Goree v. Clements

• Citation: 10 So. 906,94 Ala. 337
• Parties: GOREE v. CLEMENTS.
• Decision Date: 02 December 1891
• Court: Alabama Supreme Court

10 So. 906

94 Ala. 337

GOREE v. CLEMENTS.

Supreme Court of Alabama

December 2, 1891^[1]

Appeal from chancery court, Tuscaloosa county; THOMAS COBBS, Judge.

Bill by Napoleon D. Goree against N. N. Clements to set aside a conveyance of an equity of redemption, and to be permitted to redeem from a mortgage lien. Decree for defendant. Complainant appeals. Affirmed. Rehearing denied.

The bill in this case was filed by the appellant against the appellee. The purposes and prayer of the bill are sufficiently stated in the opinion. The averments of the answer, which were filed by the respondent, are also shown by the opinion. On the submission of the cause upon the pleadings and proof the chancellor decreed that the complainant was not entitled to the relief prayed, and ordered that the bill be dismissed. Complainant brings this appeal, and assigns as error this final decree of the chancellor.

Hargrove & Vande Graaff, for appellant.

Wm. Cochran Fitts and Wood & Wood, for appellee.

CLOPTON J.

On May 5, 1880, appellant executed to John Bowen a mortgage on the land in controversy to secure the payment of a note for $500 payable 8 months after date, with interest. The note not having been paid at maturity, Bowen advertised the land for sale under the mortgage. Appellant applied to appellee to assist him, and thereupon, by arrangement between the parties, appellant drew a bill of exchange, March 14, 1881 for $560, payable at 90 days after date, which was indorsed by appellee, and discounted in bank. The money raised by the discount of the bill was applied to the payment of the note held by Bowen, and on the same day appellant executed to appellee a mortgage on the land to secure him as such indorser. It is true, the mortgage recites that it was executed for the purpose of securing an indebtedness from appellant to appellee, "as evidenced by his promissory note of even date herewith, in the sum of five hundred dollars, payable with interest from date;" but it is undisputed that no such note was given, and that the real object of the mortgage was to secure the liability of appellee by virtue of his indorsement of the bill of exchange. Appellant having failed to provide for the payment of the bill at maturity, appellee paid it, and thereafter advertised the land for sale under the mortgage on the 3d day of September, 1881. After the land was advertised, appellant executed, August 19, 1881, to appellee, a conveyance thereof on the recited consideration of $560. Appellant, who files the bill, seeks to be let in to redeem, notwithstanding the deed. Counsel for the respective parties differ as to the nature and purpose of the bill. Counsel for defendant insist that its object is to have the conveyance, absolute in its terms, declared a conditional sale, and to enforce the right to repurchase; and counsel for complainant contend that the case made by the bill is an attack upon the fairness and validity of a sale and conveyance of the equity of redemption by a mortgagor to the mortgagee. After setting forth the facts above stated, the bill alleges that when complainant met defendant, August 19, 1881, the latter stated, in explanation of his course, that, it having become inconvenient for him to extend the debt, which the bill alleges he originally agreed to do, he had advertised the property in order to bring the complainant to town, not knowing how to get word to him otherwise, and that a new arrangement must be made. The bill further avers: "Your orator being still wholly without any ready money, or other available property than said land, and knowing of no one from whom he could obtain assistance, Clements [the defendant] finally proposed to him that, if orator would make him a deed to the property, he would allow orator a reasonable and convenient time to repay the debt to himself, and would allow orator to collect and hold the rents of the current year." It then avers that complainant, being unversed in such business, and ignorant of the law, and trusting to the representations of defendant, who had long been his friend and attorney at law, that the arrangement would be to his advantage, as saving trouble and expense, accepted the proposal, and executed the deed to defendant without any new consideration. The bill further alleges that defendant agreed, at the time of the arrangement to raise the money to pay Bowen by discounting the bill of exchange, to attend to the extension of the debt when it matured; also that the land was worth not less than $1,200. The special prayer is that the deed be set aside and canceled as having been obtained without consideration, by unfair dealing, and undue advantage taken of the necessitous condition of the complainant, and that the relation of mortgagor and mortgagee be decreed to still subsist. As the allegations and special prayer apparently sustain the contention of appellant as to the structure and purpose of the bill, and as the error insisted on by counsel in argument consists in the denial of the special relief prayed, we will first consider the right of complainant to maintain the bill for the purpose of canceling the conveyance, and thereby restore the relation of mortgagor and mortgagee, with the right to redeem.

The well-recognized rule that a mortgagor may, by subsequent contract, make a valid sale or release of the equity of redemption to the mortgagee; and that such sale or release will be maintained in equity, if shown to be free from fraud oppression, or undue advantage, and supported by a sufficient consideration, is not controverted. The contention is that defendant's acquisition of the equity of redemption cannot stand the test of the principles governing transactions between parties who deal on unequal terms,-between power on the one side and weakness on the other,-if the watchfulness with which courts of equity investigate such cases is observed, and the bill, answer, and evidence are closely and searchingly scrutinized. The principal facts averred in the bill as constituting unfair dealing are the existence of the relation of mortgagor and mortgagee, an agreement on the part of defendant to attend to the extension of the debt when the bill of exchange matured, the necessitous condition of the mortgagor, and the inadequacy of the consideration. As to an agreement to attend to the extension of the debt in bank, or to allow complainant any time in which to repurchase or redeem by payment of the debt, and as to the circumstances attending the execution of the conveyance, the testimony of complainant and defendant is in irreconcilable conflict. The necessitous condition of complainant is shown. As is usually the case, the witnesses widely differ as to the value of the property. If the value be determined by the testimony of the witnesses on the part of complainant, the consideration was grossly inadequate; if by the testimony of defendant's witnesses, it was not unreasonable. The expression, sometimes used, that the release must be for an adequate consideration, is thus defined by FIELD, J., in Peugh v. Davis, 96 U.S. 332: "That is to say, it must be for a consideration which would be deemed reasonable if the transaction were between other parties dealing in similar property in its vicinity. Any marked undervaluation of the property in the price paid will vitiate the proceeding." It may be conceded that, though there is the absence of actual fraud and undue advantage, gross inadequacy of consideration, "marked undervaluation of the property," will of itself avoid an absolute and unconditional release. Also, if the circumstances are merely suspicious, casting a shadow over the fairness of the acquisition of the equity of redemption, but not rising to the dignity of proof, a consideration, so unreasonable that a party, not unduly influenced, free to act according to his own volition and judgment, would not surrender the property for the price paid, may suffice to vitiate the release. The averments of the bill make the case of a conveyance of the land to defendant upon condition that complainant should be allowed a reasonable and convenient time to pay the debt,-a deed absolute in form, but intended to operate as a security, or conditional sale. When the sale or release is conditional, the rules as to the inadequacy of consideration sufficient to vitiate it do not apply with the same strictness, or to the same extent, as when absolute. In such case the comparative quantum of the consideration paid and the value of the property become significant and important, because connected with the previously existing relation of mortgagor and mortgagee; but, to be effectual of itself, the inadequacy must be so great as to induce the belief that the power of the mortgagee, growing out of the relation of the parties, has been oppressively...