American Freehold Land Mortgage Co. v. Pollard

127 Ala. 227

• Court: Supreme Court of Alabama
• Decided: November 15, 1899
• Status: Published

Opinion

MoCLELLAN, C. J.

Adopting in the main the statement of the cause embraced in the opinion of the chancellor, the case for the purpose of this appeal may be summarized as follows: The mortgage company, after default, purchased the mortgaged premises at its own foreclosure without authority to that end in the mortgage; and subsequently within a few months, in March, 1889, filed this bill against. Mrs. Pollard, the' mortgagor, and others for the purpose (among others) of compelling her to elect to affirm or disaffirm the purchase. The mortgage, exhibited to and made a part of the bill, contained this provision: “If it shall become necessary to employ an attorney to foreclose this mortgage, they (meaning the mortgagors) will pay such reasonable attorney’s fees and all' other lawful and proper costs and expenses that may be incurred by the mortgagee in that behalf, and this mortgage shall stand security for the same.” The bill in its original form alleged that “orator employed certain attorneys for the purpose of making said sale and foreclosing said mortgage, and to obtain their legal advice and counsel with reference thereto, and thereby became liable to pay its said counsel twenty-three hundred dollars as counsel fees.” The prayer of the bill was that respondents be required-to elect whether they would -disaffirm and avoid the purchase by complainant,' and offered in the event of disaffirmance to do equity generally, and in particular to account for rents. The further prayer was, still in event of disaffirmance, for foreclosure for the amount of the debt secured by the mortgage and necessary expenses, “including your orator’s said attorney’s fee for foreclosing this mortgage as well as for filing this bill.” There was a.prayer for general relief, but no specific relief Avas prayed in the event of an election by respondents to confirm the purchase, nor Was there any offer general or special to do equity in the event of an election by respondents to' confirm. On August 12, 1889, the respondent, Mrs. Pollard, answered the bill and in that answer definitely elected to ratify and confirm complainant’s purchase. The cause, then involving other issues, was prosecuted to a final decree, from which an appeal was taken to the Supreme Court, where it was decided that complainant was not entitled to attorney’s fees for filing the bill and prosecuting the suit. The complainant then amended its bill by -striking out its claim' for attorney’s fees for filing this bill, and the cause again progressed to a final decree. Another appeal Avas taken to the Supreme Court, and it was then decided that complainant was entitled under the mortgage -to attorney’s fees for filing this bill and prosecuting- this suit, but that no decree to that effect could.be rendered because there was no prayer in the bill for such relief in the event of an affirmance of the sale by the respondents. And then complainant again amended its bill by striking out these Avords: “And orator further prays that, in case the said defendants, -or either of them having a right to disaffirm said sale, should elect'to do so, an account may be taken before the1 register of this court for ascertaining the amount of principal and interest due upon the' said note and interest eoiipons secured by' the mortgage so • given to orator as aforesaid, including the necessary expenses incident to advertising and making said sale ■ of said mortgaged premises • and' including your orator’s said attorney’s fees for foreclosing said mortgage under the power of sale contained therein; as well as for filing this bill,” and inserting in lieu' thereof the fol-1 lowing words:' “Orator further prays that the account may be taken before the register of this court for ascertaining the amount of interest and principal due upon said note and interest coupons secured by the mortgage so given to' your orator, as ■ aforesaid, including the necessary expenses.incident to advertising"and making said sale of said mortgaged premises,' and including your orator’s attorney’s fee ‘for foreclosing ' said mortgage under the power of sale contained therein, as well as for filing this bill and prosecuting this suit.” The prayer of the bill in so far as it calls- upon respondents to elect, has never been changed in any respect. Subsequently, On March 18,1899, Mrs. Pollard filed her answer- to the bill as last amended,- which answer she makes a cross bill, and-therein she incorporates these Avords:' “And this defendant having never fully answered said original bill' and ‘ all amendments thereto, in accordance with the several prayers therein, hereby strikes out all matters stated, alleged, or averred in any of her answers, or other pleadings heretofore filed by her, which’ are inconsistent with or fepug.nant- to this answer.” And she then in said ansAver and cross bill 'again elected'' between 'affirmance and disaffirmance of said sale under the power and purchase by complainant in these words: “This defendant now - in consequence of and answering the • Said1 bill • as last amended, now exercises her right to elect to disaffirm ■or to affirm said sale, elects to disaffirm and does hereby disaffirm the said sale so made by complainant finder the poAver contained in said mortgage.” This cross bill ' avers that Mrs. Pollard is the OAvner of the premises involved, the complainant is in posession under said voidable sale and receiving the rents and profits, as indeed is shown by the original bill, that electing to disaffirm said sale she is.entitled to redeem from the mortgage, etc., etc., and the prayer is that she be let in to redeem, that an account be taken of the mortgage debt, and of the rents received by the mortgagee, that said rents be applied to said debt and she offers to pay any balance found due thereon, etc.,' etc. The respondent in the cross bill, the Mortgage Company, complainant in the original bill, demurred to the cross bill and also moved to dismiss for want of equity', on the grounds, in substance, first, that the election to affirm the sale first made by Mrs. Pollard was conclusive upon her and irrevocable, especially as decrees final in their terms had been entered in the cause ascertaining and declaring such election by her; second, that she had lost her right to disaffirm the sale and purchase by the mortgagee through laches in delaying for more than two years after the sale, to assert, it. There was also a plea by respondent in the cross bill setting up a sale of the premises by the complainant after Mrs. Pollard’s original election to affirm the sale, another such election by her after the sale with knowledge of it on her part, improvements, etc., etc., by the purchaser -at that sale, etc., etc. This plea was held insufficient, and the motion to dismiss for want to equity and the demurrer were overruled; and on final submission there was a decree granting the relief prayed for 'in Mrs. Pollard’s cross bill.

The two. former decrees rendered by the city court in this cause are to be left entirely out of view on this appeal. They were each reversed and annulled on-appeal to this court (103 Ala. 289 and 120 Ala. 1), and thereby were utterly destroyed for all purposes;, the judgments here leaving the case to stand as if they had. not been rendered. It was even said on the last appeal, though unnecessary to be .said, that “the reversal of the decree of the city court opens the. case, and. gives the court jurisdiction of all interlocutory orders and decrees.”-— American Freehold Land Mortgage Co. v. Pollard, 120 Ala. 1, 8.

• Leaving those expunged decrees out of view, it is plain that the original bill when filed and as it stood all through the litigation, down to and including the time the final decree now appealed from was entered, presented the case of an imperfect and voidable foreclosure of a mortgage under a power of sale contained therein, the infirmity resting on the fact that the mortgagee, without power so to do being .conferred.upon it by the instrument, became the purchaser at its own foreclosure sale; and from the first to the last the bill called upon the mortgagor to elect’ whether she, in the exercise of the right resulting to her from the infirmity stated, would affirm said sale, and thereby perfect the attempted foreclosure, or disaffirm the same, and there-' by wholly avoid and annul the foreclosure, leaving the parties in the attitude and relation of mortgagor and mortgagee before foreclosure to each other. And, moreover, the averment was all along in the bill that the complainant was in .possession and in the perception of rents; and from the time of filing to this day it has contained an offer to account for rents as mortgagee in possession in the event the respondent elected to dis-affirm its purchase. And, too, all along it has prayed a foreclosure of the mortgage in said event of an election by the mortgagor to disaffirm said sale. And all these matters were none the less in the bill and to be taken as parts of it at the last hearing because of amendments which seem to ignore them and proceed apparently upon a theory of relief inconsistent Avith them. They should have been stricken if complainant intended the amendments to displace them. — Brackin v. Newman, 121 Ala. 311; Taunton v. Brooks, 46 Ala. 619; Adams v. Phillips, 75 Ala. 461; American Freehold Land Mortgage Co. v. Sewell, 92 Ala. 163.

On this state of case, it is clear that if for any reason Mrs. Pollard had. made no election in the premises up to the time of the filing of her last answer, Avhich she made a cross-bill, her right to elect then was entirely free and unfettered and could, have been exercised as well by disaffirmance as by an .affirmance of the sale. For while a party having this.right of election must exercise it Avithin a reasonable time — aud.such time by analogy to tbe statutory period for redemption after tbe-foreclosure has been declared to be two years in ordinary cases — this rule has no application, and in reason can have none, in tolling the time of ' election actually made in response to a bill filed for' the' pur13 ose of having the election made. So long as the bill calls for an election to be made by the respondent, surely the complainant cannot be heard to say that' the time for election has passed': He cannot at once call for action and insist that no action can be taken. ' Cases might well occur in which, because of Other matters coming up for settlement under such a bill, it would be impracticable for the respondent to' elect advisedly within the two years of the ordinary limitation; and that, they may and do arise serves to show the necessity for the application to this class of cases' of the general principle' that in the absence of some intervening' estoppel, or other matter puis'darrein continuaoice, 'the' primary rights of parties in litigation' are to be determined as of the time the suit is begun, and, however long drawn out thé cause may be, whatever' rights the respondent had at the. beginning he has also at the end, unless since the beginning he has in some way, apart from the mere efflux of time, lost his original rights. And this without reference to the cómpMñant’s attitude throughout the pendency of the cause of calling-on the respondent to assert the fights he had at the institution of the suit. Indeed, we apprehend that a mortgagee purchasing without authority might reinvest the right of election to affirm or disaffirm in' the mortgagor after it had been lost by the lapse of: two years without assertion, by filing a; bill then tb settle the title and therein offering this option to the mortgagor, thereby securing to the mortgagor a right which he did not have at the institutibn of Ibe: suit, and giving him time and opportunity to exercise it after-the lapse of the original period of limitation. — McHan v. Ordway et al., 76 Ala. 357. And upon principle iff is held that “if a mortgagee in possession after the equity of redemption has become barred by lapse of time',' admit, either by word or act, that his mortgage is still a subsisting lien, tbe bar previously existing will be considered to have been waived, and the equity of the mortgagor ■ revived.” And that “an admission having this effect will be considered to have been made if the mortgagee institute proceedings, either by suit or otherwise, to foreclose his mortgage, the reason assigned being that such an act is entirely inconsistent with any pretention On -his part that his possession had ripened into a title.” — Chapin v. Wright, 41 N. J. Eq. 438, 443-4: And surely where the mortgagor has an existing right to treat the mortgage as a subsisting .security merely or as having been foreclosed he cannot be and is not cut off' from the exercise of that right by any lapse of time so long as the -mortgagee by a bill filed before the right is barred continued to call on him to exercise it. So that we conclude in this connection that no mere lapse of time after this bill was filed and while it is pending could destroy Mrs. Pollard’s right to elect now to disaffirm the sale and purchase by -the complainant, and she has that right if it has not been lost to her by other -cause than the lapse of time.

It is insisted for appellant that it has been so lost. It is made to appear that by her answer to the original bill' Mrs. Pollard made and declared her election to affirm the -sale if the mortgagqttself, which she attacked as not binding on her, sMúl-obe held to be valid and binding,, and further that after the validity of the mortgage had 'been adjxxdged by this court she again,' and this time xxnconditionally declared her election to affirm thé sale,, in an answer to the bill as first amended. It may be that an election so'made would ordinarily be conclusive and irrevocable. Such an election so made could not, we apprehend, be receded from and avoided, even in the fixrther progress of the sxxit in which it was íxxade, 'unless the other party changed in some way the terms xxpon which it was made so that if the .respondent were held to it she Avoxxld derix'e less benefit or incur heávier burdens than Avere’ involved in, or secxxred or entailed by her affirmance when it was made. However that may be — whether or not in every case it would be open to the mortgagor to change his election till final decree rendered — we are quite convinced that in this case, Mrs. Pollard had the right to change her election at the time she filed her answer and cross-bill to the bill as last amended, for that the terms upon which her election to affirm was made and repeated were so changed by the last amendment to the bill as to take from her • several thousand dollars which she was entitled to on the averments and prayer of the bill in -the event of affirmance at both times she declared her election to affirm the sale. The land embraced in the mortgage at the sale under the power brought considerably, three or four thousand dollars, more than the mortgage indebtedness. As the case was presented by the bill up to the time of the last amendment, embracing the times when Mrs. Pollard declared her election to affirm, this surplus belonged to her and was to be paid to her in the event she elected to affirm the sale, and it was upon these terms and induced by this consideration that she elected to affirm the sale. Had this status continued, probably she would have been irrevocably bound by the election she made. But it did not continue. By the last amendment to the bill all this surplus was diverted .from her and devoted to the payment of complainant’s attorneys, on the assumption of her election to affirm of course. Then it was, that, seeing that the terms upon which she had made her election had been: tfiíanged to her detriment, that, whereas under the proposition made to her by the original bill she would receive several thousand dollars i.f she affirmed the sale, under the amended bill she would receive nothing upon affirmance, she filed her answer and cross-bill to the bill as last amended, and therein withdrew her former declaration of election, and declared her election to disaffirm said sale. We think she had the clear right to do this. The complainant could not thus play loose and hold her fast. Having-made a definite proposition to her, she could only accept or reject it as formulated and presented, and she had a right to rely upon the proposition not being-changed to her detriment. Having elected to affirm the sale on the terms offered in the event of affirmance, she could not prevent complainant from exercising- its right to amend its bill and thereby change the proposition so as to take from her the consideration inducing her affirmance; but she had the right to pass anew upon the amended proposition, and say whether upon it she' would affirm or disaffirm-: The amendment set at large her power of election, released her from the election made and gave her the right to make a new election; conservative of her interest under the new proposition. As said by the chancellor: “The Mortgage Company actively induced Mrs. Pollard to make the election she did by a proposition in definite terms; and it seems to be-a statement of equitable principle too axiomatic to need argument to say that it cannot now be permitted to change the terms of the proposition, and yet continue to hold the respondent to the election first made.” It must either stand to the case presented to induce her to affirm, or, departing therefrom, it must 'release her from -the affirmance induced by the original presentation. So upon the bill as finally amended, we hold that Mrs. Pollard had the right to retrace her steps and dis-affirm the sale and purchase by the mortgagee, that she properly exercised this right in and by her cross-bill, that she is entitled to the relief prayed therein, and that the demurrers to and motion to dismiss the same were properly overruled.

There remains to- be considered only the sufficiency of complainant’s plea to the cross bill, before referred to. In substance the plea avers that after the respondent had elected originally to affirm the sale, complainant sold the land to one Armistead, executed to him a bond for title, put him in possession and received the consideration in part, that with a knowledge of all this Mrs. Pollard afterwards repeated her affirmance, and said Armistead has continued in possession, in other part paid the consideration, and has made extensive, permanent improvements, specifying the -same, to the value of seven thousand two hundred and fifty dollars, thereby greatly enhancing the value of the land; wherefore, the pleader concludes, “it would be inequitable for the respondent to be now permitted to withdraw her election to confirm said purchase of said mortgaged premises by complainant, and thereby involve complainant -and said Armistead in great loss and perhaps litigation in reference to” the sale by complainant to Armistead. .Little-need be said of this plea. It presents no defense against the relief sought- by- the cross-bill of Mrs. Pol-lard. What we have said- in another connection shows the grounds' of .our conclusion that Mrs. Pollard is- entitled to .the relief prayed. The complainant itself gave her the right.to disaffirm the sale. It cannot defeat that right by its own action in making a re-sale pendente lite; and Armistead of course has no greater rights than the company — ’mortgagee—had. Whatever the company did with the land after this suit was instituted was necessarily subject to the final determination of. the.-rights of the parties to the suit, and Armistead of course purchased, and made improvements upon the land at the peril of any result reached in this litigation between the mortgagor -and mortgagee, having, it is scarcely necessary to say, recourse for his damages against his vendor; and if he were a party to this, cause, which he is not, he could -assert no right or -defense- -other than such as the -complainant-mortgagee could assert..

We find no error in the' decree.-of the city court, and it must be affirmed.

Affirmed.