Court Opinion

ID: 3226992
Source: CourtListenerOpinion
Date Created: 2016-07-05 16:03:22.315902+00
Date Added: 2024-06-11T09:22:10.547552
License: Public Domain

Appellee, S.E. Thompson, filed the bill in this cause to foreclose a mortgage and for a deficiency decree against appellant in the event a sale of the mortgaged property *Page 146 
should fail to produce the amount of appellee's debt. Appellee, for value and before maturity, had acquired a note and mortgage executed by one Ebersole, the note and mortgage in litigation, by assignment from one Roy C. Thompson, while appellant became involved in the personal liability asserted against him by accepting, as appellee averred in his bill, from the mortgagor Ebersole a deed containing a recital to the effect that the title conveyed was subject to outstanding mortgages for $3,750, which were assumed by the appellant as a part of the purchase price. One Letaw held a first mortgage for $3,000, but, incidentally, it appears that his mortgage had been foreclosed prior to the filing of the bill in this cause, though with what result in money does not appear. The mortgage assigned to appellee was a second mortgage for the sum of $750. Appellee's mortgage is not denied, and of course he was entitled to a decree of foreclosure. The controversy brought here for decision is about the deficiency decree which the circuit court, sitting in equity, gave against appellant.
After considering the evidence we infer that the trial court found appellee to be a bona fide purchaser of Ebersole's $750 note and its attendant security, and that a deficiency decree was passed against appellant on the theory that his defense was not available against the thus ascertained status of appellee's right. Conceding that appellee was a bona fide purchaser of Ebersole's note and mortgage, we shall briefly state our consideration of the case thus presented.
The defense was and is that there was no delivery of the deed to appellant and so that he never became a party to the recited assumption of the outstanding mortgage indebtedness, or that, if there was a manual delivery of the deed to appellant's agent and by a subsequent recordation of the deed — this being the delivery contended for — it was imposed upon his agent and upon himself by an artifice conceived and practiced with a purpose to conceal from him the fact that the deed contained the recital in question, and that appellant, upon discovering the fraud, promptly repudiated the alleged obligation and offered to restore rents he had received from the property in the meantime.
It may be further conceded that, if appellant accepted the deed with knowledge of the recital in question, he thereby became personally and primarily liable for the debts according to the recital, and — this being said in view of appellee's claim of an attorney's fee — that such liability carried with it all the incidents of a mortgage security (People's Savings Bank v. Jordan, 76 So. 4421; that the delivery of a deed may be efficaciously made to an agent without the personal presence of the grantee; and where the agent has general authority to purchase, he may bind his principal by assuming a mortgage on the land purchased (Cravens v. Rossiter, 116 Mo. 338,22 S.W. 736, 38 Am. St. Rep. 607; Schley v. Fryer, 100 N.Y. 71,2 N.E. 280), these propositions being advanced by appellee as conducing to an affirmance of the deficiency decree rendered in his favor by the court below.
The grantee's obligation to the mortgagee in such case depends upon contract between him (the grantee) and his grantor, of which the recital in the accepted deed becomes evidence; but the authorities hold, upon what seems to be good reason, that where such an agreement is by mistake or fraud incorporated in the deed without the knowledge of the grantee, and is promptly disaffirmed by him upon discovery, he cannot be held to the undertaking by the mortgagee. Bogart v. Phillips,112 Mich. 697, 71 N.W. 320; 27 Cyc. 1347. In Kilmer v. Smith,77 N.Y. 226, 33 Am. Rep. 613, it is ruled that mutality of mistake is not necessary to the relief of the grantee in such cases, and that the ignorant party is entitled to relief, notwithstanding the other acted advisedly and upon full information, for that being admitted, there is fraud. To the same effect is Dey Ermand v. Chamberlain, 88 N.Y. 658. We quote from a high authority comment upon cases of the kind as follows:
"The truth is, in almost all cases of this character, there will be found sufficient, although it may be but slight evidence, that the party acted either upon want of consideration, which amounts to legal surprise, or upon the enticement or suggestion of some one in the interest of the other party, and this will constitute fraud." 1 Story, Eq. Jur. (12th Ed.) note to section 138c.
The case of Hayden v. Snow (C. C.) 14 Fed. 70, 9 Biss. 551, cited and stressed by appellee as holding to the contrary, and which we find cited in the latest edition of Jones on Mortages, was overturned upon this point by the Supreme Court of the United States. Drury v. Hayden, 111 U.S. 223, 4 Sup. Ct. 405,28 L.Ed. 408.
As between the bona fide assignee of the mortgage creditor and the grantee of the mortgaged premises who has become ignorantly involved in an apparent assumption of the mortgage debt the case stands upon a different footing to some extent; still the liability in such case rests upon the contract relation between the parties to the conveyance of the mortgaged premises, and the grantee who has not in fact assumed such an obligation can be held liable only in the event some matter of estoppel has arisen in favor of the assignee. 2 Jones, Mtgs. (7th Ed.) § 738.
The deed from Ebersole to appellant was recorded and afterwards appellant for some months, and until he was informed of that clause of the deed which would make him responsible for the mortgage debts, was in receipt of rents from the property. This *Page 147 
it is conceded was sufficient to make out a prima facie case of acceptance by appellant, and so of his responsibility on the assumption clause. But these facts are not conclusive proof of acceptance or of appellant's knowledge of the assumption clause (Gulf Red Cedar Co. v. Crenshaw, 169 Ala. 606, 53 So. 812; Cravens v. Rossiter, supra), and the case for appellee comes in such unquestionable shape that we are constrained to credit the unequivocal depositions of appellant and the witness Henry, appellant's agent in the transaction, who deny that either of them was aware that the deed contained the assumption clause until demand was made upon appellant for the appellee's mortgage debt — there is no testimony to the contrary — and our further conclusion upon the whole evidence is that appellant should not be estopped to assert his ignorance of the clause by the inference of knowledge that would ordinarily be drawn from the record of the deed and the receipt of rents; this for the reason that he was led into his situation with respect to the deed by the enticement or suggestion of Roy C. and H. A. Thompson, real estate men in Birmingham, who engineered the scheme by which appellant became involved, acting therein for themselves in fact, as real owners of the property, though apparently for Ebersole, in whom the legal title was, and one Tyler, who claimed to have purchased an equity in the property and proposed to convey the same to appellant the better to secure an old debt he owed the Farmers' Merchants' Bank at Goodwater, of which bank appellant was cashier. We find from the evidence, which need not be stated in detail, that the Thompsons — not, however, appellee, who appears to have had no relations of kinship or business with Roy C. and H. A. except in the matter of this one transaction — together with Ebersole and Tyler, both of whom had business connections of a subordinate sort with the Thompsons, collaborated to entice appellant into an apparent acceptance of a deed containing the assumption clause in dispute and, taking advantage of circumstances peculiarly favorable to such a scheme, so artfully managed to procure such acceptance without the knowledge of appellant or his agent of the presence of the clause in the deed as to amount to a suppressio veri; that there was no delivery other than by the act of one or the other of the Thompsons, Roy C. or H. A., who filed the deed for record in the office of the probate judge, where, or in the possession of the Thompsons, it remained until appellee demanded of appellant payment of the mortgage debt, after which, and upon learning of the presence of the clause, appellant promptly repudiated the entire transaction and offered to pay over the rents he had collected to whomsoever they might belong, afterwards bringing them into court with his answer in this cause; in short, that neither appellant nor his agent did actually agree to assume the mortgage debts, and the circumstances of such delivery as there was and of appellant's receipt of rents were such that in equity appellant ought not to be denied the right to aver and prove the veritable facts which go to a denial of the contract and, in consequence, appellant's personal liability.
The decree will be reversed, and the cause will be remanded, with direction that a decree be entered in accordance with this opinion.
Reversed and remanded.
ANDERSON, C. J., and McCLELLAN and GARDNER, JJ., concur.
1 200 Ala. 500.
                             On Rehearing.