Court Opinion

ID: 3227987
Source: CourtListenerOpinion
Date Created: 2016-07-05 16:04:09.556365+00
Date Added: 2024-06-11T13:54:22.618972
License: Public Domain

My concurrence in the affirmance of the decree of the court below is rested upon a theory different from that treated in the foregoing opinion of Mr. Justice SAYRE, and may be very briefly stated as follows: The bill is construed as disclosing that the mortgage here involved was foreclosed (the mortgagee becoming the purchaser), but no deed was executed. The bill further shows that soon thereafter respondent urged the complainants to execute a deed to him, which they did after considerable insistence both by respondent and his brother-in-law who accompanied respondent to complainants' premises and took the acknowledgments to the deed. There was no consideration for this deed; other than the debt, security for which the mortgage was executed. The deed was executed by the complainants upon the repeated assurance on the part of the respondent that upon payment of the consideration stated in the deed, with 10 per cent. interest thereon, at any time within two years from the date of the deed he (respondent) would reconvey said land, and "that complainants' right to redeem said land would not be in any way affected by said deed." It is also alleged that the land involved was of considerably more value than the amount of the debt. The bill prays for a cancellation of this deed, and that complainants be permitted to redeem the land upon the payment of the amount ascertained by the court to be due.
As an excuse for the failure on the part of the complainants to tender the amount due in court, the bill shows a demand in writing made upon respondent that they (complainants) be furnished with a statement of the debt and all lawful charges, in all respects as provided by section 5748 of the Code of 1907, and a refusal on his (respondent's) part to furnish the same. The bill was filed within the period of two years following the foreclosure of the mortgage.
Courts of equity scan with great watchfulness transactions of this character between the mortgagor and mortgagee, and the mortgagor's right of redemption is jealously guarded in equity, so that agreements for its extinguishment, as by a sale from the mortgagor to the mortgagee, are closely scrutinized, and, if found to have been induced by unfair or oppressive use of the advantage which is presumed to be held by the mortgagee, such an agreement will be set aside and redemption allowed. This principle was given effect in Pearsall v. Hyde, 189 Ala. 86,66 So. 665, where the following quotation from the Supreme Court of Ohio was noted with approval:
"Courts will scrutinize such a transaction, and will not allow the mortgagee to take any undue advantage. He will not be allowed to use his position as a creditor to oppress, or to drive an unconscionable bargain. But where such a sale is a fair one, under all the circumstances, it will be sustained."
This principle was also applied in the still more recent case of Shaw v. Lacy, 74 So. 933,1 where it was held that, in cases of this character, "the burden of proof is on the mortgagee to show that the transaction was fair and honest — free from the infection of fraud, oppression, or any form of undue influence." The opinion quotes with approval from Villa v. Rodriguez, 12 Wall. 323, 20 L.Ed. 406, from which I have taken the following excerpts as peculiarly applicable here. Speaking of the right of redemption, where the mortgagor has conveyed to the mortgagee the equity of redemption, the court said:
"It is characterized by a jealous and salutary policy. Principles almost as stern are applied *Page 120 
as those which govern where a sale by a cestui que trust to his trustee is drawn in question. To give validity to such a sale by a mortgagor, it must be shown that the conduct of the mortgagee was, in all things, fair and frank, and that he paid for the property what it was worth. He must hold out no delusive hopes; he must exercise no undue influence; he must take no advantage of the fears or poverty of the other party. Any indirection or obliquity of conduct is fatal to his title. Every doubt will be resolved against him."
The Pearsall Case, supra, also notes some of the authorities dealing with the question of "marked undervaluation" of the property in cases of that character, disclosing that some of the authorities have held that gross inadequacy of consideration alone will itself suffice to avoid an absolute conveyance by the mortgagor to the mortgagee.
It appears therefore that the principle of these cases does not rest upon such proof of fraud necessary to vitiate the instrument entirely as if in a court of law. The courts recognize that the mortgagee occupies a position of advantage, and the mortgagor usually occupies the position of one in a necessitous condition. And thus a court of equity scrutinizes such a transaction, and will allow no undue advantage to be taken of the mortgagor. The mortgagee will not be permitted to use his position to oppress, or to drive an unconscionable bargain, or to take any undue advantage. His conduct must be "fair and frank."
True, in the instant case, there is no averment that the mortgagee misrepresented the contents of the deed, or that the mortgagors did not understand that they were executing a deed; but the bill does show that the mortgagee pressed the complainants with the execution of this deed, and promised and assured them repeatedly that their right of redemption would remain unaffected thereby — all of which without any new consideration for its support. Without the execution of this deed the complainants had two years within which to redeem their property and to permit the mortgagee to hold this deed and thus cut off their right of redemption would be to permit him to obtain an undue advantage, and to drive an unconscionable bargain, based upon his false and deceptive promises and assurances — the "delusive hopes" mentioned in the above quotation from the Villa Case.
I am therefore of the opinion that the principle applied in Pearsall v. Hyde, supra, and Shaw v. Lacy, supra, together with the authorities there cited, sustain the equity of this bill for the exercise of the statutory right of redemption, and to set aside the deed in question as having been induced by unfair or oppressive use of the advantage which he held as mortgagee. I recognize the fact that the authorities in the Pearsall and Shaw Cases deal with the cutting off of the equity of redemption; but, under the averments of the bill, I can see no reason why the same principle should not be given application in the instant case, where it appears that soon after the foreclosure of the mortgage the deed was obtained upon such false promises and assurances so as to cut off from the mortgagors the statutory right of redemption.
I am of the opinion that the bill is not subject to any of the assignments of demurrer interposed, and that its equity may be rested upon the rights of complainants to exercise the statutory right of redemption, and, as an incident to their relief and to pave the way therefor, have said deed set aside and canceled. I therefore concur in the result.
MAYFIELD and SOMERVILLE, JJ., concur in the foregoing views.
1 199 Ala. 450.