Court Opinion

ID: 6513694
Source: CourtListenerOpinion
Date Created: 2022-07-19 18:24:39.383496+00
Date Added: 2024-06-11T15:54:57.561227
License: Public Domain

McCLELLAN, J.
This case has been twice before in this court, on appeals by the complainants and defendants, respectively, from decrees of the Chancery Court on demurrers to the bill. — Smith v. Conner, 65 Ala. 371; Conner v. Smith, 74 Ala. 115. On the last appeal, the averments of the bill as to the items of credit claimed by the complainants against the mortgage debt were held to be insufficient. A state of the testimony indicated by the bill and. exhibits was also adverted to by this court, and held to render the bill multifarious, assuming that the facts indicated would be the proof in the case; and the decree below, sustaining demurrers and dismissing the bill in vacation, without allowing complainants an opportunity to amend — and on this ground solely — was held erroneous, and reversed, and the cause remanded.
In the further progress of the case, the bill was amended so as to obviate the objection for multifariousness, to specify the credits claimed originally by the grantor of the complainants, and to allege that these claims had been transferred and assigned by him to the complainants before the sale of the property sought to be redeemed, by the trustee under the mortgage. The amendments further aver, that complainants have ever since owned, and still own said claims, and that, before said sale, they notified the trustee of their ownership of the equity of redemption, and these items of credits, and their claim that nothing was due on account of the indebtedness secured by the instrument. The original bill was filed February 17, 1877. The amendments, since the case was last in this court, were filed on June 5, 1885, and July 30, 1887. To the last amendment it was demurred, that its averment in regard to the assignment by ¥m. H. Moore — the grantor in the deed of trust, and of the complainants — of the claims he held against Smith to the complainants, was a departure from the case made by the original bill, and repugnant to paragraph 9 of the amendment of June 5, 1885, to which it purported to be an addition. And to both amendments it was demurred, that the claims and demands relied on to reduce or liquidate the debt secured by the deed of trust were barred by the statute of limitations, and that the claims were for unliquidated damages in such sort that they could not be the subject of set-off against the mortgage debt.
These several demurrers were sustained, and from the decree in that behalf this appeal is prosecuted,
*308In considering the first assignment of demurrer — that paragraph 4 of the last amendment “is a departure from the case made by the original bill and the several former amendments made thereto” — it is to be steadily borne in mind, that the claims therein referred to have been in the case, and relied on by the complainants, from the beginning. Not only so, but the opinions of this court, on the former appeals, have suggested no infirmity in these demands themselves, as foreshadowed in the earlier presentments of the case, for the purposes for which they were brought forward — ■%. a, the reduction of the secured debt — but only that they were insufficiently stated. The complainants have always asserted the right to have these claims applied to the reduction of the charge upon their lands, or as payments pro tanto of the sum .claimed by Smith. It is true, these counter-claims accrued to Moore after the conveyance by him of the equity of redemption to the complainants; but, as we read the bill and amendments, it has never been averred that they continued to be the property of Moore, or belonged to him at the time of the sale. On the contrary, the most that can be affirmed of the averments, prior to the last amendment, is, that they assert complainants’ right to use. the claims in reduction of the mortgage debt, without showing when, or by what means, or in what manner they acquired that right. The amendment of July, 1887, merely supplies this omission in pleading, and can not, in any just sense, be considered a departure from the case theretofore made, nor inconsistent with paragraph 9 of the amendment of June, 1885, as is contended in the second assignment of the demurrer. So considered, the amendment illustrates the rule laid down by Chancellor Kent, that “if a bill be found defective in its prayer for relief, or in proper parties, or in the omission or mistake of some fact or circumstance connected with the substance of the case, but not forming the substance itself, the amendment is usually granted.” — Lyon v. Talmage, 1 Johns. Ch. 188. The “substance” here is the right to assert these claims against the debt. Whether that right was acquired in one or the other, or in both of two ways, is a fact not of itself forming the substance, but connected with it, and proper to be brought in by amendment. And certainly, under our very broad and liberal statute on the subject, which provides that amendments “must be allowed at any time before final decree, • • • • to meet any state of evidence which will authorize relief” ( Code, § 3449), and *309the decisions of this court upon it, to the effect that any amendment which does not operate an entire change of parties, or the introduction of an entirely new cause of action, is proper to be allowed, the amendment of July, 1887, was not open to the objection urged against it in the first and second assignments of error. — Steed v. McIntyre, 68 Ala. 407; Moore v. Alvis, 54 Ala. 356.
The averments of the bill are insufficient to present the claims based on the conversion of certain mules — three in number — and certain corn and cotton by Smith, in the light of partial payments on the mortgage debt. As the facts are stated, it may be conceded that these claims are for damages resulting from a tort committed by Smith, and do not spring out of the contractual relations of the parties, so as to constitute matters of recoupment. But it by no means follows that these several items are not the proper subject of set-off against the mortgage indebtedness. It is quite an error to suppose that these demands necessarily sound in damages merely, within the language of our statute of set-off. It is true that an action of trespass de bonis asportatis would lie for their recovery, and it is also true such an action sounds in damages merely. But it is equally true, that trover would lie; and in that action the law furnishes a standard by which the damages may be admeasured, and the recovery regulated and limited. — Curry v. Wilson, 48 Ala. 638. Damages capable of being thus measured by a pecuniary standard, may be the subject of set-off at law under section 2678 of the Code. — Cage v. Phillips, 38 Ala. 382; Sledge v. Swift, 53 Ala. 520; Collins v. Green, 67 Ala. 211. And any demand which a mortgagor might set off against the secured debt, in a suit at law for its recovery, he may set off against the debt when it is sought to be enforced in equity by a bill to foreclose the mortgage. — Gafford v. Proskauer, 59 Ala. 264; Knight v. Drane, 77 Ala. 371. Anda set-off may be relied on by the assignee of the equity of redemption, to reduce the charge on his land, although no personal judgment can be had against him. — Wiltsie Mort. Fore., pp. 452, 453, § 378. And it is no objection to a claim pleaded as a set-off that the mortgagor, or owner of the equity of redemption, acquired it after the law-day. It may be availed of, if acquired at any time before steps are taken on account of the default of payment, according to the terms of the instrument. — Martin v. Mohr, 56 Ala. 221.
On the case as now presented, therefore, our conclusion is, *310that the claims asserted on account of the conversion of the mules and crops are available to the complainants by way of set-off against the mortgage debt, unless they are barred by the statute of limitations. Of course they are so barred, unless they come under the influence of section 2682 of the Code. That section provides, that “ when a defendant pleads a set-off to the plaintiff’s demand, to which the plaintiff replies the statute of limitations, the defendant is nevertheless entitled to his set-off, where it was a legal, subsisting demand at the time- the right of action accrued to the plaintiff on the claim in suit.” The statutes of limitations do not, by their own terms, apply to suits in equity, but are made to so apply by - section 3419 of the Code, and prior thereto were applied by analogy in courts of chancery; and whether proceeding by analogy, or in obedience to the present statute, such courts give effect to the limitations obtaining in courts of law, and to the exceptions and qualifications thereto pertaining. — Crocker v. Clements Adm’r, 23 Ala. 305 ; Jones v. Jones, 55 Ala. 532. Can the claims under consideration, as now presented, be brought within the exception above stated? They accrued to complainant’s assignor December 25, 1866. The right to foreclose the deed of trust accrued, by its terms, on March 16, 1867. These items, therefore, were legal and subsisting demands, within the meaning and language of the exception, when the right of action, for breach of the condition of the deed of trust, accrued.' — Riley v. Stallworth, 56 Ala. 481; Jeffries v. Castleman, 75 Ala. 262; Washington v. Timberlake, 74 Ala. 259; Patrick v. Petty, 83 Ala. 420.
It can not be denied that, had a bill been filed to foreclose the deed of trust, and sell the land to satisfy the debt secured by it, the complainants could have interposed in that suit the cross demands they had against the beneficiary in the deed, notwithstanding the bar of the statute had been perfected against them as independent causes of action, before the filing of the original bill. Shall this right be defeated, and the benefit of the exception to the statute of limitations be denied to the complainants, because, instead of proceeding by bill, the election was made to foreclose by a sale under the power, and the complainants forced to take the initiative in the courts ? Do the mere facts that the instrument contains a power of sale, and that foreclosure is sought by the exercise of that power, cut off any substantive defense which the holder of the equity might otherwise have relied upon ? Or, to put the same matter in another way, can the circum*311stance of a mere difference in the modes by which the mortgagor is put to his defense, defeat and operate to deny that defense? We think not. It is very true, that the case does not come precisely within the letter of the law; but is also true, that such a defense in equity can never come precisely within the letter of a statute applicable by its terms to actions at law. These demands, as now presented, fully illustrate the spirit and purpose of the exception quoted, and are in line with that principle of law applicable to cross demands, which regards only the balance remaining, after crediting the one with the other, as the debt due. — Washington v. Timber-lake, 74 Ala. 264. Our opinion is, that in courts of chancery section 2682 of the Code may be relied on to exempt a cross demand from the operation of the statute of limitations, in all cases of attempted foreclosure of a mortgage, whether by bill or sale under power, and either by way of cross-bill when a decree of foreclosure is sought, or on a bill for redemption after an invalid sale under the power.
If the claim of $500 for damages, because Smith defeated Moore’s right of election to purchase certain mules, is to be regarded as a set-off, it would be governed by the principles held above to be applicable to the items for conversion of property by Smith. That claim, however, is one of recoupment rather than set-off. It sprung out of the contract between the parties, and is based on the right that one party has to reduce the claim preferred against him by the other, under the contract, by the amount of damages he has sustained from a breach of that contract by that other. — Waterman on Set-off & Recoup., pp. 478 et seq; Mayberry v. Leach, 58 Ala. 339; Washington v. Timberlake, 74 Ala. 259. Such a claim runs with the contract, so to speak, and may, at least when it goes to the consideration, as it generally does in some sort, and as in the case here, be relied on without regard to the statute of limitations. So long as the contract, upon a breach of which the claim is predicated, subsists, and may be enforced, the claim itself may be pleaded in reduction, at least, of the demand on the contract; and this notwithstanding the matter of recoupment, independently considered, may be barred, not only when it is pleaded, but also when the right of action, against which it is asserted, accrued. — Wood on Limitations, pp. 602, 603, § 282.
It results from these views, that, in our opinion, the assignments of demurrer were not well taken, and each of them should have been overruled. Several other considera*312tions — some affecting the validity of these claims as now presented, and others going to the equity of the bill — have been urged upon our attention in argument, but the effort has been to confine the inquiry to the matters directly involved in the demurrers, and it is not intended to intimate any other opinion, not necessary to a determination of these matters.
Reversed and remanded.