Blackshear v. First Nat. Bank of Dothan

261 F. 601 | 5th Cir. | 1919

BEVEREY D. EVANS, District Judge.

This is an action to recover usury from a national bank, alleged to have been reserved in a loan secured by mortgage, instituted more than two years after the mortgage had been satisfied by a foreclosure under a power of sale. The bank pleaded the general issue and the statute of limitations of two years.

Counsel for plaintiff and defendant stated in open court on the argument that the sole question was the validity of the power of sale in the mortgage under which the property was sold. The power of sale in two of the mortgages was as follows:

“Now, if said debts are paid at maturity, then tbis mortgage ceases to be of force; but, if default be made in tbe payment thereof, or tbe grantor shall in any way dispose of or part with possession of any of said property, or, if for any cause said [mortgagee], its successors or assigns, shall see fit to do so, they are authorized, before or after the maturity of. said debts, at any time to take possession of said personal property, to sue for or otherwise collect in their own names for said rents and advances due to us, to sell said personal property and real estate at public outcry or private sale, with or without notice of the time, place, and terms of sale, at their election, and in case they give notice to determine what kind they will give, to make said sale when, as, ana where it shall seem best to them, for cash or on credit, to become purchaser at any such sale of either the real or personal property sold, to make deeds of conveyance to the purchaser at the sale,” etc.

The power of sale in the other mortgage was:

“If default is made in the payment of any of such obligation or debt, at its maturity, or if we shall in any way abandon, sell, or dispose of any of said property, or part with the possession of any of it, or if we shall remove, mistreat, or injure any of said property, or if the First National Bank of Dothan, or its successors or assigns, shall see fit to do so at any time before or after the maturity of this debt, if, its successors, assignees, or agent, is hereby authorized to take possession of said property, or any part of it, and to sell said property and real estate, one or both, at private sale, without advertising same and without delay, or at public outcry for cash to the highest bidder at Dothan, Ala., after advertising the same for five days by posting one notice of the time and place of sale at the front of the Houston county courthouse, in Dothan, Alabama, and either such private or public sale may be made of said property before or after taking possession of same.”

[1] Powers of sale in a mortgage are intended to avoid the delay and expense incident to a foreclosure and a sale in equity, and are in general favor, both in England and in this country. There is nothing in the law of mortgages which prevents the conferring by the mortgagor in such instrument of the power to sell the premises described therein,, upon default in payment of the debt secured by it, and if the sale is conducted in accordance with the terms of the power, the title to the premises granted by way of security passes to the purchaser upon its consummation by a conveyance. Bell Silver & C. Mining Co. v. Butte Bank, 156 U. S. 470, 477, 15 Sup. Ct. 440, 39 L. Ed. 497.

[2-5] A power of sale must be construed as a part of the contract of mortgage, and not as a hostile process. On this theory the Supreme Court of Alabama has-construed a power of sale similar, if not identical with, those sub j'udice, as only authorizing a sale after default, or before maturity of the debt, where the mortgagor was attempting to dispose of the property. Henderson-Law Co. v. Wilson, 161 Ala. 504, 49 South. 845. This is an Alabama contract, and we might well rest the construction of the powers of sale under review on the reasoning of the Alabama court.

Another equally compelling view that the powers of sale authorized a sale at public auction after posting the prescribed notice results from the verbiage of the powers. It will be seen that the mortgagee is given several modes of executing the power. Even if we grant that one or more of them he inequitable, or even void, that one which provides for public sale, after published notice, is not open to legitimate attack. As the various modes are expressed in the disjunctive, any inequitable or void mode is separable from the good, and if the latter mode be pursued the sale would not be inherently bad.

The record discloses that the property embraced in each of the mortgages was sold at public outcry to the highest bidder for cash, during the legal hours of sale, in front of the courthouse door of Houston county, Ala., in Dothan, after maturity of the debt, and that it brought a fair and reasonable value, which was sufficient to discharge the debt and pay the charges incidental to the sale, and the money was thus applied more than two years prior to the commencement of this action. Under these circumstances the sale was legal, and its consummation barred the equity of redemption. See Olcott v. Bynum, 17 Wall. 44, 21 L. Ed. 570. Such being the case, the mortgagor was foreclosed in opening the matter to recover any alleged usury in an action brought more than two years after the same.

Judgment affirmed.