Goulding Fertilizer Co. v. Blanchard

• Decision Date: 29 June 1912
• Citation: 178 Ala. 298,59 So. 485
• Court: Alabama Supreme Court
• Parties: GOULDING FERTILIZER CO. ET AL. v. BLANCHARD.

59 So. 485

178 Ala. 298

GOULDING FERTILIZER CO. ET AL. v. BLANCHARD.

Supreme Court of Alabama

June 29, 1912

Appeal from Chancery Court, Covington County; L. D. Gardner Chancellor.

Bill by W. R. Blanchard against Goulding Fertilizer Company and others to reform a deed and mortgage and to enjoin the sale of a certain quarter section of land. From a decree overruling demurrers to the bill, respondents appeal. Reversed and remanded on rehearing.

Dowdell C.J., dissenting in part on rehearing.

The bill alleges that J. A. Prestwood and wife were indebted to O'Neal, Law & Co. in the sum of $8,625, and, in order to secure it, executed a mortgage on the 26th day of September 1907, one secured thereby maturing October 1, 1908, and the other maturing October 1, 1909; that, among other lands described in said mortgage, there was conveyed the S.E. 1/4 of section 36, township 4, range 16, and that it was not intended to embrace that quarter section in the mortgage, but it was intended to convey that same quarter section in section 36, township 4, range 14; and that the said Prestwood did not at that time own the quarter section conveyed, but did own and intended to convey the quarter section last mentioned. The failure of the Prestwoods to pay said mortgage is then alleged, and the fact of its advertisement and sale and the making of the deed by the auctioneer and by the individuals composing the firm of O'Neal, Law & Co. alleging that in that deed the land conveyed was the land described in the mortgage; a similar mistake occurring in the deed as in the mortgage. It is further alleged that on March 6, 1908, the Prestwoods executed a mortgage to the Goulding Fertilizer Company, including among other lands the S.E. 1/4 of section 36, township 4, range 14, and that the Goulding Fertilizer Company advertised the lands for sale under the power contained in the mortgage. It is also alleged that they had notice of the fact that, before the execution of the mortgage to them, Prestwood intended, and had conveyed, this particular quarter section of land to O'Neal, Law & Co. It is then alleged that Blanchard became the purchaser at the mortgage sale under the mortgage given to O'Neal, Law & Co. The demurrers raised the questions discussed in the opinion.

Steiner, Crum & Weil, of Montgomery, for appellants.

W. L. Parks, for appellee.

DOWDELL, C.J.

This is a bill by a purchaser at a foreclosure sale under power contained in the mortgage to correct a mistake in the description of land in the mortgage and in the deed under the foreclosure sale. The mistake is alleged to have been made by the draughtsman of the mortgage, and consisted in stating the wrong number of the range in which the land was situated. The bill was demurred to on the theory that the purchaser was a stranger and there was no privity in contract as to him, and that the doctrine of caveat emptor applied, and hence that he had no right to file a bill to correct the mistake and to reform the mortgage and deed.

The mortgage contained an express power to the auctioneer to convey under the foreclosure, in the names of the mortgagors. The auctioneer, however, made an ineffectual effort to execute the power by conveying in the names of O'Neal, Law & Co., the mortgagees in the mortgage. But this was not all that was done. The individuals composing the partnership and in whom the legal title to the land resided joined in this conveyance with the auctioneer to the complainant, Blanchard. Moreover, at a subsequent day, the auctioneer did convey to the purchaser in the names of the mortgagors. This we think created Blanchard a privy in contract to all intents and purposes in equity, as much so as if the mortgagees had assigned the mortgage to Blanchard in a manner conveying the legal title. Under the deed he was not only the grantee of the auctioneer who conveyed in the name of the partnership, and hence only the equity, but was the grantee of the legal title by the mortgagees in their individual capacities. He (Blanchard) therefore occupied as favorable position in equity as a privy in contract as a subvendee would. The principle stated in Greer et al. v. Watson, 170 Ala. 334, 54 So. 487, is conclusive of this case.

The chancellor properly overruled the demurrer, and his decree will be affirmed.

Affirmed.

All the Justices concur.

On Rehearing.

SOMERVILLE J.

On the original hearing I concurred in the foregoing opinion of the CHIEF JUSTICE, and in the affirmance of the chancellor's decree overruling the demurrer to the bill of complaint.

On appellant's application a rehearing was granted, the affirmance set aside, and a judgment of reversal entered, in which ANDERSON, McCLELLAN, SAYRE, and SOMERVILLE, JJ., concurred, but no opinion was then filed expressive of the views of the majority.

I now undertake to explain the reasons for my action on the first application for rehearing, and to state the principles which I think properly directed that result.

1. I adhere to the conclusion reached on the original hearing that the purchaser at the mortgage sale under the power was in such privity with the mortgagor as to entitle him to the reformation of a misdescription in the mortgage, equally with the mortgagee. I regard it as immaterial that, by reason of a defective execution of the deed of sale, the purchaser acquired only an equitable title thereby; nor do I think the fact that the mortgagees individually joined in the execution of the foreclosure deed was essential to the purchaser's equity of reformation. Had no deed been executed to the purchaser at all, nor any memorandum made, its omission could be availed of to defeat the sale only by the mortgagee or the purchaser. Cooper v. Hornsby, 71 Ala. 62; Mewburn's Heirs v. Bass, 82 Ala. 622, 2 So. 520.

I can find no support either in reason or authority for the proposition that the purchaser at a mortgage foreclosure sale under the power is not as much entitled to reform a perpetuated mistake in the deeds constituting his chain of title, as any other subvendee.

In Williams v. Hatch, 38 Ala. 338, where a bill was filed by a mortgagee to correct the description in his mortgage after a foreclosure sale under the power, although relief was denied, it seems to be clearly implied that as purchaser he could have maintained the bill; for it was said: "The only title which the complainant alleges is a title as mortgagee, and the only relief he seeks is in his character as mortgagee; but the proof shows that he has parted with his title as mortgagee, and that, if he has any right to relief at all, it is in the distinct character of purchaser of the mortgage title. This variance between the allegations and the proof is fatal to the complainant's case in its present form."

In several later cases purchasers at such foreclosure sales seem to have filed such bills, and relief has been granted without any point being made as to the effect of foreclosure on the right asserted.

In the recent case of Greer v. Watson, 170 Ala. 334, 54 So. 487, the precise point was decided, viz., that "a purchaser at a mortgage foreclosure sale under power in the mortgage may sue to correct a mistake in the description in the mortgage." The bill there was substantially like the present bill, and the point in question was fairly raised by a general demurrer to the bill for want of equity. It is true that the purchaser had not paid the purchase money, although he had received his deed; but that fact, if material at all, could only have weakened the complainant's equity.

I see no reason for disturbing that decision now, even if its correctness were originally debatable. Nor can I appreciate the merit of the argument that the rule of caveat emptor however rigorously it might be applied to foreclosure sales under judicial decree, has anything to do with the question. That rule varies in force and effect, and is applied in its fullest extent to judicial sales only. The purchaser assumes the risk of the regularity and validity of the proceedings upon which the sale is founded; and, even if the sale is in all respects valid, the purchaser succeeds to no greater right and no better title...