Adams v. Sayre
76 Ala. 509
Ala.
1884
Check Treatment
SOMERVILLE, J.

— This is the second appeal in the present case, the former one having been decided at the December term of this court, in the year 1881. It is reported under the title of Adams v. Sayre, 70 Ala. 318, from an examination of which, as also from the present record, it will be seen that the first decree of the chancellor, rendered in April, 1880, was affirmed. The decree here appealed from, and upon which errors are assigned for our review, was rendered in April, 1882. The first point which we deem necessary to consider is, whether certain changes made by the chancellor in his former instructions to the register, to guide him in stating the account ordered, are of such a nature as to amount in law to an alteration, or calling in question of his first decree. If such be the case, it can not be denied that the last decree, having been rendered at a subsequent term, and being repugnant to the *516first, would be erroneous. — Rules of Chan. Prac., No. 84; Code, 1876, p. 178; Ansley v. Robinson, 16 Ala. 793.

The purpose of the bill is to redeem certain mortgaged property, which had been sold under a power of sale contained in the mortgage, and purchased by the defendant, Adams, by alleged collusion with the mortgagee, Joseph, who himself was invested with authority to purchase at his own sale. The bill was filed in a double aspect, which we held not to be multifarious, using the following language in our former opinion : “In each aspect,” we said, “it seeks to avoid the sale under the execution of the power in the mortgage to Joseph, and to redeem the property — in the one alternative, under the terms of the alleged agreement; and in the other, according to terms imposed by law. The reliefs thus afforded, in the two alternatives presented, are similar, if not identical in kind, and are certainly not repugnant in their nature.” — Adams v. Sayre, 70 Ala. 325. The chancellor, in his decree then under review, had simply overruled the demurrers filed to the bill, adjudged that the complainant was entitled to relief, without specifying the particular relief, and referred the matter to the register, for an account to be stated, under certain instructions as to the mode in which this should be done. One theory of the bill was, that Adams had purchased the property at the mortgagee’s sale, charged with notice of the complainant’s agreement with Joseph as to the terms of the redemption, and subject to all his equities against Joseph as to payments and usurious interest; and if not, in the altei’native, that Adams, occupying a fiduciary relation towards complainant, and being in the possession and management of the mortgaged property, with the authority to rent and sell it, could not become the purchaser of it without the consent of his principal. The chancellor did not give his reasons for decreeing to complainant the relief prayed, nor was there anything in his decree which indicated upon which aspect of the bill it was based, except the inference afforded by his instructions giveu to the register as to the mode of stating the account; the sole purpose of which was to ascertain the amount due by complainant to Adams, and which he was compelled to pay in order to obtain the benefit of the relief granted, which was the right to redeem the propérty. This court affirmed the decree, evidently, upon the idea that the proof sustained it in the second aspect, as the reasoning in the opinion clearly shows; no reference being made in discussion to the testimony or principles of law bearing upon the first aspect, but only upon the second. We held the decree right, because Adams, being Sayre’s agent to sell the mortgaged property, could not be permitted “to traffic with the subject-matter of the agency, without the consent of his principal, so as to reap a profit for him*517self.” — Adams v. Sayre, supra ; Pearce v. Gamble, 72 Ala. 341.

It is- the settled doctrine of this court, that, as a general rule, there can be but one final decree upon the merits of a chancery cause, which is required to settle all the equities litigated, or necessarily involved, in the issues of the particular suit. The policy of the rule is found in the indisposition of the appellate courts to multiply appeals, by undertaking “to review litigated cases by piieeeimalA — Randle v. Boyd, 73 Ala. 282. A decree may, nevertheless, be partly final, and partly interlocutory ; final, so far as it determines all issues of law and fact, constituting the equities proper of the cause, and interlocutory as to ulterior proceedings regulating its mode of execution. There may be, therefore, and often are, under our system of‘chancery practice, two final decrees in the same cause; the one settling the substantial merits of the case, and the other based on the final report of the register, upon an account taken between the parties computing damages, from each of which an appeal will lie to this court. — Malone v. Marriott, 64 Ala. 486 ; Jones v. Wilson, 54 Ala. 50 ; Walker v. Crawford, 70 Ala. 567.

No general rule can probably be stated, which would define accurately, for all possible emergencies, what constitues the equities of every case. These equities embrace the substantial merits of the controversy — the material issues of fact and law litigated or necessarily involved in the cause, which determine the legal rights of the parties, and the principles by which such rights are to be worked out. In Cochran v. Miller, 74 Ala. 50, we discussed the principles by which we would be governed in testing the finality of the first decree, and the extent of it. We then used the following language : “ If it settle all the equities between the parties, it is, to that extent, final. If it is necessary to take an account, or other proceeding must be had to carry it into effect, to this last named extent it is interlocutory, and may be moulded, modified, or altered by the chancellor, as any other interlocutory decree may be. The principles of relief can not be altered, for they are final. Directions for carrying the decree into effect may be modified, for they are interlocutory.” It was accordingly held in that case, that so much of the decree as merely declared the rules by which the register was to be guided in stating the account, or computing the amount of damages due, was interlocutory, and could be modified at will by the chancellor at any time during the progress of the cause. The instructions given the register for cai‘rying the decree into effect, not involving equities adjudged by the decree, and the decree itself, settling the equities of the case, are separate and distinct in their nature — the latter final, the former *518interlocutory. The doctrine of this case is fully reaffirmed in Voltz v. Voltz 75 Ala. 555, which was decided at the last term.

In Jones v. Wilson, 54 Ala. 50, where many authorities on this question are reviewed, a bill had been filed by certain beneficiaries, to establish a trust in lands, and to be let into possession, with an account for rents and profits. The court, observing that the whole point of controversy was one as to the paramount title to the lands, which depended upon the validity of a sale under a trust deed, said further, that when the chancellor “ adjudged the bill had equity, and the sale under which the respondent claimed title and possession was null and void, the subject-matter of controversy was determined. Further orders, such as an account of rents and profits, may have been necessary to carry the decree into full effect, but they were merely incidental to the right adjudged to the complainants.”

The whole equity of the present bill is compi’ehended in the adjudged right of the complainant to redeem the mortgaged premises, upon the condition of paying to the purchaser the amount justly due him, and the ordering of such account to be taken for the ascertainment of such amount. This, we repeat, was, in substance, the paramount equity of the whole case. The directions given to the register relate to the mode of taking the account, which involves a necessary step in the execution of the first decree. They adjudge strictly no settled principle of relief, but rather involve matters incidental to the relief given, in the meaning of this phrase as used in the authorities. It is no uncommon practice, for a chancellor, ordering an account to be taken, to instruct the register to state his account in two or more distinct aspects, and to adopt the one or the other, on the coming in of the report, as it may be supported by the testimony. A second appeal may be taken from the decree based on this report; and “ on such secondary appeal,” as observed by Stone, J., in Cochran v. Miller (74 Ala. pp. 63-4), “ questions may be raised growing out of instructions to the register, the introduction of testimony before him, and exceptions filed to his report.” We are of opinion, that the chanceller was empowered to modify these directions, and such modification constituted no alteration of liis first decree obnoxious to legal objection. There seems to be nothing in most of these instructions, not ordinarily incident to the taking of such an account. They do not presume to adjudge any equities of the parties, which were involved within the controverted issues of the bill and answer.

This brings us to a second inquiry, involving the correctness of the second decree rendered by the chancellor, in April, 1882, based upon his directions to the register.

It is not contended that the purchase made by Adams at the *519mortgage sale was void, any more than a purchase by a mortgagee at his own sale would be. It was not void, but merely voidable at the option of the complainant, seasonably expressed, and could be either affirmed or disaffirmed by him. — Dozier v. Mitchell, 65 Ala. 511; Downs v. Holpkins, Ib. 508; Comer v. Sheehan, 74 Ala. 452.

There is no element of fraud, which we can discern, in the conduct of Joseph, who, being the owner of the mortgage by assignment, stood in the shoes of the original mortgagee, his assignor. He was expressly authorized, it is true, to purchase at the mortgage sale, but he was certainly under no obligation, legal or moral, to do so. The policy of the law, without the previous consent of the mortgagee, in fact forbade him to do so. Perfect fairness and honesty in the conduct of the sale was the only duty that could be properly exacted of him, under the circumstances. Ilis agreement, therefore, with Adams, to abstain from bidding, can not be properly characterized as a breach of trust on his part, especially in view of the fact, that the amount agreed to be bid by Adams does not appear to have been an unfair or an unreasonable price for the property. The former decision in this case, as we have said above, is not based upon the theory contended for by appellee’s counsel, that Joseph was guilty of a constructive fraud, in which Adams par-' ticipated; but that Adams, being also an agent to sell, could not procure Joseph to sell the subject-matter of the agency, and himself traffic in it, without the consent of Sayre. — Adams v. Sayre, 70 Ala. 326. The testimony does not satisfactorily show that Adams bought with notice of complainant’s equities as against Joseph, and he does not stand in Joseph’s shoes as a mere assignee of the mortgage, but as a purchaser at a voidable sale. It is true that, after the sale, the balance of the mortgage debt was assigned to appellant; but this was an extraneous matter, not agreed on prior to, but after the sale, and had no connection with it.

The nature of the relief granted on bills like the present, hied for redemption, is well settled. The complainant is entitled to have the sale set aside, upon the condition of himself doing equity. He is required, at least, to refund the purchase-money with interest, with all sums expended by the purchaser in repairs and improvements of a permanent nature, with taxes and other lawful charges, to which interest may be added; the purchaser being required to account for the rents and profits, or for use and occupation, if he is in possession. — Fox v. Mackreth, 1 Lead. Cas. in Eq., Part 1, p. 172; Dozier v. Mitchell, 65 Ala. 511; Downs v. Hopkins, Ib. 508.

"While the purchaser is chargeable with rents, and with interest upon them, there is some difference of opinion, and perhaps *520confusion, among the authorities, as to the time from which interest should be calculated. In taking the account, it falls largely within the discretion of the chancellor, as to how frequently rests shall be taken, in cases like the present. The ordinary rule of partial payments, as adopted by our statute, does not seem to us to be applicable, or just in all cases. The proper rule depends upon the amount of the installments of rent collected, and their frequency of collection. If very large, interest might be charged from the time of collection. If collected in small sums, driblets, as it is commonly called, rests may be made, varying in time from six months to one year. As observed in Jones on Mortgages: “The two essential principles are — -first, that when there is a surplus of receipts in any year, above the interest then due, a rest shall be made, and the balance remaining after discharging the interest shall be applied to reduce the principal, so that the mortgage shall not continue to draw interest for the face of it, when in fact the mortgagee has in his hands money that should be applied to reduce the principal, and thereby make the interest less for the following year. Secondly, although the amount received in any one year be insufficient to pay the interest accrued, the surplus of interest must not be added to the principal, to swell the amount on which interest shall be paid for the following year; for that would result in the charging of interest upon interest, which is not allowed; but the interest continues upon the former principal, until the receipts exceed the interest due. These are the principles upon which the mortgagee’s interest account is everywhere made up; and the cases in which they are stated are many, and in general accord.” — 2 Jones on Mort. § 1139, and cases cited. See Harrison v. Harrison, 39 Ala. 511-12; Royall v. McKenzie, 25 Ala. 368-9. In the present case, the register, in taking the account, will make rests every six months, which seems to us to be equitable..

The appellant was not entitled to charge for the management of the estate while he was in possession, claiming it as his own, and holding the legal title as he did. His commissions were properly disallowed, and also his expenses for attorney’s fees and other costs of litigation, shown to have been incurred touching the mortgaged property. — Hogan v. Stone, 1 Ala. 496; Barron v. Paulling, 38 Ala. 292. He assumed the risk of losing his services, by any subsequent disaffirmance of the sale.

The effect of the sale was to cut off and bar the equity of redemption, and to satisfy and extinguish the mortgage debt, to the extent of Adams’ bid at the sale, leaving only the unpaid balance as a subsisting debt in the hands of Joseph. — Harris v. Mullen, 71 Ala. 26. This balance having been assigned by Joseph to Adams, as a separate transaction, was a demand *521against Sayre, subject to all existing equities. It could, therefore, be reduced by payments made, or abated to the extent of any usurious interest entering into the transaction.

In estimating the rents of property which has been improved by such purchaser, they should be based upon the value of the property when he took possession, and not upon the increased value arising from improvements made. — Dozier v. Mitchell 65 Ala. 512.

The decree of the chancellor is reversed, and the cause remanded.