KELLEY v. CASSELS

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Docket Number

7 Div. 177.

Attorney(S)

E. G. Pilcher and Victor Vance, both of Gadsden, for appellant. Defendant's pleas were good against demurrer; but, if the defense was available under the general issue, then it was error to sustain objection to the question to plaintiff. Pilcher v. Hickman, 132 Ala. 574, 31 So. 469, 90 Am. St. Rep. 930; 38 Cyc. 2042; 10 R. C. L. (Estoppel), §§ 77, 113; Belser v. Youngblood, 103 Ala. 545, 15 So. 863; Tallassee Falls Mfg. Co. v. First Nat. Bank, 159 Ala. 315, 49 So. 246. Plaintiff's mortgage was not sufficiently proved, and its admission in evidence was error. Code 1923, § 6861; Lewis v. Glass (Ala. Sup.) 39 So. 771. Plaintiff did not have the right to immediate possession of the property, which was essential to a recovery. Elmore v. Simon, 67 Ala. 526; Pinckard v. Cassels, 195 Ala. 353, 70 So. 153; Arnold v. Sutherlin, 216 Ala. 546, 114 So. 140; Sullivan v. Miller, 224 Ala. 395, 140 So. 606. The case was due to be submitted to the jury; the giving of the affirmative charge for plaintiff was error. Patterson v. Irvin, 132 Ala. 557, 31 So. 474. Frank J. Martin, of Gadsden, for appellee. In trover, the plea of not guilty puts in issue every matter pleadable in bar. Camp T. W. Co. v. Bonham, 10 Ala. App. 258, 64 So. 649; First Nat. Bank v. Burnett, 213 Ala. 89, 104 So. 17; Gandy v. Cowart, 163 Ala. 295, 50 So. 355. It is essential to an estoppel that one party has been induced by the declaration or conduct of another to act or desist from acting to his detriment. Mobile T. W. Co. v. First Nat. Bank, 201 Ala. 419, 78 So. 797. It is not error to allow payee in contract to testify to its execution where there is no subscribing witness. Code 1923, § 7703; Cox v. State (Ala.App.) 140 So. 617. Mortgagee suing in trover is entitled to judgment though the notes which mortgage secures were not payable until a date after the date of conversion, where mortgagee is given the right by the mortgage to seize the property whenever he deems himself insecure. Arnold v. Sutherlin, 216 Ala. 546, 114 So. 140.

Judges

FOSTER, Justice.

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Smart Summary

Factual and Procedural Background

This appeal arises from a trover action for the conversion of two bales of cotton. The plaintiff claimed ownership based on a chattel mortgage executed by Hyde on his entire 1929 cotton crop. The defendant purchased the two bales in question in September 1929. The trial court granted the plaintiff an affirmative charge, and the defendant appealed.

Legal Issues Presented

Whether the defendant's pleas, including equitable defenses based on marshaling of securities and notice requirements, were sufficient to withstand a demurrer.
Whether the chattel mortgage was properly admitted into evidence despite lacking a subscribing witness.
Whether the plaintiff was entitled to immediate possession of the cotton and thus to recover damages for conversion.
Whether the trial court erred in giving the affirmative charge for the plaintiff.

Arguments of the Parties

Appellant's Arguments

The defendant contended that their pleas were good against demurrer and that the defense was available under the general issue.
They argued that the plaintiff's mortgage was not sufficiently proved and its admission was erroneous.
The defendant asserted that the plaintiff did not have the right to immediate possession of the property, which was essential to recovery.
They claimed the case should have been submitted to the jury and that giving the affirmative charge for the plaintiff was error.

Appellee's Arguments

The appellee argued that the plea of not guilty puts in issue every matter pleadable in bar except a release.
They maintained that estoppel requires inducement to act or desist to one's detriment and that the defendant lacked sufficient notice.
The appellee asserted that it is not error to allow the mortgagee to testify to the execution of the mortgage in the absence of a subscribing witness.
They contended that a mortgagee suing in trover is entitled to judgment even if the notes secured were not yet payable, where the mortgage grants the right to seize property when insecure.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Pilcher v. Hickman, 132 Ala. 574	Defense availability under general issue and estoppel principles	Referenced in appellant’s argument regarding defense sufficiency.
Bryan v. Day, 225 Ala. 687	General issue sufficiency in trover actions	Supported the court’s statement that the general issue justifies evidence of any available defense except release.
Sullivan v. Miller, 224 Ala. 395	General issue and defenses in trover	Used to confirm the scope of defenses under the general issue plea.
Nelson v. Dunn, 15 Ala. 501	Marshaling of securities enforceability at law	Clarified that marshaling securities is not ordinarily enforceable at law except where equitable defenses apply.
Folmar v. Copeland, 57 Ala. 588	Trover as an equitable action permitting equitable defenses	Supported the court’s view that equitable defenses are admissible in trover unless property was tortiously obtained.
Turner v. Flinn, 67 Ala. 529	Equitable right to marshaling securities without statute	Confirmed that equitable rights exist even without statutory support.
Shields v. Kimbrough, 64 Ala. 504	Duty of prior mortgagee to subsequent mortgagee	Outlined the duty of good faith in enforcing mortgages and making good losses caused by fraud or gross negligence.
Barrett v. City of Mobile, 129 Ala. 179	Definition of conversion implying a wrong to plaintiff	Distinguished the nature of the defense as not denying conversion but as a release by conduct.
Sims v. United Auto Supply Co., 221 Ala. 383	Testimony to execution of unwitnessed chattel mortgage	Supported admission of mortgage evidence despite lack of subscribing witness.
Stewart v. Clemens, 220 Ala. 224	Validity of mortgage description and supporting proof	Confirmed mortgage was not void for uncertainty though indefinite, requiring supporting proof.

Court's Reasoning and Analysis

The court recognized that trover actions allow equitable defenses unless the defendant obtained property tortiously. It noted that marshaling of securities is an equitable principle generally not enforceable at law except where equitable defenses apply. The court emphasized that the statute (section 8938, Code) requires a written demand by a subordinate claimant before a mortgagee must resort to other property, but equity itself is not dependent on such demand.

The court found that the defendant’s plea attempting an equitable defense failed because it did not allege that the plaintiff had notice or received a written demand, which are essential elements under the statute. Consequently, the demurrer to that plea was properly sustained. Other pleas were similarly insufficient for failing to allege necessary facts.

The court held that evidence offered under the general issue plea was sufficient to mitigate damages and that the mortgage was properly admitted despite lacking a subscribing witness, as the mortgagor signed his own name and testimony was permitted.

The court rejected the defendant’s argument that the plaintiff lacked the right to immediate possession, concluding that the mortgage gave the plaintiff the right to seize the property when insecure. The evidence showed the mortgage was executed, recorded, and covered the cotton crop from the rented land, and the defendant purchased the cotton knowing this. Thus, the affirmative charge for plaintiff was appropriate.

Holding and Implications

The judgment of the trial court is affirmed.

The court’s decision upholds the plaintiff’s right to recover damages for conversion based on a valid chattel mortgage, properly proved and admitted, and confirms that equitable defenses require proper pleading of notice and demand. The ruling clarifies that in trover actions, equitable defenses are admissible but must meet statutory and equitable prerequisites. No new precedent was set; the decision applies established principles to the facts.

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KELLEY v. CASSELS.

FOSTER, Justice.

This case was tried on a single count in trover for the conversion of two bales of cotton. To such a count the general issue is ordinarily sufficient to justify evidence of any available defense except a release. Bryan v. Day, 225 Ala. 687, 145 So. 150; Sullivan v. Miller, 224 Ala. 395, 140 So. 606.

"Marshaling of securities is not ordinarily enforceable in proceedings in a court of law, except in those cases where an equitable defense is permitted by law" (38 Corpus Juris, 1380, § 25), for the rule without statute is said to obtain at law only to such qualified extent. Nelson v. Dunn, 15 Ala. 501.

But trover is an equitable action and lets in equitable defenses, unless the defendant has obtained the property tortiously. Folmar v. Copeland, 57 Ala. 588; East v. Pace, 57 Ala. 521.

By section 8938, Code, the mortgagee must resort to property of the mortgagor which the latter has not transferred since his mortgage was executed on the written demand of a subordinate claimant of other property in the mortgage, if he can do so without risk of loss. When the elements of this statute are presented, it is doubtless available in defense of trover. The equitable right exists without the aid of the statute. Turner v. Flinn, 67 Ala. 529; Howser v. Cruikshank, 122 Ala. 256, 25 So. 206, 82 Am. St. Rep. 76; Prickett v. Sibert, 75 Ala. 315; Dacus v. Streety, 59 Ala. 183; Scheuer v. Kelly, 121 Ala. 323, 26 So. 4.

Another principle is that the prior mortgagee owes the duty to the subsequent mortgagee of a part of the property on which he holds a first mortgage, good faith in the enforcement of his mortgage, and, if by fraud or gross negligence he permits a part of the mortgaged property to be destroyed, lost, or removed beyond their reach, and left a smaller residuum for the second mortgage, equity and good conscience require that he should make good the loss. Shields v. Kimbrough, 64 Ala. 504, 508; Holman v. Bank of Norfolk, 12 Ala. 369, 426. This rule of duty should apply to a subsequent purchaser for value of some of the property on the same principle which exists in respect to a subsequent mortgage. But there is no such duty to the subsequent mortgagee or purchaser until the prior claimant has notice of the rights of such subordinate; and constructive notice arising from the record is not sufficient. 3 Jones on Mortgages (8th Ed.) § 2093 (1629); New England Mortgage Sec. Co. v. Fry, 143 Ala. 637, 42 So. 57, 111 Am. St. Rep. 62.

We have noted that the statute requires written demand by the subordinate. Equity is not dependent upon such demand.

We think that a defense of this sort is not in the nature of a denial of the conversion, which implies a wrong to plaintiff (Barrett v. City of Mobile, 129 Ala. 179, 186, 30 So. 36, 87 Am. St. Rep. 54), but rather that of a release resulting from the conduct of plaintiff; that it should therefore be specially pleaded as was done in this case. But plea No. 3, which attempts such defense, does not allege that plaintiff had notice of defendant's claim, nor a demand in writing under the statute. Without such notice, plaintiff owed no duty to defendant in connection with the matter so averred. The demurrer to plea 3 was therefore properly sustained.

Pleas 4 and 5 seem to be an effort to present the same sort of defense, but they are insufficient to do so, since they do not aver the facts on which the claim is based so as to come within the rule.

It is sufficient to say in respect to plea 2 that the contention Is only by way of mitigation of damages, and such evidence is admissible under the general issue. 38 Cyc. 2103; East v. Pace, 57 Ala. 521; Carpenter v. Going, 20 Ala. 587; 26 R. C. L. 1156, note 14; Stephenson v. Wright, 111 Ala. 579, 20 So. 622.

Plaintiff based his claim on a chattel mortgage, which was not witnessed, and, since the mortgagor wrote his own name, it was not necessary that there be a witness. Sims v. United Auto Supply Co., 221 Ala. 383, 129 So. 53; Stewart v. Clemens, 220 Ala. 224, 124 So. 863, 66 A.L.R. 1454. And, as it was not witnessed, the mortgagee, or any other person, who had knowledge of the facts, could testify to its execution. Norton v. Allaire-Woodward Co., 185 Ala. 344, 64 So. 609; Leftkovitz v. First Nat. Bank, 152 Ala. 521 (16), 44 So. 613, 617.

The mortgage was not void for uncertainty in the description, though it was indefinite and required supporting proof. Smith v. Fields, 79 Ala. 335; Stewart v. Clemens, 220 Ala. 224, 124 So. 863, 66 A.L.R. 1454; Dutton v. Gibson, 222 Ala. 191, 131 So. 567.

It was also necessary for the mortgagee to show that at the time the mortgage was given the mortgagor had acquired the right to cultivate the land on which the cotton was grown. Sims v. United Auto Supply Co., supra. Such evidence was all supplied in this case. There was therefore no reversible error in overruling objection to the mortgage.

We do not think the third assignment of error is well taken. There is no duty on the part of a prior mortgagee to exercise any diligence in locating other property than that claimed by defendant. We have herein undertaken to set out the principles Which govern in this respect. Neither the pleas, nor this question (third assignment), were sufficient to invoke such defense.

We do not think there was error in giving the affirmative charge for plaintiff, properly hypothesized. The evidence showed that on April 3, 1929, one Hyde executed a mortgage to plaintiff on his entire crop of cotton for the year 1929; it was duly recorded; that in the fall of 1928, Hyde rented the land for 1929, on which he made a crop of cotton in 1929, and on none other that year; that defendant, in September, 1929, bought the two bales of cotton for which the damages are claimed, and that they were raised by Hyde that year on that land. Their value was shown. Nothing was lacking to entitle plaintiff to such charge.

Affirmed.

ANDERSON, C. J., and GARDNER and BOULDIN, JJ., concur.