Lipscomb v. Tucker

• Decision Date: 22 May 1975
• Citation: 314 So.2d 840,294 Ala. 246
• Parties: Virginia Bailey LIPSCOMB et al. v. John H. TUCKER and Loma Gene Tucker. SC 882, SC 882A.
• Court: Alabama Supreme Court

Page 840

314 So.2d 840

294 Ala. 246

Virginia Bailey LIPSCOMB et al. v. John H. TUCKER and Loma Gene Tucker.

SC 882, SC 882A.

Supreme Court of Alabama.

May 22, 1975.

George A. Moore, Huntsville, for appellants George L. Bailey, III, and Patricia Bailey.

Cloud, Berry, Ables, Blanton & Tatum and James T. Baxter III, Huntsville, for appellants, Virginia Bailey Lipscomb, Virginia Lee Bailey (Worley), Mary Alice Bailey Abercrombie, and Helen Jane Bailey Childers ('mortgagee-defendants') and

Dieter J. Schrader, Huntsville, for appellees.

BLOODWORTH, Justice.

On January 16, 1973, John H. Tucker and Loma Gene Tucker (plaintiffs-Tucker) filed a complaint in the Circuit Court of Madison County against Virginia Bailey Lipscomb, Virginia Lee Bailey, Mary Alice Bailey Abercrombie, and Helen Jane Bailey Childers ('mortgagee-defendants') and George L. Bailey, III, and Patricia A. Bailey ('defendants-Bailey').

The complaint seeks to:

(1) have a mortgage, executed by plaintiffs and defendants-Bailey as mortgagors in favor of the mortgagee-defendants, declared satisfied;

(2) enjoin the foreclosure of the mortgage;

(3) compel the specific performance of a contract for the sale of certain real property alleged to have been executed by plaintiffs as vendees and defendants-Bailey as vendors;

(4) Obtain a money judgment against defendant George L. Bailey, III, for the excess profits allegedly received by Bailey in violation of a joint venture agreement.

The mortgagee-defendants answered the complaint by denying that the mortgage had been satisfied and disclaiming any knowledge of, or connection with, the other matters alleged in the complaint. The mortgagee-defendants then filed a counterclaim against the plaintiffs-Tucker and a cross-claim against the defendants-Bailey, alleging that the mortgage is in default and seeking a foreclosure.

In their reply to the counterclaim, the plaintiffs-Tucker deny that the mortgage is in default and allege that it has been paid in full.

In their answer to the cross-claim, defendants-Bailey admit that the mortgage is in default. In answer to the parts of the original complaint directed to both of them, defendants-Bailey deny the existence of the alleged contract for the sale of real property and interpose the affirmative defenses of statute of frauds, laches, and the statute of limitations.

As to that part of the original complaint directed only to him, which seeks a money judgment for breach of the joint venture agreement, George L. Bailey, III, interposes the affirmative defenses of laches and statute of limitations.

In its final decree, the trial court declared that the plaintiffs-Tucker are entitled to have the mortgage declared satisfied, that defendants-Bailey must specifically perform the contract for the sale of real property, and that plaintiff John H. Tucker is entitled to a money judgment against defendant George L. Bailey, III, in the amount of $38,633.82.

Separate motions for new trial by both sets of defendants were overruled, and both sets of defendants have taken separate appeals to this Court on the one record. After a careful consideration of the issues raised and arguments made, we affirm.

The circumstances from which this cause arose are as follows. When the father of George L. Bailey, III, died intestate, a 98-acre tract of land which the father had owned, passed to all of the named defendants, except Patricia A. Bailey, wife of George L. Bailey, III. In 1962, plaintiff John H. Tucker and defendant George L. Bailey, III, ('Bailey') executed a joint venture agreement for the purpose of developing the Bailey family's 98-acre tract as a residential subdivision. Tucker and Bailey then purchased the tract from the mortgagee-defendants. It appears that the agreed consideration for the land was a $15,000.00 cash down payment, and a $147,000.00 promissory note (at no interest) secured by a real estate mortgage on the 98 acres. (The mortgagee-defendants also contend that they received an unsecured $34,000.00 promissory note as consideration. Tucker does not concede there is any evidence of such note.)

Tucker and Bailey along with one Aaron Bailey were the sole stockholders in Glen'll, Inc., which operated a trailer park. In April, 1964 Tucker and wife and Bailey and wife allegedly executed a written contract by which Tucker transferred all of his shares of Glen'll, Inc. stock to George L. Bailey, III, in exchange for the Baileys' promise to convey to the Tuckers, in an improved and unencumbered state, the Baileys' interest in the last 60 lots to be sold in the subdivision. Tucker and Bailey proceeded with the development of the land until about 1965. Since that date it does not appear that there have been any dealings between Bailey and Tucker with regard to the 'joint venture.'

In 1972, the mortgagee-defendants threatened foreclosure, and Tucker brought an action in December, 1972, to enjoin them. By agreement of the parties, that action was dismissed without prejudice and the instant action for declaratory judgment was filed January 16, 1973.

SC 882

The primary complaint of the mortgagee-defendants on this appeal is that the evidence is insufficient to support the trial court's conclusion that the amount of the mortgage, $147,000.00 has been paid in full.

Prior to trial, the Tuckers formally requested the mortgagee-defendants to produce all papers reflecting credits on the mortgage indebtedness. Rather than produce any records, the mortgagees filed a 'RESPONSE TO MOTION TO PRODUCE ' in which they set forth the amount each individual had received. The amounts totaled $142,880.00. This response was later amended by 'AMENDED RESPONSE TO MOTION TO PRODUCE,' lowering the amount to $125,673.04, and setting forth in some detail the date and amounts of payments. (The mortgagee-defendants claimed the original amount erroneously included the down payment of $15,000.00 they had received.) In the 'AMENDED RESPONSE' the mortgagee-defendants also stated that, as additional consideration for the land, they had received an unsecured promissory note for $34,000.00 and that when payments were received, the amounts were applied first to the unsecured note and then to the mortgage. (At trial, the mortgagee-defendants filed a second 'AMENDED RESPONSE' and reduced the total amount received even further to $111,903.04 (excluding down payment). The court rejected this document because it held that it was untimely filed.)

Tucker stipulated that $140,673.04 (shown in the 'AMENDED RESPONSE') was correct with 'respect to the dates that are supplied.' (Tucker included therein $15,000 down payment.)

Tucker testified that he agreed with the amount shown by the first 'AMENDED RESPONSE' to have been paid insofar as it went ($125,673.04). Tucker then introduced into evidence ten checks, totaling $16,350.00, which he claimed were not reflected in the 'AMENDED RESPONSE.' Tucker also testified that he and George L. Bailey, III, conveyed two lots (worth $16,000.00 and $3,700.00, respectively) to two of the mortgagees as part payment on the indebtedness. Thus, Tucker testified that, exclusive of the $15,000.00 down payment, he and George L. Bailey, III, had paid the mortgagee-defendants more than $147,000.00, the amount of the mortgage.

None of the defendants testified.

In addition to their contention that the evidence as a whole is insufficient to support the decree, the mortgagee-defendants also raise the following specific issues for decision by virtue of their assignments of error and arguments addressed thereto: A. Whether or not Tucker, having relied on the amounts stated in the 'AMENDED RESPONSE' to the motion to produce, is bound by the rest of the 'AMENDED RESPONSE' which states that the amounts received were first applied to the satisfaction of an unsecured promissory note; B. Whether or not Tucker, as co-mortgagor of Bailey and co-joint venturer in the development of the mortgaged property is bound by Bailey's admission f default on the mortgage which is contained in Bailey's answer to the cross claim of the mortgagee-defendants; C. Whether or not Tucker's testimony, that he paid by check the amount he claims to have paid on the mortgage indebtedness, is competent evidence of payment, when not all the canceled checks themselves were produced and admitted in evidence; D. Whether or not Tucker's testimony, as to the amount of credit on the mortgage debt he and Bailey were to receive for the two lots they conveyed to two of the mortgagee-defendants, is competent evidence.

A.

If a debtor owes two different debts to the same creditor, one debt being secured and the other being unsecured, the debtor has the right, at the time of payment, to direct the application of the partial payments. However, if the debtor does not direct the application of his partial payments to one or the other of the debts, then the creditor, at the time of payment, may elect to apply the payments to either of the debts. If neither debtor nor creditor expresses an election, it is presumed that the credit is to be applied most beneficially to the creditor, that is, to the most precarious debt or to the one least secured. Lee v. Southern Pipe and Supply Company, 283 Ala. 37, 214 So.2d 313 (1968).

Thus, mortgagee-defendants contend that even if Tucker and Bailey paid the amounts testified to by Tucker, the mortgage debt has not been paid in full because the total of the payments does not equal the sum of the mortgage debt and an unsecured note. This argument, however, assumes the existence of an unsecured note other than the mortgage debt, subject of this suit.

The only evidence as to the existence of an unsecured note is contained in one part of the mortgagee-defendants' first 'AMENDED RESPONSE' to Tucker's motion to produce.

By the use of other parts of the mortgagee-defendants' 'AMENDED RESPONSE,' Tucker offered proof, apparently to the satisfaction of the trial judge, that he and Bailey had paid the...