Court Opinion

ID: 3222322
Source: CourtListenerOpinion
Date Created: 2016-07-05 15:58:44.228966+00
Date Added: 2024-06-11T12:36:21.985485
License: Public Domain

We merely incidentally as a premise refer to the principle established in Alabama that a mortgage on real estate passes to the mortgagee a fee-simple title, unless otherwise expressly limited. Toomer v. Randolph, 60 Ala. 356; Crabtree v. Price,212 Ala. 387, 102 So. 605; Cowart v. Aaron, 220 Ala. 35,123 So. 229.
The mortgagor, before or after default, except by agreement, does not possess even the right of possession, as against the mortgagee. But, as to him, his right is the equity of redemption, which is a property right, but not the legal title. Zimmern v. People's Bank, 203 Ala. 21, 81 So. 811.
So that when the mortgage is foreclosed and the mortgagee becomes the purchaser, he does not by such purchase acquire a legal title. In so far as their respective property rights are concerned, such foreclosure merely destroys the equity of redemption, which is a substantial interest in the property created through equitable principles, and thereafter there remains only a statutory right in those persons for whom it is created by law. Powers v. Andrews, 84 Ala. 289, 4 So. 263. When the mortgagee buys at his own sale, a foreclosure deed is not necessary, nor other written instrument by which the title passes. Jackson v. Tribble, 156 Ala. 480 (15), 489, 47 So. 310; Stodenmeyer v. Hart, 155 Ala. 243, 46 So. 488; 3 Jones on Mortgages, § 2434 (1892), 2435 (1893); Hambrick v. N.E. M. S. Co., 100 Ala. 551, 13 So. 778; Woodruff v. Adair, 131 Ala. 530,32 So. 515; Wildman v. Means, 208 Ala. 487, 94 So. 823; Williams v. Oates, 212 Ala. 396, 102 So. 712. Its effect is controlled by the fact of foreclosure, and a certificate by the auctioneer is held in those cases to be sufficient evidence of such foreclosure.
In order that a purchaser of land shall be protected against equities of third persons, he must have acquired at the time of such purchase the legal title by warranty deed. Smith v. Owenton-Ensley Highlands Land Co., 219 Ala. 422, 122 So. 663; Shorter v. Frazer, 64 Ala. 74, 81; Warren v. Liddell, supra, page 247 of 110 Ala., 20 So. 89; Wood v. Holly, 100 Ala. 326,351, 352, 13 So. 948, 46 Am. St. Rep. 56; Marsh v. Elba Bank 
Trust Co., 221 Ala. 683, 130 So. 323; Gordon v. Ward, 221 Ala. 173,128 So. 217; McCollum v. Burton, 220 Ala. 629,127 So. 224; Marsh v. Marsh, 215 Ala. 571, 112 So. 189. "As a mere equity, that he acquires must be subordinate to older equities, but annexed to it is the legal estate * * * which gives him precedence." Shorter v. Frazer, supra.
It is clear that a mortgagee of land, when the mortgagor owns and thereby conveys a legal title, with covenants of warranty, becomes a bona fide purchaser if he has no notice of the equity claimed.
But when that same mortgage is foreclosed and he becomes the purchaser, by such foreclosure sale, he does not acquire a legal title, not already possessed by him, and there is lacking such element of his claim in order that he be protected by the foreclosure, when he is not protected by the mortgage.
It was held on the first appeal in the Marsh Case, supra, that, when at the foreclosure sale a third person is the purchaser in a foreclosure deed without warranty, not only such purchaser cannot be thus protected, but those to whom he conveyed by warranty deed are equally without such right. On a second appeal (see Marsh v. Elba Bank  Trust Co., 221 Ala. 683,130 So. 323), it was shown that the rule only excluded the purchaser in the quitclaim deed, but not his grantees by warranty.
But when the mortgagee buys at his own sale, he cannot improve his status by including a warranty in the deed he makes or causes to be made to himself. It is true that the warranty in the mortgage operates in his favor, but such warranty dates from the execution of the mortgage, but not from the foreclosure. Coles v. Allen, 64 Ala. 98.
So that conceding that as the foreclosure satisfied the mortgage debt bid at the sale, and such satisfaction constitutes a new consideration, the mortgagee foreclosure purchaser is still outside the rule of protection due to an innocent purchaser as to equities accruing after the execution of the mortgage, but superior to it, because he did not at such sale acquire the legal title by warranty deed.
Reverting to the case of Hanchey v. Hurley, supra, it is apparent that the writer (Justice Tyson) was of the opinion that such mortgagee foreclosure purchaser was entitled to such protection. The question was on the sufficiency of a bill in equity by the claimant of a superior equity accruing after the execution of the mortgage, and before foreclosure. It is not at all indicated that the other members of the court agreed with his views, but were of the opinion that the burden was upon the purchaser to invoke such right by affirmative assertion of claim to it, and not on complainant to overcome it. But it is also said that the majority hold that, if complainant proves his claim as averred, he *Page 601 
is entitled to relief. No one of the majority undertakes to write their views. The last statement may, or may not, have been based solely on the fact that the claim was defensive, so thoroughly refuted by Justice Tyson in such a proceeding as has by this court since been held. Bank of Luverne v. Birmingham F. Co., 143 Ala. 153, 39 So. 126; Pollak v. Millsap, 219 Ala. 273,122 So. 16, 65 A.L.R. 110.
But the expression of the court may have been due in part also to a disagreement with him as to the rights of a mortgagee foreclosure purchaser. His views are stated as though they were his only, for he uses the first person. There is certainly no indication of an express concurrence in them by the members of the court. We do not think that this court has ever so expressed an opinion. But we think the contrary is sound and results from a statement of the elements composing the claim as this court has defined them. A claim of the exact sort as this is evidently so rare, no authority directly in point seems to be available. It is not our idea that the case of Hanchey v. Hurley, supra, supports either view, and we did not so aver.
Other questions affecting the relation of a bona fide purchaser need not be discussed. Warren v. Liddell, supra; Adams Machine Co. v. I. B.  L. Ass'n, 119 Ala. 97, 24 So. 857.
Our opinion still is that appellee is not protected as an innocent purchaser as a matter of law.
Application for rehearing overruled.
ANDERSON, C. J., and GARDNER and BOULDIN, JJ., concur.