Hill v. Taylor

• Court: Alabama Supreme Court
• Writing for the Court: SIMPSON; LIVINGSTON
• Citation: Hill v. Taylor, 235 So.2d 647, 285 Ala. 612 (Ala. 1970)
• Decision Date: 15 May 1970
• Docket Number: 7 Div. 844
• Parties: Paralee HILL et al. v. J. P. TAYLOR.

Page 647

235 So.2d 647

285 Ala. 612

Paralee HILL et al. v. J. P. TAYLOR.

7 Div. 844.

Supreme Court of Alabama.

May 15, 1970.

Rains, Rains & McCurley, Gadsden, for appellants.

Roy D. McCord, Lusk, Swann, Burns & Stivender, Gadsden, for appellee.

SIMPSON, Justice.

This case arises out of the following facts.

On August 15, 1963, appellant Paralee Hill executed a mortgage to Homeowners Mortgage Company, Inc., to secure a debt of $6,251.95 with interest at the rate of 6% Per annum. The mortgagor testified that she received from the mortgage company $4,000.00. The mortgage covered the property which is the subject of this suit.

Thereafter on the 13th of October, 1964, Mrs. Hill entered into a new contract with the assignee of the mortgagee, Southeastern Fund, a corporation, under which the original mortgage was cancelled. At this time Mrs. Hill executed a deed to the property to Southeastern Fund and the parties executed a contract for the purchase of the land, whereby it was agreed that Mrs. Hill could re-purchase her property upon the payment of $91.94 per month for 120 months. This deed was recorded.

Mrs. Hill had lived on the property involved all of her life, having been born there. It was her testimony that she paid on the mortgage for about a year. She continued to pay taxes on the property.

On January 28, 1966, the property was deeded to John W. Brown by North American Acceptance Corporation, which had merged with Southeastern Fund; and the contract between North American Acceptance Corporation, the successor to Southeastern Fund through merger, and Paralee Hill was transferred to Brown. This deed and assignment were recorded.

The evidence indicated that Brown paid $5,500.00 for the property and contract.

On February 28, 1967, Brown executed a warranty deed to the property to appellee J. P. Taylor for a consideration of $2,000.00 and a mortgage in favor of Brown in the amount of $2,500.00, which mortgage was subsequently paid on March 30, 1967.

Sometime after March 31, 1967, Mrs. Hill tendered to Taylor $100.00, which was refused.

This lawsuit was commenced by an action of ejectment brought by Taylor against Mrs. Hill (and other tenants on the land) May 30, 1967.

The appellants here, who were the defendants in the ejectment action, filed a motion to transfer the cause to the equity side of the court. This motion was granted. Thereupon they filed a bill in which it was alleged that Paralee Hill had conveyed the property in question to North American Acceptance Corporation and had entered into a contract with North American Acceptance Corporation on the 13th day of October, 1964, which provided for the sale of the property to her upon payment of the amounts provided for therein; that thereafter the property had been conveyed to John W. Brown and the contract for the sale and purchase of the land assigned to him. The deed to Brown and the assignment were on record in the office of the Judge of Probate. The bill further alleged that on February 28, 1967 the property had been transferred to J. P. Taylor, and that Taylor had constructive, if not actual, notice of the sale contract. The bill further alleged that Paralee Hill had been in possession of the real estate for many years, paid taxes on it each year, etc.

The bill alleged that Paralee Hill had paid a sum equal to the amount of the payments as set out in the contract, and that she was able to continue to make the payments, that she had tendered to Taylor $100.00 'to bring the payments current up to the date of the offer and that the amount was past due at the time because she had been unable to contact the defendant.'

The complaint further alleged that by reason of the sales contract, she was entitled to exercise her right to make payments, or to pay the full contract price and when paid to obtain a deed from the defendant in the cause and she offered to do equity in that she will either bring the payments up to date and continue to pay them, or to pay the full amount found by the court to be due, which, according to Paralee Hill, was $4,500.00.

The complaint asked the court to make a determination that she had a right by virtue of the sale contract to complete the purchase of the property from Taylor by paying the balance of the purchase price; and further that the court determine the amount due under the contract.

The appellee Taylor relied upon his warranty deed from Brown, contending that he knew nothing about any sale contract at the time he purchased the land from Brown.

The court entered a decree in favor of Taylor, holding that Paralee Hill, Etta Smith, and Floyd Martin have no interest or title in the property involved.

The effect of this decree was to find in favor of Taylor in his ejectment action. The court awarded no damages for detention.

The effect of this decree must be that the court found that Taylor was a bona fide purchaser for value and took perfect title from Brown under the warranty deed. The facts do not support this finding.

It has long been established that when one purchases property with notice of an interest of another in such property, then the purchaser takes the property subject to the interest of the third person. Such notice, according to our cases, could be "actual or constructive, or knowledge of facts sufficient to put a reasonable person on notice, which, if followed up, would have discovered * * *" the interest of the third party. Shubert v. Lacy, 257 Ala. 629, 60 So.2d 442; Reeder v. Cox, 218 Ala. 182, 118 So. 338; Stone v. Lacy, 245 Ala. 521, 17 So.2d 865; Hatter v. Quina, 216 Ala. 225, 113 So. 47; Ely v. Pace, 139 Ala. 293, 35 So. 877; Alexander v. Fountain, 195 Ala. 3, 70 So. 669.

Here the appellee took title from Brown. There was on record the following assignment of the contract to purchase between Paralee Hill and Southeastern Fund (which became through merger North American Acceptance Corporation):

'For valuable consideration received, the receipt whereof is hereby acknowledged, the undersigned, North American Acceptance Corporation, a Georgia corporation, does hereby grant, bargain, sell, transfer and convey to John W. Brown all of its right, title and interest in and to the following:

'That certain contract between the undersigned and Paralee Hill dated October 13, 1964, for the purchase of real estate located in Etowah County, Alabama, which said real estate is specifically described in deed from Paralee Hill to Southeastern Fund, a corporation, dated September 10, 1964, and recorded in Book '982', page 65, Probate Office, Etowah County, Alabama.'

In addition to this recorded assignment to his grantor, which surely would have been revealed by a title search, and which surely under our cases is sufficient to put one on notice, the appellee testified himself that on the day he purchased the property, he was aware that Paralee Hill lived on the property, and had known so for quite some time.

We believe that the fact that the assignment was on record showing the existence of a contract for the sale of the land involved was sufficient to put appellee on notice of the equities held by Mrs. Hill under that contract. It has frequently been pointed out in our cases that 'It is an established rule of this court that equity as well as law charges a...