Fountain v. Pateman

66 So. 75, 189 Ala. 153, 1914 Ala. LEXIS 126
CourtSupreme Court of Alabama
DecidedJune 30, 1914
StatusPublished
Cited by5 cases

This text of 66 So. 75 (Fountain v. Pateman) is published on Counsel Stack Legal Research, covering Supreme Court of Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Fountain v. Pateman, 66 So. 75, 189 Ala. 153, 1914 Ala. LEXIS 126 (Ala. 1914).

Opinion

MAYFIELD, J.

The case attempted to be made by this bill, as last amended, is one by an infant heir of a mortgagor, against a dummy purchaser at a mortgage foreclosure sale and remote and subsequent purchasers of the mortgaged property, to set aside the foreclosure sale, and, incidentally, to allow complainant to redeem the mortgaged premises for himself and the other heirs. The bill is filed 17 years after the foreclosure sale; and the irregularity alleged as ground for the prayer to set aside the sale was that the mortgagee, without authority, purchased at his own sale, and that the sale was' so conducted by the mortgagee as to prevent competition in the bidding, and thus to effect a sale at a price grossly inadequate for the property. It is alleged that the person purchasing at the sale really purchased for the mortgagee, thus acting as a mere dummy or conduit through which the title as to the equity of redemtion passed into the mortgaagee. The bill alleges that the mortgagee is dead, that he left ho personal representative — that is, administrator or executor — and that the names of his heirs, together with their residences, are unknown to the complainant. The bill shows that the mortgagor left a widow, and other heirs than complainant, but shows affirmatively that their right to have the said sale set [155]*155aside and to redeem is long since barred. The bill as’ last amended is not one primarily to redeem and incidentally to remove a cloud from title; but it is primarily to set aside a voidable foreclosure sale, in order that redemption may be had. The bill shows affirmatively that the equity of redemption was cut off by a foreclosure sale under the powers of the mortgage; but it seeks to have the foreclosure sale set aside, with decree that complainant may redeem.

In the bill as last amended there is no attempt to show that the foreclosure sale was absolutely void so that no title passed. If that were the case — that is, if the sale was absolutely void — the court cannot now proceed, because the legal title would not be before the court; the bill would then show that the legal title was in the heirs of the mortgagee, who are not parties to the suit. The purchaser at the foreclosure sale, and to whom the mortgagee conveyed title, is made a party defendant. The bill alleges that this purchaser conveyed back to the mortgagee without consideration, and that the mortgagee subsequently conveyed to the Morris Lumber Company, which cut and removed the merchantable timber from the lands, and sold and conveyed rights of way across two 40’s to the Central of Georgia Railway Company^ and that such grantee built a railroad thereon, and, several years thereafter, sold and conveyed the land to the defendant W. A. Fountain.

There is no attempt in the bill to charge or show that these remote and subsequent purchasers from the mortgagee had any notice or knowledge, actual or constructive, of the facts alleged which would authorize the complainant to maintain this bill. The defendant O’Neal, who was the purchaser at the foreclosure sale, and who was a mere conduit to convey the title back [156]*156to the mortgagee, is of course chargeable with knowledge of all these facts alleged, to the same extent that the mortgagee was, but this is not so as to these remote and subsequent purchasers from the mortgagee. They were not chargeable with notice or knowledge of the fact that the purchaser was a mere conduit to convey the title into the mortgagee, and was not a bona fide purchaser as his deed from the mortgagee showed him to be. Nor were they chargeable with notice or knowledge of the fact that the mortgagee so manipulated the sale as to prevent others from purchasing. So far as the allegations in this bill show, they were bona fide purchasers for value without notice of any of these equities of complainant which are alleged. So far as the bill shows, none of these remote purchasers knew or were chargeable with notice that the mortgagor was dead and had left minor heirs, or that he was dead when the foreclosure was had. In other words, construing the bill most strongly against the complainant, as we must do, the bill shows that the Morris Lumber Company, the Central of Georgia Railway Company, and W. A. Fountain are bona fide remote and subsequent purchasers from the mortgagee without any notice or knowledge, actual or constructive, of the equities of the complainant to have the foreclosure sale set aside and to be let in to redeem at this late date. The bill in its present shape certainly contains no equity against these bona fide remote- and subsequent purchasers from the mortgagee. If the bill were against the mortgagee or the purchaser at the sale (and it is against such purchaser), it would contain equity under the law as often expounded by this court.

The bill is evidently filed under the doctrine as declared in the leading case in this state on the subject

[157]*157(Alexander v. Kill, 88 Ala. 487, 7 South. 238, 16 Am. St. Rep. 55), and in many cases before and after. In all of these cases, however, so far as our investigation goes, the bill was against the mortgagee or purchasers, or parties with notice, actual or constructive, of the equities set up in the complainant’s bill.

In bills to redeem, where there has been no foreclosure, subsequent and remote purchasers are of course chargeable with the mortgagor’s equitable right to redeem, and with that of his heirs. or devisees, if such there be. But in cases like this, where the bill is to set aside and annul a foreclosure sale because of fraud or irregularities such as are alleged in this case, the bill cannot be maintained against such subsequent and remote purchasers, who are without notice or knowledge, actual or constructive, of the facts which give such bills their only equity.

The rule is thus stated by Mr. Jones, in his work on Mortgages: “The’ purchaser at a mortgage sale is chargeable with notice of defects and irregularities in the sale, and with knowledge whether proper notice was given and whether the sale was had at the proper time and place and in the manner required by the power.”

The author says: “The rule is different as regards remote purchasers, who, having no notice in fact of any irregularities, will be protected as innocent purchasers.” — Jones on Mortgages, vol. 1913.

The Supreme Court of Massachusetts has announced, the same rule. That court in the case of Dexter v. Sheparcl, 117 Mass. 485, said that the objection that the mortgagee had no right to become the purchaser at the foreclosure sale could be of no avail against persons who have subsequently purchased of him in good faith, upon adequate consideration and without notice.

[158]*158The case of Burns v. Thayer, 115 Mass. 89, was a case in which the facts were very similar to the facts in this case, and in which the principles of law involved were exactly in point with those that must prevail here. Therein the bill was filed by the widow and minor child of the mortgagor; and the facts alleged to give the bill equity were that the mortgage did not authorize the mortgagee to purchase at his own sale, and that one Dow, who purchased for the benefit of the mortgagee, by an arrangement between the two, and that the purchaser and the mortgagee subsequently conveyed to third parties, against whom the bill was filed to redeem.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
66 So. 75, 189 Ala. 153, 1914 Ala. LEXIS 126, Counsel Stack Legal Research, https://law.counselstack.com/opinion/fountain-v-pateman-ala-1914.