Opinion
4 Div. 70.
October 18, 1923. Rehearing Denied December 6, 1923.
Appeal from Circuit Court, Henry County; H. A. Pearce, Judge.
O. S. Lewis, of Dothan, for appellants.
An absolute deed, executed by the mortgagor to the mortgagee, cannot prejudice the rights or equities of a junior mortgagee. Rothchild v. Lbr. Co., 139 Ala. 571, 36 So. 785. A purchaser pendente lite is bound by the proceedings. It is at his own peril that he purchases, and he is conclusively bound. Malone Foote v. Marriott, 64 Ala. 486. This being true, Mrs. Maud Martin is a proper, if not necessary, party. A defendant may bring into the litigation by his cross-bill persons not brought in by the plaintiff. Sims, Chancery Practice, 421; Coster's Ex'rs v. Bank of Ga., 24 Ala. 37; Davis v. Cook, 65 Ala. 617; Bell v. McLaughlin, 183 Ala. 548, 62 So. 798.
James J. Mayfield, of Montgomery, H. L. Martin, of Ozark, and Espy Hill, of Dothan, for appellee.
The foreclosure of the Foreman mortgage cut off the equitable right of redemption of both the mortgagors and junior mortgagees, leaving only the statutory right. The mortgagors conveyed and assigned their statutory right to Maud Martin, who exercised the right and acquired the legal title to the premises. The statutory right, having been once exercised, cannot be exercised again by the junior mortgagees redeeming from the first redemptioner; the statute does not so provide. Maud Martin was not a proper party to the cross-bill. Code 1907, § 5746 et seq., and authorities cited; Allison v. Cody, 206 Ala. 88, 89 So. 238; Crowson v. Cody, 207 Ala. 476, 93 So. 420; Id., 209 Ala. 674, 96 So. 875. The fact that land sold at mortgage foreclosure sale at greatly less than its real value does not invalidate the sale. Ward v. Ward, 108 Ala. 278, 19 So. 354; Hunter v. Mellen, 127 Ala. 343, 28 So. 468. The assignee had the right to foreclose, and to adopt any method permitted by law, either selling under the power, or taking a deed from the mortgagors. Dennis v. McEntire Co., 187 Ala. 314, 65 So. 774; Fouche v. Swain, 80 Ala. 151; Crowson v. Cody, 207 Ala. 476, 93 So. 420; Hamiltbn v. Cody, 206 Ala. 102, 89 So. 240; Allison v. Cody, 206 Ala. 88, 89 So. 238; Farrow's Case, 184 Ala. 208, 63 So. 973.
The question of redemption under the statute has been given recent consideration by this court. Allison v. Cody, 206 Ala. 88, 89 So. 238; Hamilton v. Cody, 206 Ala. 102, 89 So. 240; Crowson v. Cody, 207 Ala. 476, 93 So. 420; s. c. 209 Ala. 674, 96 So. 875; Owen v. Kilpatrick, 96 Ala. 421, 11 So. 476. A discussion of the equity and statutory rights of redemption is to be found in Dinkins v. Latham, 202 Ala. 101, 106, 79 So. 493; Grace v. Montgomery, 209 Ala. 386, 96 So. 430.
In the Allison-Cody Case, supra, it is stated that a valid foreclosure extinguishes the equity of redemption (Dinkins v. Latham, 202 Ala. 101, 79 So. 493; Baker, Lyons Co. v. Eliasberg Co., 201 Ala. 591, 79 So. 13); thereafter the privilege of the statutory right of redemption must be exercised in accordance with the statute (Snow v. Montesano Land Co., 206 Ala. 310, 89 So. 719); and where a third mortgagee has redeemed, a second mortgagee cannot redeem or hold said third mortgagee as trustee "for the benefit of himself and the second mortgagee, in the absence of special equities." And a conveyance to a junior mortgagee from the purchaser on foreclosure of a mortgage given the purchaser at the foreclosure of the first mortgage is, in effect, a statutory redemption (Hamilton v. Cody, 206 Ala. 102, 89 So. 240), so far as affects the parties to such conveyance.
The writer did not participate in the decision of Grace v. Montgomery, 209 Ala. 386, 96 So. 430. However, after a careful consideration of that decision, I am of opinion that it is well founded and supported by authority. It is true that a deed from the mortgagor and the first mortgagee of record, or his assignee, to a third party in the execution of a private foreclosure of the senior mortgage of record, is binding to that end between the parties to the conveyance where the same is free from fraud or oppression. Yet it is also true that a subsequent incumbrancer cannot be affected by such private agreement between the mortgagor and the senior mortgagee or his assignee that would impair the obligation of his contract if given superior or controlling effect. Such mortgagee or his assignee, in taking a deed from the mortgagor in lieu of foreclosure of the equity of redemption, was subordinated to the record notice that the junior mortgagee had of the senior mortgage and its terms, and the equitable right of redemption by the second or subsequent mortgagee is not barred, although such redemption may have been sought "two years after execution of the deed by the mortgagor to senior mortgagee (or his assignee) in lieu of foreclosure." Grace v. Montgomery, 209 Ala. 386, 96 So. 430, 432; Rothschild v. Bay City Lbr. Co., 139 Ala. 571, 36 So. 785. The junior mortgagee had acquired his interest in the mortgagor's equity, and with reference to the existing liens as they appear of record, "his rights cannot be prejudiced by private arrangements between the parties." 2 Jones on Mortgages (7th Ed.) § 830. See, also, Baker, Lyons Co. v. Eliasberg Co., 201 Ala. 591, 592, 79 So. 13; Butts v. Broughton, 72 Ala. 294.
If the foreclosure of the Foreman mortgage by the conveyance had terminated the equitable right of redemption of the junior mortgagees, the result urged by appellants' counsel would obtain; but such foreclosure of the equity of redemption, as to the interest of the junior mortgagees, was not the result of the private agreement or of the arrangements of the mortgagor and assignee of the senior mortgagee — and contrary rulings on demurrer to the cross-bill are in error.
It should be said that Mrs. Martin had the right to acquire the title of Foreman, the senior mortgagee, and the fact that she may not have paid full value for the same, or that of the lands secured thereby (Ward v. Ward, 108 Ala. 278, 19 So. 354), or the intention with which she acquired the same, are immaterial (Rudisill Co. v. Eastham Co. [Ala.] 97 So. 219; Martin (assignee of the Foreman mortgage) to H. L. Martin. This transfer, while it was efficacious as to parties thereto, was not such as to prevent the assertion of the right of equity of redemption sought by the junior mortgagee. Wiley v. Ewing, 47 Ala. 418; Fouche v. Swain, supra.
It is conceded by counsel for appellants that there was no error in sustaining demurrer to that phase of the cross-bill seeking recovery of attorneys' fees for foreclosing the mortgage; for if the property is sold it will be under the original bill to the satisfaction of the respective debts and liens securing the same, and as to this the decree of the chancellor is affirmed.
The decree of the circuit court, in equity, is affirmed in part, reversed in part, and the cause is remanded. The appellants are taxed with one-third of the costs of the appeal, and appellee is taxed with two-thirds of the costs of the appeal.
Affirmed in part, reversed in part, and remanded.
ANDERSON, C. J., and SOMERVILLE and BOULDIN, JJ., concur.