Lee v. Macon County Bank

• Decision Date: 07 January 1937
• Docket Number: 5 Div. 230
• Citation: 172 So. 662,233 Ala. 522
• Parties: LEE v. MACON COUNTY BANK et al.
• Court: Alabama Supreme Court

172 So. 662

233 Ala. 522

LEE v. MACON COUNTY BANK et al.

5 Div. 230

Supreme Court of Alabama

January 7, 1937

Rehearing Denied March 4, 1937

Appeal from Circuit Court, Macon County; W.W. Wallace, Judge.

Suit in equity by Mary Lou Lee against the Macon County Bank, J.H Williams, as superintendent of banks, liquidating said bank H.A. Vaughan, A.C. Bulls, and Getter Carlton. From a decree dismissing the bill, complainant appeals.

Reversed rendered and remanded.

Mary Lou Lee, pro se.

Powell & Powell, of Tuskegee, and Fred S. Ball, Jr., of Montgomery, for appellees.

THOMAS Justice.

The bill as amended sought accounting and redemption. The decree denied relief and that action is assigned as error.

The testimony was taken orally in open court, before the judge rendering the final decree, and is supported by the intendment that obtains. Hodge et al. v. Joy et al., 207 Ala. 198, 92 So. 171; Andrews et al. v. Grey, 199 Ala. 152, 74 So. 62.

The provisions of the note and mortgage are for past indebtedness and future advances to be made by the mortgagee, and are specific and unequivocal; their terms touching the right of foreclosure, however, are meager. These instruments were executed on January 1, 1923, and May 12, 1922, respectively, before the Code of 1923 became effective; are ruled by the law of the time entering therein (Cotton et al. v. First Nat. Bank, 228 Ala. 311, 153 So. 225), and the mortgage in the respects last indicated is not within section 9011 et seq. of the Code.

It is declared that before the adoption of the Code of 1923, as to mortgages executed prior thereto and where no specific place of sale is named and none provided by law, it is left to the selection of the mortgagee, who is bound to exercise a reasonable and prudent discretion in executing the power of sale. State Bank of Elberta v. Peterson, 226 Ala. 13, 145 So. 154.

The time required as to notice to be given of such a foreclosure, where it is to be given by publication, is governed by the old section, section 5182, Code of 1907, section 9258, Code of 1923. Hall v. Noble et al., 215 Ala. 444, 111 So. 14 (a bill in equity).

The purpose of a foreclosure is to extinguish the equity of redemption; and it is a material part of the security. Hamill v. McCalla et al., 228 Ala. 281, 153 So. 412. And this may be done, within the terms of the contract, by the party having that right or security according to the statutes, or the adjudicated method that obtains in this jurisdiction. 41 Corpus Juris page 830 et seq.; Woodruff v. Adair et al., 131 Ala. 530, 32 So. 515; Ward et al. v. Ward et al., 108 Ala. 278, 19 So. 354; Pollak et al. v. Millsap et al., 219 Ala. 273, 122 So. 16, 65 A.L.R. 110; Steed v. Carmichael et al., 223 Ala. 193, 134 So. 885; Mallory et al. v. Agee, 226 Ala. 596, 147 So. 881, 88 A.L.R. 1107.

If the words employed in the mortgage are sufficient to evidence an intention that a sale of the property embraced therein may be made after default, or the happening of the lawful contingency against which the stipulation or indemnity obtains (Cannon v. McNab & Eastern Bank, 48 Ala. 99; McGuire v. Van Pelt et al., 55 Ala. 344; Presnall v. D.R. Burgess & Co., 181 Ala. 263, 61 So. 804; 41 Corpus Juris page 926, § 1345), such foreclosure may be had under the law of such a case.

We find nothing in our decisions that would indicate that the provisions contained in the bank's mortgage would deny its right of foreclosure by sale after default and reasonable notice given of the time, place, and terms of the sale. If notice was duly given and the sale made within the rules of law that govern, this was sufficient to foreclose the equity of redemption. This efficacious result is dependent on other material facts that obtain and enter therein. This is clearly indicated in our recent decisions: Dewberry et al. v. Bank of Standing Rock et al., 227 Ala. 484, 150 So. 463; Kelly v. Carmichael, 217 Ala. 534, 117 So. 67; Steed v. Carmichael et al., 223 Ala. 193, 134 So. 885; DeMoville, pro ami., & c. v. Merchants & Farmers Bank of Greene County et al., 170 So. 756. These last-cited cases followed the rule or analogy contained in the earlier decisions of Dozier v. Farrior et al., 187 Ala. 181, 65 So. 364; Mahone v. Williams, 39 Ala. 202. The terms of this mortgage, as to the right of sale on default, when tested by the decisions, are not only an expression of a power coupled with an interest, but are quickened with an element of trust. The mortgagee is charged with the duty of exercising fairness and good faith in executing the power of sale, to the end that the mortgagor's property may be disposed of to her advantage in satisfying the debt or indemnity which the mortgage was given to secure.

The description employed in the mortgage, the notice given of the intended foreclosure, and the deed from the purchaser and wife to the mortgagee, given a few days later, described the lands by governmental subdivisions and a general description designating the names by which the several places are known. This fact, aided by judicial knowledge and the evidence before us, shows an attempted foreclosure of the mortgagor's equity of redemption to the several, separate, and distinct tracts of farm land, which were not adjacent or contiguous, but widely separated. It was the mortgagee's duty to expose separate tracts of the land for sale to encourage bidders and to obtain the best price; not to embarrass prospective purchasers by exposure of the lands for sale en masse. This is well-established by recent decisions: Dozier v. Farrior et al. (1914) 187 Ala. 181, 65 So. 364; Kelly v. Carmichael (1928) 217 Ala. 534, 117 So. 67.

The last statement of this rule by this court may be found in DeMoville, pro ami., & c. v. Merchants & Farmers Bank of Greene County et al., 170 So. 756, 764, as follows:

"Conceding that the mortgagee was within its rights in electing to sell the real estate covered by the mortgage in advance of a sale of the collaterals (though there are authorities to the contrary, 1 Wiltsie on Mortgage Foreclosures (4th Ed.) p. 241, § 173; same Author, 1st Ed. p. 313, § 263; Koger v. Weakly et al., 2 Port. [ Ala.] 516), it was charged with the duty arising out of the trust, to act in good faith and 'adopt all reasonable modes of proceeding in order to render the sale beneficial to the debtor,' and it is familiar law, in most every jurisdiction, that anything done by the party conducting the sale calculated to prevent competitive bidding or discourage it, renders the sale void. 19 R.C.L. page 613, § 430; Longwith v. Butler, 3 Gilman (8 Ill.) 32; Mapps v. Sharpe & Company, 32 Ill. 13; Miltenberger v. Morrison et al., 39 Mo. 71; Jackson ex dem. Bowers v. Crafts, 18 Johns. (N.Y.) 110."

In Dozier v. Farrior et al., supra, this court said:

"We direct attention to the limits of the rule which we now have under consideration. The lands must be in 'separate parcels, distinctly marked for separate and distinct enjoyment,' and such parcels, when so sold en masse, must bring at the sale an adequate price. Mahone v. Williams, 39 Ala. 202. ***

"A mortgagee is, in a sense, a trustee for the mortgagor, and, in exercising the power of sale contained in his mortgage, he must not disregard the rights of the mortgagor. The rule which we now have under discussion arises out of 'the reasonable presumption, sanctioned by observation and experience, that such property,' i.e., property in distinct parcels, distinctly marked for separate and distinct enjoyment, 'will produce more when sold in parcels, because the sale is thus accommodated to the probable wants of purchasers.' Mahone v. Williams, supra." 187 Ala. 181, 185, 65 So. 364, 366.

In Kelly v. Carmichael, supra, it is stated that "the reason of the rule requiring property covered by a mortgage or lien which is in 'separate parcels, distinctly marked for separate and distinct enjoyment,' to be first offered for sale in parcels rather than en masse, is that a sale in parcels or lots opens a field to a greater number of bidders, is conducive to a better price, and 'tends to prevent odious speculation upon the distress of the debtor,' and enables him to redeem some of the property without being compelled to redeem it all." 217 Ala. 534, 537, 538, 117 So. 67, 71.

In the case of Dewberry et al. v. Bank of Standing Rock et al., 227 Ala. 484, 493, 150 So. 463, authorities are collected covering many phases of foreclosure and the well-recognized distinction between a redemption under the statute and under the equity; and the opinion in that case contains, among other things, the recognized rule that where there is no debt, or indemnity therefor, or duty reduced to a money value, there is no mortgage, or the mortgage ceases to exist and its powers are withdrawn. Drum & Ezekiel et al. v. Bryan et al., 193 Ala. 395, 69 So. 483.

The amount of the mortgage, or the amount due thereon at the time of foreclosure and at the time of response to complainant's written demand for lawful charges necessary to redeem, was an important fact, as affecting the redemption and aiding the accounting prayed. The authorities construing section 10144 of the Code of 1923, section 5748, Code of 1907, Acts 1911, p. 391, § 1, are collected in Dewberry et al. v. Bank of Standing Rock et al., 227 Ala. 484, 150 So. 463; Fellows et al. v. Burkett, 219 Ala. 601, 122 So. 808; Johnson v. Williams, 212 Ala. 319, 102 So. 527.

The duty of one seeking to redeem as to tender was considered and the rights declared as to tender in Hale et al. v. Kinnaird, 200 Ala. 596, 76 So. 954, where the purchaser at mortgage foreclosure sale had separated the tract or tracts of land purchased en masse into several tracts. See, also, Snow v. Montesano Land Co. et al., 206 Ala....