Simmons v. Henderson

Citation207 Ala. 692,93 So. 624
Decision Date27 April 1922
Docket Number4 Div. 956.
CourtSupreme Court of Alabama

Rehearing Granted June 30, 1922.

Appeal from Circuit Court, Coffee County; A. B. Foster, Judge.

Bill by T. J. Simmons against J. E. Henderson and J. P. Adams to enforce specific performance and for redemption. From a decree sustaining demurrers to the bill, complainant appeals. Affirmed.

Gardner J., dissenting in part.

W. W Sanders, of Elba, for appellant.

C. W Simmons, of Enterprise, and Sollie & Sollie, of Ozark, for appellees.


This bill of complaint is filed by T. J. Simmons against J. E. Henderson and J. P. Adams, who composed the late firm of Henderson & Adams, to enforce specific performance of a contract of sale of land to him and to redeem this land under a second mortgage, and to redeem personal property in this mortgage. The cause was submitted upon demurrers of defendant J. E. Henderson to the bill of complaint as amended, they were sustained by the court, and this decree is assigned as error by the complainant.

Complainant and his wife on December 30, 1913, executed a mortgage on this land, about 300 acres, to J. A. Fuller, to secure an indebtedness therein described. This mortgage and the debt it secured were by Fuller duly transferred and assigned to one G. R. Beers. Default was made in the payment of the debt, the power of sale in the mortgage thereby became operative, and it was duly foreclosed on June 5, 1916, and G. R. Beers became the purchaser of the land at the foreclosure sale under the mortgage.

The bill makes no attack on the Fuller mortgage, its transfer to Beers, the foreclosure sale, nor the purchase by Beers, the assignee of the mortgagee, of the land at the sale. The complainant rented the land from Beers, after the foreclosure sale, for the years 1916 and 1917, and continued in possession as his tenant until and on January 25, 1918, when complainant, to save the land from being lost by the foreclosure sale, induced Margaret C. Simmons and L. F. Simmons to contract in writing for the purchase of the land for the benefit of complainant, for the sum of $3,030.15; $530.15 was paid in cash, and the balance was payable November 1, 1918, evidenced by note for $2,500, bearing 7 1/2 per cent. interest from date. The contract of sale contained this stipulation:

"It is understood that this contract is made subject to right of redemption, and if the property is redeemed all payments made by second party are to be returned to her without interest."

The bill also avers that on April 2, 1915, complainant and his wife executed a mortgage to said Henderson & Adams on this land, and some personal property to secure $1,800. A part of the indebtedness of $1,800 was balance due from 1914, and the remainder was for future debts or advances to be obtained; and the real debt secured by it is about $1,300. This was a second mortgage on the real estate. It avers that on information and belief defendant J. P. Adams conveyed and assigned his interest in this mortgage and debt to his partner, J. E. Henderson, the other defendant in this cause.

The complainant avers that-

"On or about 5th day of June, 1918, the said Beers through his attorneys mailed to your orator from Selma, Ala., a letter addressed to Mrs. Margaret C. Simmons, advising that 'Mr. J. T. Henderson, who holds a second mortgage on the T. J. Simmons place, had redeemed the same, and we are hereby refunding to you the amount paid by you to Mr. Beers, as well as the interest and taxes'; and the letter was mailed in Selma at 9:30 p. m., June 6, 1918, and was delivered June 7, 1918, after the time allowed by law for a redemption by complainant of the land."

The bill avers that the land was not redeemed by J. E. Henderson paying the foreclosure mortgage sale debt, 10 per cent. interest and lawful charges in cash, but by paying Beers part cash and note for balance due with interest, under written contract of purchase, which was fully paid after this suit was filed. The bill avers Henderson persuaded Beers to represent unto complainant that Henderson, as junior mortgagee, had effected a redemption of the land with the fraudulent purpose to induce complainant and others acting with him to relinquish the rights under the contract they had secured to acquire title to the property, and it avers such was the effect of the transaction; and that, believing Henderson had redeemed the land, Mrs. Simmons accepted, and collected the check for the amount due her under the contract with Beers and herself. The complainant further avers:

"That he offered to pay said Henderson what he was out in the matter of obtaining said lands, and that he made such offer before said Henderson completed the payment of the sum he agreed with said Beers to pay; but that said Henderson refused to allow your orator to do that, and insisted that the lands was worth much more than he had against it."
"There is no such relation of trust and confidence between the mortgagor and the mortgagee that the latter will be prevented from acquiring title to the subject-matter of the mortgage either under his own or any other valid lien." 20 Ency. of Law (2d Ed.) p. 1013, § 7.

In Walthall v. Rives, 34 Ala. 96, head note 5, Justice Walker wrote:

"Upon the principle settled in Randolph v. Carlton, 8 Ala. 606, the mortgagee, Walthall, was not estopped by his acceptance of the mortgage from purchasing the property conveyed by the mortgage, under judgments having a paramount lien to the mortgage. And if it should appear, in the further progress of this case that he made such purchase, he would establish a title beyond the reach of the complainants."

This court in Cooper v. Posey, 205 Ala. 674, 89 So. 35, held:

"One taking a second mortgage from the then owner of land was not thereby estopped to purchase the mortgaged property from the first mortgagee after a foreclosure of its mortgage."

Henderson had the right to purchase the property from Beers, the purchaser at the mortgage foreclosure sale. He as second or junior mortgagee did not stand in such relation of trust and confidence with the mortgagor, Simmons, that would prevent him from purchasing the property from Beers. This right to purchase the property from a holder of a prior lien or title is essential for the protection of his own junior mortgage lien on the property. Cooper v. Posey, 205 Ala. 674, 89 So. 35; Walthall v. Rives, 34 Ala. 96; 20 Ency. of Law (2d Ed.) p. 1013, § 7.

The bill avers that Beers on January 25, 1918, agreed in writing to sell and convey the land to Margaret C. Simmons and L. F. Simmons for $3,030.15, part cash and the balance, $2,500, payable with interest November 1, 1918. The cash payment was made, but it was, on June 7, 1918, returned with interest; and it appears the contract was made for the benefit of complainant, and he was the party really in interest as purchaser. This is a bill for specific performance of that contract, and not for statutory redemption under the senior mortgage foreclosed. Under the allegations of the bill, the defendant and Beers entered into a written contract, the former to purchase and the latter to sell the land under a contract similar to the one made by Beers with complainant as beneficiary. The bill avers Henderson was a purchaser of the land under contract with Beers. It avers he did not redeem the land as junior mortgagee.

The defendant when he entered into the contract to purchase the land knew of the prior contract made by Beers on January 25, 1918, with Margaret Simmons and others; Beers and the defendant attempted to have that contract cancelled and surrendered by fraudulently and falsely representing that he as junior mortgagee had redeemed said land and had not purchased it. The contract of January 25, 1918, was not, under the allegations of the bill, legally canceled; its attempted cancellation was obtained by fraud. It was still valid and binding between the parties when this bill was filed. T. E. Henderson, the defendant, knowing that Beers had agreed to sell and convey the land under the contract of January 25, 1918, purchased or made his contract of purchase, with Beers subject to that previous contract of sale of the land.

If the contract of purchase by defendant of the land from Beers was an exercise of his right of statutory redemption as junior mortgagee, then the purchase by Mrs. Simmons and others of the land from Beers for the benefit of complainant would be an exercise of complainant's right of statutory redemption as mortgagor, because the bill avers both contracts were practically the same, both were contracts of purchase of the same land, and both were made with Beers. The contract under which complainant claims was executed prior in point of time, and should have preference, as the defendant knew of it when his was executed. From the averments of the bill, it appears neither complainant nor defendant directly exercised their rights of statutory redemption. Each made a special contract with Beers for the purchase of the land in lieu of the direct statutory redemption, thereby securing more than the statutory time, two years within which to pay the foreclosed mortgage redemption debt. Complainant's contract was made first, defendant knew of it before and when his was executed, and thus the defendant's contract of purchase became subject to the prior contract of purchase under which the complainant claims. When this fraud was discovered by the complainant, he offered to pay J. E Henderson the amount he had paid on his purchase contract with Beers, but he refused to accept it, the bill avers Henderson paid Beers the balance of the purchase money for the land after this suit was commenced, and complainant avers and shows a readiness...

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