42 So. 2d 829 | Ala. | 1949
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *56
Appellant is entitled to be subrogated to the rights of Hughes in the original mortgage which was held by him, as against appellee.
On January 10, 1925, the respondent Jim Raiborn bought forty-five acres of land in Crenshaw County, the subject matter of this suit, from the respondent R.T. Hughes, and executed a purchase-money mortgage thereon for approximately $1,600. The mortgage was duly recorded on January 13, 1925.
On October 19, 1926, respondent Jim Raiborn made application to the Bank through the Pike County National Farm Loan Association for a loan of $2,000, offering as security the same forty-five acres of land. In the said application it was recited that the purpose of the loan was to pay a balance of $1,334 on the Hughes mortgage and to build a barn and fence on the land. The application did not show any mortgage against the land except the Hughes mortgage, that is, the purchase-money mortgage. Applicant agreed to furnish, at his expense, an abstract or certificate of title, acceptable in form to the Bank, which would show a perfect title in him and that the mortgage given to secure the loan would be a first mortgage on the property.
On October 30, 1926, the Bank received from the Pike County National Farm Loan Association the application for loan made by the respondent Jim Raiborn on October 19, 1926. It appears from a certificate executed by George M. Grant, Secretary-Treasurer of the Pike County National Farm Loan Association, that the board of directors of said association recommended to the Bank that a loan not exceeding $1,300 be made to the respondent Jim Raiborn.
On November 1, 1926, the day after the aforementioned application and recommendation reached the Bank, the respondent Jim Raiborn executed a mortgage on the same forty-five acres of land to the Henderson Company to secure a note in the sum of $575 due January 1, 1927.
On January 17, 1927, the executive committee of the Bank approved the application of the respondent Jim Raiborn for a loan of $900. Raiborn was notified on January 21, 1927, that a loan of $900 had been approved and that the Bank would proceed further upon receipt of abstract of title. Raiborn was furnished with a list of attorneys approved by the Bank and was instructed to select from that list an attorney to prepare his abstract of title.
On January 26, 1927, the mortgage executed by Raiborn to the Henderson Company on November 1, 1926, was recorded.
At the request of Raiborn, an abstract of title was prepared by Hon. George M. Grant, who was at the time a practicing attorney of Troy, Alabama, and who was on the list of attorneys approved by the Bank. Mr. Grant, as before indicated, was the Secretary-Treasurer of the Pike County National Farm Loan Association. On February 21, 1927, Mr. Grant, as attorney for Raiborn, the borrower, executed the customary abstractor's certificate, which in effect stated that the abstract properly enumerated and set forth all recorded instruments affecting the title to the land here involved. The abstract did not show the mortgage to the Henderson Company executed on November 1, 1926, and recorded January 26, 1927. The abstract prepared by Mr. Grant was received by the Bank on February 24, 1927. Thereafter, the Bank had prepared a note for $900 and a mortgage in that amount covering the land involved here, which were sent to Mr. Grant to be executed, recorded, and returned to the Bank.
Jim Raiborn signed a note in the sum of $900, bearing date of March 1, 1927. Raiborn and his wife appear to have signed *58 the mortgage on March 1, 1927, although their acknowledgements are dated March 11, 1927.
The mortgage bears the following endorsement:
"In consideration of the Federal Land Bank of New Orleans making the grantor in the mortgage the loan hereby secured, the Pike County National Farm Loan Association of Troy, Alabama, as provided by § Eleven of the Federal Farm Loan Act, does hereby endorse and become liable for the indebtedness secured by this mortgage; the Grantor therein being a shareholder in said Association.
"In Witness whereof the said Pike County, National Farm Loan Association of Troy, Alabama, has caused this endorsement to be executed for it and in its name by its president, attested by its secretary.
"The Pike County National Farm Loan Association, of Troy, Alabama,
"By, G. F. Youngblood "Attest. As its President. "George M. Grant, as "Secretary-Treasurer."
The mortgage to the Bank was filed for record on March 15, 1927.
On March 19, 1927, Mr. Grant, as attorney for Jim Raiborn, executed what is termed a lien certificate which, among other things, stated that the mortgage had been recorded "and will constitute a valid first lien on the property therein described when the liens listed in the above lien certificate have been paid and cancelled of record." The mortgage of Raiborn to Hughes, under date of January 10, 1925, that is, the purchase-money mortgage, was listed, but not the mortgage to the Henderson Company executed on November 1, 1926, and recorded January 26, 1927.
The note, mortgage, and lien certificate were forwarded by Mr. Grant to the Bank. Thereafter, on March 23, 1927, the Bank issued its check in the sum of $822.24, payable to the order of Jim Raiborn, Robert T. Hughes, George M. Grant, Attorney, and George M. Grant, Secretary-Treasurer. This check was mailed by the Bank to Mr. Grant, in that it was his duty as Secretary-Treasurer of the Pike County National Farm Loan Association to handle the disbursement of the proceeds of the loan. The difference between the amount of the loan, $900, and the amount of the check seems to be attributable to certain deductions incident to the making of such loans.
It does not appear exactly when Mr. Grant received the check or when the proceeds thereof were disbursed. But it does appear that all of the payees endorsed the check and that respondent R. T. Hughes received all the proceeds thereof except $25 paid to Mr. Grant as attorney for Raiborn, $5 paid to the Pike County National Farm Loan Association, $5 for recording the mortgage, and an unspecified sum used to pay taxes on the mortgaged property. Raiborn received no part of the proceeds of the check.
Thereafter, on April 19, 1927, respondent R. T. Hughes took another mortgage from respondent Jim Raiborn on the same land in the amount of $550. This mortgage was recorded on May 9, 1927.
On May 7, 1927, two days before the mortgage last above referred to was recorded, respondent R. T. Hughes cancelled of record the mortgage executed to him on January 10, 1925, by the respondent Jim Raiborn.
On June 11, 1927, Mr. Grant as "examining attorney for the borrower," executed an instrument termed an "attorney's final certificate," which showed that the mortgage from Raiborn to Hughes under date of January 10, 1925, had been "satisfied and discharged of record" and "that the title to said lands is good and valid in fee simple in said Jim Raiborn subject only to mortgage of The Federal Land Bank of New Orleans, on the property which is described in the abstract to which my first certificate has been attached, and I further certify that from a personal inspection of the records I find where no mortgage or lien or encumbrances of any nature or character whatsoever have been inscribed against said property between the date of the execution of said deed of trust, or mortgage, and the recordation of same." This certificate was received by the Bank on June 16, 1927. *59
It clearly appears from the foregoing that Mr. Grant, in drawing up the abstract of title and in executing the several certificates, overlooked the mortgage from Raiborn to the Henderson Company under date of November 1, 1926, which was on record prior to the time the abstract was certified and the other certificates executed.
On April 22, 1932, the respondent Hughes transferred to the respondent Henderson Company the mortgage made to Hughes by Raiborn on April 19, 1927. This mortgage was foreclosed on May 2, 1936. The Henderson Company purchased the land at the foreclosure sale and went into possession.
The bill as amended sought to have the Bank subrogated to the rights of the respondent Hughes in the original purchase-money mortgage made by Raiborn to Hughes, that is, the mortgage under date of January 10, 1925. The bill also sought an adjustment of the equities between the Bank and the Henderson Company and to have the Bank's mortgage of March 1, 1927, foreclosed. Complainant offered to do equity in all respects.
The trial court denied relief to complainant and dismissed its bill. From that decree the complainant has appealed to this court.
Generally speaking, one advancing money to discharge a prior lien on property and taking a new mortgage as security is entitled to subrogation to the prior lien, as against the holder of an intervening lien of which he was ignorant. He is not a volunteer or stranger, merely paying off the debt of another in the sense that he is not entitled to subrogation. First Avenue Coal Lumber Co. v. King et al.,
In Groom et al. v. Federal Land Bank of New Orleans et al.,
The evidence in this case, in our opinion, clearly shows that the Bank made the loan to the respondent Raiborn for the purpose of enabling him to pay off the debt which he owed to Hughes in the amount of the loan, less the usual charges and expenses incident to the making of such loans. We do not think the mere fact that the amount of the loan made to Raiborn was in excess of the amount of money received by Hughes deprives the Bank of the right of subrogation as to the amount received by Hughes, since it appears that the portion of the loan which Hughes did not receive was used for the purpose of paying charges, expenses, attorney's fees and taxes on the land. See Federal Land Bank of Louisville v. Lightfoot et al.,
We are also of the opinion that the evidence shows that it was the intention of the parties to the loan that the Bank should have a first mortgage on the forty-five acres of land here involved; that is, that the lien of Hughes against the property created by the mortgage to him under date of January 10, 1925, should be discharged. The Bank could only take first mortgages. *60 True, the amount of the loan made by the Bank was not sufficient to pay the entire debt owed to Hughes, but we think the evidence, as it relates to events subsequently occurring, namely, the taking by Hughes of the mortgage of April 19, 1927, and the subsequent satisfaction by Hughes of the mortgage of January 10, 1925, clearly indicates that it was the intention of the Bank, Raiborn, and Hughes that the mortgage made by Raiborn to the Bank should create a lien of equal dignity with that of the purchase-money mortgage.
We come now to consider the question as to whether or not the Bank is to be deprived of the right of subrogation because of the fact that its loan was not in an amount sufficient to pay the entire debt owed by Raiborn to Hughes. As shown above, pro tanto subrogation is not permitted. Groom et al. v. Federal Land Bank of New Orleans et al., supra; Atherton v. Tesch,
In Corinth State Bank v. First Nat. Bank of Florence,
In Shaddix et al. v. National Surety Co. [
Appellees insist that the trial court correctly denied subrogation in this case because the evidence shows that the Bank, although ignorant of the existence of the intervening lien of the Henderson Company (the mortgage under date of November 1, 1926, which was recorded on January 26, 1927), was guilty of culpable neglience in not determining the existence of such mortgage. The rule here applicable is stated in Whitson et al. v. Metropolitan Life Ins. Co.,
It is clear that the Bank was entirely ignorant of the existence of the intervening lien. So, the question remains as to whether or not the ignorance of the Bank as to the existence of the intervening lien is shown by the evidence to have resulted from culpable negligence.
In so contending, if we correctly understand the brief filed by their counsel, the appellees contend that such negligence does appear in that although the mortgage was on record at the time the abstractor's certificate was made, it was not included in the abstract and that the abstractor was the agent of the Bank. We have given careful consideration to the evidence as it relates to the agency of the abstractor and we are clear to the conclusion that he was the agent of Jim Raiborn and not of the Bank. True, he was the Secretary-Treasurer of the Pike County National Farm Loan Association, but this relationship in and of itself did not make him an agent of the Bank. Gantt v. Gunter et al.,
At the time Raiborn executed the mortgage to the Bank, the mortgage of the Henderson Company was in fact a second mortgage, although it did not so appear in the mortgage. The lien of the Henderson Company was subordinate to that of Hughes and, consequently, we cannot see how the Henderson Company, the intervening lienor, can be burdened, embarrassed, or prejudiced by permitting subrogation as sought by the Bank in this case.
The appellees further insist that subrogation was properly denied in this case for the reason that the evidence shows the Bank relied upon other security than its mortgage. In this contention appellees rely upon the following statement contained in the opinion of this court in the case of Shaddix et al. v. National Surety Co.,
The testimony in this case was not taken ore tenus before the trial judge; therefore, the decree is not supported by a presumption of verity. Under such circumstances it is our duty to consider the evidence de novo. Box v. Box,
We have given careful and studied consideration to the evidence in this case and are constrained to the conclusion that under the evidence the Bank was entitled to subrogation as prayed for.
In enforcing the right of subrogation, the purpose always is to make the application of equitable principles to the particular facts and to effectuate the administration of natural justice between all parties concerned. That is the real doctrine of subrogation. One will not be permitted to secure an advantage to the prejudice of another; nor will his rights be diminished in any degree to further the interest of such other.
In arriving at this conclusion, we have considered all the evidence. Appellees have insisted that we could only review the evidence taken prior to September 30, 1939, in that the cause was submitted for final decree at that time and that since that submission was not set aside, evidence taken thereafter and subsequently noted could not be considered.
It is true that we have held that where a cause has been submitted for final decree on pleadings and proof as noted by the register, it is error to permit an amendment to the note of testimony without first setting the submission aside. Darling et al. v. Hanlon,
Conceding without deciding that the cause was properly submitted for final decree on September 30, 1939, we are of the opinion that respondents, appellees here, in effect consented to have the trial court consider testimony taken subsequent to that time without setting the alleged submission aside. Counsel for respondents were served with a copy of the amended bill, which was filed after the date of the alleged submission, and they forthwith interposed their answers. Thereafter counsel for the respondents entered into written agreements with counsel for complainant relative to the taking of additional testimony. True, after entering into such agreements the respondents did interpose objection to the consideration of such additional testimony, but this objection came too late. We think that in agreeing to the taking of the additional testimony they tacitly agreed that such testimony should be considered by the trial court in rendering its final decree.
The note of testimony, or note of submission, filed by complainant on May 27, 1946, was in compliance with Equity Rule 57, as amended. 1947 Cum. Pocket Part, Title 7, Appendix, Code 1940; Home Ins. Co. v. Shriner,
The decree of the trial court is reversed and the cause is remanded for further proceedings in accordance with this opinion.
Reversed and remanded.
BROWN, FOSTER and STAKELY, JJ., concur. *63
