Martin v. First Nat. Bank of Opelika

• Decision Date: 31 March 1966
• Docket Number: 5 Div. 815
• Parties: Colie Lee MARTIN v. FIRST NATIONAL BANK OF OPELIKA.
• Court: Alabama Supreme Court

Page 815

184 So.2d 815

279 Ala. 303

Colie Lee MARTIN v. FIRST NATIONAL BANK OF OPELIKA.

5 Div. 815.

Supreme Court of Alabama.

March 31, 1966.

Russell, Raymon & Russell, Tuskegee, for appellant.

Samford, Torbert & Denson, Opelika, for appellee.

HARWOOD, Justice.

This is an appeal from a decree of the Circuit Court of Macon County, In Equity, in a declaratory action, holding that certain advances made to appellant's husband by the appellee were secured by a mortgage executed to appellee bank by the appellant and her husband.

The appellant, Colie Lee Martin, and her husband, Hughie Martin, purchased a tract of land in Macon County containing 80 acres from one Francis Thompson and wife on October 5, 1956, for the sum of $7,000. Title to said property was taken in the name of appellant and her husband as joint tenants with the right of survivorship. On the same date appellant and her husband executed a mortgage on said lands to the appellee to secure a loan of $2,000, said loan being evidenced by their promissory note of even date, due one year after date, with interest. The appellant and her husband occupied the property as their home from the date of the purchase until the date of her husband's death on February 6, 1963. The appellant and her minor children were still occupying said property as their homestead at the time of trial of this suit.

The note for $2,000 and the mortgage securing the same were signed by both appellant and her husband. The mortgage contains an 'advance clause,' set out in the consideration clause of the mortgage, as follows:

'Now, therefore, in consideration of the premises and of said indebtedness and in order to secure the prompt payment of the same according to the terms and stipulations contained in said note, And to secure any other amount that the mortgagee or his assigns may advance to the mortgagor before the payment in full of said mortgage indebtedness, the said mortgagors, Hughie Martin and Colie Lee Martin, husband and wife, hereby grant, bargain, sell * * * (Emphasis ours.)

The first paragraph of the mortgage describing the parties thereto refers to 'Hughie Martin and Colie Lee Martin, husband and wife, hereinafter called Mortgagor * * * (Emphasis ours.) Throughout the mortgage the word 'mortgagor,' the singular, is used in referring to both mortgagors, except in two places, one being the granting clause and the other pertaining to the payment of taxes on the property.

In paragraph five of the mortgage, a defeasance clause, it is provided that the mortgage shall be subject to foreclosure if the mortgagor fails to pay the note 'and advances, if any.' Paragraph six provides for the application of proceeds of sale of the mortgaged premises to the debt 'including advances.'

Paragraph nine is as follows:

'Unless a contrary intention is indicated by the context, words used herein in the masculine gender include the feminine and the neuter, The singular includes the plural and the plural the singular.' (Emphasis ours.)

The terms of the mortgage also provide that the mortgagor waives all 'right of homestead and personal property exemption' provided under the Constitution and laws of the State of Alabama and of any other state.

The lower court found that the $2,000 borrowed from the appellee by the appellant and her husband was applied on the payment of the purchase price of the property in question.

It appears that approximately one year after the execution of the original note and mortgage the appellant and her husband made a payment to the appellee of $400 on principal and a renewal note for $1,600, due in one year from date, was executed. This note was signed by both husband and wife. Approximately one year later appellant and her husband paid $200 on principal and executed a renewal note in the amount of $1,400, due one year later. This note was also signed by both husband and wife. Some six months later a payment of $1,000 was paid on principal which was noted on the $1,400 note, leaving a balance of $400. Upon the arrival of the due date of this second renewal note, another renewal note was given to appellee to secure the $400 indebtedness then outstanding. This note was not submitted into evidence, however, the president of the appellee bank testified that it was executed by both husband and wife. Upon the due date of this third renewal note a payment of $300 was made leaving an outstanding balance of $100, and the appellant's husband executed a renewal note for $100 due one year from date. The appellant did not sign this note. Approximately one month later the appellant's husband executed a note for $2,000, payable one year from date. The appellee advanced the appellant's husband $1,900 in cash and applied $100 to the last note executed by appellant's husband. The appellant did not sign this note. Approximately one year later the appellant's husband paid $1,000 on principal on the last mentioned note and executed a renewal note for $1,000. The appellant's husband died before the due date of this last note.

Each of the renewal notes mentioned above were marked 'Ext. Mtge. Real Estate.' The appellee bank retained possession of the original note and mortgage throughout these transactions.

The appellant's bill for a declaratory judgment alleges in part that she was under opinion and impression that the mortgage on the property had been paid in full; that the appellee was claiming the sum of $1,000 due on the mortgage; that the basis of said claim was an advance or extension given her husband secured by a note which she did not sign; that she had no knowledge of such transaction prior to her notification by the appellee that it was claiming under an extension of said mortgage; that she had not executed any instrument extending the mortgage on the homestead; and that said transaction was done without her knowledge. The prayer for relief asked that the lower court declare that the transaction between her husband and the appellee bank be declared not an extension of the mortgage on the homestead; that the original mortgage had been satisfied prior to the advancement in question which was made to her husband; and that any indebtedness is against her husband's estate and is not an indebtedness secured by the mortgage referred to in these proceedings.

The trial court found that the advance of $1,900 made by the appellee bank to appellant's husband on a note executed by him alone was and is secured by the mortgage executed by appellant and her husband on October 5, 1956; that the original indebtedness secured had not been paid in full at the time of the said advance of $1,900, the sum of $100 remaining unpaid; and that there was now due appellee bank the sum of $1,000 plus interest, which indebtedness was then in default.

The appellant has argued six assignments of error.

Assignment of error No. 1 is based upon the trial court's holding that the original mortgage was a purchase-money mortgage and therefore superior to any homestead rights of the appellant.

The appellant insists that a purchasemoney mortgage can only be given to a vendor as a substitute for his vendor's lien and therefore a mortgage given to a third party, who advances the purchase price to the vendee, cannot be a purchase-money mortgage as the third party has no vendor's lien for which a mortgage can be substituted.

The fact that a mortgage is made to a person other than the vendor does not alone prevent its being a purchase-money mortgage. A mortgage on land executed to secure the purchase money by a purchaser chaser of the land executed contemporaneously with the acquisition of the legal title thereto, or afterward, but as a part of the same transaction, is a purchase-money mortgage. 36 Am.Jur., Mortgages, Section 15; 59 C.J.S. Mortgages § 168; Lipps v. Lipps, (Ohio App.), 87 N.E.2d 823, 827; Hill v. Hill, 185 Kan. 389, 345 P.2d 1015; Wermes v. McCowan, 286 Ill.App. 381, 3 N.E.2d 720. In the case of Birmingham Building & Loan Association v. Boggs, 116 Ala. 587, 22 So. 852, it was held that a mortgage given to a party, other than the vendor, who loaned money to the vendee to be applied to the purchase price as part of one transaction, was superior to a mechanic's or material-man's lien. In Russell v. Stockton, 199 Ala. 48, 74 So. 225, the mortgagee who advanced part of the purchase price was held to have a lien superior to the vendor's lien where that was found to be the intention of the parties. In Cates v. White, 252 Ala. 422, 41 So.2d 401, a mortgage given to a party, other than the vendor, who advanced the purchase price, was held to be a purchase-money mortgage given contemporaneously with the purchase and to be superior to a homestead exemption claim.

Section 627, Title 7, Code of Alabama 1940, provides in part that the provisions of the chapter containing such section do not prevent any lien attaching to the homestead in favor of 'any vendor for unpaid purchase money, or so as to affect any deed, mortgage, or lien on such homestead, lawfully executed or created.'

It is apparent therefore that a lien secured by a mortgage which is lawfully executed or created is superior to a claim of homestead exemption. The constitutional and statutory provisions, requiring separate voluntary acknowledgment by the wife, are for the benefit of the wife. Leonard v. Whitman, 249 Ala. 205, 30 So.2d 241. The purpose of the statutory provision requiring voluntary signature and assent is to safeguard the wife from duress of the husband. Weatherwax v. Heflin, 244 Ala. 210, 12 So.2d 554.

Even if this mortgage had not been executed to secure the mortgagee's advancement of part of the purchase price and contemporaneously with the purchase of the properly in question, the appellant fails to demonstrate why, considering the terms of this mortgage, this encumbrance would not be superior to her claim of homestead exemption in as much as it appears she voluntarily signed the original note and mortgage....