BURKS v. CITIZENS BANK OF MOULTON, 244 Ala. 169 (1943)
12 So.2d 415
8 Div. 204.Supreme Court of Alabama.
March 18, 1943.Page 170
Appeal from Circuit Court, Lawrence County; Seybourn H. Lynne, Judge.
Action in the nature of an action of ejectment by the Citizens Bank of Moulton against Mrs. B. C. Burks and others. From a judgment for plaintiff, defendants appeal.
This suit was instituted by the plaintiff, Citizens Bank of Moulton, against Mrs. B. C. Burks, J. R. Burks and Pruitt Burks, and sought recovery of the land involved by virtue of the purchase by the plaintiff at foreclosure sale of a mortgage executed January 13, 1926. Defendant J. R. Burks was eliminated from the case on his plea of disclaimer. Pruitt Burks likewise disclaimed any interest other than as tenant of Mrs. B. C. Burks, in which capacity he was in possession.
The case was submitted to the court, without the intervention of a jury, on an agreed statement of facts, and some additional testimony not in conflict with the agreement. Insofar as here pertinent, the facts are substantially as follows:
Mrs. B. C. Burks had long been the owner in possession of the land involved when, on January 13, 1926 being joined by her husband, J. R. Burks, she executed a mortgage thereon to secure an indebtedness evidenced by a note contemporaneously given. Yearly renewals of the note were given and the old notes taken up, but the indebtedness, in major part, remained unpaid in 1937. Desiring to refinance, Mrs. Burks, in that year made application for a Federal Land Bank loan which she failed to obtain. Thereupon, as a further plan of refinancing the loan, with the consent of the Citizens Bank of Moulton, Mrs. Burks and her husband executed a deed to the land to their son, Pruitt Burks, of date June 7, 1937, and on the same date Pruitt Burks and his wife executed a mortgage on said land to the Citizens Bank of Moulton. The indebtedness secured by this mortgage was represented in larger part by the balance remaining due on the mortgage of January 13, 1926, and in smaller part by a preexisting indebtedness due by Pruitt Burks to the Bank. The evidence discloses a stipulation by Mrs. B. C. Burks for a surrender by the Bank of her prior note and mortgage before delivery of the note and mortgage of Pruitt Burks, and a delivery of his note and mortgage by Pruitt Burks only after a surrender of the older instruments given by his mother. Thereafter the books of the Bank showed the full amount of the mortgage debt as the indebtedness of Pruitt Burks and no indebtedness due by Mrs. B. C. Burks and her husband. Pruitt Burks reduced this indebtedness only by a small amount.
In October, 1938, Mrs. B. C. Burks filed a bill in equity, in the Circuit Court of Lawrence County, making parties defendant thereto J. R. Burks, Pruitt Burks and his wife and the Citizens Bank of Moulton, and seeking to have cancelled the mortgage executed by Mrs. B. C. Burks and her husband to the Citizens Bank of Moulton and the deed executed by them to Pruitt Burks. Decrees pro confesso in said suit were suffered by the defendants Burks, and a final decree, on pleading and proof, was rendered in favor of the complainant (Mrs. B. C. Burks), cancelling and holding for naught her mortgage to the Bank and her deed to her son. From this final decree the Citizens Bank of Moulton appealed to the Supreme Court. Thereafter the Supreme Court rendered a decision (made a part of the agreed facts in this case, and published in 242 Ala. 465, 6 So.2d 597) whereby itPage 171
reversed the decree of the Circuit Court insofar as it cancelled said mortgage, rendering a decree sustaining the validity of said mortgage, and affirmed the decree below in the respect that it cancelled said deed to Pruitt Burks.
Subsequently the Citizens Bank of Moulton proceeded to foreclose its mortgage of date January 13, 1926, under the power contained therein, and itself became the purchaser at foreclosure sale. At the foreclosure sale J. R. Burks appeared and made objections, publicly announcing that said mortgage had been paid and surrendered up by the mortgagee. A foreclosure deed was thereafter duly made and executed to the purchaser, the Citizens Bank. Demand for possession of the property was made in writing by the Bank upon the original parties defendant here, and the demand being refused this suit was instituted. After hearing the trial court rendered judgment in favor of the plaintiff, Citizens Bank of Moulton, with damages for detention, and this appeal by defendants Mrs. B. C. Burks and Pruitt Burks followed.
J. Foy Guin, of Russellville, for appellants.
Appellant’s note was paid by giving in exchange therefor of the note of her son. Her note and debt to the Bank having been fully paid, the lien and title of the mortgage became functus and unavailable for purposes of foreclosure and title. Wallace v. Branch Bank, 1 Ala. 565; Dennis v. Williams, 40 Ala. 633; James Supply Co. v. Frost, 214 Ala. 226, 107 So. 57; Milhous v. Dunham, 78 Ala. 48; 8 C.J. 613, 854. The former suit was in personam, not in rem. It was not res adjudicata as to title to the land. People’s Bank v. Barret, 216 Ala. 344, 113 So. 389; Lamkin v. Lovell, 176 Ala. 334, 58 So. 258. It did not preclude appellant from basing her claim upon a new and more correct theory. 34 C.J. 806, ? 1227; Gilbert v. McCreary, 87 W. Va. 56,104 S.E. 273, 12 A.L.R. 1172. Appellant is not cut off from her defense by estoppel, appellee being aware of the facts and not misled to its detriment. First Nat. Bank v. Burch, 237 Ala. 680,188 So. 859; 21 C.J. 1233, ? 239.
R. L. Almon, of Moulton, and Peach Caddell, of Decatur, for appellee.
Surrender of note and mortgage to mortgagor, does not necessarily extinguish the mortgagor or prove payment. Renewal or substitution of evidence of debt will not impair the lien of the mortgage as long as debt remains unpaid. 41 C.J. 758, ?? 888, 889; 36 Am.Jur. 919, 920; 37 Am.Jur. 367, ? 1095; 35 L.R.A., N.S., 13, note. Payment in law means real, not imaginary payment. Union Bank v. Schneider, 70 Misc. 377, 128 N.Y.S. 878; Wolf v. First Nat. Bank, 66 Pa. Super. 72; 48 C.J. 704, ? 219; Manser v. Sims, 157 Ala. 167, 47 So. 270; 41 C.J. 789, ? 903. Appellant is estopped from setting up the fact that execution of deed to her son and a mortgage by him to appellee had the effect of satisfying the mortgage given by her. Bromberg v. First Nat. Bank, 235 Ala. 226, 178 So. 48; Citizens Bank v. Burks, 242 Ala. 465, 6 So.2d 597.
In the transaction between appellant, her husband, her son and the appellee bank, by the execution of the deed to the son, and his execution of the note to cover the indebtedness claimed to be due from the appellant and her husband and the mortgage given by the son on the lands to secure the payment of same, the parties contemplated and effected a novation, ? the substitution of the obligation of the son secured by the mortgage on the land in lieu of the obligation of appellant and her husband secured by the original mortgage. That the effect of that transaction standing alone operated a legal satisfaction of appellant’s and her husband’s obligation to pay.
But appellant by filing the bill in equity against all of the parties to that transaction, to cancel the deed which she executed to her son to arm him with the power to effect such novation and obtaining in said equity proceedings a decree cancelling said deed, destroyed the security supporting the son’s obligation to pay, in legal effect repudiating the entire transaction, and she thereby estopped herself from pleading and proving the truth, ? that said transaction constituted a novation and release of her obligation to pay the debt which she contracted with the appellee bank. Woodmen of the World Life Ins. Soc. v. Greathouse, 242 Ala. 529, 7 So.2d 89; Sealy v. Lake, 243 Ala. 396, 10 So.2d 364.
So, also, appellant’s act and conduct in the equity proceeding [Citizens Bank of Moulton v. Burks, 242 Ala. 465,6 So.2d 597] are clearly inconsistent with the assertion now made that her obligation to the appellee bank had been discharged by thePage 172
novation effected in the transaction between herself, her son and the bank. The basis of the equity proceeding clearly was that, prima facie, her obligation to the bank was valid, but was in fact and law void because of her coverture, which deprived her of the power to contract the same as surety for her husband. In this last contention she is concluded by the decree of this court under the doctrine of res adjudicata. Citizens Bank of Moulton v. Burks, 242 Ala. 465, 6 So.2d 597, supra; Drinkard v. Oden, 150 Ala. 475, 43 So. 578; Boyd et al. v. Presley et al., ante, p. 16, 12 So.2d 85.
We find no error in the record.
GARDNER, C. J., and THOMAS and LIVINGSTON, JJ., concur.