85 So. 779 | Ala. | 1920
Lead Opinion
The bill was filed to compel the Bank of Hartselle to transfer certain bank stock held by Mr. Oden in his lifetime and transferred to appellee as security for debt.
It is immaterial whether the transaction be regarded as a mortgage or a pledge; the equity of the bill is unquestioned. The learned trial judge well states that —
"The theory of some of the cases is that the remedy at law is inadequate and incomplete, and that a court of equity by analogy will give relief on the theory of specific performance. Birmingham Nat. Bank v. Roden,
As an analogous ruling, see Boyett v. Hahn,
"When the contract of the parties provides no method of enforcing or foreclosing a lien, a court of equity in the exercise of its original jurisdiction may protect and foreclose such lien. 1 Pom. Eq. Jur. §§ 165-167; Averyt Drug Co. v. Ely-Robertson-Barlow Drug Co.,
See, also, Morris v. Southern Realty Const. Co.,
Courts of equity have jurisdiction, for the purposes invoked, to compel cancellation of the old stock and the issuance of stock in lieu thereof to complainant. Evins, Guardian, v. Cawthon,
The decree overruling demurrer to the bill was that Alice E. Oden "must file an answer to the bill within ten days from" date. The Bank of Hartselle, as respondent, filed answer and cross-bill, and made as respondents thereto the complainant in the original bill (W. B. Vaughn) and Alice Oden, "both individually and as administratrix of the estate of A. A. Oden, deceased," on which process duly issued and service was had on the said Alice Oden, who thereafter did not appear and make answer. Decrees pro confesso on the original bill and on the crossbill of the Bank of Hartselle were taken against the said Mrs. Oden, individually and as administratrix, on March 10, 1919. The respective notes of testimony, for complainant and the Bank of Hartselle, show that submission was had upon the respective decrees pro confesso against said Oden in her individual and representative capacity. The order of submission for final decree recites that —
"Complainant, being called, offers the following testimony: Original bill; decree pro confesso against defendant Oden in favor of complainant; admissions in the answer of the Bank of Hartselle; decree pro confesso on cross-bill of Bank of Hartselle against defendant Oden. The defendant and cross-complainant, Bank of Hartselle, being called, offers the following testimony: Answer and cross-bill; answer of complainant to cross-bill; decree pro confesso against Alice E. Oden, individually and as administratrix, on cross-bill."
The final decree recited that W. B. Vaughn is the owner of the five shares of capital stock of the Bank of Hartselle mentioned in the original bill, is entitled to have paid to him the dividend declared on said five shares of stock, and that the defendant "Alice E. Oden, individually and as administratrix of A. A. Oden, deceased, has no right, title, or interest in or to said stock or to said dividends." Order is contained therein for cancellation of original certificate of stock on surrender, and issuance of another certificate *448 of stock in lieu thereof by the bank to complainant and in his name, and that —
The "Bank of Hartselle is relieved of all liability for said shares of capital stock to the defendant Alice E. Oden, individually and as administratrix of A. A. Oden, deceased. It is further ordered, adjudged, and decreed by the court that the defendant Alice E. Oden, as the administratrix of A. A. Oden, deceased, pay the costs of this suit, for which execution may issue."
An inspection of the record will show that in rendering the foregoing decree the provisions of Code, § 3163, to the effect that "In all cases in which decrees pro confesso are lawfully taken, the allegations of the bill are to be regarded as admitted, except in case of infant defendants, persons of unsound mind, executors, administrators, and bills for divorce," were overlooked. Howell v. Randle,
In the instant case the decree is against the said Alice E. Oden as an individual and as administratrix of the estate of A. A. Oden, deceased, and the costs are taxed against her in her individual and representative capacities. For noncompliance with the provisions of Code, § 3163, as to establishment of original complainant's right by a decree pro confesso taken against such administratrix rather than on proof, the judgment of the circuit court was clearly erroneous as binding the estate of A. A. Oden, deceased. The error in rendition of the decree in question is challenged by appropriate assignment on the part of Alice E. Oden in her individual capacity and not as administratrix of the estate of A. A. Oden, deceased. Rule 1, Sup. Ct. Prac. (page 1506, Civil Code); Carney v. M. C. Kiser Co.,
Reversed and remanded.
ANDERSON, C. J., and McCLELLAN and SOMERVILLE, JJ., concur.
Addendum
Appellant invokes a decision by the court as to whether the transfer of the shares of stock in question constituted a mortgage or a pledge.
The instant bill avers that —
"On or about the 19th day of July, 1904, A. A. Oden was indebted to complainant in a large sum of money, to wit, $2,000, and to secure said indebtedness transferred and assigned unto complainant as collateral security a certificate for five shares of the capital stock of the Bank of Hartselle, which certificate was numbered 7, and was issued to A. A. Oden by the Bank of Hartselle on the 14th day of December, 1903, and was signed by John S. Mitchell, cashier, and J. D. Pullen, president of said bank. At the time of the transfer of said certificate of five shares of stock the said A. A. Oden made the following indoresment thereon, viz.: 'For value received, I hereby sell, transfer and assign to W. B. Vaughn as collateral security five shares of the within-mentioned stock, and do hereby constitute and appoint Dr. W. A. Barclift as my attorney, to transfer the same on the books of the bank. This 19th day of July, 1904. [Signed] A. A. Oden. Witness: Arthur Stephenson.' "
And further:
"Complainant avers that the indebtedness due him from A. A. Oden to secure which the said Oden delivered to him the said stock as collateral security was due and unpaid at the time of the notice of sale and sale of said stock."
A statement of the difference between a mere pledge, a mortgage, and an equitable charge or lien in the nature of a mortgage is not free from difficulty. The general distinction between a pledge and a mortgage is thus defined: *449
"A pledge differs from a chattel mortgage in three essential characteristics: (1) It may be constituted without any contract in writing, merely by delivery of the thing pledged. (2) It is constituted by a delivery of the thing pledged, and is continued only so long as the possession remains with the creditor. (3) It does not generally pass the title to the thing pledged, but gives only a lien to the creditor, while the debtor retains the general property. People v. Remington. 2 N.Y. Supp. 824, 826, 50 Hun, 602; Thurber v. Oliver (U.S.) 26 Fed. 224, 226. See, also, Mitchell v. Roberts (U.S.) 17 Fed. 776, 778; McFarland v. Wheeler (N.Y.) 26 Wend. 475 (citing Cortelyou v. Lansing [N.Y.] 2 Caines' Cas. 202); Wright v. Ross,
As early as Sims v. Canfield,
"A pledge is, when a thing is deposited as a security to be returned to the pledgor when he has redeemed it. In this the title is retained, although the possession is parted with. In a mortgage, the title is conveyed, subject to be divested if the condition of the mortgage is performed. Cortelyou v. Lansing, 2 Caines' Cases in Error, 200; Jones v. Smith, 2 Vesey."
This distinction is made in Jackson, Morris Co. v. Rutherford,
"There can be no legal mortgage of chattels, however, without a transfer of the legal title to the mortgagee, such as will become absolute on default. Such a mortgage is something more than a mere lien, or security. It is rather in the nature of a conditional sale, and operates to transfer such a legal title to the mortgagee, that to be divested the condition must be discharged in full. Jones' Chat. Mortg. §§ 1, 9. It differs from a mere pledge, in which the possession is parted with, and the title retained. * * * It is true that no technical words are necessary to constitute a mortgage which would be good at law, any more than in equity. Any words would be sufficient which serve to show a transfer of the mortgaged property as security for a debt. 'Whatever language may be used, if it shows that the parties intended a sale of the chattels as security, the instrument will be construed to be a (legal) mortgage.' Jones' Chat. Mort. §§ 1, 8, 9. This we take to be the decisive test, and nothing less will answer the purpose. * * * In Mervine v. White,
In Alabama State Bank v. Barnes,
A bill in equity for account by an owner of corporate stock deposited as collateral security for a loan was denied in Gilmer v. Morris,
"The transfer of the stock in controversy is something more than a mere pledge. It partakes of the nature of both a pledge and a mortgage, because the transferee holds both the possession and the title of the thing transferred. The chief difference between a pledge and a mortgage is, that in the former possession is transferred, and in the latter title, usually unaccompanied by possession. No reason is perceived why the two forms of security may not be combined in one as is here done. Casey v. Cavoroc,
It should be said that Mr. Justice Clopton was not sitting and Mr. Chief Justice Stone stated his concurrence, in which he said of the transaction:
"Whatever class the present transaction may have previously belonged to, when by the transfer on the books the title to the stock became vested in Morris, it acquired the properties of a chattel mortgage; the thing mortgaged being in the possession of the mortgagee."
In Campbell v. Woodstock Iron Co.,
This question was considered in Birmingham Tr. Sav. Co. v. Louisiana Nat. Bank,
"The certificates were issued to him, and he remains registered as owner and holder on the books of the company. The question is, Will the asserted lien prevail over his prior pledge of the stock to the appellee, to secure the payment of a debt contracted on the faith of the pledge? The common law regards shares of stock in private corporations as personal property, capable of alienation or descent in any of the modes by which that species of property may be transferred. * * * So far as the statute declares the shares personal property, it is simply affirmative of the common law. * * * The requirement that a transfer of them must be made or registered on the books of the corporation does not prohibit a transfer in other modes, or render a transfer otherwise made absolutely invalid. It is invalid only as to the particular parties mentioned in the statute. A transfer not made or registered on the books of the corporation may not pass the legal title. But it is not intended to establish a rule applicable only to this particular species of property, prohibiting the creation therein of equities binding the legal title, or requiring that at all times the legal and equitable title must be united in the same person."
The justice proceeds with the discussion of "the pledge to the appellee," Louisiana National Bank, its precedence in point of time to the creation of the debt for the payment of which the Trust Savings Bank sought to assert a statutory lien on the stock in question, and denying such lien on the ground of "notice of the pledge." The statement of facts recites:
"On the maturity of this note (to Louisiana National Bank) it was renewed by said Boddie, and Hudson, the said cashier of Birmingham Trust Savings Company, wrote the written part of said note and indorsed in his handwriting on the back of said note the pledge of 300 shares of stock as collateral security."
The loan was reduced by a sale of a part of said stock, and Boddie executed a second note to the Louisiana National Bank, "with the pledge of the remaining 250 shares of stock indorsed thereon." It is apparent that by the agreement of the parties thereto the loan by the Louisiana National Bank to Boddie was secured by a pledge rather than by a mortgage, and was so treated by Judge Stone.
It must result from the foregoing that in case of a written transfer of the legal title to personal property as security for debt, under such circumstances as to show that the parties intended a sale thereof, whether with or without a delivery of such property the instrument will be construed as a mortgage, though no method of foreclosure is provided in the instrument evidencing the transfer (Boyett v. Hahn,
Further applicable rules of construction of written instruments for the conveyance of personal property that may aid in classification in a doubtful case are that where words are employed that are sufficient to show a transfer of chattels as security for a debt, such instrument will be held a mortgage; that is, if it shows "that the parties intended a sale of the chattels as security." This is the decisive test. Jackson, Morris Co. v. Rutherford, supra; Sims v. Canfield, supra. If there is doubt whether the transaction was a mortgage or a conditional sale, it will be held that the former was the intention of the parties. Robinson v. Farrelly,
Such being the general rules of construction of conveyances of real and personal property, the same should obtain where the subject of the written instrument was the corporate stock of a bank. The shares of stock, not the certificate representing them, are personal property and made the subject of levy and sale. Code, §§ 3470-3475; White v. Rankin,
