Ross v. New England Mortg. Sec. Co.

• Citation: 101 Ala. 362,13 So. 564
• Parties: ROSS v. NEW ENGLAND MORTGAGE SECURITY CO.
• Decision Date: 20 June 1893
• Court: Supreme Court of Alabama

13 So. 564

101 Ala. 362

ROSS v. NEW ENGLAND MORTGAGE SECURITY CO.

Supreme Court of Alabama

June 20, 1893

Appeal from chancery court, Pike county; John A. Foster, Chancellor.

Bill by C. E. Ross against the New England Mortgage Security Company to restrain the foreclosure of a mortgage, and for other relief. Defendant had a decree, and plaintiff appeals. Reversed, and bill dismissed.

Defendant demurred to the bill upon the following grounds: (1) That there was no equity in the said bill. (2) That the bill fails to allege that the respondent had a known place of business in the state, and an agent or agents thereat, at the time of the execution of said mortgage. (3) Because the act of the legislature of Alabama approved February 28, 1887, entitled "An act to give force and effect to section 4 of article 14 of the constitution of the State of Alabama," is a penal statute, and did not, therefore, go into effect until after the lapse of 30 days from its passage, and was not in force at the date of the execution of the mortgage involved in this suit. (4) Because the act of February 28, 1887, above referred to, is a penal statute, and prescribes a penalty for the violation thereof, other than the forfeiture of the debt secured by said mortgage. (5) Because the complainant does not offer to do equity, in that he does not offer to pay back the money he received from respondent under said mortgage.

The chancellor overruled the 1st and 2d grounds of demurrer to the bill, and sustained the 3d, 4th, and 5th; and on final submission of the cause, as is stated in the opinion, he refused the relief prayed for by the complainant, but ordered the foreclosure of the mortgage for the payment of the respondent's debt.

M. N Carlisle, for appellant.

Caldwell Bradshaw and Jas. E. Webb, for appellee.

HARALSON J.

1. The bill alleges that complainant, Ross, on the 1st day of March 1887, jointly with his wife, executed and delivered a mortgage to the defendant, the appellee, on certain lands therein described, which mortgage is attached to the bill and made part thereof. It was given to secure a loan by defendant to complainant of $7,200, that day made, for which complainants executed their note to the defendant, payable on the 1st of March, 1892, at the office of the Corbin Banking Company of New York, to which note were attached five coupon notes, for the accruing annual interest on said principal sum loaned, payable on the 1st day of December of each year except the last, which was payable on the 1st day of March, 1892, and, like the principal, were payable at said banking house, in New York. By the terms of the mortgage, if default should be made in the payment of either of these notes, at the option of the holder, the whole sum of money received became due and payable 20 days after such default, and the mortgage foreclosable. Two of the interest coupon notes-the ones falling due on the 1st of December, 1889, and on the 1st of December, 1890-were not paid. More than 20 days after default in the payment of the last of said notes the defendant was proceeding to foreclose said mortgage, according to its terms, by advertisement for a public sale of the lands therein described, when the complainant filed this bill to enjoin that sale, alleging that the mortgage was void because it was made in violation of the act of the legislature of this state, passed on the 28th of February, 1887, entitled "An act to give force and effect to section 4, art. 14, of the constitution of the state," forbidding foreign corporations to do business in this state except on compliance with conditions prescribed in said act. The prayer was that the mortgage be declared to be void, and given up and canceled, and for general relief. The offer in the bill to do equity is: "But, if said interest notes, past due, are held valid, in any event, complainant hereby offers, and is able and willing and ready, to pay the same." A demurrer was interposed to the bill, which was sustained, on some of its grounds, when complainant amended the bill, offering to do equity, as follows: "Complainant avers that if, upon the final hearing of this cause, [the court should ascertain] that said mortgage is void, and should order a reference to the register to ascertain and report the amount due from complainant to respondent, he is ready and willing and able to pay the same." On a submission of the cause the chancellor, by a reference, ascertained the debt, and rendered a decree of foreclosure of said mortgage, to reverse which this appeal is prosecuted.

2. Penal laws are defined to be those which prohibit an act, and impose a penalty for the commission of it. 2 Rap. Law Dict 945; 2 Abb. Law Dict. 231; 18 Amer. & Eng. Enc. Law, 270. The statute of 1886-87 (acts of those years, p. 102) was intended, as declared in its caption, to give force and effect to section 4, art. 14, of the constitution of the state. It was unlawful, before that act was passed, for a foreign corporation to engage in business in this state "without having at least one known place of business, and an authorized agent or agents, therein." That clause of the constitution was prohibitory, and it required no legislation to carry the mere prohibition into effect, or to give it force. American Union Tel. Co. v. W. U. Tel. Co., 67 Ala. 30; Nelms v. Mortgage Co., 92 Ala. 159, 9 South. Rep. 141. And section 1 of the act of 1886-87 merely gives regulation as to the manner of conducting business in the state by foreign corporations, and did not make it any more unlawful to do business here without complying with the requirements of the constitution than before its enactment. The constitution did not prescribe any penalty for its own violation; but the statute comes along, and, in order to secure more certain compliance with the fundamental law, prescribes penalties for its violation. The second section provides that whoever...