Harper v. Dothan Nat. Bank, 4 Div. 531.

• Decision Date: 14 May 1931
• Docket Number: 4 Div. 531.
• Citation: 134 So. 623,223 Ala. 26
• Parties: HARPER ET AL. v. DOTHAN NAT. BANK.
• Court: Alabama Supreme Court

134 So. 623

223 Ala. 26

HARPER ET AL. v. DOTHAN NAT. BANK.

4 Div. 531.

Supreme Court of Alabama

May 14, 1931

Appeal from Circuit Court, Geneva County; H. A. Pearce, Judge.

Bill to cancel a mortgage as a cloud upon title by M. H. Harper Steve Hicks, and Alex Henderson against the Dothan National Bank, with a cross-bill by respondent seeking foreclosure. From a decree overruling a demurrer to the cross-bill complainants appeal.

Affirmed.

E. C Boswell, of Geneva, for appellants.

Lee & Tompkins, of Dothan, and W. O. Mulkey, of Geneva, for appellee.

THOMAS J.

The respective claims and rights of the parties are asserted in the original and cross-bill. The appeal is from a decree overruling appellants' demurrer to the answer and cross-bill.

The facts, therein disclosed, are that the trustee of the estate of the Union Mercantile Company, an adjudicated bankrupt of date of March 11, 1929, conveyed to appellants the land in question; that on the 26th day of February, 1924, Wilson and wife (grantors of Union Mercantile Company) conveyed by mortgage to H. H. Jones, which instrument was duly and immediately recorded; that on February 23, 1928, the mortgage was satisfied by mortgagees' attorney in fact; that at the time of that conveyance of the trustee to the appellants there was no unsatisfied mortgage on the land shown by the record. The answer and cross-bill aver that on February 20, 1928, the Union Mercantile Company made draft in favor of attorneys for mortgagee Jones on the appellee bank, and it was for the purpose of having said mortgage transferred and assigned by said mortgagees to appellee, Dothan National Bank. The draft was returned for a due transfer of the mortgage, Jones and his attorneys notified of such fact and necessity of a due transfer, and on March 3, 1928, the draft was re-presented to appellee with the original mortgage from Wilson and wife, on which was the indorsement of transfer. The draft was paid, and mortgage with transfer was again recorded on March 14, 1929.

It is further averred in the cross-bill that the person acting as attorney in fact in satisfying the mortgage record as to said conveyance was without legal authority to so act and satisfy said mortgage on record. There was notice, averred to have been given before and at the date of the sale pursuant to the order of the bankrupt court, of appellee's prior right and interest as transferee of the mortgage, and that appellants purchased with such notice.

The foregoing averred notice was within the provisions of the statute, section 6887, Code, Acts 1927, p. 503, and the provisions of the bankrupt act, as amended in 1910. It was provided by the amendment of 1910, that the trustee in bankruptcy, "as to all property not in the custody of the bankruptcy court, shall be deemed vested with all the rights, remedies, and powers of a judgment creditor holding an execution duly returned unsatisfied." In re Calhoun Supply Co. (D. C.) 189 F. 537; In re Bazemore (D. C.) 189 F. 236, 26 A. B. R. 494; Amendment Bankruptcy Act 1910, § 47a, 11 USCA § 75 (a).

The construction placed on the foregoing act of Congress is that the trustee is vested with the same rights the bankrupt had to the property at the time of the petition for bankruptcy, subject to all valid claims, liens, and equities; that is, the trustee on appointment takes the property of the bankrupt, "not as an innocent purchaser, but as the debtor had it at the time of the petition." Zartman v. First Nat. Bank, 216 U.S. 134, 30 S.Ct. 368, 369, 54 L.Ed. 418; Lewin v. Telluride Iron Works Co. (C. C. A.) 272 F. 590, 595; In re Kellogg (C. C. A.) 118 F. 1017; Sparks v. Weatherly, 176 Ala. 324, 58 So. 280; American Bottle Co. v. Finney, 203 Ala. 92, 82 So. 106; Coffman v. Folds, 216 Ala. 133, 112 So. 911.

The act of Congress was not intended as an...