Patterson v. Holmes

• Court: Alabama Supreme Court
• Writing for the Court: SAYRE, J.
• Citation: Patterson v. Holmes, 202 Ala. 115, 79 So. 581 (Ala. 1918)
• Decision Date: 06 June 1918
• Docket Number: 8 Div. 88
• Parties: PATTERSON v. HOLMES et al.

79 So. 581

202 Ala. 115

PATTERSON v. HOLMES et al.

8 Div. 88

Supreme Court of Alabama

June 6, 1918

Rehearing Denied June 29, 1918

Appeal from Circuit Court, Morgan County; R.C. Brickell, Judge.

Bill in equity by T.Z. Holmes and others against A.G. Patterson. From a decree overruling demurrer to bill, defendant appeals. Affirmed.

Anderson C.J., and McClellan, J., dissenting.

E.W Godbey, of Decatur, for appellant.

Sample & Kilpatrick, of Cullman, for appellees.

SAYRE J.

As the bill filed by appellees shows, appellant foreclosed his mortgage upon the land of appellees, and became the purchaser at the sale; no irregularity in the sale is averted, but no deed was executed to evidence the new right or title thus acquired, nor did appellant then go into possession. The averment of the amended bill is that appellant "never claimed any right in said land as such purchaser, and expressly denies any claim or right to said land for and on account of any foreclosure of said mortgage." Afterwards appellees made a deed to appellant without expressed condition or defeasance, after which, and according to agreement, appellant went into possession. By their bill in this cause appellees seek to redeem under and according to the terms of a concurrent parol agreement into which the parties entered; their understanding being, perhaps, that such deed and parol agreement served in lieu of a formal foreclosure.

The bill avers that:

"Soon after the alleged or attempted mortgage foreclosure sale," appellant "requested, urged, and insisted that complainants [appellees] execute to him a deed in proper form conveying to him said land, and suggested that such deed recite as a consideration the amount of the indebtedness on said mortgage, stating that no deed had been made under the foreclosure; that, in compliance with said request, the complainants executed said deed upon condition and with the agreement and understanding"--resting in parol, evidently--"between complainants and respondent [appellant] that, at any time within two years from the date of the execution of said deed, complainants could redeem said land from the respondent by paying to respondent the consideration stated, being the amount of the original debt together with 10 per cent. interest thereon."

It is further averred that the land is worth considerably more than the amount of the debt, and that:

"Said deed was executed upon the sole consideration of said debt together with the agreement with the grantee *** that complainants' right to redeem said land would not be in any way affected by said deed, *** and after repeated promises and assurances on the part of the respondent that complainants would be permitted to redeem said land, and after repeated promises upon the part of the respondent that upon payment to him of the consideration stated in said deed with 10 per cent. interest thereon at any time within two years from the date of said deed, he would reconvey said land so as to vest the absolute title in and to said property back in the complainants."

The bill is not clear or consistent in all respects, it may be conceded--the demurrer takes no objection on this account--and, as appears from their briefs, the parties are not agreed as to the ground upon which it proceeds or the precise nature of the relief sought; but we construe it as above stated, that being perhaps the most fair and natural construction, and one, we take it, of which the appellant will not complain, since it gives point to the most vital objections urged in the brief against the bill, demurrer to which was overruled in the court below.

It may be noted further that a prayer for cancellation, which the bill contains, in connection with some of the circumstances under which it is alleged the deed was executed, might be construed as intimating in some sort fraud in its procurement; but the bill draws no conclusion of oppression, undue influence, or fraud of other character, and it would seem that it recognizes the validity of the instrument by offering to redeem under an agreement which is alleged to have constituted an essential part of the contract in virtue of which the deed was executed.

Appellant's argument is that the conventional deed extinguished the statutory right of redemption absolutely--a proposition that need not be denied as to the strict statutory right--and that the original foreclosure must be held valid, and that the statutory right of redemption thereafter existing as the only element that survived such foreclosure could not be made the subject of a mortgage, nor could it survive a deed absolute in form, with a defeasance merely oral; in short, appellant contends that there is no equity in the bill for the reason that the alleged agreement for redemption was not expressed in writing.

In Stoutz v. Rouse, 84 Ala. 309, 4 So. 170, this court held that mortgagor and mortgagee may by fair contract, without resort to the courts, do what the law would do for them or what the law would compel one to do for the other. The court said of an agreement in that case similar to the agreement averred in this--evidenced, however, in that case by an instrument in writing--that it merely converted the equity of redemption into the statutory right of redemption, in order to save the expenses of foreclosure incident to a suit in chancery.

In Peagler v. Stabler, 91 Ala. 308, 9 So. 157, the court said:

"There is no reason why a mortgagor and mortgagee may not contract with each other that a sale and conveyance of the mortgaged property to the mortgagee shall stand for a mere formal foreclosure"--citing Stoutz v. Rouse, supra.

But the court added:

"And they may contract at the same time that the mortgagor may redeem or repurchase the property within two years, or within any reasonable specified time; but such agreement for the right to repurchase or redeem cannot rest in parol, or be established by parol evidence"--and this expression is cited by appellant as authority for his contention stated above.

It is conceded that the expression relied upon must be accepted as always correct if used in a court of law (Bragg v. Massey, 38 Ala. 89, 79 Am.Dec. 82); but it is well settled that:

"In a court of equity, the character of the conveyance must be determined by the clear and certain intention of the parties; and, if there be an agreement between them that it shall operate as a security for a debt, it can and will operate only as a mortgage. The agreement may be expressed in the deed, or in a separate writing, or it may rest in parol." Harrison v. Maury, 157 Ala. 227, 47 So. 724.

The expression relied upon was entirely correct in the case in which it was used, for the true ground of the decision, in accord with our cases generally (see cases cited in the notes to section 286 of 1 Jones on Mortg. [ 7th Ed.]), appeared in the further course of the opinion where it was said: "We agree with the chancellor that the evidence fails to show that the deed was intended to operate as a mortgage, or that it expresses any other than the true intention of the parties at the time of its execution"--viz. that it was a conveyance in satisfaction of the debts due from the mortgagors in that case, thus absolutely and beyond redemption destroying all rights growing out of the mortgage relation between the parties. I do not agree, therefore, that the statement made in the case of Peagler v. Stabler can be properly applied to the case at hand.

Counsel for appellant in his brief, very correctly, as I think, states the matter at issue as follows:

"Now, there can be a formal foreclosure, and there can be an informal foreclosure. A formal foreclosure cuts off the equity of redemption, leaving the statutory right of redemption. But a formal foreclosure may be dispensed with by agreement of parties, and an informal or conventional foreclosure be substituted. This conventional foreclosure must take the shape of a deed from the mortgagor to the mortgagee. If there has been no previous foreclosure, of a formal nature, this conventional foreclosure merely does that which would be done by the formal foreclosure--extinguishes the equity of redemption, leaving the statutory right of redemption just where it would have been left had there been a formal foreclosure. But"-- and here is stated in a few words the whole force of appellant's argument on this point--"where there has been first a formal foreclosure, as there has been here, there is left, thereafter, no field for the operation of an absolute deed save only the extinguishment of that statutory right of redemption. When Patterson foreclosed, there was nothing but the bare right to redeem left; and that passed irrevocably by the deed. It was not property that could have been mortgaged."

Pursuing his argument, appellant cites Harris v. Miller, 71 Ala. 26 (a case arising out of a contest of a claim of exemption to a debt sought to be subjected by garnishment, and in which, for aught appearing, a deed was executed) to the effect that, where the mortgagee becomes the purchaser at his own sale, bidding the amount of his debt and expenses, the mortgage debt is by operation of law satisfied and extinguished--a proposition in no wise questioned, if the mortgagee gets what he bids for, i.e., all the original right and title of the mortgagor.

Further the appellant quotes from Mewburn v. Bass, 82 Ala. 622, 2 So. 520, this language, which in that case was quoted from Comer v. Sheehan, 74 Ala. 452:

"We are of opinion that one who purchases as mortgagee at his own sale comes within the benefit designed to be secured by this statute (Code 1876, § 2878, statutory redemption), although no deed, or other written memorandum of the sale, is made at the time, so as to rescue the

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