Baxter v. Ft. Payne Co.

62 So. 42, 182 Ala. 249, 1913 Ala. LEXIS 408

• Court: Supreme Court of Alabama
• Decided: April 10, 1913
• Status: Published

Opinion

SAYRE, J.

The Ft. Payne Company filed this bill to foreclose a mortgage to secure purchase money which had been executed by E. C. and Louisa H. Drew, who had afterwards sold the property to the Ft. Payne Fuel & Iron Company, and for a receiver pending foreclosure. The Drews and the Fuel & Hon Company were made parties defendant. J. W. Baxter was afterwards admitted to defend as the trustee in bankruptcy of the Fuel & Iron Company, and he demurred on the single general ground that there was no equity in the bill. This demurrer was overruled, and the trustee in bankruptcy complains of the decree as erroneous for. three several reasons which will be noticed.

The averment of the bill is that the purchase-money note first payable, and upon default as to which complainant had reserved the.option to declare two others for the balance due and payable, “is long past due, and the complainant declares all of the notes due.” If perchance this averment is not a complete equivalent for an averment that the note first payable is past due and unpaid and that thereupon complainant had exercised his option to declare the other two due and payable, on the general demurrer it will be so taken. — McDuffie v. Lynchburg Shoe Co., 178 Ala. 268, 59 South. 567. It does not appear, therefore, that the bill was prematurely filed.

2. It is insisted in brief for appellant that the bill discloses no sufficient ground for the appointment of a receiver. It suffices to say, in response to this insistence, that the appointment of a receiver is a mere ancillary remedy sought for the purpose of preserving the property pending the litigation, and that the alleged defects of the bill in that regard have no effect upon the court’s jurisdiction to entertain the bill for a foreclosure. The defects, if any, should have been pointed out in the motion for the appointment of a receiver.

3. The facts necessary to be considered in connection with the appellant’s further contention are as follows: Complainant, the Ft. Payne Company, a domestic corporation, had sold and conveyed its property to “E. O. Drew, trustee.” For whom or what he may have been trustee does not appear, nor is there anything besides the use of the word “trustee” to show that there was a trust in fact. As apart of the transaction complainant had taken a mortgage to secure, as the mortgage recites, a large balance of unpaid purchase money. Subsequently “Drew, trustee, conveyed the property to appellant’s assignor, the Ft. Payne Fuel & Iron Company, a foreign corporation. This last-named company is in possession of the property and is operating mines upon it. The insolvency of Drew and the Fuel & Iron Company is alleged along with other facts intended to show the propriety of and necessity for the appointment of a receiver. And that seems to have been the purpose, also, of the averment in respect to the non-residence of the Fuel & Iron Company and its failure to comply with the laws of the state requiring foreign corporations to take out a license and designate an agent on whom service can be bad before transacting any business in tbe state. Tbe argument for tbe appellant on this state of tbe bill seems to be that tbe court must assume that Drew purchased tbe property and executed the mortgage as trustee for tbe Fuel & Iron Company, and thereupon bold that tbe transaction was a nullity because that company bad not qualified to do business in tbe state, thus leaving Avitb complainant an unincumbered legal title and no reason for resorting to equity; or, if tbe court is not disposed to indulge that presumption, then it must bold that DreAV is trustee for other parties undisclosed, and cannot proceed in their absence.

There is no merit in either born of tbe proposed dilemma. On tbe facts averred in the bill, Avithout more, it is not our opinion that anything in regard to tbe nature of the trust or tbe identity of tbe supposed beneficiaries under it ought- to be presumed on demurrer, or indeed that there was a trust, or, if there was, that complainant Avas informed of tbe fact, or that by tbe execution of tbe deed and acceptance of tbe mortgage it became a party to an attempt to evade tbe laws of the state; all this for tbe reason that complainant, who dealt Avith tbe individual DreAv, bad a right to treat the Avord “trustee,” occurring in tbe deed and mortgage, as mere descriptio personae, and Avas under no duty to be concerned about the question Avhether there Avas a trust in fact. — 2 Jones on Mortgages, § 1397. Tbe fact that Drew saw fit to append, °or required that complainant should append, tbe descriptive term to his name in tbe deed and mortgage, did not have the effect of mating him a trustee for any one. But DreAv may have held tbe property in trust, and tbe doctrine of notice is that, whenever, facts exist sufficient to put a person of common prudence on inquiry, he is thereby charged with notice of everything to Avhich tbe inquiry, if prosecuted with proper diligence, would have led. It is thereupon settled that if a deed is made to- a person designated as trustee, although the nature of the trust, or the beneficiary under it, is not disclosed, a purchaser from the person so designated must inquire as to the nature and limitations of the trust. — 2 Dev. Deeds (2d Ed.) * 738a. But that is not the situation of this complainant. In making its deed to Drew it was not bound to inquire under what trust Drew would or ought to hold the property. If there was a trust, it was created apart from the deed and was no concern of the grantor’s. Complainant did nothing in the way of creating the trust in the land it conveyed, nor did it in any way affect or impair the interest of the cestuis que trust in the land. Tn taking its- mortgage it took security for what was its own, of which the supposed beneficiaries cannot be heard to complain. If there was a trust, it attached to tne land after it came into the ownership of complainant’s grantee, and the beneficiaries cannot claim the benefit of it without at the same time acknowledging the obligation of the mortgage to secure the purchase money. The supposed beneficiaries are therefore in the position of subsequent incumbrancers taking in subordination to complainant’s mortgage. They would be proper parties, and, if known, they may now or hereafter be brought before the court under rules 106 and 107 of chancery practice; but their presence; is not necessary to .the granting of the relief prayed in complainant’s bill.

The only assumption of fact which could bring into the case the question which appellant seeks to raise in respect to his assignor’s violation of the statutes of the state made for the regulation of foreign corporations doing business in this state would be that complainant in dealing with Drew was party to a scheme by which Drew and appellant’s assignor sought to evade those laws. Without intimating that there is any merit in appellant’s contention on that point (Brooklyn Life Ins. Co. v. Bledsoe, 52 Ala. 538; 19 Cyc. 1301, 1302), it will be time enough to consider it when it is raised by appropriate averment of facts. We will not, in the absence of averment, presume fraud upon the law.

The demurrer was properly overruled, and the decree will be affirmed.

Affirmed.

All the Justices concur, except Dowdell, C. J., not sitting.