Semmes Nurseries, Inc. v. McDade

• Decision Date: 01 June 1972
• Docket Number: 1 Div. 644
• Citation: 263 So.2d 127,288 Ala. 523
• Parties: SEMMES NURSERIES, INC., a Corp., et al. v. Clint McDADE.
• Court: Alabama Supreme Court

Page 127

263 So.2d 127

288 Ala. 523

SEMMES NURSERIES, INC., a Corp., et al. v. Clint McDADE.

1 Div. 644.

Supreme Court of Alabama.

June 1, 1972.

Vincent F. Kilborn, Mobile, for appellants.

Sam W. Pipes, Gordon B. Kahn, Wesley Pipes, Mobile, for appellee.

McCALL, Justice.

In this case, the appellants, Semmes Nurseries, Inc., a corporation, and C. Elwood Stephens, mortgagors, filed a bill in equity, against the respondent-appellee, Clint McDade, their mortgagee. The bill prays for a determination and declaration of what amount of money, if any, is owed by the appellants to the appellee, what the security therefor is, whether the amount owed is due, and, if due, to allow the mortgagors a reasonable opportunity to pay the indebtedness, or, in the alternative, to sell the mortgaged property in such manner that it will bring the best result and the highest possible price.

The appellee McDade's answer denies those averments of the bill that present the appellants' claim for relief, and, by way of a cross-bill, McDade, as respondent and cross-complainant, joins Kathryn T. Stephens, who is the wife of Stephens, as a cross-respondent in the suit. The cross-bill likewise prays for a determination of the amount of money due McDade, this to include an attorney's fee as provided for in the mortgage in event of foreclosure; also, that the mortgage, given as security, be ordered foreclosed and the proceeds of the sale be applied toward satisfaction of the indebtedness owed McDade; and, lastly, that a deficiency judgment be entered against all of the cross-respondents for the amount of any indebtedness in excess of that defrayed by the proceeds of the foreclosure sale.

The chancellor, who heard the testimony ore tenus in open court, entered a decree denying the appellants' relief under their bill; and, he granted the appellee relief under his cross-bill. The court determined and found that the mortgage was in default and that the amount due the appellee under the mortgage was $193,807.06, made up of $123,569.34 principal, $55,129.72 interest, and $15,108 attorney's fee. The court ordered the mortgage foreclosed and the property sold in satisfaction of the mortgage debt, after publication of notice of foreclosure. In conducting the foreclosure sale, the Register in Chancery was ordered and directed to sell (a) all personal property not including nursery stock--that in cans, to be offered in certain lots, (b) crops growing in the ground by lots, (c) each parcel of real estate separately without nursery stock and (d) each parcel, including the nursery stock in the ground. The decree further ordered that if a sufficient amount was not realized from the sale to pay the mortgage debt, then all of the property was to be offered as a whole, the Register to accept the bid or bids, totaling the largest amount. The sale was for cash with McDade as mortgagee enjoying the express right to bid and credit against his bid as an offset the amount of the debt owed him. The amount realized at the foreclosure sale, being insufficient to satisfy the mortgage indebtedness, on appellee's motion, the court entered a deficiency judgment against appellants for $52,354.06. The court further found and decreed that the amount realized at the sale extinguished the debt of the cross-respondent, Kathryn T. Stephens, and she did not appeal.

The underlying facts are that on January 18, 1965, pursuant to an agreement, the appellant, Stephens, who owned 398 of the 400 shares of the capital stock of the corporate appellant, Semmes Nurseries, Inc., executed on behalf of the nursery corporation, as its president, a mortgage of all the corporate properties to the appellee, McDade, to secure the payment of the balance due on three original debts held by him. The first was for the principal balance of $35,597.87, due McDade on the sale to Stephens of 397 shares of stock in the corporation for $44,497.34. The second was for the principal amount of $143,517.48, which was the balance due on $182,601.18 that the nursery corporation owed McDade at the time of the stock sale. The third was for $14,500, the principal balance of an indebtedness of $45,500, that the nursery corporation and Stephens had incurred to McDade.

This mortgage of January 18, 1965, extended, amended, corrected, and supplemented a prior mortgage, executed to McDade by the appellant nursery, on February 28, 1961, to secure the same corporate debt of $143,517.43, and the debt of $45,500. The condition of the mortgage of January 18, 1965, was the payment of the notes, as provided for, when and as the payments became due and payable, and the performance of the other covenants and agreements contained in the mortgage.

The appellants first complain of error in that the court held that no waiver of payments on the mortgage debt occurred. While the mortgagee failed to receive the payments when and as they became due under the notes and mortgage, he, on occasions, remonstrated with the appellant Stephens about failing to pay on the mortgage, and he protested to him that he needed money to live on. To induce payments, the appellee offered and gave Stephens and his wife, as a gift, each a credit of two dollars against their debt for every dollar paid on the corporate debt. Like the trial court, we are unable to agree with the appellants that because the appellee indulged the appellants in not forcing satisfaction of his mortgage at an earlier date upon its default, he thereby waived his rights or was estopped to thereafter assert foreclosure under the mortgage provisions. The appellants suffered extensive damage by reason of unprecedented freezes on two successive years, and, the appellee, though payments were in arrears, not only did not foreclose his mortgage, but lent his personal credit to secure a bank loan to tide the nursery business over. It further appears from the record that when foreclosure was finally instituted in March of 1969, the corporate business, both physically and financially, had so deteriorated that there was concern as to its ability to survive. The equipment was old and considerably worn, many of the fields or plant areas were grown up in weeds, state and federal agriculturalists were threatening to cut off sales to the public because of alleged plant infestation, and the business was extremely low on operating funds. We also observe that earlier the appellant Stephens had purchased another nursery business in his own name upon which he was meeting his obligations and apparently operating a successful business, and, further that the appellee charged that Stephens transferred quantities of nursery stock to his individual nursery before and after foreclosure was begun, without a proportionate liquidation of the appellee's debt. When default was declared and foreclosure instituted in 1969, there was evidence that the balance due the appellee McDade on the stock loan was $29,763.95 principal and $11,450.58 interest, the only credit, since 1961, being two gifts by McDade, on January 5, 1967, totaling $5,834.08. On the Semmes Nursery debt to McDade, $88,515.44 principal and $44,991.33 interest was owed. The only credit against this debt, since 1961, was one made on August 25, 1967, for $52,025 which was in exchange for a conveyance to the appellee of some corporate land, and, another credit that same year, of $2,917.04. Lastly, $10,380 principal and $559.80 interest were due on the $45,500 debt to the appellee the last payment of principal thereon having been made October 31, 1966. Payments on all the secured debts were in default.

While appellants averred in their bill both the belief in their ability to pay such sums as may be finally found due, if given a reasonable opportunity to do so, and also an offer to do equity, it does not appear that, during the interval between filing the bill in April 1969 and December 22, 1969, when the court decreed foreclosure, any offer to do equity was actually made or redemption attempted by offering to pay the mortgage debts. It is true that appellants did offer, after foreclosure proceedings were started, to assign to McDade a $4,000 trade acceptance which the appellee declined.

No doubt the trial court considered all of this evidence, as well as the appellants' contention that the appellee exhibited a course of conduct toward them that lead the appellants to believe that the appellee would not insist on payment and satisfaction of his debts, and that he should not be permitted to foreclose his mortgage, or that he should be limited to such earnings as the nursery business might produce for satisfaction of his debts, but the trial court did not find credible evidence to support an order of that kind. Since there was evidence to support a contrary view, we do not think that the court erred in holding there was no waiver or estoppel occasioned. The trial court's ruling on the issue was not therefore so plainly and palpably wrong under the evidence as to warrant the court's reversal. Alabama Pecan Development Co. v. Case, 266 Ala. 471, 97 So.2d 537; Lovelace v. McMillan, 265 Ala. 290, 90 So.2d 822.

The general rule as expressed in Arnett v. Willoughby, 190 Ala. 530, 537, 67 So. 426, seems to be that:

'* * * 'Where the debt secured by a mortgage is evidenced by several notes maturing at different times, and there is a provision that default of one matures all, or, if such construction can be given by implication, the mortgage may be foreclosed as to all; and, if there is no such provision in the mortgage, then as to the amount due only, and the decree stands as security for the balance, to be sold as the debt matures.' 4 Mayf.Dig. p. 249, § 1167, and authorities...