such owner is not permitted to come into equity and have the deed vacated against the objection of the grantee that complainant does not have clean hands. Baird v. Howison, 154 Ala. 359, 45 So. 668.

And the complainant will likewise be denied relief in equity on account of any unconscientious conduct connected with the controversy by which he takes advantage of his own wrong. Anders v. Sandlin, 191 Ala. 158 (3), 67 So. 684; Montgomery v. Ward, 227 Ala. 641, 151 So. 583.

We are not here called upon to define the power of a married woman to estop herself by her conduct to assert her ownership of land. See Russell v. Peavy, 131 Ala. 563 (2); 32 So. 492. But it has been pointed out that statutes made for her protection do not yield to other statutes having general application, when they are not in harmony. See Morris v. Marshall, 185 Ala. 179, 64 So. 312.

There was no such contention made as to the application of the maxim in Williams v. Fundaburk, 237 Ala. 30, 185 So. 383, under circumstances quite similar to those in the instant case.

It may be observed in passing that we are not dealing with a situation where a married woman concealed her ownership and induced action by others on the assumption that the property was not hers nor where the rights of innocent purchasers are involved. See People's Bank v. Barrett, supra.

Another theory which should have attention is based upon a principle that sometimes the court will enforce an illegal contract at the suit of one who is in pari delicto, where his guilt is not considered as equal to the higher right of the public, and he is simply the instrument by which the public is served. It is said, however, that "courts are and should be cautious in affording relief to a fraudulent debtor or other violator of the law under this exception, and should act only where it is evident that some greater public good can be subserved by action than by inaction," and "It has been held that the public good is not involved unless some person other than those engaged in the illegality is concerned or interested." 17 Corpus Juris Secundum, contracts, pages 665, 666, § 278.

And based on this principle, the Court of...