Title: Newell v. Newell
Citation: N/A
Docket Number: 1160851
State: Alabama
Issuer: Alabama Supreme Court
Date: December 15, 2017

Rel: December 15, 2017
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter.  Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-
0649), of any typographical or other errors, in order that corrections may be made before
the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
OCTOBER TERM, 2017-2018
____________________
1160851
____________________
Alan Newell
v.
Floyd Newell
Appeal from Franklin Circuit Court
(CV-13-900037)
MAIN, Justice.
Alan Newell appeals from a summary judgment entered
against him on various claims and counterclaims relating to
two tracts of real property located in Franklin County.  For
the following reasons, we reverse and remand.  
1160851
I.  Facts and Procedural History
This appeal arises from a dispute between a father, Floyd
Newell, and his son, Alan, regarding the ownership of two
tracts of land located in Franklin County.  The two tracts are
farmland referred to, respectively, as "the Hester farm" and
"the DeVaney farm."1  Floyd is the title owner of the two
properties.  Alan, however, claims to be the true owner of the
properties and asserts that the properties were deeded to
Floyd only as security for loans Floyd made to Alan to
purchase the land.
On February 21, 2013, Floyd sued Alan, asserting claims
of ejectment and detinue.  Specifically, Floyd alleged that
Alan was unlawfully withholding possession from Floyd of the
Hester farm and the DeVaney farm, as well as a number of items
of personal property allegedly belonging to Floyd.  Alan filed
a counterclaim that also alleged claims of ejectment and
detinue.  Alan contended that it was, in fact, Floyd who had
wrongfully obtained possession of the Hester farm and the
DeVaney farm and who was precluding Alan's rightful access to
the properties.  Alan also contended that Floyd was wrongfully
1The DeVaney farm is also sometimes referred to in the
record as "the McAfee farm."
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withholding various items of Alan's personal property.  Alan
subsequently amended his counterclaim to add counts seeking a
declaration of an equitable mortgage for both the Hester farm
and the DeVaney farm.  Alan contended that he purchased each
property with a loan from Floyd and that the deed to each
property was placed in Floyd's name as security for purchase-
money loans.
Floyd moved for a summary judgment as to the ejectment
and equitable-mortgage counterclaims, contending that there
was no genuine issue as to any material fact regarding the
ownership of the two properties.  The deposition testimony of
Floyd and Alan was submitted in support of and in opposition
to the summary-judgment motion.  That testimony is hopelessly
at odds.
Alan testified that the Hester farm was purchased in
1992.  He claims that, upon learning that the farm was for
sale, he arranged financing to purchase the property from a
local bank.  According to Alan, before the closing on the sale
of the property, Floyd offered to finance the purchase so long
as Alan agreed to repay the full purchase price of $65,000,
plus $5,000 in interest.  Alan says that, at the time of
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purchase, he paid Floyd $35,000 toward the purchase price. 
According to Alan, the title to the Hester farm was placed in
Floyd's name as security for the loan Floyd made to Alan. 
Alan claims that he made payments toward the loan and that it
was paid off in 1999.  Alan also claims that he was in
possession of the Hester farm following its purchase.  He
testified that he raised cattle on the Hester farm for several
years; that he built an entrance to the farm secured by a
gate; that he paid half the cost of constructing a barn on the
farm; and that he placed a mobile home and a camper on the
farm.
As to the DeVaney farm, Alan contends that he also
purchased this property through a loan from Floyd and that the
title to the DeVaney farm was, like the Hester farm, held by
Floyd as security for the loan.  Alan testified that the
property was purchased at auction in 1995 for $89,000.  Alan
contends that repayment of the loan he used to purchase the
DeVaney farm was accomplished by the withholding of $10,000 in
annual compensation that he was allegedly due from the family
business.  Specifically, he claims that he was a partner in
Floyd's heating and air-conditioning business and that, as
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part of his compensation, the company was making a $10,000 per
year contribution into a retirement account established for
Alan.  Alan claims that he and Floyd agreed that Floyd would
withhold the retirement contribution for nine consecutive
years to pay off the loan.  Alan states that he kept cattle on
the DeVaney farm; that he cut, hauled, and stored hay on the
farm; that he built a fence and gates around the farm; and
that he paid for all the improvements to the farm.
Floyd flatly denies Alan's claim of ownership of the two
farms.  Floyd contends that he purchased both the Hester farm
and the DeVaney farm and that he owns the farms outright.  He
denies lending Alan money to purchase the properties.  He
denies that Alan made any payments to him toward the purchase
price of the farms.  He disputes claims that Alan made
improvements to the farms.  He denies that Alan was a partner
in his heating and air-conditioning business or that any
retirement account or contribution was ever set up for Alan or
that he received any payment from Alan through withholding
such funds.  Floyd admits to no more than allowing Alan to use
the properties in varying degrees over the years.
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On August 3, 2015, the trial court entered a partial
summary judgment in favor of Floyd as to the ejectment claim
and counterclaim and as to Alan's claim seeking recognition of
an equitable mortgage.  The trial court specifically held that
the basis for Alan's claim of ownership of the two tracts of
real property was barred by the Statute of Frauds.  On May 15,
2017, the trial court entered a final judgment disposing of
all remaining claims.  This appeal followed.
II.  Standard of Review
Alan's appeal concerns only the claims disposed of by the
partial summary judgment.  Our review of a summary judgment is
de novo.  Tanner v. State Farm Fire & Cas. Co., 874 So. 2d
1058, 1063 (Ala. 2003).  In reviewing a summary judgment, we
apply the same standard used by the trial court -- whether
there has been a showing that there is no genuine issue of
material fact and that the movant is entitled to a judgment as
a matter of law.  Rule 56, Ala. R. Civ. P.; Bond v.
McLaughlin, [Ms. 1151215, Feb. 24, 2017] __ So. 3d __, ___
(Ala. 2017).  Moreover, we review all evidence in the light
most favorable to the nonmovant.  Foster v. North Am. Bus
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Indus., Inc., [Ms. 1150716, April 28, 2017] __ So. 3d __, ___
(Ala. 2017).
III.  Analysis
On appeal, Alan argues that there are material facts in
dispute concerning his interest in the Hester farm and the
DeVaney farm such that a summary judgment on the ejectment and
equitable-mortgage claims was improper.  Specifically, he
contends that he presented sufficient evidence to support his 
equitable-mortgage claim.  Further, he contends that his
equitable-mortgage claim is not subject to the Statute of
Frauds.  Floyd, on the other hand, contends that the trial
court properly concluded that the Statute of Frauds barred
Alan's claims and also questions the sufficiency of the
evidence submitted by Alan in response to the motion for a
summary judgment. 
It is clear from Alan's pleadings and from the arguments
made in this Court and in the trial court that what Alan terms
an "equitable mortgage" is what this court has long recognized
as a "resulting trust in the nature of an equitable mortgage."
"When one person makes a loan to another with
which to purchase lands, and by mutual agreement a
deed is made directly from the vendor to the lender
as security for the loan, the transaction partakes
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of the nature both of a resulting trust and a
mortgage.  A resulting trust, because the money
loaned becomes that of the borrower, and the title
acquired with his money is taken in the name of
another; a mortgage, because it is given as security
for the debt due from lender to borrower.
"For convenience this court has come to call it
a trust in the nature of an equitable mortgage.  For
purposes of equitable relief it is treated as a
mortgage.  It is not subject to the statute of
frauds."
O'Rear v. O'Rear, 220 Ala. 85, 86, 123 So. 895, 896 (1929). 
Stated another way:
"[W]hen complainant procures a loan of the funds
from respondent, such funds belong to complainant,
although provided by respondent; and that when title
is taken in respondent as security for the loan, the
respondent is held to receive the title in trust,
and as complainant provided the funds it is a
resulting trust in the nature of a mortgage, and the
statute of frauds does not apply."
Pollak v. Millsap, 219 Ala. 273, 276, 122 So. 16, 19 (1928).
See also Dorman v. Knapp, 284 Ala. 387, 390, 225 So. 2d 799,
801-02 (1969);  Holman v. Weed, 248 Ala. 179, 181, 26 So. 2d
721, 722 (1946); Leonard v. Duncan, 245 Ala. 320, 322-23, 16
So. 2d 879, 881 (1944); and Gunter v. Jones, 244 Ala. 251,
253, 13 So. 2d 51, 53 (1943). 
A resulting trust in the nature of a mortgage arises by
implication of law and is therefore not subject to the Statute
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of Frauds.  See, e.g., § 19-3B-1301, Ala. Code 1975 ("No trust
concerning lands, except such as results by implication or
construction of law, ... can be created, unless by instrument
in writing ...."); McClellan v. Pennington, 895 So. 2d 892,
897 (Ala. 2004); and Perryman v. Pugh, 269 Ala. 487, 493, 114
So. 2d 253, 259 (1959) ("The equity sought to be enforced
under the trust aspect is one which arises by operation of law
and is not dependent upon a contract; hence, the statute of
frauds is no obstacle to the establishment of such trust.").
In this case, because the Statute of Frauds is not
applicable to a claim seeking a declaration of a trust in the
nature of an equitable mortgage, the summary judgment entered
on that basis was in error.2  
Furthermore, nearly every fact relevant to Alan's
counterclaim seeking an equitable mortgage is disputed.  Alan
2We note that, in light of the recognition that a trust
in the nature of an equitable mortgage may be proved by parol
evidence, this Court has required that such proof be clear and
convincing.  See, e.g., Dorman, 284 Ala. at 391, 225 So. 2d at
802 ("'[T]o entitle a complainant to relief in such cases, the
testimony 
must 
be 
clear, 
consistent, strong, 
and 
convincing.'"
(quoting Knaus v. Dreher, 84 Ala. 319, 319, 4 So. 287, 288
(1888))).  We make no comment at this time, however, regarding
the application of this standard to the evidence before the
trial court on summary judgment, and we do not mean to express
any opinion as to the ultimate merits of the case. 
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maintains that Floyd loaned him the money to purchase the
Hester farm and the DeVaney farm and took the deeds to those
properties as security for the loans.  Floyd, on the other
hand, denies the loans all together.  Given the elemental
nature of these disputed facts, summary judgment was
inappropriate.  See McClellan, 895 So. 2d at 897 (holding that
genuine issues of material fact precluded summary judgment as
to claim of a resulting trust).
IV.  Conclusion
Because the Statute of Frauds does not prohibit the
establishment of a resulting trust in the nature of an
equitable mortgage by parol evidence and because there are
genuine issues of material fact regarding whether a resulting
trust in the nature of an equitable mortgage was created, the
summary judgment entered by the trial court was improper. 
Accordingly, that judgment is reversed, and the case is
remanded 
for 
further 
proceedings consistent with 
this 
opinion.
REVERSED AND REMANDED.
Stuart, C.J., and Bolin, Murdock, and Bryan, JJ., concur.
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