Estes v. Metropolitan Life Ins. Co.

• Decision Date: 11 June 1936
• Docket Number: 6 Div. 863
• Citation: 169 So. 316,232 Ala. 656
• Parties: ESTES v. METROPOLITAN LIFE INS. CO.
• Court: Alabama Supreme Court

169 So. 316

232 Ala. 656

ESTES v. METROPOLITAN LIFE INS. CO.

6 Div. 863

Supreme Court of Alabama

June 11, 1936

Rehearing Denied July 16, 1936

Appeal from Circuit Court, Jefferson County; E.M. Creel, Judge.

Suit in equity by the Metropolitan Life Insurance Company against Walter F. Estes and others. From a decree for complainant the named respondent appeals.

Corrected and affirmed.

J.C Burton, of Birmingham, for appellant.

Cabaniss & Johnston, Smyer, Smyer & Bainbridge, and K.E. Cooper, all of Birmingham, for appellee.

KNIGHT Justice.

The proceedings in this cause were commenced by a bill filed by appellee-complainant, against Walter F. Estes, Nettie B Estes, his wife, and others, seeking relief under an instrument, in form a mortgage, executed by the Estes to Jemison & Co., and which was thereafter, and before maturity transferred, sold, and conveyed to the complainant. The bill presented the case in a number of aspects, with relief prayed under the several aspects in the alternative.

There were demurrers to the bill, which were overruled, and thereafter answers were filed by all respondents, the respondent Walter F. Estes filing an amended answer and cross-bill, making the complainant in the original bill the cross-respondent thereto. There was a demurrer by the cross-respondent to this cross-bill, and this demurrer on final submission was sustained by the court, and full relief as prayed for in the bill was granted the original complainant.

From this decree the respondent Walter F. Estes alone has appealed, and among the errors assigned is one which presents for our determination the propriety of the court's action in sustaining the cross-respondent's demurrer to the cross-bill, and in dismissing the same.

That the real issues involved in this case may be fully understood, we deem it proper to set out the salient averments of the bill; and we may here say that the evidence fully sustained the averred facts.

Walter F. Estes owned a lot in the city of Birmingham, Ala., upon which he and his wife resided as their homestead. The title to the property was in the husband, and he undertook the erection of a residence thereon at a cost of $8,000. At that time he and his wife lived in the upper story of the garage on the lot. A contract was made by Estes with a man by the name of A. Hinkle to construct the residence at and for the sum of $8,000. The residence was thereafter constructed by said Hinkle, and at the time the loan was made to him by Jemison & Co., there was due Hinkle a balance of $5,776.59 on the construction cost.

Walter F. Estes applied to Jemison & Co. for a loan of $7,000, to be secured by a first mortgage on the property. Pursuant to this agreement Estes and wife executed and delivered to Jemison & Co. an instrument that purported to be a mortgage on the property, and apparently executed and acknowledged in all respects as required by section 7883 of the Code (amended by Gen.Acts 1931, p. 183).

Thereafter, Jemison sold and conveyed and duly transferred the writing, the notes, and said mortgage to the complainant, the Metropolitan Life Insurance Company, for value, before maturity of the notes, and without notice of any defect in the acknowledgment of the parties to the mortgage.

After making some small payments on the indebtedness, the mortgagors made default in the payment of the notes, and the Metropolitan Life Insurance Company foreclosed, or went through the form of foreclosing, the mortgage under the power of sale given in the instrument, and at the foreclosure sale became the purchaser of the property at and for the sum of $6,696.09, and a deed was duly executed to it.

Estes and his wife declined to deliver possession to the Metropolitan Life Insurance Company on its purchase of the property, and the company instituted an action of ejectment against the mortgagors for the recovery of possession of the property.

On the trial of this ejectment suit, it developed that while both Mr. and Mrs. Estes had signed the mortgage, it was not in fact acknowledged by either of the parties, as the certificate purported to show, and there was no subscribing witness. For this reason the Metropolitan Life Insurance Company lost in its ejectment suit. The complainant prosecuted an appeal to this court from the judgment for respondents in the ejectment suit, but the judgment of the lower court was affirmed on said appeal. Metropolitan Life Insurance Co. v. Estes et al., 228 Ala. 582, 155 So. 79.

After the final determination of the ejectment suit, the Metropolitan Life Insurance Company filed the present bill, praying, inter alia, specifically that the foreclosure proceedings referred to in the bill be set aside and held for naught, and the mortgage be treated as being in full force according to its tenor and effect; that the instrument intended as a mortgage be decreed "to amount in equity to a good agreement to mortgage"; that "whether relief be granted by the court in the form prayed for in either of brackets (1) to (4) inclusive above, that the mortgage or lien which shall be decreed as existing against said property for the security of said indebtedness, be foreclosed under the orders of this court for the satisfaction of said indebtedness"; and in the alternative complainant prayed to be subrogated to the rights of the holders of the mechanics' liens paid and discharged out of the proceeds of the loan made by the lender to Estes. There was also a prayer for general relief.

The respondent Walter F. Estes in his answers, made a cross-bill against the complainant, averred that the property conveyed by the mortgage was his homestead at the time of the execution of the mortgage; and that there was no acknowledgment of the same by his wife. He avers also that the homestead, after being reduced to its lowest practical area, exceeds in value $2,000.

He prayed that the property be sold by order of the court at such time, and under such conditions as the court may direct, and that of the proceeds the cross-complainant be paid $2,000 "in lieu of a homestead." He made no offer to pay the debt secured, or intended to be secured, by the mortgage as a condition precedent to relief.

Section 7913 of the Code, the provisions of which the appellant invokes in this case, has its genesis in the Act of the Legislature of February 9, 1877 (Gen.Acts 1876-77, p. 32). Prior to the passage of that act this court had held that exemption did not extend to and embrace a homestead, which after being reduced to the lowest practical area, still exceeded $2,000 in value. And that the law had provided no method for carving a homestead, or its equivalent, out of the property thus circumstanced. We held, however, under the...