Kelly v. Tatum

• Decision Date: 05 March 1931
• Docket Number: 3 Div. 924,924-a.
• Citation: 133 So. 703,222 Ala. 655
• Parties: KELLY v. TATUM ET AL. TATUM v. KELLY.
• Court: Alabama Supreme Court

133 So. 703

222 Ala. 655

KELLY v. TATUM ET AL.

TATUM v. KELLY.

3 Div. 924, 924-a.

Supreme Court of Alabama

March 5, 1931

Rehearing Denied April 23, 1931.

Appeal from Circuit Court, Montgomery County; Walter B. Jones Judge.

Bill in equity by William Tatum, Augustus S. Tatum, and Carley Tatum against J. W. Kelly, individually and as receiver of the estate of William Tatum, Sr., deceased, Fannie Jeanette Tatum, and others, to declare a resulting trust, to cancel a deed, etc. From a decree granting relief to complainants William and Augustus Tatum and denying relief to complainant Carley Tatum, respondent Fannie Jeanette Tatum appeals, and complainant Carley Tatum cross-assigns error.

Affirmed.

Rushton Crenshaw & Rushton, of Montgomery, for appellants.

Steiner Crum & Weil, Thos. B. Hill, Jr., and Hill, Hill, Whiting, Thomas & Rives, all of Montgomery, for appellant and cross-appellant.

FOSTER J.

The bill on behalf of William and Augustus Tatum against appellant Mrs. Kelly is based upon the theory of a resulting trust in the nature of an equitable mortgage on the authority of our cases, among others, of Montgomery v. McNutt, 214 Ala. 692, 108 So. 752; Moss v. Winston, 218 Ala. 364, 118 So. 739; Pollak v. Millsap, 219 Ala. 273, 122 So. 16, 65 A. L. R. 110; O'Rear v. O'Rear, 220 Ala. 85, 123 So. 895; O'Rear v. O'Rear, 219 Ala. 419, 122 So. 645; Rudulph v. Burgin, 219 Ala. 461, 122 So. 432; Snead v. Dooley, 221 Ala. 598, 130 So. 222.

These complainants and respondent Mrs. Kelly were children of William Tatum, Sr., deceased, whose will provided that his estate should be kept together until the youngest child became thirty years old, and then divided among his children then living. There were ten of them, and they all lived until the youngest became thirty, February 22, 1929. Respondent J. W. Kelly, having married a daughter, became the main stay of the large family in respect to counsel and advice, and was later appointed receiver of the estate, which he kept together and managed until the time of distribution. It was a large and valuable estate.

In the meantime and some fifteen years before the period of distribution, these complainants, having become financially involved, mortgaged their interest. They were then adjudged bankrupts. They claim in their bill and by their testimony that J. W. Kelly agreed with them to take care of the mortgage debt for them and collect their share of the income until the time of distribution, and then adjust the claim; but that he permitted the mortgage to be foreclosed and purchased the property at the sale in his wife's name, and then also purchased their right of redemption out of the bankrupt court; that he kept the estate together under the will until the time of distribution, 1929; and that their share of the net income had more than paid the amount advanced, etc.

Their interest was contingent and dependent upon their continued life until the time of distribution. Whether their interest would ever vest, apparently depended upon their living to the time of distribution. Though the precise nature of their interest was said to be uncertain, it was held subject to alienation. Tatum v. Com. Bank & Trust Co., 185 Ala. 249, 64 So. 561. This of course lessened the value of such interest. To protect him against this hazard, J. W. Kelly insured the life of one of these complainants for his benefit.

The bill does not allege in so many words that the agreement was that J. W. Kelly should lend them a definite amount of money for a definite time and then be repaid and as security should receive their income from the property, or that the mortgage should be transferred to him or title taken as security for the debt specific in amount, maturity, interest, and other detail. But it does allege that he agreed to take over the debt and pay it, and repay himself out of the rents and incomes to which these complainants were entitled before distribution, when he would be repaid any balance due him out of their share, and subject to his claim they would own their share at that time.

The time of distribution was fixed in the will to be when the youngest child arrives at thirty years of age. Until then there was to be no distribution, but all the children should share in the income. The amount promised by J. W. Kelly, as there alleged, was definitely ascertainable, and due not later than a time fixed, which was bound to occur, though it may be postponed for some fifteen years, and in the meantime he was to receive the share of the income due these complainants to be applied on the debt.

If these allegations are true, we see in them nothing lacking to constitute a loan of money, and a debt thereby created in its fullest sense. The fact that the lender could not force its repayment as a personal debt until the time of distribution arrived, merely postponed until then its due date, except that in the meantime he could apply upon it their share of the income. When the due date arrived he could enforce his claim in the usual and ordinary manner. So that if the proof established as true the allegations of the bill, it was sufficient to show an advance of money creating a resulting trust in the nature of an equitable mortgage.

Both these complainants testified to the facts substantially as alleged, and Mr. and Mrs. Kelly denied them. They were examined orally in open court, and the result as found on such testimony has the qualities of the verdict of a jury. Therefore, it should not be vacated, regardless of what we may think is a mere preponderance of the evidence.

While the agreement as alleged may not have included the amount paid into the bankrupt court to prevent its exercise of the statutory right of redemption, it was an amount paid by such trustee-mortgagee, which we think should be held to be for the benefit of the beneficiary mortgagor by reason of the trust relation then existing between them, and a proper amount to be charged on the security of the equitable mortgage. We therefore discover no reason to disagree with that aspect of the decree which thus declares the rights of the complainants William and Augustus Tatum.

United in the bill with William and Augustus Tatum is a claim by another brother Carley Tatum directed against J. W. Kelly. There is no demurrer testing the sufficiency of the bill as a whole or in its different aspects, or for uniting the distinct claims. The basis for relief by Carley is set forth in the fifth paragraph of the bill, not necessary here to repeat. The court decreed against him, and he has prosecuted an appeal.

After Carley's mother died, and he had received some money from her estate, and being about nineteen years old, with his disabilities removed, he went off and spent up his money, and found himself in Chicago without a job and no money. He then began an urgent appeal to Mr. Kelly for help, first by long distance telephone for a loan, as he testified. After this 'phone call their negotiations were entirely by telegrams and letters, which were in evidence. They show quite conclusively that Mr. Kelly's negotiations were for an outright purchase of this interest.

We agree with the evident conclusion of the circuit court that the claim of Carley that he understood the transaction to be a loan is not sustained by the written evidence of their negotiations. We are not willing to differ with the circuit court in refusing to accept the theory that when such communications throughout refer to the transaction as a sale for a price, and the execution of a deed, the words did not mean to express such idea but meant something else. Their language is plain, unambiguous, and can convey but one thought-a purchase and sale. We think that the decree is correct in evidently holding that the proof did not sustain that aspect of Carley Tatum's claim that the deed was security for a debt, but it shows that a sale was made and intended.

The fifth paragraph also alleges that while confidential relations existed between them with J. W. Kelly as the dominant party,...