Case Title: Fundaburk v. Cody

Citation: 72 So. 2d 710

Docket Number: 

State: alabama

Court: Alabama Supreme Court

Date: 1954-05-13T00:00:00Z

Document:
72 So. 2d 710 (1954)
FUNDABURK et al.
v.
CODY et al.
4 Div. 643.

Supreme Court of Alabama.
May 13, 1954.
*711 Lightfoot & Bricken, Luverne, for appellants.
Calvin Poole and Arthur E. Gamble, Jr., Greenville, for appellees.
GOODWYN, Justice.
Bill in equity to sell land for division among tenants in common. The principal question relates to the right of those not in possession to require those in possession to account for rents, income and profits, and the right of those in possession to reimbursement out of the proceeds of the sale for sums expended by them in payment of insurance, repairs, and interest and principal on a mortgage debt against the property. The tenants in possession also seek compensation for personal services rendered by them in managing the property.
Essentially, the facts are these:
Emma T. Beard died intestate in 1934 leaving five children surviving her, viz.: Dell Fundaburk, Susie E. Cody, John M. Beard, Renoba Douglass, and Minnie Reynolds. At the time of her death she owned what is known as the Beard Hotel property in Luverne, Alabama, here involved. Since her death, Dell Fundaburk and Minnie Reynolds have been in sole possession of said property operating it as a public hotel. However, the other tenants have never been excluded from occupancy of said property. To the contrary, it clearly appears that they have acquiesced in the sole occupancy by said Dell Fundaburk and Minnie Reynolds. The receipts from the operation of said *712 hotel, for room and board, totaled $83,675 and "expenses of groceries for board, laundry, three servants, coal and wood, telephone, and state and county licenses" amounted to $72,329.25. An additional expenditure of $3,956.58 was made for lights and water, making the total expenditures in the operation of the hotel $76,285.83. Said parties also claim that they paid out during their occupancy $1,211.08 for repairs, $926.13 for insurance, $686.40 for state, county and city ad valorem taxes, and $11,528.19 in principal and interest payments on a pre-existing mortgage to Home Owners Loan Corporation. They also claim $100 a month each for personal services rendered in the operation of the hotel, which they insist inured to the benefit of all the cotenants. The hotel consisted of thirteen rooms, two of which were occupied by the said Dell Fundaburk and Minnie Reynolds.
The bill was filed by appellees Frank J. Cody, Esther Cowart, Frances Thames and James Cody, the children and only heirs of Susie E. Cody, deceased. Renoba Douglass having conveyed her interest in the property to Dell Fundaburk and Minnie Reynolds, said last named parties and John M. Beard, being all of the tenants in common other than complainants, were made respondents to the bill. The complainants seek not only a sale for division but an accounting from Dell Fundaburk and Minnie Reynolds of the rents, income and profits received by them during their occupancy of the hotel property. Dell Fundaburk and Minnie Reynolds, by crossbill, seek reimbursement, out of the proceeds of the sale, of the amounts expended by them in payment of taxes, insurance, repairs, and interest and principal on the mortgage, and also for their personal services.
The court ordered the property sold. At the sale, Dell Fundaburk and Minnie Reynolds became the purchasers for $15,000. No question is presented with respect to the sale. The sale was confirmed and the register ordered to hold a reference to ascertain the following: (1) reasonable solicitors' fees; (2) the rents and income received by Dell Fundaburk and Minnie Reynolds; (3) any outstanding liens against the property; (4) expenditures by Dell Fundaburk and Minnie Reynolds for the following purposes: (a) mortgage payments, (b) incidental expenses in operating the hotel, (c) repairs for preservation of the property, (d) state, county and city taxes, (e) fire insurance, and (f) what amount Dell Fundaburk and Minnie Reynolds should be paid for their personal services rendered for the common benefit of the estate.
The parties stipulated as follows:
That the mortgage payments to the Home Owners Loan Corporation totaled $3,965.54 on the principal and $4,760.80 for interest; that expenditures for repairs amounted to $1,211.08; that the total paid for taxes and insurance was $3,945.56; and that the reasonable rental value of the property during the period of time in controversy was $13,885.
The register found and reported as follows: That the rents and income received by Dell Fundaburk and Minnie Reynolds totaled $83,675; that in operating the hotel business they expended $76,285.83; that they also expended the following amounts: $3,965.54 principal and $4,760.80 interest on the mortgage; repairs and preservation of the property, $1,211.08; and taxes and insurance, $3,945.56. The register also found that Dell Fundaburk and Minnie Reynolds should be paid $100 each, per month, for services rendered for the common benefit of the estate in operating the hotel.
Complainants filed exceptions to the register's report with respect to the finding of expenses in operating the hotel, on the ground that "the expense of operating a hotel business by the respondents is not a proper charge against the joint property." Exception was also taken to that part of the report finding that Dell Fundaburk and Minnie Reynolds should be paid $100 per month each for personal services rendered in operating the hotel.
*713 The trial court, in effect, held as follows:
"1. That the expenses of operating the hotel were not proper charges against the joint property for which the other joint owners should be held accountable.
"2. That the operation of the hotel by Dell Fundaburk and Minnie Reynolds was for their own benefit and not for the common benefit of the joint owners of the property; that there was no agreement, express or implied, that said parties were to be paid for such services; and that said parties are not entitled to compensation from the proceeds of the sale of the property for such services.
"3. That since the reasonable value of the use and occupation of the jointly owned property, which was in the sole possession of the respondents, Dell Fundaburk and Minnie Reynolds, was in excess of all payments made by them for the protection and preservation of the property, the value of the use and occupation should be [and] the same is hereby set off against the amounts paid out by the respondents, Dell Fundaburk and Minnie Reynolds, for the protection and preservation of the property while the same was in the sole possession and used by them for operating a public hotel."
It is apparent that the "rents and profits" from the hotel operations came to $7,389.17, being the difference between receipts of $86,675.00 and expenses of $76,285.83; and that the expenditures by Dell Fundaburk and Minnie Reynolds for repairs, taxes, insurance and mortgage payments totaled $13,882.98. The position which they take is that they should be reimbursed out of the proceeds of the sale, before distribution, the sum of $6,493.81, which represents the balance of said $13,882.98 after crediting against it the "rents and profits" of $7,389.17. We note that no insistence is here made that they are entitled to compensation for personal services.
On the other hand, appellees take the position that the trial court very properly set off the reasonable value of the use and occupation of the property ($13,885.00, as stipulated) against the payments for protection and preservation of the property ($13,882.98). Our problem, then, is to determine whether this was error.
This is not a case of one cotenant seeking a pro-rata part of "rents" collected by another cotenant from third parties, but involves instead the adjusting of equities between cotenants in a partition proceeding where some have been in sole possession of the property. It is provided by statute that, in partition proceedings, the court "shall proceed according to its own practices in equity cases", Code 1940, Tit. 47, § 186, and "may adjust the equities between and determine all claims of the several cotenants", Code 1940, Tit. 47, § 189. And, as we see it, that is what the trial court did in this case.
We have consistently approved the general principle that "a friendly occupancy of the common estate by one tenant does not render him liable to account for rents and profits". Rehfuss v. McAndrew, 250 Ala. 55, 57, 33 So. 2d 16; Warner v. Warner, 248 Ala. 556, 566, 28 So. 2d 701; Burk v. Burk, 247 Ala. 91, 92, 22 So. 2d 609; Turner v. Johnson, 246 Ala. 114, 115, 19 So. 2d 397; Cochran v. Leonard, 204 Ala. 163, 164, 85 So. 693; McCaw v. Barker, 115 Ala. 543, 548, 22 So. 131; Gayle v. Johnston, 80 Ala. 395, 400; Wilkinson v. Stuart, 74 Ala. 198, 204, 205; Fielder v. Childs, 73 Ala. 567, 572, 573; Newbold v. Smart, 67 Ala. 326, 331, 332.
The principle is thus stated in Rehfuss v. McAndrew, supra [250 Ala. 55, 33 So.2d 17]:
In Warner v. Warner, supra, this court stated as follows [248 Ala. 556, 28 So.2d 710]:
In Burk v. Burk, supra [247 Ala. 91, 22 So. 2d 609], it was stated as follows:
From Turner v. Johnson, supra [246 Ala. 114, 19 So. 2d 398], is the following:
We quote the following rule from Cochran v. Leonard, supra [204 Ala. 163, 85 So. 694]:
In McCaw v. Barker, supra [115 Ala. 543, 22 So. 132], it is stated:
From Gayle v. Johnston, supra, we quote the following:
The rule, as stated, was first announced in Wilkinson v. Stuart, supra, as follows:
The following discussion and statement of the rule is from Newbold v. Smart, supra:
There is no dispute about the occupancy of Dell Fundaburk and Minnie Reynolds coming within the stated rule. Being so, it might be observed that there would be no difficulty in finding them not liable for "rents and profits" if that question, as presented by the original bill, had remained the one issue for equitable adjustment between the cotenants. However, said tenants in possession seek reimbursement, out of the proceeds of sale, of expenditures which they claim they have made for the benefit of the common property. When such is the situation, there is presented the task of adjusting the equities between the several cotenants. As stated in Freeman on Cotenancy and Partition, Sec. 505, p. 674:
In Henderson v. Stinson, 207 Ala. 365, 367, 92 So. 453, 454, it is said:
The Taxas Supreme Court, in Roberts v. Roberts, 136 Tex. 255, 150 S.W.2d 236, 238, 136 A.L.R. 1019, discusses the principle as follows:
In the Indiana case of Porter v. Mooney, 64 Ind.App. 479, 116 N.E. 60, 63, it is said:
Would it be just and equitable, in a partition proceeding, for a tenant in sole possession to have the benefit of the use and occupation and the "rents and profits" incident to such use and occupation, without accounting therefor, and still be permitted to have contribution from the other cotenants for expenditures made in maintaining and protecting the common property? That is the question presented here.
In Gordon v. McLemore, 237 Ala. 270, 274, 186 So. 470, 474, we stated as follows:
The interpolation there made by this court is of significance here and has reference to the rule that "where one tenant in common actually receives rents for the common property from those to whom he rents it, he may be compelled to account for such profits actually received.'" Rehfuss v. McAndrew, 250 Ala. 55, 33 So. 2d 16, supra. To the same effect is Faust v. Faust, 251 Ala. 35, 37, 36 So. 2d 232, 233, from which the following is quoted:
The interpolation also has reference to the principle that a cotenant in possession may be accountable for the rental value when there is an agreement to that end or there has been an ouster of the other cotenant. Henderson v. Stinson, 207 Ala. 365, 366, 92 So. 453, supra; Gayle v. Johnston, 80 Ala. 395, 400, supra; Newbold v. Smart, 67 Ala. 326, 331, supra. In the last cited case it is said that "unless the one in actual possession denies to the other the right to enter, or agrees to pay rent, nothing can be claimed for such occupation". But this principle has no application here since there was neither an agreement to pay rent nor an ouster.
If there were any "rents" collected by the tenants in possession from third parties, it was in the form of pay for use of rooms in the hotel. The usual rate was $1.50 per day; but can this be said to be "rents" collected by the tenants in possession within the rule requiring them to account therefor? As we view it, under the evidence in this case, such pay was simply an element in determining what, if any, "profits" were received by the tenants in possession in connection with their operation of a hotel business on the property. The tenants in possession introduced in evidence an account showing the annual receipts and expenses in operating the hotel. There is no separation of "rents", as such, from receipts for board. The account merely shows lump sums received annually for "rooms and board". So, even if it could be said that the pay for "rooms" should be accounted for as "rents", there is no way of ascertaining, from the evidence, the amount thereof.
The one question which has given us most concern is the right of the tenants in possession to contribution from the other cotenants for payments on the principal of the mortgage. In Troy v. Protestant Episcopal Church, 174 Ala. 380, 387, 56 So. 982, 983, it is stated as follows:
In Salter v. Odum, 240 Ala. 462, 465, 199 So. 687, 689, the right of a cotenant who pays off a mortgage on the common property is thus declared:
However, it is clear that those cases do not have reference to the right to contribution of a cotenant in sole possession. We have already quoted from the case of Gordon v. McLemore, 237 Ala. 270, 274, 186 So. 470, supra, wherein approval was given to the rule stated in 7 R.C.L. 824. In that case the question involved was the right to contribution for permanent improvements made and taxes paid. It was there noted that the question of contribution to a cotenant in possession for taxes paid by him had not theretofore been before this court. Nor do we find that there has been before this court the question of the right of a cotenant in possession to contribution for interest and principal payments made by him on a mortgage against the property. Insofar as mortgage interest is concerned, we are content to follow the same rule from 7 R.C.L. 824, approved in Gordon v. McLemore, supra, in holding that such interest payments, like taxes, are not reimbursable. Included in the rule, as stated in 7 R.C.L. 824, but omitted from the quotation approved in Gordon v. McLemore, supra, is the "payment of interest on a subsisting mortgage". It is to be noted that no mention is made in the rule with respect to payments in reduction of the principal amount due on the mortgage. Thus, we must decide whether, under the facts here present, the tenants in possession are entitled to reimbursement, out of the proceeds of the sale, of payments made by them on the mortgage principal. The answer to this, we think, may properly be resolved in adjusting the equities between the cotenants. The trial court found that the rental value for the use and occupation by the tenants in possession was a complete offset for all of the items of expenditure made by them, including the payments on the mortgage principal. We see no basis for a reversal of such finding. We have no way of knowing how the parties arrived at the value of the use and occupation as stipulated and cannot say that setting off such value against the expenditures was not a fair and equitable adjustment of the claims between the several cotenants.
*719 From what we have said it follows that the decree of the trial court is due to be, and is, affirmed.
Affirmed.
LIVINGSTON, C. J., and SIMPSON and MERRILL, JJ., concur.