Hicks v. Dowdy

• Decision Date: 16 January 1919
• Docket Number: 8 Div. 50
• Citation: 202 Ala. 535,81 So. 37
• Parties: HICKS et al. v. DOWDY.
• Court: Alabama Supreme Court

81 So. 37

202 Ala. 535

HICKS et al. v. DOWDY.

8 Div. 50

Supreme Court of Alabama

January 16, 1919

Appeal from Circuit Court, Marshall County; W.W. Harralson, Judge.

Bill by Lee Dowdy against W.P. Hicks and others to redeem, and for an accounting, and for other relief. Demurrers to the bill were overruled, and respondents appeal. Affirmed.

Street & Bradford, of Guntersville, for appellants.

D Isbell, of Guntersville, for appellee.

SOMERVILLE J.

With respect to assignments of mortgages of land as collateral security for the debt of the mortgagee, and the ensuing rights and relations of the parties, we approve the following statement of the law as declared by the Court of Appeals of New York:

"That the assignment is in substance a mortgage or pledge of the transferred security; that it gives to the assignee merely a defeasible title, which ends upon payment of the debt, leaving the ownership in the assignor precisely as if no transfer had been made; that such defeasible title cannot be changed or enlarged, as against the assignor, by any act or dealing of the assignee, or his representatives to which the assignor is not in some manner a party; that if the assignee forecloses the mortgage without also foreclosing the assignor's right, and becomes a purchaser at the sale, he holds the land as a substitute for the mortgage and precisely as he held the latter, and by no other, or different, or stronger title; and that whatever of benefit results from extinguishing the mortgagor's equity inheres in the security assigned in its changed form and goes of necessity to him who resumes its ownership by payment of the debt. The sale to the assignee, freeing the property from the mortgagor's equity, affected the relations of both assignor and assignee with the original mortgagor, but not at all their relations with each other. The security was thereby strengthened and made more valuable but remained a security still, and held by the same defeasible title and upon the same conditions as at first. That is not only the logical but the just view of the transaction. The assignee gets exactly what he bargained for, and what is his of right. While he holds the security, whether in the form of mortgage or of land, he gains the added protection of the added value; but when his debt is paid, and his title annulled, he has no claim to anything more." Matter of Gilbert, 104 N.Y. 200, 211, 10 N.E. 148, 151.

See also, Colebrooke on Col. Securities, § 183, and 31 Cyc. 831, c, where the law is thus substantially stated.

The assignor's ultimate right extends no further than the redemption of his pledged securities from his assignee before his foreclosure of the pledge. "Generally speaking, a bill in equity to redeem will not lie on the behalf of the pledgor or his representative as his remedy, upon a tender, is at law. But if any special ground is shown, as if an account or a discovery is wanted, or there has been an assignment of the pledge, a bill will lie." Nelson v. Owen, 113 Ala. 372, 376, 21 So. 75, 76.

In the case before us, the fact that the assigned mortgage has been foreclosed by the pledgee, and thereby converted into land to which he has taken the legal title in himself as purchaser very clearly calls for equitable relief to effectuate a complete redemption in favor of the pledgor. Rice v. Dillingham, 73 Me. 59. The case is also brought...