Federal Land Bank of New Orleans v. Ozark City Bank , 225 Ala. 52 ( 1931 )

The agreed statement of facts, among other things, recites of the material issue of fact and question for decision as follows:

"There was no notice ever filed in the Probate Office of Dale County, Alabama, in the Lis Pendens record, under the provisions of the Acts of 1915, approved March 5, 1915, Acts 1915, pages 122 and 123, and sections 6878 and 6881 of the 1923 Code of Alabama. The complainant had no actual notice of any pending litigation affecting title to the lands hereinabove described, when either of said mortgages to it, involved in this suit, were executed and delivered. In this connection the parties agree that their controversy has arisen over, and mainly concerns and involves complainant's insistence that in order for the respondent's interests asserted under its answer to be entitled to equitable and legal protection, and to be available to it herein, said notice should have been filed upon said Lis Pendens record, as the only legal constructive notice to complainants, under the facts in this case, at the times respectively when complainant acquired its said two mortgages; and respondent insisting that said statutes as to Lis Pendens notice do not apply to it in this case, and do not defeat the equities asserted by it under its said answer. * * *

"During the period intervening from September 1st, 1911, to May 1st, 1912, W. L. Casey sold to Alex Thesmar Co., cotton buyers, of Savannah, Georgia, a large number of bales of cotton, represented by a large number of written orders, or sales contracts. * * * Out of said sales certain differences and disputes arose as to amounts of money owed by W. L. Casey to Thesmar Company, which differences and disputes were referred to and arbitrated by, and according to the charter, by-laws and rules of the Savannah Cotton Exchange.

"On the 14th day of October, 1912, an award was made in said arbitration, in favor of said Thesmar Co., against said W. L. Casey. * * *

"After said award was rendered, Alex Thesmar Co., assigned and transferred its claim under said award to L. W. Haskell, who became the owner of the demand.

"Thereafter, on the 13th day of June, 1914, said L. W.Haskell, as assignee of said demand, filed his suit at law in the District Court of the United States, for the middle district of Alabama, southern division, at Dothan, against said W. L. Casey. * * *

"Thereafter, on the 21st day of February, 1916, a certificate of said judgment against W. L. Casey was filed and recorded in the office of the Probate Judge of Dale County, Alabama. * * *

"On the 15th day of December, 1917, L. W. Haskell filed in said District Court, at Dothan, on the equity side thereof, his bill of complaint against said W. L. Casey and his wife. * * *

"On the 26th day of February, 1921, said L. W. Haskell amended his said bill in equity, wherein he made said M. M. Pippin a party defendant thereto." (Italics supplied.)

In the application for rehearing it is admitted that before the enactment of the statute, the rule of lis pendens was that of the common law.

And as to the statute and its section 10, it is insisted that an "interest or demand in real estate on March 5th, 1915, of such nature and character that it might have been pleaded and enforced in equity, so as to bring the suit for its enforcement within the common law lis pendens doctrine, such existing right, title, claim, interest or demand is covered by said section 10, and is excepted from the operation of the provisions of the other sections of said lis pendens statute," and that it operated to protect appellee.

We advert to the rule at common law of lis pendens, which the statute sought to modify. That is, before the enactment of the statute (March 5, 1915, Acts, p. 122, Code, §§ 6877-6886), to constitute a valid lis pendens: (a) The litigation must be about some specific subject-matter or thing that is and will necessarily be affected by the termination of the suit and judgment therein; (b) where the court has jurisdiction of the person and property that is sufficiently described and indicated in that proceeding — to "warn the whole world that they intermeddle at their peril." Freeman on Judgments, §§ 196, 197; Moragne v. Doe, ex dem. Moragne, 143 Ala. 459, 39 So. 161, 111 Am. St. Rep. 52, 5 Ann. Cas. 331; McCollum v. Burton,220 Ala. 629, 127 So. 224; 17 Rawle C. L., p. 1019, § 13; Houston v. Timmerman, 17 Or. 499, 21 P. 1037, 4 L.R.A. 716, 11 Am. St. Rep. 852; Hailey v. Ano, 136 N.Y. 569, 32 N.E. 1068, 32 Am. St. Rep. 764, 767, and notes. There is an early statement of the rule by Chancellor Kent in Cook v. Mancius, 5 Johns. Ch. (N.Y.) 89 (L.Ed. p. 1019), and our cases are collected in Thompson v. Johnson, 201 Ala. 315, 78 So. 91. And we may say, the lis pendens rule at common law (2 Lord Bacon's Works, 479) was rigorous, often worked hardships, and to prevent such condition and result to innocent parties, the remedial statutes were enacted. Winston v. Westfeldt, 22 Ala. 760, 58 Am. Dec. 278; 17 Rawle C. L. 1014, § 7; p. 1015, § 9; Fisher v. Shropshire,147 U.S. 133, 13 S. Ct. 201, 37 L. Ed. 109.

It is well, therefore, that we have in mind the limitations of the rule of lis pendens as recently applied, under the statute. In McCollum v. Burton, 220 Ala. 629, 127 So. 224, the complainant recovered a judgment in a tort action after the statute (on October 18, 1926), and sought by the bill to set aside conveyances of real property of date of October 25, 1926, in fraud of the rights of the original plaintiff. Mr. Justice Gardner for the court said: "Complainant's suit against Burton was pending at the time the Brashers purchased, but the evidence is without dispute that they had no actual knowledge or notice thereof. No specific property was sought in that action — merely the recovery of a money judgment, and the doctrine of lis pendens had no application. Moragne v. Doe, etc., 143 Ala. 459, 39 So. 161, 111 Am. St. Rep. 52, 5 Ann. Cas. 331; Thompson v. Johnson, 201 Ala. 315, 78 So. 91; § 6878, Code 1923."

What then was the effect, if any, of section 10, Acts 1915, p. 122 (section 6886, Code) and its terms employed, shall not "affect any pending suit, existing right, title, claim, interest or demand"? The remedial statute was to ameliorate the common law, and it cannot be insisted with force that its section 10 was to increase the rigor or exaction of the former rule, and can only mean that nothing contained in the act shall affect any pending suit and rights thereunder that were theretofore protected by the common-law rule; and after the enactment the statutory rule of lis pendens was of force and effect.

Counsel for appellant observe that when Haskell procured his judgment against Casey on money demand and recorded against that person in the probate office (February 21, 1916), the Alabama lis pendens statute was of force, and was about two years prior to the filing of the bill against Casey and wife in the United States District Court December 15, 1917, and about four years before Pippin was made a party to set aside the previous conveyances as fraudulent. It is apparent from the agreed statement of facts that there was a failure on appellee's part to comply with the lis pendens statute to prevent the appellant from being and becoming a bona fide purchaser without notice of the lands from Pippin.

The amendment of the statute, section 5746, Code of 1907 (extended in section 10140, Code of 1923), extending the class of redemptioners to "the debtor, his vendee, junior mortgagee, or assignee of the equity or statutory right of redemption, wife, widow, child, heir at law, devisee, or his vendee or assignee of the right to redeem under this Code, from the purchaser, or his vendee, within two years" after execution sale of "real estate, or any interest therein," or sale by virtue of "any decree in the circuit court," or sale "under any deed of trust," or that under the "power of sale in a mortgage," did not extend such right of redemption to the appellee as an assignee under or from Haskell, the assignee of the original plaintiff in the award in favor of Thesmar Co., and as assignee Haskell was the plaintiff in judgment thereon in the United States District Court. To this feature we will later advert.

The recent cases upon the statutory right of redemption of real estate from execution and mortgage sale thereof are to the uniform effect that such statutory right can only be exercised (1) by the parties or persons named in and provided by the statute; (2) and effectuated in the mode or manner prescribed; (3) within the time and upon the conditions required and prescribed. Snow v. Montesano Land Co., 206 Ala. 310, 311,89 So. 719, and authorities; Whiteman v. Taber, 203 Ala. 496, 500,83 So. 595; Baker, Lyons Co. v. Eliasberg Bros., 201 Ala. 591,79 So. 13; Wittmeier v. Cranford, 199 Ala. 1, 73 So. 981; Leith v. Galloway Coal Co., 189 Ala. 204, 66 So. 149; Ivy v. Hood, 202 Ala. 121, 122, 79 So. 587; Neuberger v. Felis et ux.,203 Ala. 142, 82 So. 172; Toney v. Chenault, 204 Ala. 331,85 So. 742; Johnson v. Davis, 180 Ala. 143, 60 So. 799; Zimmern v. People's Bank, 203 Ala. 21, 81 So. 811; Wootten v. Vaughn,202 Ala. 684, 81 So. 660; Burke v. Brewer, 133 Ala. 389,32 So. 602; Narrell v. Phillips Merc. Co., 185 Ala. 141, 64 So. 305.

In Wittmeier v. Cranford, supra, Mr. Chief Justice Anderson declared, of the attempt of an assignee from a trustee in bankruptcy, that it was beyond the provisions of the statute for redemption, and cited with approval Leith v. Galloway Coal Co., 189 Ala. 204, 66 So. 149. And our cases do not give the right to other parties in interest than are within the terms and reasonable implication of the statute (for redemption by the debtor or his vendee), and the right was not in the remote assignee, the appellee, Ozark City Bank, had this been a bill by the latter, for redemption from the mortgage foreclosures on February 23, 1917.

It will also be noted that the statute defining property subject to levy and sale under execution was: (1) Real property to which defendant has a legal title or a perfect equity, or a vested legal interest. (2) Personal property of the defendant, whether he had the absolute title thereto, or the right of possession thereof for a limited term or period of time measured by his life or that of another. (3) "On an equity of redemption in either land or personal property. When any interest less than the absolute title is sold, the purchaser is subrogated to all the rights of the defendant, and subject to all his disabilities." Section 4091, Code of 1907, section 7806, Code 1923.

It results the statutory right of redemption from mortgage foreclosure in the half interest that may have been exercised by W. L. Casey was not subject to levy and sale under the foregoing statute.

The registration statutes for judgments and decrees, sections 4156, 4157, Code of 1907, sections 7874, 7875, Code of 1923, are specific in the use of the words "shall be a lien on all the property of the defendant in the county where filed, which is subject to levy and sale under execution," extending for ten years from the date of such judgment, and "the filing of the judgment or decree shall be notice to all persons of the existence of the lien." And under these statutes was the announcement that a lien created by these sections when existing as to mortgaged property is a lien only on the equity of redemption and does not extend to the property covered by the mortgage. Zimmern v. People's Bank, 203 Ala. 21,81 So. 811. This makes clear that the half interest in the lands (as such) mortgaged to the Dale County Bank on December 11, 1915, or lands conveyed by Casey and wife to Pippin on February 13, 1914, was not affected by the rendition of the money judgment in behalf of Haskell, the assignee of the right or claim of Alex Thesmar Co., and by the record thereof February 21, 1916. The equity of redemption therein was defeated and extinguished by the foreclosure sale under the power in the mortgage, duly transferred (on November 11, 1916) to Melissa Casey.

Thus we are brought to appellee's insistence of some right acquired as against W. L. Casey's statutory right of redemption from the foreclosure of half interest in the lands on February 23, 1917. We have adverted to the decisions to the effect that the right of statutory redemption was not the subject of levy and sale under execution or attachment (section 7806 [section 4091], section 7874 [section 4156], Code), and here note the earlier cases that were recognized in the foregoing statutes. Bailey, Davis Co. v. Timberlake, 74 Ala. 221; Junkins v. Lovelace, 72 Ala. 303; Childress v. Monette, 54 Ala. 317; Central Mining Mfg. Co. v. Stoven, 45 Ala. 594, which were followed, and authorities collected, in Whiteman v. Taber,203 Ala. 496, 499, 83 So. 595.

It follows that on this phase of the decision and application for rehearing, the recording of the money judgment by Haskell against Casey, the filing of the plaintiff's bill against Mr. and Mrs. Casey, the amendment bringing in Pippin on February 26, 1921, as owner of the land, and the decree of relief against them on November 18, 1924, would not change the result of noncompliance with the lis pendens statute, by reason of Casey's personal right under the statute of redemption from the mortgage foreclosure and purchase by Mrs. Melissa Casey on February 23, 1917. Whiteman v. Taber, 203 Ala. 496, 499,83 So. 595; Id., 205 Ala. 319, 87 So. 353, redemption of real estate from mortgage foreclosure; Zimmern v. People's Bank of Mobile,203 Ala. 21, 81 So. 811, equitable right to property; Wootten v. Vaughn, 202 Ala. 684, 686, 81 So. 660, statutory and equitable rights distinguished; Burke v. Brewer, 133 Ala. 389,392, 32 So. 602, statutory redemption; Narrell v. Phillips Merc. Co., 185 Ala. 141, 64 So. 305, statutory right of redemption; Johnson v. Davis, 180 Ala. 143, 60 So. 799, where the statutory right was a personal privilege or right personal to the debtor; Johnson v. Smith, 190 Ala. 521, 67 So. 401, an equitable bill to redeem as distinguished from a statutory bill of redemption. See new section (section 10156) in the Code of 1923, merely codified as the result of the foregoing decisions. Toney v. Chenault, 204 Ala. 329, 85 So. 742; Allison v. Cody,206 Ala. 88, 89, 89 So. 238; Bailey, Davis Co. v. Timberlake,74 Ala. 221.

We have by this indicated that appellee was not protected under the provisions of law, and that the judgment and record thereof against Casey, and the decree of the United States court against respondents setting aside the conveyances in question, were not efficacious to defeat appellant's right as a bona fide purchaser without notice under our statute of lis pendens. This is the final judgment of this court, which is intended to give to appellee its federal question if such there be. Chicago G. W. R. Co. v. Basham, Adm'r, 249 U.S. 164, 39 S. Ct. 213,63 L. Ed. 534.

Application overruled.

ANDERSON, C. J., and BROWN and KNIGHT, JJ., concur.