Court Opinion

ID: 3222321
Source: CourtListenerOpinion
Date Created: 2016-07-05 15:58:44.221926+00
Date Added: 2024-06-11T13:50:03.122724
License: Public Domain

Reference has frequently been made to a conflict in the authorities as to whether an improvement, which can be removed without impairing the value of the realty as it existed at the time of the execution of a mortgage on it, may, by contract between the mortgagor and another, without the consent of the mortgagee, by which the right to its removal is attempted to be reserved in such other, be so effectually reserved as to free it from the mortgage pursuant to the terms of such contract. This conflict of authority is pointed out in Fuller-Warren Co. v. Harter, 110 Wis. 80, 85 N.W. 698, 53 L.R.A. 603, 84 Am. St. Rep. 867, in which those holding that the improvement becomes subject to the mortgage notwithstanding the agreement are said to follow the Massachusetts cases first so declaring, and that it is sometimes called the Massachusetts rule. Miller v. Walson, 71 Iowa, 610, 33 N.W. 128; Clary v. Owen, 15 Gray (Mass.) 522; Pierce v. George, 108 Mass. 78, 11 Am. Rep. 310; Smith Paper Co. v. Servin, 130 Mass. 511; Southbridge Sav. Bank v. Mason, 147 Mass. 500, 18 N.E. 406, 1 L.R.A. 350; Meagher v. Hayes, 152 Mass. 228, 25 N.E. 105, 23 Am. St. Rep. 819; Watertown Steam Engine Co. v. Davis, 5 Houst. (Del.) 192; Hawkins v. Hersey, 86 Me. 394, 30 A. 14; McFadden v. Allen,134 N.Y. 489, 32 N.E. 21, 19 L.R.A. 446. It also lists the following as holding to a contrary doctrine: Campbell v. Roddy,44 N.J. Eq. 244, 14 A. 279, 6 Am. St. Rep. 889; Binkley v. Forkner, 117 Ind. 185, 19 N.E. 753, 3 L.R.A. 33; Hill v. Sewald, 53 Pa. 271, 91 Am. Dec. 209; Crippen v. Morrison,13 Mich. 23; Belvin v. Paper Co., 123 N.C. 138, 31 S.E. 655; German Savings  Loan Society v. Weber, 16 Wn. 95, 47 P. 224, 38 L.R.A. 267; Northwestern Mut. Life Ins. Co. v. George,77 Minn. 319, 79 N.W. 1028, 1064.
Wisconsin has followed the Massachusetts rule, which is reaffirmed in later cases. Menard v. Courchaine (Mass.)179 N.E. 167; Bankers'  Merchants' Credit Co. v. Harlem *Page 599 
Park B.  L. Ass'n, 160 Md. 230, 153 A. 64; Planter's Bank v. Lummus Cotton Gin Co., 132 S.C. 16, 128 S.E. 876, 41 A.L.R. 592.
On the other hand the argument is that "the mortgagee is not misled by the annexations, and parts with nothing on the faith of them, and, therefore, does not stand as a bona fide purchaser. * * * The doctrine is highly equitable when, as here, the annexations can be removed, and leave the realty as good security as though they had not been made at all" (citing the case of Campbell v. Roddy, 44 N.J. Eq. 244, 14 A. 279, 6 Am. St. Rep. 889, which is often mentioned as the leading case adopting that view). Paine v. McDowell, 71 Vt. 28, 41 A. 1042,1044; 26 C. J. 684.
In the case of Young v. Chandler, 102 Me. 251, 66 A. 539, the conflict is again noted with the cases cited as to each contention, showing that Maine follows the Massachusetts rule. Ekstrom v. Hall, 90 Me. 186, 38 A. 106.
Likewise in 41 A.L.R. 616, the notes give a full discussion of such conflict. They classify Alabama as one of the states which do not follow the Massachusetts rule, citing Broaddus v. Smith, 121 Ala. 335, 26 So. 34, 77 Am. St. Rep. 61, and Roberts v. Caple, 8 Ala. App. 444, 62 So. 343. To the same effect is Warren v. Liddell, 110 Ala. 232, 20 So. 89. Those cases take a firm stand on the subject and commit us definitely in the controversy. They cite cases in Alabama referring to the general proposition that by such agreement a fixture or a building may not become a part of the freehold. These cases are cited on the latter proposition in others of a later date. Middleton v. Ala. Power Co., 196 Ala. 1, 71 So. 461; Clements v. Morton, 200 Ala. 390, 76 So. 306; Barbour Plumbing, Heating Electric Co. v. Ewing, 16 Ala. App. 280, 77 So. 430. We see no reason for departing from the position thus taken in our cases.
It matters not whether the status was created before or after default. While a mortgagor, after default, is said to be a tenant of the mortgagee by sufferance (Buchmann v. Callahan,222 Ala. 240, 131 So. 799), such status relates to his possessory right and not to the character of his property right. After, as before, default, before foreclosure, the mortgagor has an equity of redemption, which is a property right, and, in all controversies, except with the mortgagee, it is treated at law as the legal title, and sufficient to sustain any action which requires the legal title. Turner Coal Co. v. Glover, 101 Ala. 289, 13 So. 478; Allen v. Kellam, 69 Ala. 443; Marks v. Robinson, 82 Ala. 69, 2 So. 292; Cotton v. Carlisle,85 Ala. 175, 4 So. 670, 7 Am. St. Rep. 29; Zimmern v. People's Bank of Mobile, 203 Ala. 21, 81 So. 811.
It is true that some of the cases express it by saying that after default nothing remains in the mortgagor but the equity of redemption. But it is only in controversies between the mortgagor and mortgagee that courts of law do not treat such so called "equity" as the legal title. Toomer v. Randolph, 60 Ala. 356; Lomb v. Pioneer Savings  Loan Co., 106 Ala. 591,17 So. 670; Foster v. Carlisle, 148 Ala. 259, 42 So. 441; Harmon v. Dothan Nat. Bank, 186 Ala. 360, 64 So. 621.
There is no reason why a second mortgagee may not be an innocent purchaser and protected as such. As to all the world except the first mortgagee, the legal title is thereby conveyed. He is treated as a purchaser of the legal title. Though appellee, as such second mortgagee, could have been thus protected, the protection of course does not extend to occurrences happening subsequent to the execution of his mortgage. Therefore, as mortgagee, he had no protection against the rights acquired by contract between the mortgagor and another made after the execution of the mortgage, by which the house did not become realty, assuming that there was such a contract. Such alleged agreement related to the building of a small outhouse on the mortgaged premises by the son-in-law of the mortgagor. It could have been removed without impairing the substantial value of the property as it was when mortgaged; and was made, if at all, after default and before foreclosure. But appellee claims, and the court seems to have agreed, that a mortgagee, by becoming the purchaser at the foreclosure sale, acquires the status of a bona fide purchaser, though he was not such as mortgagee. He then had the legal title. The only change between the parties as to their respective property rights which results from such a foreclosure is to destroy the equity of redemption, and bring into being a bare statutory right. This court has conceded that thereby he did not acquire any different status as a bona fide purchaser from that which he had as a mortgagee, but enjoyed the same protection. Hanchey v. Hurley, 129 Ala. 307, 30 So. 742; Sheridan v. Schimpf, 120 Ala. 475,24 So. 940; Cahalan v. Monroe, 56 Ala. 303.
Such is said generally to be the rule when the mortgagee or trustee becomes the purchaser at his own sale. 41 Corpus Juris 1009 (notes 78, 79).
There may be a different rule when a third person buys at such sale under a power in the mortgage and pays cash. He thereby acquires a legal title for value. If he has no notice of infirmities in the title before he buys and pays for the property, his protection may be complete, except, of course, against the statutory right to redeem. 41 Corpus Juris 1008; Hoots v. Williams, 116 Ala. 372, 22 So. 497; Goulding Fertilizer Co. v. Blanchard, 178 Ala. 298, 305, 306,59 So. 485.
In this case while the mortgagee was a trustee, and he bought apparently as an individual, such sale was made by himself as *Page 600 
trustee. This cannot work the status of a bona fide purchaser.
We think the court erred in giving the plaintiff the affirmative charge.
Reversed and remanded.
ANDERSON, C. J., and GARDNER and BOULDIN, JJ., concur.
                              On Rehearing.