Opinion
6 Div. 791.
May 15, 1919. On Rehearing, June 30, 1919.
Appeal from Circuit Court, Blount County; O. A. Steele, Judge.
T. J. Judge and C. A. Avant, both of Birmingham, for appellant.
M. L. Ward, of Birmingham, for appellee.
The evidence in this cause reasonably satisfies us that the debts secured by the mortgages in question were in fact the debts of complainant's husband. Not only is this not controverted in the evidence submitted, but respondent's president, who conducted all of the transactions in question, testified that he represented the mortgagee in the $2,800 mortgage transaction, and "made a loan to Mr. Webb for $2,800 and took a mortgage on his farm, and gave him a check for the proceeds."
If this were all, complainant would be entitled to the relief prayed for as to both of the mortgages.
But the amended answer charges that the mortgaged property was bought by complainant's husband with his own money, and that the title was placed in complainant only for the purpose of fraudulently withholding it from his creditors, the property remaining for all purposes the husband's.
The testimony of complainant and her husband clearly establishes this charge, and shows in fact a constructive trust in favor of creditors, whether existing or subsequent. Seals v. Robinson, 75 Ala. 363.
Such a title in complainant can furnish no basis for relief by way of cancellation of the mortgages on the ground alleged, and that relief must be denied. Of course respondent could not have affirmative relief upon its answer without making it a crossbill. But for purely defensive purposes, the fraud set up is available on answer alone. Trippe v. Trippe, 29 Ala. 637, 648-650.
It was of no consequence, so far as this case is concerned, whether the latter mortgage was or was not so executed by complainant as to convey the legal title to the property. She being the owner, the statutory requirements for homestead conveyances by married men have no application. Dawson v. Burrus, 73 Ala. 111.
We apprehend that the trial judge denied relief on the theory that a wife may convey her property to her husband's creditor in payment of his debts, and that the deed of July, 1917, was effectual for that purpose, although complainant received no personal benefit therefrom. Elkins v. Bank, 180 Ala. 18, 6 So. 96.
Such an application of that theory to this case would be sound enough but for the fact that, when complainant executed this deed with her husband for that purpose, the relationship of mortgagor and mortgagee already existed between her and her grantee, this respondent, and the deed was therefore a mere release of her equity of redemption.
In such a case, when the mortgagor attacks and seeks to set aside the release in equity, "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." Shaw v. Lacy, 74 So. 933. Here the burden was upon respondent, and not complainant, to show that no duress of any sort was practiced upon complainant, and also that the consideration paid for the release was fair and adequate.
199 Ala. 450.
Respondent made no attempt to meet this burden of proof, and, indeed, the testimony offered for complainant supports the charge of duress, and shows an inadequate consideration.
Let the decree of the chancery court be reversed, and a decree here rendered setting aside and canceling the deed executed by complainant and her husband to respondent on July 27, 1917, as shown by Exhibit D to E. F. Enslen's testimony, and authorizing redemption from the mortgage executed by them to Emma J. Enslen on, to wit, December 16, 1913, and by her transferred to respondent.
The cause will be remanded for further proceedings to this end.
Reversed, rendered, and remanded.
McCLELLAN, MAYFIELD, and SAYRE, JJ., concur.
On Rehearing.
On the original hearing we interpreted the testimony of M. F. Webb as showing that he was indebted to various creditors at the time he caused the property in question to be conveyed to his wife, the complainant, as a gift from himself to her; and thereupon we held that she took it in fraud of subsequent creditors as well.
We are now satisfied from a further analysis of his testimony that his admissions did not refer to the period of his said gift, but only to the period of a transaction which occurred many years afterwards, and that his intentions with respect to creditors at the later period can have no effect upon the validity of the original gift, which we think stands unassailed and unimpeached by any testimony or circumstances shown by the record.
The result is that, as to the mortgage referred to, it must be held invalid as being a mere security for the husband's debts, and complainant is entitled to have it canceled as prayed.
There is no merit in appellee's contention that the bill of complaint does not present any issue as to the adequacy of the consideration for the deed of July 27, 1917. The bill shows the relation of the parties, and attacks the deed as procured by the oppressive conduct of the mortgagee. This casts upon the respondent the burden of alleging and proving the fairness of the transaction, including the sufficiency of the consideration, as pointed out in the original opinion.
The rehearing will be granted, the opinion will be modified as above, and full relief granted, as prayed, both as to the mortgage and the deed.
As to the mortgage of June 11, 1915, for $600, complainant is entitled to no relief except redemption, and the cause will be remanded for a reference to ascertain the amount due, and for further orders and decrees as may be appropriate.
It is urged for the appellee that the doctrine of Shaw v. Lacy, 74 So. 933, cannot be applicable here, because, if the mortgage for $2,800 was void as a security for the husband's debt, the relation of mortgagor and mortgagee did not in fact exist between Mrs. Webb and the respondent at the time her deed was executed. This contention ignores the fact that there was another mortgage for $600, which we hold was valid and binding on Mrs. Webb, and which fixes the relation between them.
199 Ala. 450.
Respondent's application for rehearing is without merit, and will be overruled.
Reversed, rendered, and remanded.