Town of Carbon Hill v. Marks

• Decision Date: 13 May 1920
• Docket Number: 6 Div. 924
• Citation: 86 So. 903,204 Ala. 622
• Parties: TOWN OF CARBON HILL et al. v. MARKS.
• Court: Alabama Supreme Court

86 So. 903

204 Ala. 622

TOWN OF CARBON HILL et al. v. MARKS.

6 Div. 924

Supreme Court of Alabama

May 13, 1920

Rehearing Denied Oct. 30, 1920

Appeal from Circuit Court, Walker County; J.J. Curtis, Judge.

Bill by Ione F. Marks against the Town of Carbon Hill and others for discovery and for an accounting and to declare and establish a superior and paramount lien on or incumbrance upon certain property conveyed by trust deed or mortgage, and for other relief. From a decree for complainant, the respondents appeal. Reversed and remanded.

Coleman Coleman & Spain, of Birmingham, for appellant.

Rudulph & Smith, of Birmingham, for appellee.

G.W.L Smith, of Brewton, amicus curiae.

THOMAS J.

The court was without authority to decree that complainant had a claim or lien superior to that of the holders of bonds of the town of Carbon Hill who were not parties to the bill. As to this, it is decreed that said lien of complainant "is superior to any other lien given since the date of said trust deed, given to secure said warrants, whether said last trust deed or lien was given to the Birmingham Trust & Savings Company as trustee, or to any other person."

Complainant's right, if it existed at all, rested on the mortgage of the town of Carbon Hill to Jefferson County Savings Bank recorded in volume 100 of Mortgages, at page 479, in the probate office of Walker county, on January 13, 1906. The same is shown to have been released by the mortgagee of date January 21, 1910, and recorded in volume B, page 100, of the appropriate record in the probate office of said county.

The Jefferson County Savings Bank, failing in business, went into the hands of the superintendent of banks January 28, 1915 and all of its assets were transferred to the Jefferson County Bank, a corporation, on August 1, 1915. The latter bank on January 28, 1916, was placed in the hands of A.E. Walker, as superintendent of banks, who was engaged in the liquidation of its affairs at the time the bill was filed. Said Walker as superintendent of banks, the Jefferson County Bank, the town of Carbon Hill, and the American Trust & Savings Bank (the trustee in last mortgage by said municipality) are made respondents.

It is averred that--

The American Trust & Savings Bank, as trustee for certain persons, firms, or corporations whose names and places of residence are unknown to complainant, "claims to own some right to, interest in, or lien or incumbrance upon, the property" in question "by reason of a purported mortgage or deed of trust recently executed (the bill being filed December 29, 1916) to said American Trust & Savings Bank as trustee by said town of Carbon Hill; *** that any right, interest, or incumbrance which the said American Trust & Savings Bank, either for itself or for the benefit of any and all of its alleged cestuis que trustent, may have or claim in and to said property, or any part of it, was acquired subsequent to and with knowledge or notice of the lien, right, and incumbrance" of complainant "by reason of the execution of said warrants and said deed of trust securing the same"; and charges that complainant has a "right, title, interest, lien, or incumbrance upon and to all of said property so described in said deed of trust *** superior and paramount to that of said American Trust & Savings Bank and any and all of its cestuis que trustent, which should be declared and enforced in this cause."

The decree shows on its face a want of jurisdiction in undertaking to cancel the release of the trust deed (that of January 13, 1906) entered of record before the execution of the mortgage by the town of Carbon Hill to the American Trust & Savings Bank in 1916, about August or September, which injuriously affected the rights of the real parties at interest, holders of the warrants or bonds secured by said trust mortgage, by subordinating that debt to that of the old mortgage of January 13, 1906, long since canceled of record. The pleading shows further that the trust mortgage to the American Trust & Savings Bank was to secure the town's waterworks and light-plant bonds by a lien on its municipal waterworks and light plant.

The bill alleges an interest in the properties under the mortgage of the town of Carbon Hill to American Trust & Savings Bank, and that the owners of the debt secured by said mortgage are unknown to complainant. No required affidavit was made showing their names or residences, or that they were unknown; nor was diligence shown on complainant's part to ascertain the names and residences of the cestuis que trustent under said mortgage. They were not parties to the suit. It was not sought to make them respondents. No publication or notice was given to them, or such as bound them as owners. No property of such parties was seized by attachment, nor statutory requirement complied with to perfect service on them as unknown or as nonresident defendants. There was no appearance in this suit by such real parties in interest. The decree, attempting to injuriously affect their interest or property rights, is not binding on them, and presents reversible error on its face. Such is the result whether they are residents or nonresidents of the state. The making of American Trust & Savings Bank (the trustee in said mortgage) a defendant was an attempt on the part of complainant to effectuate service upon the real parties in interest, and to bind them (by the decree) as cestuis que trustent by the appearance of the trustee. This the decree erroneously undertook to do. It did not contain a provision that the relief granted was without prejudice to the rights of such cestuis que trustent or owners of the evidences of debt by the town of Carbon Hill to American Trust & Savings Bank as trustee, and secured by the mortgage of that municipality to said bank. In equity, such cestuis que trustent are the real owners of the debt and mortgage securing the same, and as such parties in interest were indispensable parties to the suit.

In Lebeck v. Ft. Payne Bank et al., 115 Ala. 447, 453, 22 So. 75, 77 (67 Am.St.Rep. 51), the court observed that in a court of law a trustee is regarded as the owner of the property, and his representation is for the cestui que trust; that if there is dereliction on his part injuriously affecting the interest of the cestui que trust, or if he is incompetent to properly assert and defend his legal rights in legal forms, or is unfaithful therein, the cestui que trust may apply to equity to control his conduct and restrain the jurisdiction of the legal tribunals, to the end of the full and complete protection of the cestui que trust.

"Hence, an action at law which proceeds to judgment against the trustee, unaffected by fraud, accident, or mistake, binds the cestui que trust. Frank v. Myers, 97 Ala. 437. But in a court of equity an entirely different doctrine obtains. There the cestui que trust is regarded as the owner of the property, and his own representative in reference thereto. He is, there, separate and distinct from the trustee, and, in a sense, the adversary of the latter. He prosecutes and defends his own interests, and shapes, through the decrees of the court, the conduct of the trustee. Hence unless there be something special in the terms of the trust, which confers upon the trustee the power and duty to represent, in courts of equity, the beneficial interests; unless a power of attorney, so to speak, is conferred upon him to represent those interests, in those forums, a decree in equity, affecting the trust estate, rendered against the trustee, in the absence of

the cestui que trust, is not binding upon the latter. The cestui que trust is an indispensable party to such proceedings, and he cannot be concluded unless he is made a party. Collins v. Lofftus (10 Leigh, 5), 34 Am.Dec. 719, and extended note at page 722, citing many authorities." Stone v. Hale, 17 Ala.

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