Case Title: Sixty St. Francis Street v. AMERICAN SAV. AND LOAN ASS'N

Citation: 554 So. 2d 1003

Docket Number: 

State: alabama

Court: Alabama Supreme Court

Date: 1989-12-15T00:00:00Z

Document:
554 So. 2d 1003 (1989)
SIXTY ST. FRANCIS STREET, INC., and Cleveland A. Rivers, Sr.
v.
AMERICAN SAVINGS AND LOAN ASSOCIATION OF BRAZORIA COUNTY.
88-1470.

Supreme Court of Alabama.
November 3, 1989.
As Modified on Denial of Rehearing December 15, 1989.
Richard E. Shields, Mobile, for appellants.
W. Lloyd Copeland of Clark, Deen & Copeland, Mobile, and Thomas H. Brown, Birmingham, for appellee.
STEAGALL, Justice.
On November 8, 1985, Cleveland A. Rivers, Sr., purchased from his son certain real property that was subject to a mortgage to First American Mortgage Company, Inc. (hereinafter "First American"), of Baltimore, Maryland. To consummate the transaction, Rivers borrowed $9,300 from Thames, Jackson, Harris Company, Inc., and executed a mortgage to Sixty St. Francis Street, Inc. Thames, Jackson, Harris Company delivered a check in the amount of $8,099.56 (representing the unpaid balance and accumulated interest) to First *1004 American on November 12, 1985, on behalf of Sixty St. Francis Street as mortgagee. Unbeknownst to Rivers, Sixty St. Francis Street, or Thames, Jackson, Harris Company, First American had assigned its mortgage to American Savings and Loan Association of Brazoria County (hereinafter "American Savings"), a Texas corporation, on September 10, 1985, prior to Rivers's purchase of the property from his son; the assignment was not recorded until December 10, 1985. First American subsequently declared bankruptcy and refused to refund the money.
On January 20, 1986, Sixty St. Francis Street, mistakenly assuming that the prior check to First American in November 1985 had not been negotiated, sent checks to American Savings, which, being apprised of the situation, returned the checks to Sixty St. Francis Street and agreed to help recover the money from First American.
Sixty St. Francis Street and Rivers sued for a declaratory judgment on September 27, 1988, alleging that American Savings was negligent[1] in failing to give actual or constructive notice of the assignment prior to December 10, 1985. The complaint sought a judgment declaring the property free of any mortgage, note, or other encumbrance, as well as a release of the mortgage held by American Savings. The trial court entered a summary judgment in favor of American Savings on March 3, 1989.
The decisive issue is whether the assignee of a mortgage is required to file a record of the assignment, as against a bona fide purchaser, in order to give constructive notice of the conveyance. The applicable statute, Ala.Code 1975, § 35-4-51, has its origin in a 1927 statute and is discussed in two early Alabama cases, Metropolitan Life Ins. Co. v. Guy, 223 Ala. 285, 135 So. 434 (1931), and Pratt City Sav. Bank v. Merchants' Bank & Trust Co., 228 Ala. 251, 153 So. 185 (1934), both of which involved facts that occurred prior to the passage of the 1927 act. Section 35-4-51 provides, in pertinent part:
This is almost identical to the 1927 act, which is referred to in Metropolitan Life Ins. Co.:
Although Pratt City Sav. Bank was not decided on the basis of the 1927 act, that case settled the question that was posed *1005 but not answered in Metropolitan Life Ins. Co. Quoting Federal Land Bank v. Branscomb, 213 Ala. 567, 569, 105 So. 585, 587 (1925), Pratt City Sav. Bank discussed an assignee's duty to bona fide purchasers:
228 Ala. at 252-53, 153 So.  at 186-87 (emphasis added).
The clear import of these cases is that unrecorded assignments are void as to bona fide purchasers without notice. Applying the interpretation of the recording statute by Pratt City Sav. Bank, Metropolitan Life Ins. Co., and Federal Land Bank v. Branscomb to these facts, we conclude that summary judgment for American Savings was inappropriate.
REVERSED AND REMANDED.
HORNSBY, C.J., and MADDOX, ALMON and ADAMS, JJ., concur.
STEAGALL, Justice.
APPLICATION OVERRULED; OPINION MODIFIED.
HORNSBY, C.J., and MADDOX, ALMON and ADAMS, JJ., concur.
[1]  Although American Savings argues that the suit is barred by the two-year statute of limitations for negligence actions, we find that the case sounds in contract and that it is, thus, not time-barred.