Opinion ID: 1699154
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Heading Rank: 2

Heading: The Intervention Phase

Text: Peoples Bank loaned Russell $25,000 in August, 1957, due in one year with interest added to the note. As collateral, Russell assigned three insurance policies, having a cash surrender value of $4,500, and J. L. Crenshaw guaranteed payment of the note. When the note came due, Russell paid only the interest. A new note was made with the same insurance policies as collateral and a new guarantee by Crenshaw. When the second note came due, Russell paid neither principal nor interest but requested a renewal. The bank's investment committee approved a six months' extension, provided he would give as additional collateral a mortgage on his Montgomery County farm land. He agreed to give the mortgage and was directed to deliver his abstracts to the bank's attorney. The renewal was not delayed to await examination of abstracts and the execution of the mortgage because bank examiners were at the bank and both the bank and Russell desired to get the loan out of the defaulted status. A few days later, Russell's wife sued him for the divorce and asked for a division of his property. The bank asked Russell to carry out his agreement to execute the mortgage even though his wife did not sign it, but he refused, and the bank filed their petition for intervention, asking for an equitable lien on his farm lands. Appellant makes three contentions as to why an equitable mortgage or lien should not have been declared: The first is that the essence of equitable mortgage is to secure the advancement of money with which to purchase [lands]. If this were a correct statement of the law, then there could be no equitable mortgage in the instant case. But our cases hold otherwise. In Roberts v. Lindsey, 242 Ala. 522, 7 So. 2d 82, this court held that a contract which provided that if the builder would erect a filling station on the owner's land, the builder would have a lien on the property until he was paid, created an equitable lien which was subject to foreclosure. In Murphy v. Carrigan, Ala., 116 So.2d 568, we held that a builder who had been promised a mortgage for moving and repairing a house was entitled to an equitable mortgage. In Bishop v. McPherson, 232 Ala. 594, 168 So. 675, 678, it was said that the following quotation from 41 C.J., § 33, p. 293; 59 C.J.S. Mortgages § 13, finds abundant support in our own adjudications: `Courts of equity are not governed by the same principles as courts of law in determining whether a mortgage has been created, and, generally whenever a transaction resolves itself into a security, or an offer or attempt to pledge land as security for a debt or liability, equity will treat it as a mortgage, without regard to the form it may assume. Although the conveyance in question may lack the formal requisites of a mortgage, or be expressed in inapt or untechnical language, equity will look to substance and give effect to the intention of the parties.' In Woodruff v. Adair, 131 Ala. 530, 32 So. 515, 519, it is stated:    `There are many kinds of equitable mortgages, as there are variety of ways in which parties may contract for security by pledging some interest in lands. Whatever the form of the contract may be, if it is intended thereby to create a security, it is an equitable mortgage, that is, of course, if it is not a legal mortgage.' Hall v. Mobile & M. R. Co., 58 Ala. 10, 22.    In Murphy v. Carrigan, Ala., 116 So.2d 568, 571, we said: In order for an equitable mortgage to exist, it is essential that the mortgagor have a mortgageable interest in the property sought to be charged as security; that there be clear proof of the sum which it was to secure; that there be a definite debt, obligation or liability to be secured, due from the mortgagor to the mortgagee; and the intent of the parties to create a mortgage, lien or charge on property sufficiently described or identified to secure an obligation. Barnett v. Waddell, 248 Ala. 189, 27 So.2d 1; Pollak v. Millsap, 219 Ala. 273, 122 So. 16, 65 A.L.R. 110; Jones v. Stollenwerck, 218 Ala. 637, 119 So. 844; 59 C.J.S. Mortgages §§ 13 and 15. All of these elements are present in the averments of the cross-bill. All of these elements exist in the instant case. We, therefore, hold that this was a proper case for the application of an equitable mortgage. Appellant's second contention is that the renewal or extension of the debt by the bank in reliance on appellant's promise to execute a mortgage on his farm lands was not sufficient consideration to support an equitable mortgage. We cannot agree. In Roberts v. Lindsey, 242 Ala. 522, 7 So.2d 82, 84, we said: A test of good consideration for a contract is whether the promisee at the instance of the promisor has done, forborne or undertaken to do anything real, or whether he has suffered any detriment, or whether in return for the promise he has done something he was not bound to do, or has promised to do some act or to abstain from doing something. Presbyterian Board of Foreign Missions v. Smith, 209 Pa. 361, 58 A. 689. That the instant contract meets that test is obvious beyond the necessity of elaboration. In 59 C.J.S. Mortgages § 92, it is said: The forbearance of a creditor to sue on a debt or claim or his extension of time for payment of the debt or interest thereon may constitute a sufficient consideration for a mortgage. Some of our cases so holding are Hartford Fire Ins. Co. v. Clark, 258 Ala. 141, 61 So. 2d 19; Moore v. First National Bank, 139 Ala. 595, 36 So. 777; Starr Piano Co. v. Baker, 8 Ala.App. 449, 62 So. 549. Cases from other jurisdictions specifically holding that the granting of an extension of time to pay an indebtedness is sufficient consideration to support the giving of additional security for a pre-existing debt are: Panama Savings Bank v. Arkfeld, 228 Iowa 313, 291 N.W. 182; Hawe v. Johnson, 130 Neb. 320, 264 N.W. 760; Havel v. Havel, 145 Kan. 650, 66 P.2d 399; Hahn v. Hahn, 123 Cal.App.2d 97, 266 P.2d 519; Portland Cattle Loan Co. v. Hansen Livestock & Feeding Co., 43 Idaho 343, 251 P. 1051; Dempsey v. McKenna, 18 App.Div. 200, 45 N.Y.S. 973. Appellant's third contention is that the evidence does not support the establishment of an equitable mortgage. Not only do we regard the evidence sufficient, and it supported the statement of facts in this phase of the case, but appellant did not help his cause when he testified that he did not know the value of his farm land; his own telephone number; how many rooms are in the house he lives in; what his net worth was; how much land he was leasing; how many cattle he owned; how many eggs he was getting on his chicken farm; how much of his land is open land; how many cattle he sold in 1958; whether his chicken farm is on his own land or leased land; whether he owns a controlling interest in a corporation of which he is the president; who his landlord is; the value of improvements on his land; the value of his own house, or how much equity he has in it; whether he owned a tractor or whether he owned a truck; or his monthly or yearly income. Lastly, appellant argues that the court erred in allowing the intervenor a solicitor's fee. Appellant's note, which was in evidence, provided for all costs of collecting or securing or attempting to collect or secure this note, including a reasonable attorney's fee. Evidence of a reasonable attorney's fee was before the court, and such a stipulation in the note has been held to include an attorney's fee in a suit in equity to enforce a vendor's lien on the land, Johnson v. Durner, 88 Ala. 580, 7 So. 245, and no error was committed in the allowance of same. The decree of the trial court on the petition for intervention is affirmed.