Callahan v. Auburn Production Credit Ass'n , 240 Ala. 104 ( 1940 )

The appellee insists that "the decision [embodied in the foregoing opinion] is inconsistent with every case decided by the Alabama Supreme Court, which cases were relied upon by appellee in drafting its form of mortgage, but does notexpressly overrule those cases or distinguish them," and the substance of its contention is, that while the opinion states the common law rule, nevertheless a mortgage given on cattle after acquired by the mortgagor in which the mortgagor had neither a present nor potential interest, the identity of which is unknown to the parties to the contract — chattels endowed with independent life and incapable of a fixed situs — "creates an equitable interest, attaching to the property when it is acquired, or when it comes into existence, that a courtof equity will enforce and protect against all persons other than bona fide purchasers without notice." This is the doctrine announced in a dictum in Abraham v. Carter, 53 Ala. 8, and reiterated in Hurst McWhorter v. Bell Co., 72 Ala. 336,340, an action on the case for damages for the destruction of an equitable lien arising out of a mortgage on after acquired property in which the mortgagor was without interest, present or potential, at the time the mortgage was given.

That doctrine is in direct conflict with the pronouncement of the court, speaking through Justice McClellan, afterwards Chief Justice, more than a half century ago in the case of Paden Co. v. Bellenger Ralls, 87 Ala. 575, 576, 6 So. 351, where it was observed: "This is an action on the case, for the wrongful conversion by John S. Paden Co. of certain cotton on which appellees, plaintiffs below, claim to have an equitable mortgage. According to the unbroken current of our decisions, as well as by the weight of authority in other states, it is essential to the creation of such an incumbrance that its subject-matter should have a potential existence, as distinguishable from a mere possibility or expectancy on the part of the contracting parties that it will come into being. While the thing itself need not have identity * * * yet it must at least be the product or growth or increase of property which has at the time a corporal existence, and in which the mortgagor has a present interest, — not a mere belief, hope, or expectation that he will in future acquire such an interest."

These utterances were concurred in by Chief Justice Stone and Justices Somerville and Clopton.

That holding has been expressly re-affirmed in the following cases, and the utterances in Hurst McWhorter v. Bell Co., supra, criticized, as "probably going too far," being "out of line" with the weight of authority, and finally repudiated. Fields v. Karter, 121 Ala. 329, 25 So. 800; Sellers Orum Co. v. Hardaway et al., 188 Ala. 388, 66 So. 460; Gilliland Mercantile Company v. Pond Bros., 189 Ala. 542, 66 So. 480; Vinson Bros. et al. v. Finlay, 206 Ala. 478, 90 So. 310, in which, in the aggregate, all the Justices of the court, then incumbent, concurred.

In the case last above cited, it was observed: "Taking that phase and theory of the evidence which is most favorable to the plaintiff, the most that can be said of the contract made in 1915 is that the landlord agreed to rent the land to the tenant for succeeding years if the tenant should desire it, and if they could agree upon the terms, in common parlance, as the landlord himself expressed it, the tenant was to have the refusal of the land on the landlord's terms."

The applicable doctrine was thus expressed:

"The general principle is thoroughly well settled that, while the subject-matter of a chattel conveyance need not have identity, nor separate existence, 'yet it must at least be the product, or growth, or increase of property, which has at the time a corporal existence, and in which the mortgagor has a present interest, not a mere belief, hope or expectation, that he will in future acquire such an interest.' Paden v. Bellenger, 87 Ala. 575, 6 So. 351; Sellers [ Orum Co.] v. Hardaway, 188 Ala. 388, 66 So. 460; Gilliland Co. v. Pond Bros., 189 Ala. 542, 66 So. 480, cited in note, L.R.A. 1917C, 15. In the last-cited case we said:

" 'It is necessary, however, for the creation of a specific lien on such crops — such as will prevail against third persons who * * * acquire a specific interest therein — that they must be the contemplated product of land in which the mortgagor has a definite present interest, as distinguished from a mere possible or expectant future interest.'

* * *

"The 'present interest' which the principle requires is a present interest in the usufruct period.

"The case of Hurst v. Bell, 72 Ala. 336, which would support the claim of the mortgagee in this case, has been several times criticized as going too far (Fields v. Karter, 121 Ala. 329,333, 25 So. 800), and as being out of line with the firmly settled doctrine of the later cases. Sellers [ Orum Co.] v. Hardaway, 188 Ala. 388, 66 So. 460; Gilliland Co. v. Pond Bros., 189 Ala. 542, 66 So. 480.

"Upon the considerations above stated, we hold that the plaintiff has showed no right to recover, and that the trial judge should have instructed the jury peremptorily for the defendants, and that the refusal to do so, as requested by them, was error which must work a reversal of the judgment."

As appears from the original opinion, the doctrine of Paden Co. v. Bellenger Ralls has been consistently followed down to the present day.

But the appellee insists that the lien or mortgage dealt with in those cases were not equitable liens or mortgages, but were legal mortgages and passed not an equitable but the legal title, although they embraced chattels not in esse when executed. This contention is not only contrary to all the decided cases, but imputes to the illustrious Justices who have constituted this court for a half of a century and who have gone to their reward, leaving behind a reputation for profound ability and a thorough grasp of legal principles, ignorance of legal terminology. This indictment of those illustrious men and jurists requires no further comment.

It is further insisted that the equitable rights or liens arising from such transactions are not cognizable or apparent to a court of law but are the creatures of a court of equity, and only a court of equity could recognize such liens or equitable rights.

The answer to this contention is that courts of equity do not create causes of action, they arise out of contract or the relation of the party and the subject matter dealt with as a matter of law, and equity only furnishes a remedy for such causes and rights when the common law procedure "by reason of its universality is deficient" and the remedy at law is inadequate. Smith v. Roney, 182 Ala. 540, 62 So. 753; Janney v. Buell and Wife, 55 Ala. 408; Butler v. Wilson et al., 237 Ala. 312,186 So. 687, 688.

In the last cited case it is observed: "Nor do we find the case of Janney v. Buell, 55 Ala. 408, in any manner sustains plaintiff's insistence here. That authority merely recognizes the jurisdiction of the equity court in instances where the legal remedies are inadequate for the enforcement or protection of an 'acknowledged right,' to use the language of the opinion,but repudiates any theory of equity jurisdiction for theestablishment of a right that previously did not exist." [Italics supplied.]

The action on the case is an equitable action and lies for the destruction of equitable interest in property, as indicated by the authorities herein above cited.

Amicus curiae have filed briefs contending that the doctrine in Paden Co. v. Bellenger Ralls in no way impinges the doctrine of Meyer, Trustee et al. v. Johnston and Stewart, Trustees, 53 Ala. 237, and Electric Lighting Company of Mobile v. Rust, 117 Ala. 680, 23 So. 751, and in this we agree. The doctrine of those cases relates to chattels within the contemplation of the parties to be acquired and used as an essential element or unit of an industrial plant, which has a fixed situs, or addition to existing plant or system not for sale as a separate chattel. While the doctrine of Paden Co. v. Bellenger Ralls, supra, relates to chattels produced or acquired for traffic and sale.

The ruling of the original opinion is in strict harmony with the well settled rule relating to the latter class of chattels, a rule of property which has been recognized by the Legislature as the law making body of the State. Shaw et al. v. Kinney,227 Ala. 170, 149 So. 227.

The application is without merit and is due to be overruled.

Opinion extended. Application overruled.

All Justices concur.