Stevens v. Romano

PELHAM, J. It is shown by the evidence set out in the bill of exceptions that one Joe Booth executed a mortgage on a horse owned by him to the appellee to secure the payment of $130; that appellee failed to file his mortgage for record promptly, and subsequently the appellants mortgaged their household goods to the Bessemer- State Bank for $50 by a chattel mon'gage in which Joe Booth joined as surety for appellants and included in the mortgage to- the bank the horse he had previously mortgaged to the appellee. The appellee did [603] not file the mortgage field by him for record until after the bank filed its mortgage. The bank bad no actual knowledge of the mortgage given by Booth to the appellee, nor did the appellee have any notice or knowledge of the mortgage given by Booth to the bank, except that with which he was charged, because of the due filing and recording of the instrument at a date- prior in point of time to the record of his mortgage. Booth, afterwards being in default on the mortgage given by him to the appellee, turned the horse over under this mortgage to the appel]ee, who sold him and applied the amount received from the sale (|70) as. a credit on the mortgage debt. Thereafter the bank notified appellee personally of its mortgage and claim on the animal, and the appellee, after conferring with an officer of the bank, conceded the title or lien of the bank to be superior to his because of his failure to file for record the mortgage on the property held by him until after the mortgage to the bank had been made and filed for record, and thereupon he purchased from the bank its mortgage, paying full face value therefor, and had it duly transferred (without recourse) to him. During the year or two following this transaction, the appellants made certain small payments on the mortgage to the appellee, and, upon their refusing or failing to make further payments or satisfy the mortgage indebtedness in full, the appellee made demand upon the appellants for the household goods described in the mortgage, and, upon refusal of the appellants to surrender the goods, instituted a detinue suit in the court below and recovered a judgment, from which this appeal is prosecuted. The proposition urged upon the court is that, the appellee having received the proceeds from the sale of the horse, this money belonged to the mortgagors in the [604] mortgage given to the bank, and. that, when the appellee paid to the bank the face value of its mortgage, the debt thereby secured was discharged, and the transfer by the bank of the mortgage held by it to the appellee was inoperative and of no effect. The answer to this is that the undisputed proof shows that the horse that was sold by the appellee was the property of Booth, who, known to all parties, joined and included his property in the mortgage to the bank as surety for the appellants. He executed the note and mortgage as maker in form, but the appellants were the principal debtors and mortgagors, and received all of the money advanced by the bank, and Booth joined in the mortgage entirely for the accommodation of the appellants as the principals in the transaction. Of course, if the money paid to the bank belonged to the principal mortgagors, or debtors under the mortgage, the payment would be absolute and would act as a discharge of their indebtedness, and any transfer of the mortgage would be ineffectual. — Hagin v. Shoaf, 9 Ala. App. 300, 63 South. 764. But the proceeds from the sale of the property of the surety, one who receives no part of the money, but includes his property and joins in a mortgage purely for the accommodation of the principals, does not belong to them, and they are in no position to complain of its application to the payment of a junior mortgage or otherwise. That is a matter in which the senior and junior mortgagees and the original owner of the property have certain rights that may be enforced as between themselves, but is res inter alios acta as to the .appellants. They have no ownership or other interest in the property of their surety, although it be pledged for the payment of their debt, that would let them be heard to direct an application of the proceeds derived from a saie of the property, or object to any disposition of it that might [605] be made between the owner and mortgagees holding senior and junior mortgages on the property. The senior mortgagee might waive or relinquish his prior right against the surety’s property embraced in the mortgage, and thus let the junior mortgagee’s claim or lien on the surety’s property become superior to his own, and the principal debtor in the mortgage could not be heard to object. The same would be true of an assignee or transferee of the mortgage. Section 3386 of the Code, cited and relied upon by appellants, has no application; it is for the protection of creditors and purchasers without notice. Under the facts in this case, when the appellee purchased the bank’s mortgage and the bank transferred it to him, he succeeded to all of the bank’s rights against the principal mortgagors, including the right to bring suit for the property of the principal debtors embraced in the mortgage. — Gafford v. Lofton, 94, Ala. 333, 10 South. 505. The finding and judgment in favor of the plaintiff (appellee) by the court below sitting without a jury is free from error, and the judgment will be affirmed. Affirm ed.