Marx v. Clisby

130 Ala. 502

Opinion

TYSON, J.

The bill in this cause contains no offer to do equity, and on former appeal, this court held, that it was not subject to demurrer on that account, saying: “The fifth and sixth grounds [of demurrer] are without merit. They question the equity of the bill, for that •complainants have not offered to return or account for the proceeds of the purchase money for said lots, which inured to their benefit, and have not offered to account for the benefits received by them. How could they be required to make such an offer? It was their money that paid for property, not liable under the will to be mortgaged; and as for that part of the other property covered by-said mortgage, which might have been properly mortgaged to secure a debt of the testatrix, the only benefit complainants could have derived as to it, under said mortgage, was its extension for two years, and even that extension of the mortgage might have been a disadvantage to them. We fail to see how the bill is liable to any of the objections interposed by demurrer. The complainants were not estopped by any unauthorized act of the trustee in mortgaging this trust land, nor have they received anything they are required to return, as a condition to the maintenance of their bill.—Gillespie v. Nabors, 59 Ala. 441; Randolph v. Land Co., 104 Ala. 355.”—Marx v. Clisby, 126 Ala. 109.

The averments of the bill that the debt secured by the mortgage was the debt of the trustee, and, therefore, under the provisions of the will, was a charge upon the lot in controversy, as well as upon the entire trust estate, and that it was 'discharged and extinguished by the foreclosure sale under the mortgage, seem® to have escaped the court, and the opinion, if allowed to control the case as now presented, would lead to the result of giving the complainants an unconscionable advantage. We, therefore, must decline to 'allow it to control us on this appeal in so far as the point involving the question of benefit to complainants is concerned.

The question of benefit to complainants by the ex-tinguishment of the mortgage debt, leaving out of view the demurrer, is squarely presented on the facts, and the estoppel set up against complainants on that account as a defense in the answer. The defense of es-toppel being invoked, if it appears from the facts, that complainants are not entitled to the relief sought without being required to do equity, the court should have declined a further exercise of its jurisdiction in aid of their cause, unless they amended their bill by submitting themselves to its jurisdiction by proper aver-ments and offer. Without such an offer in the bill, the court was without power or jurisdiction 'to render a decree against them requiring them to do equity. Rogers v. Torbut, 58 Ala. 525, 526; Eslava v. Elmore, 50 Ala. 578; Smith v. Comer, 65 Ala. 376; Garland v. Watson, 74 Ala. 323, 326; Am. F. L. M. Co. v. Sewell, 92 Ala. 169, 170; Br. Bank v. Strother, 15 Ala. 51, 60.

Complainants’ testatrix, at the time of her death, was largely indebted, and the trustee, under the authority conferred upon him by the will, in 1889. borrowed from one Hirsh $12,500 which he secured by a mortgage, on a lot which was owned by the testatrix at the date of her death. This money was used exclusively by the trustee in paying debts of the testatrix. The law day of the mortgage arrived in 1892, and the trustee being unable to pay it, the mortgagee 'agreed to extend the debt until 1894, upon consideration that the trustee execute to him a new mortgage conveying the property conveyed by the first and the lot involved in this suit. This was done. The debt not being paid upon the maturity of the new mortgage, it was foreclosed and the mortgagee became the purchaser of both lots, including the one involved in this suit, bidding the amount of his debt. The sale appears to have been regular — the auctioneer, in pursuance to the terms of the mortgage, executed a deed to the purchaser. I-Iirsh, the 'purchaser, conveyed the lot in controversy to Steiner Brothers, and it passed from them, through mense conveyances, to these appellants. Each of the grantees in the several conveyances paid a valuable consideration, and there is no evidence of any notice of the complainants’ equity other than the constructive notice which arises from the probate of the will and the registration of the deed from Maddox to the trustee. The lot here involved, was not oivned by the testatrix, but was purchased by the trustee with the rents and profits of lands devised to him and was conveyed to him by Maddox to be held for the benefit of the complainants in trust under the provisions of the will. The lot in controversy belongs in equity to the complainants, and not having belonged to the testatrix, the trustee under the will was without authority to mortgage it. Marx v. Clisby, supra. Being without this authority, his act in so doing was voidable at the election of the complainants. And, of necessity, their avoidance of the mortgage operates to destroy the conveyances to the several grantees claiming title under it, who, having constructive notice of complainants’ right in this respect, are not bona, ficle purchasers. It is true, only one of the complainants, when the present bill was filed, was capable of making the election of repudiating the unauthorized act of the trustee, the others being infants, but notwithstanding their disability, and the undoubted power of the court to elect for them, they can no more be permitted to receive the benefits of the sale and at the same time repudiate it, than will the adult complainant be 'allowed to do so. As said in Goodman v. Winter, 64 Ala. 437, “While an infant cannot make an election, a court of equity lias undoubted jurisdiction to elect for him. It is also true, that an infant may not create an estoppel; yet, under 'circumstances, the benefits of a particular transaction may have been so appropriated 'for liis advantage, that he will not be heard to gainsay it.” It is without dispute that the money borrowed and comprising the mortgage debt, was applied exclusively to the payment of debts of the testatrix, which, of course, were a charge upon this lot-as well as upon the entire property of the trust estate belonging to these complainants. When the mortgagee purchased this lot and the other lot at the mortgage sale, bidding the amount due on liis mortgage, this operated as an extinguishment of liis debt and, of necessity, .resulted in relieving the complainants’' estate to the extent of the debts against it paid out of the $12,500. And it cannot- be doubted, assuming an absolute want of authority in the trustee to borrow the $12,500, that having borrowed it and appropriated it to relieving the estate of debts for which it was liable, that I-Tirs'h would be subrogated to tlie 1‘iglits of those creditors whose debts were paid out of the money loaned by him. — Faulk v. Calloway, 123 Ala. 325. So then it may be unquali-fiedly said that as a result of the transaction with Hirsh, whether made with or without authority, the trustee relieved the estate of a charge or charges to the extent of the amount of the loan to him, which Hirsh had the right to have repaid to him out of the estate. This being true the complainants must be held to have received the benefit of the transaction. Having received it, they are estopped to deny the validity of the sale and at the same time enjoy the benefits derived from the appropriation of the money borrowed from Hirsli, whose right to collect it was destroyed by his purchase at the foreclosure. Hirsh’s position as purchaser at that sale cannot be different, in so far as the question here involved is concerned, than would be that of a stranger who had purchased and paid the purchase price to him. The case, then, is clearly governed by the principles announced in Woodstock Iron Co. v. Fullenwider, 87 Ala. 586: “It is deemed unconscionable that the heirs or devisees shall reap the fruits of the purchaser’s payment of money, appropriated to the discharge of debts, which were a charge on the lands and at the same time recover the lands. They are estopped to deny the validity of the sale and at the same time enjoy the benefits derived from the appropriation of the purchase money. And this principle applies to minors, as well as adults.” This doctrine has often been declared and enforced in this court alike as to adults and infants. Goodman v. Winter, supra; Bell v. Craig, 52 Ala. 215; Robertson v. Bradford, 73 Ala. 116; Bland v. Bowie, 53 Ala. 152; Hobbs v. Nashville, Chattanooga & St. Louis R’y., 122 Ala. 602.

While it is doubtless true, in the absence of proof .that the sale of the lot under the mortgage was to the interest of the estate of the infant complainants, the court is not in a position to elect for them, still if the proof had' been made that an avoidance would be to their advantage, the court must refuse to avoid the transaction, without the power to mold its decree so as not to allow them the unfair advantage of avoiding it while retaining its fruits.—Goodman v. Winter, supra; Hobbs v. N. C. & St. L. R’y, supra.

But it is urged that as the sale under the mortgage was valid as to one lot and voidable as to the one here involved, that the doctrine of the cases cited above has no application. This contention is based upon the proposition that there is no evidence that the bid of the purchaser at the foreclosure sale was increased by reason of the lot here involved being included in the purchase. It would be strange, indeed, that Hirsh, the mortgagee, consented to an extension of his debt upon condition that this lot be put in the mortgage if he regarded it as valueless, and that he would, after purchasing it, sell it, executing a warranty title to it. It is further urged in support of the contention, even if there was such evidence, there would be no means by which it could be ascertained to what extent the bid was so ■ increased. One of the principles underlying the doctrine in the cases cited is, that the purchaser, notwithstanding the sale is void or voidable, will be protected when he has in good faith acted upon the transaction as valid. It is of no consequence, that he could have known that he was not acquiring a title. For, in all of the cases cited, it was affirmed, that the purchaser acquired no title. This they were bound to have known, for the reason that the defect which rendered their conveyances in to lid ai>peared of record, as liere, in their chain of title. It cannot 'be affirmed, upon the facts that Hirsh did not honestly believe that he was acquiring a good title to both of the lots. “The good faith of the purchaser must be presumed until the contrary is shown.”—Davis v. Gaines, 104 U. S. 386. Hirsh having purchased this lot in good faith, believing as he did that he was acquiring a perfect title to it, there is no difficulty in ascertaining the amount of benefit received by complainants out of the transaction. Ascertain the value on day of sale of the lot first mortgaged and deduct this sum from the amount due on that day on the mortgage, and the balance, if any, with interest from said date, would be the amount complainants should be required to pay, less the rental value, if any, of the Maddox lot. It seems to us this point was necessarily involved in Oden v. Dupuy, 99 Ala. 36, where the purchaser believed he was buffing a tract of 240 acres of land, which was sold by an administrator under a decree of the probate court. He acquired an indefeasible title to 200 acres, but none to the 40 acres. The proceedings of the court as to the sale of the latter was absolutely void, and yet the court upon bill filed by the heirs to recover it, applied the principles we have here announced, and held them es-topped from impeaching it.

As the infant complainants have no right of election, and as it must be exercised for them by the court, and since the court has not had an opportunity to do so, we will dismiss the bill, but it must be without prejudice to their rights to file another if they are so advised. However, as to the adult complainant, he having the right to elect for himself, within a reasonable time, to avoid the transaction and restitution not being proffered by him in the bill, it must be dismissed.—Davis v. Gaines, supra. A majority of the court, however, are of the opinion that the bill should be dismissed without prejudice as to all the complainants and it is so ordered.

Beversed and rendered.