Opinion ID: 1700164
Heading Depth: 1
Heading Rank: 3

Heading: C. 1058-BThe Bank Action

Text: This case, as discussed above, involves a foreclosure by the First National Bank of Birmingham on certain lots awarded Brown and Bateh by the August 31, 1971 decreewhich dissolved the partnership. Each party was ordered to assume one-half of a note due the Bank. The lots and certain listed securities served as security for the note. Because of the partners' dispute, the Bank gave notice of foreclosure on the two lots. A coin toss determined that Brown's lot would be sold first. A Mr. Nick Fawal offered $92,500 which he paid the Bank's attorney. Brown then requested the excess of the sales proceeds over the $87,000 debt. He offered to deliver a warranty deed. The Bank returned the money to Fawal, believing that legal action would be taken if the sale were consummated. Brown then sued the Bank in a separate action for failure to close the sale and for the surplus collateral. The Bank filed a petition in equity to foreclose on Brown's mortgage. Judge Barber then restrained Brown from proceeding with his separate suit against the Bank, pending a final decree in the partnership case. Subsequent to the trial a foreclosure sale was conducted. Brown entered the highest bid, $65,000, but failed to pay the purchase price into the registry of court. The sale was never confirmed. On June 14, 1974, Judge Barber included an order of foreclosure in his final decree. At the same time he made the temporary injunction permanent. Brown has assigned as error the noncompliance of Judge Barber's order making the temporary injunction permanent with Rule 65(d) ARCP. Bateh counters with the argument that, even if the order does not comply with Rule 65(d), Brown has not been substantially harmed. His interests have been litigated in the instant action; he has merely been stopped from prosecuting a separate action. Brown has not complained of the substantive right to enter the permanent injunction. He has never denied the debt due the Bank. The Bank argues this also. Brown replies that he is arguing more than a technical failure, that he has a right to have the reasons for the injunction set out. The Bank's parry is that Brown was given an opportunity to litigate the Bank's justification in aborting the first foreclosure sale, in the Bank's equity suit for foreclosure. Additionally, Judge Barber's order only amended the temporary injunction, making it permanent. The Rule 65(d) requirements were met. The Bank wants to be able to foreclose in peace; it contends that the aborted foreclosure under a power of sale cannot preclude its foreclosure action in equity. This latter contention was not raised by Brown on appeal. In any case, we agree that the Bank should be allowed to foreclose, as Judge Barber decided. If there was any error in the order making the injunction permanent, it was harmless. On December 3, 1974, Brown filed three petitions for alternative writs of mandamus, asking that Judge Barber be ordered to set aside his final decrees entered on June 14, 1974, or show cause why he should not do so. The same grounds were alleged as in Brown's appeal, filed on November 15, 1974. The mandamus petitions were continued by this court on December 4, 1974, to be submitted at the time of the submission of the appeal. Bateh has claimed that Brown has waived his mandamus petitions by not arguing them. Brown has answered that this contention is without authority, that no brief is required on a mandamus petition prior to submission. We do not need to reach this question in denying the petitions for mandamus. The same issues are at stake on appeal. Brown's contentions will be answered with the merits of his appeal. In addition to all of Brown's assignments of error, Bateh has presented us with a question we must answer. He has filed a motion to dismiss Brown's appeal. This motion, filed on April 23, 1974, was continued to be submitted at the time of the submission of the appeal. In this motion Bateh has alleged numerous grounds for dismissal, some substantive, some procedural. The gist of the substantive reasons put forth for dimissal is that Brown has accepted the fruits of Judge Barber's final decrees, and has wasted them, thus becoming unable to make restitution should he prevail on appeal. By so doing Brown has waived any objections to Judge Barber's decrees. Brown cannot avail himself of the decrees and also attack them. The court will address itself to these contentions infra. They are identical with the ones brought up on appeal. Bateh has also accused Brown of several procedural infractions. Allegedly Brown failed to issue citations of appeal to Bateh's sons; he delayed in filing the transcripts of the evidence; he delayed in filing the transcripts of record; he violated Rule 37 in filing a motion for extension with someone other than the trial judge; he failed to furnish various appellees with copies of the appeals transcripts, and with copies of his briefs. Bateh asks, rhetorically, if his motion to dismiss is hypertechnical. We are not going to answer this now, for we shall address the substantive issues of the appeal first. Numerous questions have been left open in our opinion thus far. We shall now answer them and resolve the dispute. 1. Did Brown properly raise Judge Barber's failure to order a new trial? Yes, either appeal or in the alternative, mandamus, was the proper method of bringing the question before this court. As we stated supra, any failure of a trial judge to follow an order of this court is open to review. 2. Did Judge Barber commit reversible error in failing to hold a new trial? No, we agree with Bateh that a trial de novo was not necessary. The only reason Justice Merrill ordered a new trial was to establish evidence for an equitable distribution of the assets. Brown's acquiescence and waiver can be considered as having the same result as the settlement Justice Merrill encouraged. A new trial was necessary only if the parties could not agree or did not become bound to a scheme of distribution. Judge Barber, while not following the remand order to the letter, did accomplish what we wanted him to do. He developed the evidence necessary for an equitable partition. He presided at the first trial, received Morton's report, and heard arguments on the various motions filed by the parties after remand. 3. Is there evidence properly in the record to support Judge Barber's final decree? Brown, of course, has argued no. His view is that since a new trial should have taken place, no evidence from the first trial is competent. His affidavit, dated May 10, 1971, suggesting certain valuations, is almost five years old. His amended complaint, wherein he asked for partition of assets and division of debts is from the former trial and consequently stale. Bateh has asserted there is evidence competent against Brown. The initial decree was reversed because Justice Merrill felt there was no evidence competent against Bateh; there was, however, evidence competent against Brown. We need not resort to this, for in his Second Amendment to Bill of Complaint filed in open court on May 30, 1973, Brown reiterated his desire to have the assets and liabilities partitioned in-kind. He even proposed a division substantially similar to, if not identical with, the one later ordered by Judge Barber. Furthermore, the deputy register of the trial court certified in response to a writ of certiorari issued by this court on July 22, 1975, that the parties made admissions and statements in open court, not recorded, as to the equality of the division of the Docray Lands. To clinch the argument on this point, Bateh has sworn that Brown has dissipated certain of the assets awarded him. He has sold part of the Docray Lands; he placed a mortgage on the Hi-Way Host Motel in Hattiesburg, then sold his interest by warranty deed; he extended the amortization period of the mortgage and increased the interest rate on the Hi-Way Host Motel in Ozark; and he has permitted foreclosure, albeit by Bateh's wife, on the Motel Continental in Montgomery. He has also allowed foreclosure by the First National Bank, Bateh contends. We do not agree with this latter contention, for Brown has resisted said foreclosure in S.C. 1058-B. He has, however, given SECO stock awarded him by the decree to his children and their spouses. And he has, along with Bateh, asked that final tax returns be prepared on the property awarded him. For these reasons we think that Brown has waived his rights to complain that there was insufficient evidence to support Judge Barber's final decree. 4. Did the trial judge err in his partnership distribution scheme? We think not. While the dictates of Title 43, § 31 were not followed precisely, we emphasize that we find no reversible error. The law in this state has long recognized the flexibility of the chancellor in equity. Equity applies its own established principles, and it has its own flexible modes of procedure. Donnor v. Quartermas, 90 Ala. 164, 8 So. 715 (1890). Naturally, all equities should be settled and all claims adjusted. Bean v. Northcutt, 240 Ala. 289, 199 So. 7 (1940). We are convinced that Judge Barber has settled all the equities in this case, except for the award to Bateh, Jr., which has been discussed supra. Brown has bound himself to an in-kind distribution by his amendments to his complaint. As stated above, in his Second Amendment he said he would be satisfied with a division of the partnership debts. All the creditors have accepted such a division. They are bound by the final decree since their time for appeal has expired. Brown's contention that his asking for payment or provision for payment of partnership debts constituted merely a general plea for relief is without merit. So, too, is his contention all of the creditors of the partnershipnamely, First Federal Savings and Loan of Bessemerare not bound by the decree. Brown's and Bateh's obligation on the note to First Federal is only secondary. Even if the primary obligor, Inreco Corporation has defaulted, there is sufficient collateral to satisfy the obligation, the Holiday Inn in Bessemer. 5. Was it reversible error not to issue separate decrees? No, Judge Barber's failure to order all three cases consolidated was an oversight. In any event, Brown and his attorneys requested consolidation. He has not been harmed by the congruence of the decrees. 6. Was it error to grant Bateh and the creditors options to set aside the final decree? Again we find no prejudicial error. No one elected to exercise his option. Judge Barber, sitting as chancellor, was attempting to protect a delicate decree. He recognized that if he followed the mandate of Title 43, § 31 and sold all the business assets, there would be stunning tax consequences to the parties. For the above reasons we deny Brown's petition for mandamus, deny the motions to dismiss, and affirm the trial court's judgment, except for the award of $30,000 to Joseph A. Bateh, Jr. This we reverse, with instructions to treat the debt as discussed above. AFFIRMED IN PART, REVERSED IN PART, AND REMANDED WITH INSTRUCTIONS. HEFLIN, C.J., and BLOODWORTH, ALMON, and EMBRY, JJ., concur.