First Nat. Bank v. Boles

• Decision Date: 23 January 1936
• Docket Number: 4 Div. 842
• Citation: 231 Ala. 473,165 So. 586
• Parties: FIRST NAT. BANK OF OPP v. BOLES et al.
• Court: Alabama Supreme Court

165 So. 586

231 Ala. 473

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

4 Div. 842

Supreme Court of Alabama

January 23, 1936

Appeal from Circuit Court, Covington County; Robt. S. Reid, Judge.

Suit for accounting and redemption by Mrs. M.J. Boles and another against the First National Bank of Opp. From a decree overruling a demurrer to the bill, respondent appeals.

Affirmed in part, and in part reversed, rendered, and remanded.

Mulkey & Mulkey, of Geneva, for appellant.

P.B Traweek, of Elba, for appellees.

KNIGHT Justice.

Bill by Mrs. M.J. Boles and Beulah Boles, exhibited in the circuit court of Covington county, in equity, against the First National Bank of Opp. The bill, as originally filed, seeks to require the respondent to "set forth and propound in detail its accounts which were secured by the mortgage of J.M. Boles and wife, dated December 14, 1926, to the bank," and an accounting by the bank of the rents incomes, and profits accruing to it from the lands conveyed by the mortgage; prays that all usurious charges and other erroneous items be eliminated, to the end that the true condition of the accounts be judicially determined, and if any balance be found due and unpaid on the mortgage indebtedness that the court permit complainants to pay same and redeem the lands conveyed by the mortgage.

The complainants further pray: "That the status and condition of the title to said lands may be established and judicially declared, and that said mortgage and pretended foreclosure thereof may be canceled of record and held for naught, under such orders as to the court shall appear just and equitable."

There was demurrer to the bill as first filed, and this demurrer was, upon submission, sustained. Thereupon, the complainants amended the bill, and to the bill as then amended the respondent again demurred, and this demurrer was sustained by the court.

After the demurrer was sustained to the bill as first amended, the complainants again amended the bill, and to the bill as last amended the respondent again demurred. This demurrer was overruled by the court, and from this decree the present appeal is prosecuted.

The prayer of the first amendment is in the following language: "Wherefore, said complainants pray that the foregoing may be considered as a part of the bill of complaint in this cause, or as an amendment thereto in lieu of paragraphs 8 and 9 of the original bill; that relief may be granted to them by your honor in accordance with the prayer of the original bill, either by cancellation of the foreclosure deed, or by setting aside the foreclosure, stating the mortgage account, and permitting the complainants to redeem the lands in the mortgage, and for general relief as heretofore prayed for."

It appears from the bill that J.M. Boles (now deceased) and his wife, Mrs. M.J. Boles, one of the complainants, executed to the First National Bank of Opp a number of mortgages during a period of years; that in each year there was an unpaid balance carried into the mortgage of the succeeding year, and that the last and final mortgage was executed on December 14, 1928; that the unpaid balance under the mortgage executed during the preceding year was carried into this last-mentioned mortgage.

It is charged that the respondent bank knowingly and intentionally charged the mortgagors usurious interest on the indebtedness secured by said mortgages, in this wise, that while the mortgages only ran for a part of the year, the mortgagee charged the mortgagors interest in each instance for a full year at 8 per cent. per annum. The amount of usurious interest charged does not otherwise appear in the bill, nor is it averred that the amount of the usurious interest charged and paid was unknown to complainants.

In paragraph 5 of the original bill the complainants attempt to aver that the mortgage debt had been fully paid, but in the last amendment to the bill this averment is stricken, and with respect to the striking of this averment the following statement appears: "Complainants, with leave of the court, hereby strike out from the original bill the averment that the mortgage debt is fully paid (end of paragraph 5), because they kept no records themselves, and the decedent, J.M. Boles, kept none, but trusted the respondent herein to keep all the records, so that these complainants cannot say just what amount is rightfully due under the mortgage, but respondent contended at one time, and stated to complainants, that there was only a balance of $125 still unpaid on the mortgage, or debts."

The bill is filed by Mrs. Boles, the widow of the deceased mortgagor, and by Beulah Boles, a daughter of said decedent.

It is averred that "there was no administration on the estate of J.M. Boles, or, if there was, it has long since been closed."

The averments of paragraph 7 and 8, as amended, of the bill appear in the report of the case.

In the last amendment to the bill, the complainants bring forward the mortgage of J.M. Boles and wife, and the foreclosure deed, and make the same exhibits to the bill.

From these exhibits it appears that the mortgage was foreclosed by public sale of the lands had on July 16, 1929, at the front door of the First National Bank of Opp, recited in the foreclosure deed to be a public place in the town of Opp; that notice of the sale was given by posting notice in three public places in the town of Opp, Covington county, Ala.

We are persuaded that in that aspect of the bill which seeks the cancellation of the mortgage and the foreclosure deed made thereunder the bill as amended contains equity, and therefore the demurrers to the bill as a whole, and to this aspect thereof, were properly overruled. Wood v. Estes, 224 Ala. 140, 139 So. 331; Oden v. King, 216 Ala. 504, 113 So. 609, 54 A.L.R. 1413.

In paragraph 8 of the bill as last amended every fact is averred which is necessary to confer upon the court jurisdiction to cancel the deed and mortgage as clouds upon title of complainants, and to quiet the title to the lands in question.

In the case of Kelly v. Martin, 107 Ala. 479, 18 So. 132, it was said: "Notwithstanding section 1870 of the Code provides that 'the payment of a mortgage debt, whether the mortgage is of real or personal property, divests the title passing by the mortgage,' we are of opinion that the mortgagor of lands, in possession, having fully paid the secured debt, though possibly denied the right of a bill to redeem, as such, is entitled to go into a court of equity, and have the payment established, and the mortgage delivered up and canceled, as a cloud upon his title. The payment resting in parol, the evidence of it may be readily lost by the death, removal, or failure of recollection of witnesses, or other causes, while the mortgage outstanding contains within itself enduring evidence, prima facie, that the legal title has passed to the mortgagee, and still remains in him. It is manifest, therefore, that the mortgagor is subjected to the danger of the loss of his estate, unless some remedy is afforded him of establishing the payment, and withdrawing from the mortgagee the instrument of such possible loss, with which he is armed. There is no other adequate remedy than a resort to a court of equity. See Rea v. Longstreet, 54 Ala. 291; Lehman v. Shook, 69 Ala. 486; Jones v. De Graffenreid, 60 Ala. 145; Morgan v. Lehman, 92 Ala. 440, 9 So. 314."

In line with the above holding is our more recent case of Bank of Henry v. Elkins, 165 Ala. 628, 51 So. 821, in which we held that courts of equity have jurisdiction to cancel and remove a specially described cloud upon the complainant's title, when the owner is in possession, and when the evidence of the alleged cloud is not void on its face, and extrinsic evidence is necessary to show its invalidity. And to the same effect is the still more recent holding in the case of Wood v. Estes, supra.

As a bill to cancel the mortgage, and the foreclosure deed as clouds upon the title of the grantors, upon the asserted equity that the mortgage was fully paid when the attempted foreclosure was had, we think it sufficient as against respondent's stated ground of demurrer, and the court properly overruled the demurrer to this aspect of the bill.

The equity to have the mortgage purged of the alleged usurious interest is dependent, of course, upon whether there was a valid foreclosure of the mortgage; or if there was in fact a valid foreclosure, whether the alleged conduct of the respondent as averred in the bill, and especially in paragraph 7, was such as to show that the First National Bank of Opp, mortgagee-purchaser, abandoned the foreclosure, or waived its right as a purchaser at the foreclosure sale, and made a binding election to treat the mortgage as their sole source of title and interest; or whether the conduct of the bank in entering into the alleged agreement, and collecting the rents thereafter and thereunder, was such as to work an equitable estoppel against the bank to assert its title to the land under the foreclosure deed.

If there was a valid foreclosure of the mortgage and the contract thus became executed, the fact that usurious interest was charged cannot invalidate the sale. Jones v. Meriwether et al., 203 Ala. 155, 82 So. 185; Alford v. Southern Building & Loan Ass'n, 228 Ala. 412, 153 So. 864; Alabama Cash Credit Corporation v. Bartlett et al., 225 Ala. 641, 144 So. 808.

In any event, it was incumbent upon the complainant to state distinctly and correctly the terms of the usurious agreement and the amount of the usurious interest paid. Bernheimer v. Gray, 201 Ala. 462, 78 So. 840; Davis v. Ashburn et al., 224 Ala. 572, 141 So. 226; Bradford v. Daniel, 65 Ala. 133; Security Loan Ass'n v. Lake, 69 Ala. 456; Masterson v. Grubbs, ...