East Gadsden Bank v. Bagwell

• Decision Date: 14 June 1962
• Docket Number: 6 Div. 818
• Citation: 143 So.2d 438,273 Ala. 441
• Parties: EAST GADSDEN BANK v. G. H. BAGWELL.
• Court: Alabama Supreme Court

Page 438

143 So.2d 438

273 Ala. 441

EAST GADSDEN BANK v. G. H. BAGWELL.

6 Div. 818.

Supreme Court of Alabama.

June 14, 1962.

Frank Donaldson, Birmingham, T. J. Carnes, Albertville, and Barnes & Smith, Gadsden, for appellant.

Geo. I. Case Jr., and McGowen & McGowen, Birmingham, for appellee.

MERRILL, Justice.

Appellant filed a bill for declaratory judgment against appellee Bagwell and Charles Thompson, and wife, and for the determination of the priority of liens, and asked for an injunction pendente lite. A temporary restraining order was issued by the trial court and a hearing set on the application for the temporary injunction. At the hearing, appellee Bagwell filed a motion to dismiss the bill. No other responsive pleading was filed by the appellees. Following the hearing, the trial court entered a decree denying the application for a temporary injunction and dismissed the bill of complaint. From this decree, appellant appealed. The Thompsons filed no brief on appeal.

The bill of complaint shows that appellant is a bank operating in Gadsden, in Etowah County, and appellee is an individual owning a building in Birmingham, in Jefferson County. In 1958, appellee leased the property to Charles Thompson and wife for $200 per month and they operated a cafe on the premises. The lease was to expire on May 31, 1961.

In 1959, the Thompsons sold their business to one Dickey, who executed a note and mortgage to them, which they later assigned to one Miles, and Miles assigned same to appellant in 1960. Upon default, appellant filed a detinue suit in Jefferson County and recovered possession of the property. In december, 1960, appellant sold this equipment back to the Thompsons and took their notes and a purchase money mortgage as security for the unpaid balance. As part of the transaction, appellant made a check payable to appellee and Thompson for $600, which paid rent for the months of November and December, 1960, and January, 1961. The property never left the premises owned by appellee during all of these transactions.

Appellant foreclosed the Thompson mortgage in September, 1961, and became the purchaser of the property. But in May, 1961, the Thompsons became delinquent in their rent to appellee and appellee filed a suit with writ of attachment against the property in the Jefferson County Civil Court. A judgment was rendered in favor of appellee for $982.45 on October 28, 1961.

The bill avers that a justiciable controversy exists between the parties and prays for a construction of the instruments made an exhibit thereto and that the rights and liabilities of the parties be declared and that the matter of priority between appellant's purchase money mortgage lien and appellee's landlord's lien be determined and adjusted.

The application for a temporary injunction asked that appellee be restrained from disposing of the property under his attachment suit pending the final decree in the circuit court in this case.

The main question presented by the bill and which must ultimately be decided is whether appellee's landlord's lien is superior to appellant's mortgage lien. As already shown, the lease expired May 31, 1961. Appellant concedes that, since the property never left the premises, appellee's lien for rent was superior up to May 31, 1961, at which time the Thompsons owed $200, because the rent had been paid through April, 1961. Appellant also concedes that appellee had a lien for $200 when the lease expired, but argues that appellant's mortgage was superior to appellee's lien for rent during the new term which began after the expiration of the lease, except, of course, for the $200 due for rent in May.

The only responsive pleading to the bill of complaint was a motion to dismiss, the first ground of which was that 'there is no equity in the bill.' Equity Rule 14 states that 'The motion to dismiss for want of equity is abolished.' Some testimony was taken and the court held that appellee's lien for rent was 'paramount and takes precedence over complainant's claim,' denied the application for temporary injunction and granted the motion to dismiss the bill for want of equity.

We think the trial court erred in holding in effect that the bill is without equity, and we also think that the decision as to the priority of the liens was premature.

The bill alleged a justiciable controversy when it was shown that each of the parties claimed a valid lien on the property and that there was a dispute as to which lien had priority. We have many times affirmed the rule that in suits for declaratory judgments where the bill shows a bona fide justiciable controversy which should be settled, it states a cause of action for declaratory judgment, and the test of the sufficiency of a bill or complaint in a declaratory...