Court Opinion

ID: 4916980
Source: CourtListenerOpinion
Date Created: 2021-09-22 00:11:04.04237+00
Date Added: 2024-06-11T08:13:54.172422
License: Public Domain

Taylor, J.,
(after, stating the facts.) — It is contended here in support of the first, third and fourth grounds of the defendant’s demurrer to the bill, the Overruling of which is assigned as error, that the payee of the note D. C. Carmichael never having transferred the legal title to the properties for the purchase-money of which said note was given, but only having executed a contract to convey the legal title when said note was paid, that it is in no sense a mortgage that is subject to foreclosure; that the defendant maker of said note had no title to the property that he could encumber with a mortgage; and that the legal title to the properties still remaining in the original payee of said note he could not assign or transfer to his endorsee of said note and lien that his retention of the legal title to such properties gave him' except by conveyance to such endorsee of the legal title to the properties for the purchase money of which said note was given. The authorities do not sustain this contention, but seem to establish the doctrine that in equity where the relation of vendor and vendee has been established, by the vendor executing a contract to convey the legal title to property upon the payment by vendee of the purchase price that he has obligated himself to pay, the vendee is regarded as the real beneficial owner, even though he has not paid the purchase price; the vendor holds the legal title as trustee, and when the terms of the contract are complied with, he is bound to convey. Until those terms are complied with, the legal title remains in the vendor as his security; or, as it is otherwise expressed, he has a Hen upon the vendee’s equitable estate as security for payment of the purchase money according to the terms of the agreement. In effect, this lien consists in the vendor’s right to enforce payment of the price by a suit in equity against the *619vendee’s equitable estate in the land, instead of by means of an ordinary action at law to recover the debt. And both in England and America the vendor’s equitable remedy consists in a suit in the nature of a strict foreclosure by which the vendee is decreed to pay the price within a limited time, and in default of such payment the vendee’s equitable estate is foreclosed and sold to pay the purchase price; and in a case like the one at bar where the vendor has sold and assigned the negotiable evidence of indebtedness given for the purchase money and is made a party .defendant to such foreclosure proceedings, both his and the vendee’s estate in the property would pass by a foreclosure sale under the decree. 3 Pomeroy’s Eq. Jur. § 1261 et. seq. and citations in notes; 6 Pomeroy’s Eq. Jur. § 863; Robinson v. Appleton, 124 Ill. 276, 15 N. E. Rep. 761; 2 Warvelle on Vendors (2nd ed.) §713; Amory v. Reilly, 19 Ind. 490. It is also well settled that.where a note is given for the purchase money of land, the vendor retaining title as security for its payment, all the essential incidents of a mortgage attach, and a transfer of the debt for the purchase money passes an equitable right to. the assignee,' whether the vendor is liable to him' or not, to charge the lands with the payment. Wolffe v. Nall, 62 Ala. 24; Comer v. Banks, 18 Ala. 42, S. C. 52 Am. Dec. 209; Wright v. Troutman, 81 Ill. 374; Stevens v. Chadwick, 10 Kan. 406, S. C. 15 Am. Rep. 348; Graham v. McCampbell, Meigs (Tenn.) 52, S. C. 33 Am. Dec. 126; 2 Warvelle on Vendors (2nd ed.) § 716; 6 Pom. Eq. Jur. § 854.
In support of the next assignment of error it is contended that the court erred in .excluding evidence tending to establish a shortage in 'some of the property for the purpose of which the note involved was given, *620and tending to- establish as a partial set off against said note payments made by the defendant for rent and taxes that had accrued on part of the property prior .to its sale to the defendant by D. C. Carmichael. There is no error here. The note involved is a negotiable instrument, assigned to the complainant bank, before its maturity for value and without notice of any infirmities, and in its hands it was not subject to- the partial defense sought to be established against it by the excluded questions. But it is further contended that D. C. Carmichael, the original payee of the note, was, at and before the time of its transfer to the complainant bank, vice-president of such bank, and that he had knowledge and notice of such shortage in the property, and of such payments for past accrued rent and taxes, and that the corporate ‘bank of which he was vice-president is also chargeable with such knowledge when' it took the note from him. The authorities do not sustain this contention, but, on the contrary, established the rule that the knowledge acquired by the officers or agents of a corporation, while not acting for the corporation, but while acting for themselves, is not imputable to- the corporation. io Cyc. 1063; I Morse on Banks (4th ed.) § 109; Benton v. German-American Nat. Bank, 122 Mo. 332, 26 S. W. Rep. 975; Findley v. Coweles, 93 Iowa 389, 61 N. W. Rep. 998; First Nat. Bank of Brandon v. Briggs, 70 Vt. 594, 41 Atl. Rep. 580; Holm v. Atlas Nat. Bank, 84 Fed. Rep. 119, 28 C. C. A. 297; Graham v. Orange Co. Nat. Bank, 59 N. J. L. 225, 35 Atl. Rep. 1053.
The decree appealed from is hereby affirmed at the cost of the appellant
Parkhill, J., concurs;
*621Shackleford, C. J., and Cockrell and Whitfield, JJ., concur in the opinion.