Pollard v. American Freehold Land Mortgage Co. of London

139 Ala. 183 | Ala. | 1903

McCLELLAN, O. J.

—

These appeals involve a review of the action of the judge of the city court sitting as chancellor upon, exceptions to the report of the register and master made on reference to state the account between a mortgagor and a mortgagee, in possession for the purposes of redemption, or, failing that, foreclosure. As to the amount of the original mortgage debt and as to interest charges thereon there was no dispute before the master, and the correctness of his finding and report in that regard was not questioned before the chancellor, and, of course, is not questioned here. The correctness of his finding and report as to the amount the mortgagee should be charged for rents of the lands while it, the mortgagee company, ivas in possession of them or chargeable as a mortgagee in possession, and as to the amount such mortgagee should be charged as for waste committed on the one hand, and, on the other, as to the amount the mortgagor should be charged for attorneys’ fees provided for in the mortgage, and for taxes paid on the land during such possession, was challenged by exceptions thereto, and the chancellor in passing upon those exceptions overruled such of them as went to the findings as to waste, as to attorneys’ fees and as to taxes, and sustained those which went to the master’s findings as to the rents chargeable against the mortgagee, and reduced those charges from three thousand to two thous- and dollars per annum for certain five of the years of the mortgagee’s possession, and from an average of about three thousand five hundred dollars to three thous- and dollars for each of the remaining years of such possession. As to the rents, the liability of the mortgagee is not now nor was it before the master or chancellor, denied, but the issue in that respect is one of amount only. As to waste, the contention of the mortgagee is that no formal claim therefor was made in the case, and also that waste was not proved. As to attorneys’ fees, the mortgagor’s position is that the amount thereof was not proved, and hence that nothing should be allowed to the mortgagee on that account, and the contention of the mortgagee is that it should have been allowed three thousand dollars on that account instead of the two-thousand dollars allowance found by the master and confirmed by the chancellor. And in respect of taxes, the mortgagee insists that it should have been allowed all taxes assessed against and paid on the property from the time it went into possession to the time of hearing, whereas the report made and confirmed disallowed its claim in this connection í'ot taxes paid by a purchaser from it during the years lie held the land as such purchaser. There are also brought under consideration some questions as to the computation of interest on taxes paid and on attorneys’ fees allowed, and upon the failure of the register to alhnv the mortgagee credit for repairs it claimed to have made, and for expenses incurred in the collection of rents.

We will first consider questions which arise upon those parts of the decree whereby the findings and report of the master as to certain items are confirmed; and in approaching these matters it is well to state and have in mind the familiar rule which obtains here in respect of revising the decree in so far as it sustains the findings of the master on evidence adduced before him, and confirms his report thereon. “The rule is,” said Chief Justice Walker in Mahone v. Williams, 39 Ala. 202, 221, “to indulge all reasonable presumptions in favor of the register’s décisions upon questions of fact, such as those now under consideration, and not to reverse it unless clearly satisfied that it is wrong. Judge Story goes so far as to say, ‘that the court must be clearly satisfied that there has been unquestionable error.’ ” And he illustrates the application of the rule thus: “The testimony as to the annual value of the slaves is conflicting and voluminous: We have made an examination of it. No two minds would ever draw the same conclusion from it. As the result of our examination, we feel no full conviction that the register’s conclusion is wrong. His conclusions are not unreasonable. It does not appear to us that they are plainly wrong; and, therefore, wo Avill not reverse the chancellor’s decree confirming the report.” On this subject, it was said in Jones v. White, 112 Ala. 449, 451: * * * “To say the least, we cannot affirm that the chancellor erred in overruling the exceptions and confirming the report. The evidence before the register, consisting for the most part of the oral testimony of witnesses, and being presented to the chancellor and here in written form, the rule laid down in Woodrow v. Hawving, 105 Ala. 240, and also the general rule to be observed in reviewing findings of fact by the register on reference. Mahone v. Williams, supra, requires the chancellor and requires ns to indulge all reasonable presumptions in favor of the register’s decision upon questions of fact, * * * and not to reverse it unless clearly satisfied that it is wrong.” The general doctrine that the register’s conclusion upon evidence should not be disturbed unless it is “clearly wrong,” “palpably erroneous,” “plainly and palpably incorrect,” etc., etc., and so appears after the indulgence of all reasonable presumptions in its favor, has been declared also in the following cases: Kinsey v. Kinsey, 37 Ala. 393; Lehman v. Levy, 69 Ala. 43; Winter v. Banks, 72 Ala. 409; Glover v. Hembree, 82 Ala. 324; Trust Co. v. Wood, 108 Ala. 85; Warren v. Lawson, 117 Ala. 339; Speakman v. Burleson, 123 Ala. 678. The effect of this rule in cases of findings upon the testimony of Avitnesses, oral evidence, considered in connection with the doctrine of Woodrow v. Hawving, supra, is to put the register’s decision upon the same footing as the verdict of a jury, and to authorize the reversal of a decree confirming it only upon such a state of case as Avould require a trial court to grant a motion to set aside the verdict of the jury and grant a neAV trial. — Cobb v. Malone, 92 Ala. 630; Bank v. Chaffin, 118 Ala. 246.

This rule for the examination and consideration — the revieAV — of decrees confirming the register’s finding of fact, has application here to the charge of eight hundred dollars for Avaste made against the mortgagee. Having this rule in mind and the testimony of the Avitnesses Huggins and Barnes going to show that the denudation of the place of timber by Armistead reduced the value of it to the extent of from eight hundred to fifteen hundred dollars, we cannot affirm, even though there Avas strong evidence to the contrary, even to the effect that the removal of the timber increased the value of the lan'd, that the chancellor erred in confirming the report of the register as to that item.

What we here say is not intended to foreclose certain objections to the allowance of this item based upon other considerations than the testimony as to this cutting of timber being waste, etc.; but we proceed to consider tliose other objections. The first of them is that the mortgage company is not liable for this waste for that it was not committed by the comjiany directly or indirectly, but by Armistead for whose acts in that regard the mortgagee is not responsible. This court on the former appeal in effect held, or at least proceeded upon the assumption, that the mortgage company was liable for waste committed by Armistead, and we think that ruling or assumption was correct. It may well be that a mortgagee in possession is not liable for waste committed by a tenant, a party to avIioiu he has merely rented the land, and who hás only the right of a tenant, since it is the mortgagee's duty to rent the premises; but if the mortgagee should assume to do -more than this duty imposed upon it, and in and by the contract of rental had undertaken to authorize the tenant to do acts which constitute waste as between the tenant and the mortgagor, and waste under these circumstances were committed by such tenant, unquestionably the mortgagee would be in pari delicto with the tenant, and himself responsible for the injury thus done to the laud. And if possible, it is a clearer case against the mortgagee when he repudiates his duty to rent the premises, and, wholly apart from any rental contract, assumes to authorize another to waste the lands, directly or indirectly. The mortgagee here, instead of renting the lands, undertook to arid, as far* as it was competent to that end. did, sell them to Armistead. The status which it thus assumed to confer upon Armistead involved as between the company and Armistead the right on the part of the latter to denude the place of timber and do whatever else he saw fit with it; the rights of the owner. The transaction was in effect an authorization from the company to Armistead to cut the timber from the lands of the mortgagor, involving a repudiation of the company’s duty to rent the land and a violation of its duty as a mortgagee in possession to conserve the integrity of the property. It is clear to us that the mortgagee is liable for the Avaste it thus, as far as lay in its power, authorized Armistead to commit.

Another objection put- forward here to the allowance to the mortgagor of this item of waste is that of damages oi- compensation for waste are not claimed in her cross-bill for accounting and redemption. We do not find that such claim is presented by the cross-bill, and, for the purpose in hand, it may be conceded that, abstractly speaking, a mortgagor would not be entitled to credit for waste on bill or cross-bill for accounting and redemption exhibited against a mortgagee in possession in the absence of all claim in the bill or cross-bill of damage's on that account, this, however, will not avail the mortgage company on this appeal. The mortgagor’s claim on account of waste has all along been treated as being properly in the case. It was one of the matters litigated on the first reference, and it was discussed and considered, on its merits on the appeal from the decree of the chancellor on the first report of the register. On the reversal of that decree and remandment of the cause, a second decree of reference was entered and in that decree the register is directed to allow the mortgagor damages for any waste that the evidence may show liad been committed or permitted by the mortgagee. That direction is not assigned as erroneous. The register obeyed the decree in this respect, found the damages to be eight hundred dollars, and allowed that sum .to the mortgagor. It does not appear that this allowance was <-! lenged in the court below on any other ground than that the evidence did not show any damages had resulted from the felling of timber which the register found to be waste and to have injured the estate in the sum al-1 o-wed by him. The objection here made to this allowance, based on the failure of the cross-bill to aver waste, etc., comes too late.

The register allowed the complainant two thousand dollars for attorneys’ fees. The mortgagor excepted to this allowance on the ground that the value of attorneys’ services she was chargeable under the mortgage had not been proved. The mortgagee excepted to the allowance on the theory that the evidence showed it was entitled to 'an allowance of three thousand dollars. The chancellor overruled the exceptions on either hand and confirmed the register’s report in this regard. The mortgagor’s position on this matter is untenable. There was evidence before the register, and also before the chancellor, authorizing an allowance of counsel fees by the former and the confirmation of an allowance on' that account by the chancellor. All the papers in the cause showing all the proceedings that had taken place, and evidencing the character of the litigation, the importance of it as to amount, and, in a way, the character and extent, of the services performed by plaintiff’s counsel to the end of foreclosing the mortgage and collecting the debt secured by it, were before the register and again before the chancellor, and proper to be considered by them. — Stephenson v. Allison, 123 Ala. 489. There was also before the register and afterwards before the chancellor testimony on the part of the witnesses Massie and Bradshaw tending to show the value of such services of complainant’s solicitors. Upon the case thus presented, it was for the register in the first instance to determine Avliat Avould be a reasonable allowance for counsel fees, subject, of course, to review by the chancellor on exceptions taken. That there was a large sum due on the mortgage debt Avhen foreclosure proceedings were begun is not questioned, nor is it denied that such proceedings were necessary Avhen they were instituted. It would seem to be of no consequence to complainant’s right to counsel fees if the necessity for an actual foreclosure} should have ceased because of the application to its debt of the rents of the mortgaged premises, the possession of AArhic.h was acquired as an incident to the sale and purchase by the mortgagee in an attempted foreclosure under the power of sale. But that is really an abstraction in the case. As to the amount allowed for counsel fees: We cannot consider the amount, which, should have been allowed as an original proposition. We, under the rule stated above, must affirm the decree of the chancellor confirming the allowance made by .the register unless it is plain and clear to us that the allowance was incorrect in amount. We are unable to say that the register's finding tras clearly erroneous. It is true that the only witnesses who testified as to the value of the services in question, placed that value at three thousand dollars, and the register found it to lie only two thous- and. But this testimony ivas the mere estimates,• opinions of the witnesses. Their judgment cannot be substituted for that of the register. He was not bound to find in accordance with their estimates. As to one of those witnesses there were circumstances calculated to bias him favorably toward a high estimate. As. to the other, it was not altogether clear but that his estimate Avas based in paid, upon services for which the mortgagor was not liable. These and other considerations Avere proper to bo entertained by the register in determining the ultimate aa eight and effect to be accorded the estimates of these witnesses; and upon them and the whole case as dcweloped before him, it Avas his poAver and duty to determine for himself what Avould he reasonable compensation to he a.lloAved the mortgagee in this connection. United States v. McGlue; 1 Curtis C. C. 1, 9; Forsyth v. Doolittle, 120 U. S. 73, 77; Rogers Expert Testimony, § 207; Tennessee & Coosa Railroad Company v. Danforth & Armstrong, 112 Ala. 80, 93-4.

The professional services for the value of Avhich this alloAvance of two thousand dollars Avas made, Avere rendered throughout a period of about fourteen years extending doAA'ii to and including the time of this reference and Avere constituted in part of services of the mortgagee’s attorneys on this reference. There Avas, however, evidence going to sIioav that the mortgagee paid its counsel in advance, for all these sendees, paid them as far hack as the year 1889, more than the sum noAV allowed by (die register, for services commencing then and con-tinning down to 1902; and upon this state of case it is contended that the register should have alloAved the mortgagee interest on the t.Avo thousand dollars attorneys’ fees from 1889 to the time of stating the account. No authority is cited in support of this proposition and probably none exists. The mortgagor is bound in such case no more by or on account of the time the expenditure is actually made than by the amount actually paid at any time for such, services. In respect of amount lie is liable for reasonable fees wholly regardless of the sum the mortgagee may have contracted to pay, or in fact paid. And so in respect of the time of payment by the mortgagee. The mortgagor, to put the case most strongly against him, cannot be held to reimburse the mortgagee for fees paid as of a given date unless it be shown that it was reasonably necessary for the payment to be upon that date. Assuming without deciding that where it is reasonably necessary for a mortgagee to pay his counsel a retainer at the institution of a foreclosure suit, the mortgagor who in the end is adjudged to be liable for ilie sum so paid may be held also to nay the interest thereon, it by no means follows that where the mortgagee without necessity pays in advance for the services of counsel throughout the litigation, extending, as here, (mu* a period of more than a dozen years, the mortgagor is liable for interest on such premature expenditures. Such a charge could byno means be said to be reasonable, or necessary to the adequate reimbursement of the mortgagee for reasonable expenditures toward the foreclosure of the mortgage. It avouIcI be manifestly unreasonable and inequitable to charge this mortgagor interest from 1889 to 1902 on attorneys’ fees for services rendered in 1902 and in and about the reference unon which it is sought to have the charge made; and so, in less flagrant degree only, in respect of all services rendered subsequent to 1889, and which constituted the main part of all the services rendered by mortgagee’s counsel in the case. If any part of the two thousand dollars was nec-essarilv paid in 1889, the evidence neither shows the fact of such payment nor the sum then necessarily paid, so that no case is made, even under the assumption upon which we are proceeding, for charging the mortgagor with any interest in this connection.

The payment of taxes bv the mortgage company for each of the several years the company was actually and directly in possession as mortgagee, were necessary payments for which it was entitled to credits against the charges for rent for each of those years; and credits to the extent of the sums so paid were allowed by the register, and their allowance was confirmed by the chancellor. The company, however, insisted below and contends here that it should have been allowed interest on the several sums expended for taxes from the dates of such payments, respectively, to the times at which they were applied in reduction of the rent charge for the current year: In a given year, for example, the taxes were paid in March and the rent charge was made as of January 1st following, the rent charge being reduced as of that time by the sums actually paid months before for taxes; and the position of the company is that the' interest on the sum so paid in March to the time of the allowance as a credit on the. rents, should also have been allowed the company in further reduction of the rent charge then made. We are of opinion that this position is well taken. ■ These payments on account of taxes were necessary to be made when they were made. From the time they were made, respectively, to the time the rents became due in the respective years, the mortgagee was deprived of the use of the tax money so paid, anil its use enured to the benefit of the mortgagor in the sense that they protected her interests as well as those of the mortgagee in the premises. The mortgagee is not fully reimbursed for his expenditures on account of taxes unless he is allowed interest on such expenditures from the times they are made to the times when they are credited on the rent charges against him; and he is entitled to full reimbursement, to be made whole, in this regard. The account stated must be so modified as to accommodate' these several items of interest as alloAvances to the mortgagee. We do not understand that this question was determined on the last appeal. What was then said as to .interest on sums paid for taxes seems to have had reference to a claim for such interest down to the time of reference and not to the period from such payment to the succeeding date of charging the rents for the current-year.

It was decided on the last appeal tliat the mortgage company was not entitled to credit for taxes paid 03^ its vendee Armi stead, and we adhere to and reaffirm that ruling. The stipulation in the contract of sale which the company undertook to make to Armi stead that the latter should keep the taxes on the land paid np was intended merely to protect the company’s supposed lien for purchase money. It, was in no sense a contract to pay the taxes for the company as in discharge of its duty to pay them, for as between it and Armi stead no such duty rested on the company, nor did it involve in any event the liability upon the company to pay back to Armi stead the money he should pay on account of taxes. The company has not paid these taxes directly or indirectly. Armi stead did not pay them for it in any sense that would involve a liability on its part to repay him, and it can never be made liable for the money so paid. Clearly it is not entitled to credit for the money so paid by Armi stead.

We cannot affirm that the register was plainly in error in his conclusion that the evidence failed “to show what repairs were made, if any, and the value of the same,” and hence, we find no error in the decree of confirmation in respect of the mortgagee’s claim for repairs.

As we shall see further on, the mortgagee is chargeable in respect of rents upon a consideration of the rental value of the lands taken as a whole and rented to one person. It is not shown and we cannot believe it to be necessary for an individual owner of such plantation as this, residing in the county where it is situated, to employ and pay an agent to rent it out in solido to one tenant or to collect the rents from such tenant. And this is the standard by which to determine whether the mortgagee here should be credited with commissions paid by it for such services of its agents. Of course, it was necessary for this mortgagee to have this business done by an agent, because it was a corporation and a non-resident corporation at that; but these fortuitous circumstances cannot be made the basis for the imposition of burdens upon the mortgagor beyond such as would have been in* cident to the transaction had the mortgagee been a resident natural person. As was said on the former appeal, rhe mortgagor “is not to be prejudiced because the mortgagee was a non-resident corporation and ivas compelled by that fact to pay agents for attention to rents.” (132 Ala. 164. At least we may say that the register’s conclusion that no reasonable necessity was shown by the evidence to exist for employing and paying agents in and about the rental of the land cannot be affirmed to be clearly wrong; and lienee our concurrence in his dis-allowance of the mortgage company’s claim for expenses incurred in that connection.

There is left for review those parts of the decree which determine the amounts chargeable against the mortgagee as rents for the lands since the mortgage company took possession of them early in 1889. A question much discussed in this connection is as to the mode of renting the propetry incumbent upon the mortgagee in possession, that is to say, whether it was the company’s duty to let the plantation in parcels to farm laborers severally, charging them so much for each parcel graduated by the number of mules each tenant employed, the average per mule being from twenty-live to twenty-seven acres, or whether the mortgagee’s duty could be fully performed by leasing the plantation as a whole to one man. The evidence showed that both methods of renting were in vogue with ordinarily prudent and diligent owners of large tracts of land in that country. It was also shown that the renting in parcels to tenant “croppers” -was productive ordinarily of considerably larger total net rent than the other method, and that it was practicable in a sense for the company thus to have farmed out this plantation; but it also appeared that this method involved a certain care and surveillance on the part of the landlord, certain looking after and overseeing the numerous tenants at the expense of time and money to the landlord, and might also involve a necessity for the landlord to advance supplies to the tenants to enable them to plant, cultivate and gather crops, and further that none of these infirmative considerations pertained or was incident to letting of the place as a whole to one tenant for a lump rental. The register states in a collateral and incidental way in the course of his report that his findings in respect of the rents to be charged against the company are based upon the evidence as to the rental value of the place rented as a whole and to one tenant, and the chancellor’s decree in iliat regard proceeds upon the same basis of computation. We do not doubt that that is the correct basis. We are by no means prepared to say on the showing-made that it was the comnpany’s duty to rent the plantation in parcels. To the contrary, our opinion is that ■its duty in the premises would have been fully discharged by exercising- the care and diligence an ordinarily prudent and active owner would have exercised to lease the place as a whole to one tenant ; and its liability to account for rent is to be measured accordingly.

For the first five years of the period in respect of which the company is to be treated as a mortgagee in possession, it rented the plantation, as a whole, and received the stipulated rentals. The sums it so received are to be taken as measuring its liability to account to the mortgagor for the rental values of the lands for those years, unless such sums were materially less than such values, and it is made to appear that the company’s failure to contract for and realize fair rental values was due to willful misconduct or default, or gross negligence on its part. Some expressions of this court have led to more or less confusion in the interpretation and application of the rule just stated. Thus, in Gresham v. Ware, 79 Ala. 199, it is said: “On a bill to redeem, a jnortgagee in possession will not be held accountable for anything more than rents actually received, unless there has been willful default or gross negligence, which in such case, is the measure of reasonable diligence;” and so, on the former appeal in this case, (132 Ala. 161-2),- it is said that in such case the mortgagee is liable for the rents received, and that “for loss of rents and profits he is liable to the extent the loss results from his willful default or gross negligence, which in such case is defined, as a failure to use reasonable ' care and dili-(jenceTlie expression to which we refer are those we have italicised. It appears at a glance that they might well be construed to mean that any want of reasonable care and diligence in the premises, though amounting to simple negligence only — mere inadvertance — is the equivalent of willful misconduct or of gross negligence within the intent and purview of this rule. That is not the law, and it is not the idea intended to be conveyed by the language we have quoted. An accurate statement of the doctrine would be this: When a mortgagee holds possession of the mortgaged premises he is chargeable with the fair rental values of the property. . The fair rental values, generally speaking, are such as an owner of ordinary prudence could secure by the exercise of reasonable, diligence. When the mortgagee leases the premises and reserves and receives rent therefor, prima fade he has acted with reasonable caré and diligence, and, therefore, prima facie, he will be charged only with the rent he has so received: All which is to say that in the absence of proof of willful default or gross negligence the rent received by the mortgagee in such case is to be taken as measuring the result of the exercise of due care and diligence, and beyond such result he cannot be charged. To charge him as rental value a sum in excess of what he has received as rent upon the ground that an ordinarily prudent and diligent owner would have received such larger sum, would be to charge him upon the same considerations which obtain where the lands have not been rented at all, and to give no operation or effect whatever to the presumption, which the law indulges until it is shown-that the sum is less than the rental value and that his failure to secure such larger amount was due to his gross negligence or willful default, that the sum received was all that reasonable care and diligence could have secured. The register was misled by the expressions, to which we have adverted to the conclusion that the company was chargeable with a much larger sum for each of the five years it rented out the land than that received by it, upon the express ground that “a provident owner could have realized by exercising reasonable caré and diligence” sucli larger sum per annum, wholly without reference to the question whether the company’s failure to secure the larger sum was due to willful default or gross negligence on its part. As the register’s findings of the amounts to be charged against the mortgagee for the five years now under consideration were thus based upon an error of law, and as he did not find as a fact that the company had been guilty of willful default or gross negligence, these findings came before the chancellor on exceptions to the report unattended by any presumption of correctness; and the question of willful default or gross negligence vel von was at large before the chancellor and for original determination by him. As we have seen, the chancellor reduced the allowance of three thousand dollars per annum made by the register to two thousand dollars per annum. This was the sum received by the' company for four of the five years in question, and for the remaining year of this period the company received only one thousand five hundred dollar’s as rent for the place. The chancellor does not expressly pass upon the question whether the company was guilty of willful default or gross negligence in not securing more rent; but the decree in this connection is virtually a decision, or necessarily involves a conclusion, acquitting the mortgagee of such fault, since if the charges for those years was to have been made on the contrary conclusion it would necessarily on the evidence have been materially greater than two thousand dollars per annum. But whether the chancellor decided that question, directly or indirectly, or not, it is before us now as an original issue, and to be determined without regard to what occurred below. We deem it unnecessary to set forth or to discuss the evidence bearing upon it; but will content ourselves with stating our conclusion that it is not made to appear that the failure of the company to secure more rent for the place during the years 1889-1893, inclusive, than it contracted for and received was due to willful default or gross negligence on its part. It follows, of course, that the mortgagee should have been and is now to be charged only with the rent if received. These amounts were for 1889, $2,000, for 1890, $1,500, and for 3891, 1892, and 1893, severally, $2,000. The eoiiipany not having been gniltv of willful default or gross negligence in the premises, the chancellor erred in charging it two thousand dollars for the year 1890: That item of charge should have .been fifteen hundred dollar,s, the amount contracted for and received by the mortgagee. The decree must be modified so as to debit the mortgagee with the smaller sum as the rent for that year.

The decree in so far as it sustains the complainant’s exceptions to findings of the register of the rental value of the plantation for each of the years 1894-1902, inclusive, and fixes the rent charge for each of those years at a less sum than that found and stated on the reference, remains to be considered. We apprehend the general rules of consideration obtaining in this court where the chancellor has sustained exceptions to the findings of the register in a matter of this sort, and reduced the amounts of such findings or disallowed them altogether as items in the account to be these: First, where the register proceeds upon correct principles to ascertain-on testimony before him the amount of an item on the account to be stated by him, his conclusion, as we have seen, stands upon the footing of the verdict of a jury, and should not be disturbed by the chancellor unless it is plainly erroneous. Formerly the conclusion of the chancellor on such and all other matters of fact brought with it to this court on appeal a prima, facie presumption of correctness, which for the purpose of review here displaced the presumption of. correctness which attended the register’s finding before the chancellor, so that this court would affirm the decree sustaining exceptions to such finding unless after indulging the presumption just referred to of the correctness it still appeared here to be erroneous. The statute now, however, provides that this court shall give no weight to the decision of the chancellor upon the facts, (Code, § 3826); and from this it would seem to follow that such finding of the- register although it has been disallowed or modified by the chancellor, comes before us on appeal for original review, attended by the same presumption of correctness that waited on it before the chancellor and that it should not be disturbed here unless, that presumption to the contrary notwithstanding', it appears to us to be clearly erroneous. The second rule if it may be called a rule rather than, an exception to the first rule stated, or, perhaps yet more accurately, an illustration of the scope and limitations of the first rule — is' this: When it appears from the report that the register has proceeded upon incorrect principles to the conclusion he reaches and reports, and’in consequence his finding is not wholly the result of his consideration of the testimony upon the issue, but is referable in a material degree to a mistake of law or the misapplication of law to the facts before him, his finding carries no presumption of correctness with it before the chancellor, nor brings any such presumption here; and the matter is to be determined de novo by the chancellor, on exceptions taken, and again by this court, on appeal, wholly regardless of the conclusion reached and reported by the register.

The findings of the register of the rental values for the years 3894- to 3902, inclusive, during which Armis-tead had possession of the premises as upon a sale by complainant and for which the company is liable for the fair and reasonable rental value of the lands, fall within the category just stated: They were reached upon incorrect basis of consideration and calculation and result from mistake or misapplication of law.

In the first place, it is fairly inferable from the report that the findings in this connection were to some extent at least based upon a consideration of the amount of rent that could have been secured by farming the lands out to many individual tenants at so much for each mule crop, which, as we have seen, was an improper theory upon which to assess the rents chargeable against the mortgagee. And in addition to that — a consideration which would suffice for the purpose in view in and of itself — it appears from the report that the findings were based upon a consideration of the enhanced rental values of the premises due to permanent improvements made by the vendee of the mortgagee, and were thus fixed by the register contrary to the law declared on the last appeal and contrary to the decree of reference. It was found by the register, and the fact is not controverted, that Arnfistead made improvements during each of the years 1894 to 1898, inclusive, ranging in value from $175 to $1,405, and aggregating $3,580. These were permanent improvements, of a character to give additional rental value to the place, not only for the year in which they were severally made, but as well for every year after that throughout the period of accounting. In ascertaining the yearly rental values without these improvements the register first found such values with these improvements and deducted therefrom for each year the amount the improvements of that year — made in that year — enhanced the rental value for that year, but he took no account of the augmentation of the rental value of succeeding years due to the permanent improvements of the particular year. For illustration: Arnfistead built a barn and made other improvements in 1894, all of a total value of $1,015. The register found that the rental value of that year with these bet-terments was $3,500, and that, a certain part of this value for that year was due to the betterments, and this sum he deducted from the $3,500 and charged the mort-agee with the balance. These betterments added a like siirn to the rental value for the next year, 1895, and for each succeeding year, and having regard to them the register found the rental value of the next and each succeeding year to be $3,500, but he did not deduct from the rent to be charged the mortgagee that part of the $3,500 which was due to the betterments made in 1894. The same method was pursued by him in respect of each of the other years in which improvements were made: and in respect of the last four years of the accounting period, 1899, 1900, 1901 and 1902, during which no improvements were made, he charged the mortgagee with the gross rental value enhanced as it was by all the permanent improvements of the preceding five years, without any deduction whatever of that portion of the gross rental value which were referable to the betterments made by Armistead, and for which the company was not liable at all. The findings of the register of the items of charge as rent for the years 1894 to 1902, inclusive, were, it thus appears, the result of a mistake of law or of a misapplication of the rule, of liability declared in the opinion of this court and in the decree of reference; and for that reason the question as to what the mortgagee should be charged as rent, for those years was entirely open before the chancellor and is entirely open before us on the evidence adduced on the reference and reproduced, on exceptions taken before the chancellor and now again here.

It would serve no good purpose to discuss the evidence at length in this opinion. Both the register and the chancellor found incidentally that the number of tillable acres of land in the plantation has all along been fifteen hundred, or as much as fifteen hundred. A careful consideration of the whole evidence, with all the light thrown upon it by the exhaustive briefs of counsel, satisfies us of the correctness of that conclusion, that is to say, we are reasonably satisfied from the evidence and without reference to the conclusions in this connection of the register and the chancellor, that apart from the lands cleared by Armistead — about one hundred and seventv-five acres — the place contains fifteen hundred acres of tillable land. It is further clear to us on the evidence that two dollars per acre is a fair and reasonable rental for the lands for each of the years 1894 to 1902, inclusive, not considering the enhancement of its rental value due to betterements made by Armistead during that period, or, in other words, that the complainant should he charged with the sum of three thousand dollars as rent for each of those years as it Avas charged by the final decree below.

The decree so far as brought in question on the appeal in chief, that of the complainant in the cross-bill, must be affirmed. On the appeal of the complainant in the original bill, the mortgage company, the decree will be modified as indicated in the foregoing opinion, and as modified will be affirmed.

Case Details

Case Name: Pollard v. American Freehold Land Mortgage Co. of London

Court Name: Supreme Court of Alabama

Date Published: Nov 15, 1903

Citation: 139 Ala. 183

Court Abbreviation: Ala.