Court Opinion

ID: 3235522
Source: CourtListenerOpinion
Date Created: 2016-07-05 16:10:10.770533+00
Date Added: 2024-06-11T07:40:22.543362
License: Public Domain

This case was submitted and considered under rule 46 (65 South. vii3). The bill presents the complainant's case in two aspects:
The first theory is that under the terms of the paper attached as Exhibit A to the bill, while the legal title to the property was in substance and legal effect reserved in the complainant, yet the supposed contract recognized in respondent an equity which, in the event of foreclosure, entitled it to any surplus in the proceeds of the sale remaining after satisfaction of the balance due on the purchase price and expenses incident to the foreclosure, and a court of equity will treat it as a mortgage and proceed to a foreclosure. Turnipseed v. Cunningham, 16 Ala. 501, 50 Am. Dec. 190; Wood et al. v. Holly Manufacturing Co., 100 Ala. 326, 13 So. 948, 46 Am. St. Rep. 56.
Two reasons appear on the face of the bill, when considered in connection with the exhibit, why this aspect of the case cannot be sustained:
(1) The contract was not executed in the name of the town, as required by the statute, and therefore it cannot be looked to as vesting in the complainant any right, or fixing any legal obligation on the respondent. Code 1907, § 1183; City of Mobile v. Mobile Electric Co., 84 So. 816,4 and authorities there cited. The words "Camden, Alabama," manifestly were not affixed to the paper as the town's signature, but merely to designate a geographical location, or the post office address of the town clerk, and no matter what the parties intended in respect to the execution of the contract in the name of the town, they did not so execute it, and in so far as the "Town of Camden" is concerned it is a case of non est factum. Code 1907, §§ 1046, 1183; Hall v. Cockrell, 28 Ala. 507.
(2) Before the negotiations for the purchase of the property were concluded, the town of Camden had contracted a debt in the issuance and sale of bonds to the full limit allowed by the Constitution, and the town authorities were without power to bind the municipality in contracting further general indebtedness. Constitution 1901, § 224; Gunter et al. v. Hackworth, 182 Ala. 205, 62 So. 101; Moody v. Terrell-Hedges Co., 16 Ala. App. 441, 78 So. 639; State ex rel. Terrell-Hedges Co. v. Moody, 202 Ala. 444, 80 So. 828; 19 R. C. L. 987, par. 284.
It is elementary that one of the essentials to a mortgage is the existence of a debt to be secured thereby. West v. Hendrix,28 Ala. 226; Robinson v. Farrelly, 16 Ala. 472, 2 Mayf. Dig. 583, par. 29. But it is suggested that, inasmuch as it appears that the engine and its accessories are attached to, and being used as a part of, respondent's system of waterworks — as was the manifest contemplation and intention of the parties — and assuming that they have become so affixed thereto that they cannot be removed without destroying, for at least a considerable time, the efficiency of the system, thereby causing public inconvenience and probable hazard to the health of the community, the principle announced in Ross  Co. v. Perry, 105 Ala. 533, 16 So. 915, may be invoked; and, acting thereon, a court of equity, to prevent a failure of justice and at the same time conserve the public convenience and health, will declare an equitable lien on the *Page 123 
entire system of waterworks, and foreclose the same by a sale of the plant for the satisfaction of complainant's claim.
Pretermitting the question of the manifest injustice of declaring such a lien, and thereby creating, as between the parties, a contract which was never contemplated by them, such course would, because of the insolvency of the town, foreshadow the sacrifice of its property for a claim for which it is not legally liable, though a moral obligation may rest upon it to satisfy such claim; yet reasons are manifest why this cannot be done. A lien cannot exist and will not be raised by a court of equity, except as incident to an existing debt, capable of enforcement either in personam or in rem. Turnipseed v. Cunningham, supra; Relfe v. Relfe, 34 Ala. 500, 73 Am. Dec. 467. And for this reason a lien in favor of the complainant cannot be declared on the plant or specific property in question.
It is true in the case last cited an equitable lien was declared — though the debt upon which it was rested was barred by the statute of limitations. However, in that case, it was held that the effect of the bar of the statute of limitations was merely to destroy the remedy for the enforcement of the debt in personam, and that the debt still existed and could be enforced by a proceeding in rem. There is no debt against the town of Camden in this case, and there can be none, because of the limitation fixed by the Constitution, and this prevents the application of the principles announced in Ross  Co. v. Perry, supra, and Wood et al. v. Holly Manufacturing Co., supra.
Another reason is apparent why such lien will not be raised and enforced in this case. The establishment and foreclosure of such lien by a sale of the entire property would, of course, vest in the purchaser at such foreclosure sale the title to the property, and the right to remove so much thereof as would not disturb the use of the public streets and ways of the town, and would necessarily result in the destruction of the entire waterworks system. Such a sale could not carry with it the franchise to operate the waterworks system, as this can only be acquired by the consent of the town authorities. Constitution 1901, § 220; City of Montgomery v. Orpheum Taxi Co., 203 Ala. 103,82 So. 117.
This brings us to a consideration of the other aspect of complainant's case. When the property in question was delivered to the town of Camden, it had in its treasury money obtained from the sale of bonds issued, as authorized by the Constitution, for the purpose of constructing a system of waterworks, and the town authorities were authorized to purchase, for cash, the property in question, and pay therefor out of the special fund then in the town treasury; and the complainant had the right to assume that the town authorities would not make purchases beyond the ability of the town to pay, and that the property in question would be paid for out of this special fund. However, it appears from the averments of the bill that the town is now insolvent and unable to pay the complainant the balance remaining unpaid on the purchase price of the property in question; and it may be assumed from these averments that this special fund has been exhausted in making purchases incident to the construction of said waterworks system.
We have, therefore, a case where the negotiations for the sale of property, entered into in good faith, have failed of consummation because of the legal disability of the purchaser to comply with the terms of sale, and the possession of the property has been parted with by the seller in good faith under a mistake of fact. This arms the seller with a right to tender back whatever it has received in part payment, and to rescind the sale in so far as it has been performed by it, and reclaim the property. Chapman v. County of Douglas, 107 U.S. 348,2 Sup. Ct. 62, 27 L.Ed. 378; General Electric Co. v. Town of Fort Deposit, 174 Ala. 179, 56 So. 802; Municipal Security Co. v. Baker County, 39 Or. 399, 65 P. 370.
There is in the bill an absence of averment showing that the property has lost its character as personalty by being so attached to the freehold as to become a part thereof; so, upon the facts pleaded, the right of the complainant to rescind may be effected in an action at law. General Electric Co. v. Town of Ft. Deposit, supra; Wellden v. Witt, 145 Ala. 605, 40 So. 126; Wilcox v. San Jose Fruit Packing Co., 113 Ala. 519,21 So. 376, 59 Am. St. Rep. 135; Continental Jewelry Co. v. Pugh Bros., 168 Ala. 303, 53 So. 324, Ann. Cas. 1912A, 657; Whitworth v. Thomas, 83 Ala. 308, 3 So. 781, 3 Am. St. Rep. 725.
On the other hand, if the contract was efficaciously executed, as the majority of the court hold, it is manifest, under the terms of the contract, that the complainant has the legal title to the property, and, no matter if it is affixed as a part of the waterworks system, it may be recovered in an action of law. The contract expressly preserves the status of the property as personal property. Authorities supra.
This being true, the demurrer taking the point that the complainant has an adequate remedy at law under the facts here pleaded was well taken, and should have been sustained. Yellow Pine Export Co. v. Sutherland-Innis Co., 141 Ala. 664,37 So. 922.
I therefore respectfully dissent.
ANDERSON, C. J., concurs in the foregoing views.
3 178 Ala. xix.
4 203 Ala. 574. *Page 124