Court Opinion

ID: 6510668
Source: CourtListenerOpinion
Date Created: 2022-07-19 18:22:04.072515+00
Date Added: 2024-06-11T15:54:52.163221
License: Public Domain

SOMEEV1LLE, J.
— It is settled law, that where the proof of mistake is clear and satisfactory, as to a misdescription of land conveyed by deed or mortgage, equity will reform the instrument, so as to correct the mistake, where it can be done without injury to an innocent purchaser without notice. — Mills v. Lockwood, 42 Ill. 111.
Tested by the principle established in Uhlfelder v. Carter’s Adm’r, at the last term (64 Ala. 527), the mortgage given by Mitchell to Lehman, Durr & Co., was not usurious, and the chancellor erred in ordering the register to exclude from the account to be taken by him the amount, designated as liquidated 'damages, to which the mortgagees became entitled by Mitchell’s failure to deliver the cotton agreed by him to be delivered under the terms of the mortgage. The question of usury is one of intent, and is to be determined by the substance and effect, rather than by the mere form of the contract. The onus is upon the party seeking to impeach the transaction, to prove the guilty intent, and to show that the contract is really a mere loan, assuming the form of a device for the cover of usury. — 7 Wait’s Actions & Def. p. 622, § 14.
The stipulation made in this case, for commissions and storage on the cotton agreed to be delivered by the mortgagor to the mortgagees, Lehman, Durr & Co., was, under the circumstances, lawful and bona fide, and therefore free from usurious taint. The mortgagees were engaged in the commission business, and were also ware-housemen. The stipulation in question was in their usual course of trade, and tended to promote their regular business. The money loaned was advanced to make a crop for the current year, and it is evident that the actual delivery of the cotton was contemplated. In these particulars, this case is entirely dissimilar to that of Uhlfelder v. Carter’s Adm’r, supra, and its validity is fully sustained by the authorities. Cockle v. Flack, 93 U. S. (3 Otto), 344; Matthews v. Eve, 70 N. Y. 239 (S. C., 26 Amer. Rep. 583); Grubb v. Brooke, 47 Penn. 485.
Durr, being one of the mortgagees, could not purchase the trust estate at his own sale, without the consent of the mortgagor. The transaction was voidable, at the option of the mortgagor, seasonably expressed. It could be either ratified *519or disaffirmed. — 2 Brick. Dig. p. 500, §§ 156-166. So, likewise, of the re-sale by Durr to the appellant, Dozier, which was effected at a profit on the original purchase. Mitchell could either hold Durr to account as a trustee, as making the re-sale for his benefit, and thus have it ratified, so as to claim the profit or advanced price ; or he could ask for the sale to be disaffirmed and set aside entirely. He must have pursued either the one or the other of these alternative courses, which were antagonistic, and he could not pursue both simultaneously. — Cunningham’s Adm'r v. Rogers, 14 Ala. 147; Brackenridge v. Holland, 2 Blackf. (Ind.) 377; S. C. 20 Amer. Dec. 123.
The mortgagor, Mitchell, had the right to redeem only by the payment of the entire mortgage debt, with lawful interest and charges. The re-sale by Durr to Dozier, under such circumstances as to charge the latter with notice of existing equities, could not defeat or embarrass this right. The profits paid by Dozier to Durr do not enter into the question of redemption. — 2 Jones on Mortg. §§ 1070, 1038, 1075; Glidden v. Andrews, 14 Ala. 733. But the taxes paid by the mortgagee on the mortgaged premises are properly included in such charges. — 2 Jones Mort. § 1134.
In taking the account between the mortgagor and the mortgagees, or any purchaser from them with notice, the latter would, in ordinary cases, be accountable for fair and reasonable rents and profits of the mortgaged estate from the time of actually entering possession. This would include such rents as they may have received from others, or failed to collect by fraud, willful default, or gross negligence ; also, a reasonable occupation rent for any portion of the premises held by them under the mortgage. — Powell v. Williams, 14 Ala. 476; 3 Lead. Cas. Eq. (Hare & Wall.), * 891-892 ; 2 Jones Mort. § § 1123-24 ; Barron, Meade & Co. v. Paulling, 38 Ala. 292.
The mortgagee in possession is bound to make all reasonable and necessary repairs, and is responsible for any loss or damage occasioned by his willful default, ot gross neglect in this regard. He is also liable to account for voluntary waste, or such as is actually committed by him while personally in possession. — 2 Jones on Mortg. §§ 1123, 1126. This would, of course, include the pulling down or improper removal of houses or buildings attached to the freehold. Sandon v. Hooper, 6 Beav. 246; 3 Lead. Cas. Eq. (Hare & Wall.) * 892; Guthrie v. Kahle, 46 Penn. St. 331.
In estimating the rents, they are not to be charged upon the increased value of the property arising from improvements, but upon the estate as it was when it came into the *520hands of the mortgagees prior to such improvements. — 4 Kent’s Com. p. 166; Bell v. The Mayor, &c., 10 Paige, 49; 2 Jones Mort. § 1127.
This case is, however, governed by section 2966 of the present Code of 1876, which provides, that “ persons holding-possession under color of title, in good faith, are not responsible for damages or rent for more than one year before the commencement of" suit.” Although strictly applicable to suits at law, it has been applied, by analogy, to cases in the nature of equitable ejectment, like the present. Dozier purchased from Durr in good faith, and held possession under color of title. Hence, he is not chargeable with rent for more than one year before the commencement of the suit. — Dudley v. Witter, 46 Ala. 664. And he was entitled to compensation for improvements made, but not beyond the rents charged against him. — Ormond v. Martin, 37 Ala. 598; Horton v. Sledge, 28 Ala. 478; 2 Jones Mortg. § 1128.
There was no error in disallowing the amount paid by the mortgagees for the purchase of the land made at the United States marshal’s sale. The levy upon the lands so fatally misdescribed them as to convey no title, and the rule of caveat emptor applied. To allow this amount thus paid as an incumbrance, would be tantamount to effecting a collateral reformation of the marshal’s deed, without proper pleadings in a case seeking such relief.
The decree of the chancellor is reversed, and the cause remanded, that the account may be taken in accordance with the principles announced in this opinion.