Thompson v. Union Bank Trust Co. , 204 Ala. 293 ( 1920 )

Appellant's perfect equity, except as against a bona fide purchaser for value without notice, cannot be denied. The only question, then, is whether appellee, the Union Bank Trust Company, is such purchaser. The bank deraigned title as follows: Cowart, owning the property at the time, mortgaged it to appellant to secure a loan of money. After Cowart defaulted in the payment of his debt, appellant, acting on the representations of Martin (who had negotiated the loan for her), in order to facilitate his collection of the debt, by the instrument shown in the report of the former appeal (202 Ala. 537,81 So. 39) assigned the mortgage and quitclaimed the land to him; the instrument to that effect being duly acknowledged and recorded. Shortly thereafter Martin caused a foreclosure of the mortgage under the power therein, and at the sale became the purchaser, taking a deed from the auctioneer, which was duly recorded. At the same time he executed and delivered to appellant a mortgage purporting to secure to her the payment of an indebtedness equal to her claim against Cowart; but, acting on the advice of Martin, appellant withheld this mortgage from record. Then Martin sold the property to Mathews, taking a mortgage to secure the purchase money falling due three years after date. About a year later Martin borrowed money from the bank, and to secure the same executed a paper similar to that shown by the report, supra, assigning his mortgage, and quitclaiming the land to the bank. After Mathews had defaulted the bank foreclosed under the power and became the purchaser. All the paper writings evidencing these transactions were recorded, save only Martin's mortgage to appellant, which, as stated above, appellant withheld.

That appellee paid value and had no knowledge or actual notice of appellant's claim is well established and is not controverted. Accepting Martin's statements, the bank made no investigation of his title. Had it gone to the records, it would have found appellant's unsatisfied mortgage; but it would have found also her assignment and quitclaim to Martin and the subsequent proceedings, all in due form and showing title in Martin. But appellant contends (1) That the auctioneer's deed to Martin should be ignored as ineffectual for any purpose — this for the reason that the auctioneer was by operation of law a special agent, authorized to sell only upon payment of the purchase money, and every person in the world claiming through such deed was required at their peril to take notice of his want of power; and (2) that all purchasers claiming through Martin were put on notice of appellant's equity by the fact that he held under a quitclaim. These contentions may be answered by the same considerations. Appellant's assignee held under a mortgage with full covenants of warranty. The quitclaim, superadded to the assignment, was no doubt inspired by the decision in Sanders v. Cassady, 86 Ala. 246, 5 So. 503; its purpose being to enable the assignee to make a completely effectual foreclosure — at least such would have appeared to be the reasonable explanation of the quitclaim, had appellee gone to the record, and there was no reason for going elsewhere, because Martin, or his vendee mortgagor, was in possession. On the former appeal it was held that this appellee was not put upon notice as to whether appellant had intended to preserve an equity in the subject-matter of the assignment. And this appearance of things accurately reflected appellant's actual purpose, as she freely admits from the witness stand. She assigned her mortgage and armed her agent with her legal title for the very purpose of making an effectual disposition of the property — in other words, to realize the full benefit of her security; and we find no sufficient reason for attributing a different meaning to the record. The transfer of the mortgage and the mortgagee's estate in the land, on the face of it, vested the debt in the transferee, because the transaction could have no other meaning than that in equity the debt belonged to the transferee, as we also held on former appeal, and as appellant now concedes. She took a mortgage to secure her rights against her agent, but, as has appeared, she withheld it from record, and this she did for the very reason that she did not desire to leave under a cloud her agent's apparent power to make an effectual disposition of the property. Hence it is that, though Martin paid nothing for the title which he got, he did get the legal title, and there was nothing to indicate the fact that in foreclosing Cowart's equity he was an agent or trustee for appellant — nothing, therefore, to give notice that Martin's dependable appearance of right and title had been procured by practicing on appellant's trust and confidence.

Our judgment is that a due observance of the rights of an innocent purchaser requires that the present status of the title be not disturbed.

Affirmed.

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

On Application for Rehearing.