Grace v. Montgomery

• Decision Date: 03 May 1923
• Docket Number: 7 Div. 361.
• Citation: 209 Ala. 386,96 So. 430
• Parties: GRACE v. MONTGOMERY ET AL.
• Court: Alabama Supreme Court

96 So. 430

209 Ala. 386

GRACE v. MONTGOMERY ET AL.

7 Div. 361.

Supreme Court of Alabama

May 3, 1923

Appeal from Circuit Court, Clay County; W. L. Longshore, Judge.

Bill of M. B. Grace against W. H. Montgomery and others, to foreclose a second mortgage on land, etc. From a decree for respondents, complainant appeals. Reversed and remanded.

Grace &amp Simpson, of Birmingham, for appellant.

A. L Crumpton, of Ashland, for appellees.

GARDNER J.

Upon the former appeal in this cause (Grace v Montgomery, 207 Ala. 188, 92 So. 412), the bill filed by this appellant was held sufficient as against any objection interposed thereto as one by a junior mortgagee seeking redemption from the senior mortgage. The respondents' pleas 1 and 2 were held insufficient as a defense, and upon remandment of the cause the respondents filed pleas A and B as a defense. The trial court held these pleas sufficient and the proof establishing the averments thereof, denied relief to the complainant, and dismissed the bill. From this decree the complainant has prosecuted this appeal; and the important question presented is as to the sufficiency of pleas A and B.

The bill discloses that the mortgage to complainant was executed by W. H. Montgomery and wife on August 3, 1916, payable January 1, 1917, and duly recorded on September 23, 1916. The pleas disclose that W. H. Montgomery and wife executed on August 12, 1915, a mortgage upon the same property to W. A. Worthy and I. G. Lynch, which was duly recorded September 7, 1915, and that on October 8, 1917, W. A. Worthy, one of the mortgagees, transferred and assigned his interest in the mortgage and the lands therein described to respondent C.J. Montgomery, which transfer was entered on the margin of the record, and on October 25, 1917, I. G. Lynch, the remaining mortgagee, also transferred and assigned his interest in the mortgage and lands to said C.J. Montgomery, and that by reason of these assignments the said C.J. Montgomery became the owner of the entire interest in the mortgage. The pleas further disclose that on December 8, 1917, W. H. Montgomery and wife, the mortgagors, executed a warranty deed conveying to the said C.J. Montgomery the lands described in the mortgage in lieu of foreclosure thereof, and in settlement of said mortgage indebtedness. This deed was duly recorded on December 20, 1917, and since the execution thereof C.J. Montgomery has claimed to own the land.

Plea B has the additional averment that, more than two years having elapsed since the execution and recordation of the deed, this suit by the complainant is barred.

The defense here sought to be interposed as against the right of this complainant, as junior mortgagee, to redeem, rests upon the execution of the deed by the mortgagors W. H. Montgomery and wife to the assignees of the senior mortgagees; this deed being in lieu of foreclosure. As between the mortgagor and the assignees of the senior mortgagees, the transaction being free from fraud or oppression is held to be binding between the parties, and such conveyances have been upheld by numerous decisions of this court. Stoutz v. Rouse, 84 Ala. 309, 4 So. 170; Farrow v. Studivant Bank, 184 Ala. 208, 63 So. 973; Grace v. Montgomery, supra.

The mortgage, however, was not foreclosed either under power of sale or by decree of the court; the agreement between the mortgagor and mortgagees resulting in the execution of the deed being merely in lieu of foreclosure. Therefore there does not arise the question as to the statutory right of redemption so far as this complainant is concerned.

The rights of the junior mortgagee for the exercise of the equity of redemption conveyed to him by virtue of his mortgage, and of which the senior mortgagee had notice, cannot be affected by the private arrangement or agreement entered into between the mortgagor and senior mortgagee.

"A subsequent mortgagee is presumed to have acquired his interest with reference to the existing liens as they appear of record, and his rights cannot be prejudiced by private

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