McCall v. Rogers

77 Ala. 349

• Court: Supreme Court of Alabama
• Decided: December 15, 1884
• Status: Published

Opinion

SOMERVILLE, J.

Trust funds can be followed into the hands of a third person, so long as they can be satisfactorily traced and identified, although such person may have taken the title to the property, in which such funds are invested, in his own name. — Parker v. Jones, 67 Ala. 234 ; 2 Perry on Trusts, §§ 828; Whaley v. Whaley, 71 Ala. 159. But, to induce courts of equity to establish a trust of this nature, not only is it required that the facts, from which the trust originates, should be averred with distincness and precision, but they must be proved by “ clear, full, and convincing evidence.” — Mobile Life Ins. Co. v. Randall, 71 Ala. 220 ; Lehman v. Lewis, 62 Ala. 129.

In all such cases, moreover, it is a settled rule, that a mortgagee, who is a bona fide purchaser for value of such property, will be entitled to protection against this prior equity, of which he has had no notice, or of any other secret trust or conveyance. Rogers v. Adams, 66 Ala. 600; Mobile Life Ins. Co. v. Randall, supra.

The evidence manifestly fails to show satisfactorily that the lands mortgaged to the defendant Rogers were purchased with any specific trust fnuds belonging to the minors in whose behalf this equity is sought to be asserted by cross-bill. There is a total failure of proof as to the identity of these funds.

The chancellor erred, however, in giving the second mortgage of the defendant Rogers, bearing date in January, 1881, the priority over that executed on August 5th, 1880, to IT. Cl. McCall, as guardian of the minor children, Daniel and Rena McCall. The latter conveyance is prior in point of time to Rogers’ second mortgage, which was executed by the complainant on the same property. And although it was not recorded, and Rogers probably had no notice of its existence, he was not a bona fide purchaser for a valuable consideration, and can not, for this reason, claim protection against the prior equity of these minors. The claims or notes of Rogers, which were secured by this mortgage, were in fact usurious ; and under the authority of Wailes v. Couch, 75 Ala. 134, and other previous rulings of this court upon which that case was founded, he can not be regarded as a bona fide purchaser. A contract, based on a consideration which is against the pronounced policy of the law, has an element of mala fides in it. — Saltmarsh v. Tuthill, 13 Ala. 390 ; Carlisle v. Hill, 16 Ala. 398.

We need not notice the assignments of error based on the omission to serve notice of Rogers’ cross-bill on II. G. McCall, as this is susceptible of easy remedy on remandment of the cause.

It is claimed that the chancellor erred in rendering a personal decree against the appellant, Mrs. Serena McCall, before a sale of the mortgaged property. The statute does not prohibit the rendition of a decree personally against the mortgage debtor, in cases of this nature. On the contrary, it declares that, when an account is taken between the parties, and “ the amount of .indebtedness between them is ascertained ” by the decree of the chancellor, such decree shall, of itself, have “ the force and effect” of a judgment. The only prohibition is against the issue of an execution on such decree, until the mortgaged property shall have been sold, and the sale confirmed, and the balance due is ascertained by the decree of the court, “ when execution must issue for the balance which may be found due.” — Code 1876, §§ 3908-9.

For the error above mentioned, of failing to give the mortgage executed to II. G. McCall, as guardian, priority over the second mortgage of Rogers, the decree of the chancellor is reversed, and the cause remanded.

Olorton, L, not sitting, having been of counsel.