Jones v. Stollenwerck

• Decision Date: 20 December 1928
• Docket Number: 3 Div. 820
• Citation: 119 So. 844,218 Ala. 637
• Parties: JONES et al. v. STOLLENWERCK.
• Court: Alabama Supreme Court

119 So. 844

218 Ala. 637

JONES et al. v. STOLLENWERCK.

3 Div. 820

Supreme Court of Alabama

December 20, 1928

Rehearing Denied Jan. 24, 1929

Appeal from Circuit Court, Montgomery County; Leon McCord, Judge.

Bill for accounting, etc., by Mamie D. Jones and Henry C. Jones against Frank Stollenwerck, with cross-bill by respondent. From the decree, complainants appeal. Modified and affirmed.

See also, 217 Ala. 208, 115 So. 301; 217 Ala. 200, 115 So. 302.

Arthur B. Chilton and Hill, Hill, Whiting, Thomas & Rives, all of Montgomery, for appellants.

Ball &amp Ball, of Montgomery, for appellee.

FOSTER J.

The litigation between the parties to this cause began by a bill in equity filed by appellee Stollenwerck against appellants in May, 1924, praying for a specific performance of an alleged contract for the sale of certain lots in South Cloverdale.

In June, 1924, appellants filed a bill in equity against appellee, alleging many transactions occurring between them extending from 1916 to 1922, consisting of loans of money secured by mortgages, deeds, and other transactions; and, as later amended, alleging that certain deeds were intended as mortgages, and seeking an accounting of all such transactions and a redemption. Between the dates of the two bills, appellee had sued appellants on notes executed as rent of one of the places embraced in a deed, and had begun unlawful detainer for the recovery of said property. The bill sought an injunction against the prosecution of said suits. An injunction was granted and issued as prayed.

On January 5, 1925, the court made an order consolidating the two equity cases, and thereafter appellants were known as complainants. The bill contained many allegations showing a fraudulent scheme by appellee to obtain all the property of appellants. There are many irrelevant and impertinent matters running through the whole proceeding, presumably as shedding light on such issue. The bills were answered in detail, each respectively, and appellee made his answer a cross-bill, praying that the deeds and mortgages be declared valid and binding, and for general relief.

On November 5, 1926, the register filed a report reciting that it was referred to him by decree of April 2, 1925. We cannot find such decree of reference. But neither party makes any point on the absence of such decree, or as to its terms, and therefore we will treat the matter as though the decree were in proper form and authorized the register to act in the manner shown by his report. The report, after reciting the contentions of appellants, states that the court has not determined the validity of the deeds and mortgages, and that the register is not directed or authorized to make a finding as to such matters, but that he has been directed to make his report in two respects, one assuming that the deeds, mortgages, etc., are valid, and the other treating them as invalid. The register held the reference as so directed, and the evidence was taken orally before him. The report then proceeds to ascertain and find the status of the indebtedness as to each separate mortgage and other transaction.

An important controversy relates to what is known as the Dexter avenue property. Appellee purchased this property, and conveyed it to a corporation apparently controlled by appellants, and known as Southern Cities Realty Company. The report shows that there were several mortgages on said property, all of which were acquired by appellee; that the amounts of said mortgages, taxes, insurance, and repairs were agreed on between the parties, amounting to $55,032.84, as of April 13, 1921; that on March 13, 1921, said corporation conveyed to appellee said property in satisfaction of said indebtedness. The deed was also executed by appellants, who insist that it was intended as a mortgage to secure the debt. The final decree of the court adjudged that issue against appellants, and that decision is one of the serious issues in this case. There was no writing between the parties evidencing the transaction, other than the deed. Our courts have held in many cases that to constitute an equitable mortgage, the alleged mortgagor must have a mortgageable interest in the property, and must owe to the alleged mortgagee a definite debt for which the alleged mortgage is security. Downing v. Woodstock, 93 Ala. 262, 9 So. 177; Moseley v. Moseley, 86 Ala. 289, 5 So. 732; Micou v. Ashurat, 55 Ala. 607. Under some circumstances the court will decree a trust in the nature of an equitable mortgage to effectuate the intention of the parties; but will only do so when the evidence showing such relation is in writing. Appellants did not own the property and could not make a mortgage on it, either equitably or otherwise, but appellee could in writing stipulate a trust relation effectual in the nature of a mortgage. It may be shown by parol evidence that a deed was intended as a mortgage in equity, but a trust relation must be manifested by writing complying with the statute. Moseley v. Moseley, supra; Code, § 6917. As the evidence upon which it is claimed the deed was intended as a mortgage rested solely in parol, we will not review the decree of the court as to its sufficiency. Appellants are not in position to complain of any alleged imperfection in the conveyance by the corporation to appellee. The corporation is not complaining.

As to the home place and east frontage property, the register reported as follows: "The title to this property was at one time in the complainant, Mamie D. Jones, who, her husband joining, executed and delivered to the respondent Stollenwerck a warranty deed dated March 1, 1922. The testimony shows that the respondent acquired a number of mortgages on said property at the request of the complainants, paid various items of taxes, and insurance, added interest at a legal rate, and the account as agreed upon showed an indebtedness in favor of the respondent on September 30, 1922, of $50,756.88; that some time prior to said date complainants agreed to convey the property to respondent Stollenwerck for a consideration of $37,000 which was reduced to $36,000 as of September 30, 1922, said consideration to be paid by the respondent Stollenwerck giving to the complainants credit therefor on said agreed indebtedness. The testimony shows that the deed was executed and delivered, and the respondent, Henry C. Jones, given opportunity to sell the property as agent for the respondent. Said Jones failed to find a purchaser and on September 30, 1922, the complainants, pursuant to an agreement had between them and the respondent Stollenwerck, entered into a lease contract by which they agreed to pay him a monthly rental of $175 for a term of twelve months expiring September 30, 1923, which monthly payments were evidenced by rent notes executed by complainants. The testimony further shows that on September 30, 1923, complainants entered into another rent contract with the respondent for said property and agreed to pay therefor $175 per month until April 30, 1924. It further appears that no part of said rent was ever paid and the complainants have retained possession continuously to the present time."

The register also reported that said balance of indebtedness had been overpaid by the sales from time to time of other lots embraced in the mortgages, by the sum of $578.20, which amount was credited to appellants on other subsisting claims due appellee. The rent notes mentioned in the report were found by the register not to have been paid in any part; that the principal sum of them was $3,325, and they were the basis of the suit at law; that with interest added to September 30, 1926, and attorneys' fee of fifteen per cent., appellee was entitled to a decree against appellants for $4,791.52 on the rent notes, and for use and occupation from April 30, 1924, to September 30, 1926, at $175 per month (the amount of the rent notes for the previous term) appellee was entitled to $5,075. The court confirmed this report, adding interest to July 1, 1927, the date of the decree. The register also charged appellants with a like sum as a penalty, being double the sum found for use and occupation. The court overruled the register's report in this respect, of which appellants cannot and do not complain. Likewise, the court overruled exceptions to such findings of the register, and decreed that the deed was without condition and not intended as a mortgage. Appellee has not pleaded or contended in brief that appellants are estopped, by reason of having rented the property, to litigate with appellee on the question of whether the deed was a mortgage. We will therefore not give consideration to any such doctrine. The report of the register is not controlling on the question of the effect of the conveyance to appellee. It was not submitted to him as he expressly states. He found the status of the parties based on that assumption as directed by the court.

But the court found and decreed that the deed was not a mortgage. It is therefore necessary for us to review such decree. It was not based upon evidence heard personally by the presiding judge, and therefore there is no presumption as to the correctness of the decree in that respect. In deciding that question from the evidence, we must remember that the burden is on appellants to overcome the presumption of law that the deed was intended as such to a clear and satisfactory conclusion. "The testimony going to establish the essential facts [of a mortgage] must be consistent, strong and convincing." Downing v. Woodstock, supra. "There must be a continuing binding debt from the mortgagor to the mortgagee to uphold it; a debt in its fullest sense. Not a mere privilege reserved in the grantor to pay or not at his election, but a debt which the...