Alexander et al. v. Caldwell et al.

Alexander et al. v. Caldwell et al. Bill in Equity for Reformation and Foreclosure of Mortgage. 1. When mortgagee is purchaser for a valuable consideration. — When a mortgage is given to secure the payment of a pre-existing debt, the mortgagee cannot .claim protection against, older equities as a bona fide purchaser for a valuable consideration. 2. Declarations of grantor; when admissible against grantee. — The declarations or admissions of the grantor, in disparagement of his own title, are competent evidence against a subsequent grantee, but not against a prior grantee. 3. Reformation of loritten contracts inequity. — When, by mistake, a written contract fails to express any material term of the actual agreement which the parties intended to make, a court of equity will reform it, and make it express the true agreement; but the mistake must be shown by clear and satisfactory proof; and if it is uncertain in any material respect, the uncertainty is fatal to relief, although the court may see that great wrong has been done. 4. Reformation of mortgage refused, notwithstanding mistake, on account of uncertainty of proof. — Where a mortgage purported to convey eight hundred acres of land, part of a large plantation, but, by a misdescription of government numbers, conveyed three hundred and twenty acres to which the mortgagor had and claimed no title ; held, that a reformation was properly refused, although there was an evident mistake, because it was uncertain what lands were intended to be conveyed instead of those described by mistake. Appeal from tbe Chancery Court of Wilcox. Heard before tbe Hon. Charles Turker. Tbe bill in this case was filed on tbe 7th of January, 1872, by John 3). Alexander, Fred. A. McNeill, John T. Hollis, and Alexander C. Davidson, against J. D. Caldwell, and J. H. George; and sought, principally, to reform and foreclose a mortgage on a tract of land in said county, which said Caldwell had executed to Patrick, Irwin & Co., on the 5th November, 1860, and of wbicb tbe complainants claimed to be tbe owners by assignment and transfer from said Patrick, Irwin & Co.; also, to annul and set aside, as fraudulent and void, another mortgage, and a quit-claim deed for a part of tbe same lands, wbicb said Caldwell had executed to said John H. George, and to restrain the defendants from cutting timber, or otherwise committing waste on tbe lands. Tbe mortgage to Patrick, Irwin & Co. was given to secure a promissory note for $14,080.80, dated the 2d July, 1860, and payable one day after date. It purported to convey eight hundred acres of land, wbicb were described as lying in sections one, two, eleven, and. twelve, in township eleven, and range ten; but, by mistake, as tbe bill alleged, in describing the lands by tbeir government numbers and subdivisions, three hundred and twenty acres were included, to which said Caldwell neither had nor claimed any title. This mortgage, which was duly acknowledged and recorded, contained no power of sale; and on the 5th November, 1868, by another instrument under seal, reciting as its consideration the desire to avoid the expense of a suit for foreclosure in equity, and indulgence granted to him by said Patrick, Irwin & Co., Caldwell authorized them, or their assigns, to foreclose by a sale. In this latter instrument, the mortgage is described as “conveying to them a plantation and tract of land lying in said county, near the town of Allenton, containing about eight hundred acres, more or less.” On the 14th February, 1861, said Caldwell executed a mortgage to said J. H. George, to secure the payment of a promissory note for $6,556.41, borrowed money; the lands conveyed being three hundred and twenty acres in quantity, and erroneously described as they were in the mortgage to Patrick, Irwin & Co. On the 8th December, 1868, he executed another mortgage to George, reciting the mistake in the description of the land in the former mortgage, purporting to correct that mistake, and to provide full security for the payment of the note; and this mortgage conveyed six hundred and seventy acres of said plantation, and included one hundred and sixty acres of the lands conveyed by the mortgage to Patrick, Irwin & Co. On the 9th October, 1872, Caldwell conveyed these six hundred and seventy acres, described as in said second mortgage, by quit-claim deed, to said J. H. George, for the nominal consideration of ten dollars. The opinion of the court contains a diagram of the lands, from which the several portions, as described in the different instruments, will be better understood. The bill alleged, that the mortgage to Patrick, Irwin & Co. was intended and understood by both parties to it to convey Caldwell’s entire plantation, and that it failed to do so through the mistake of Caldwell, who furnished the numbers and description of the lands to the draughtsman; also, that the first mortgage to George was without consideration, and was intended to hinder, delay, and defraud the creditors of Caldwell ; that the subsequent mortgage and quit-claim deed were executed with the same intent; and that George had notice of the mortgage to Patrick, Irwin & Co. The defendants filed separate answers. Caldwell denied that he ever promised or intended to convey his entire plantation to Patrick, Irwin & Co., or to convey to them any other lands than those described in their mortgage; and alleged that, at the instance and request of their attorneys, he consented to give them a mortgage, and, for that purpose, procured the numbers and description of Ms lands from the books of tbe tax-assessor, wMck be gave to said attorneys, and tbey thereupon prepared the mortgage, including such lands as they deemed sufficient security, and he signed it, supposing that the lands were accurately described; and that the inclusion in the mortgage of other lands, to which he had no title, was a mistake on the part of said attorneys, which he could not explain, and in which he had no agency. George, in his answer, asserted the bonafides and validity of his mortgages, and denied all notice or knowledge of the alleged mistake in the mortgage to Patrick, Irwin & Co. Other matters were brought forward in the answers, which require no special notice. On final hearing, on pleadings and proof, the chancellor dismissed the bill, holding that the complainants had failed to make out a case for relief; and his decree is now assigned as error. - ' Bbooks, Habalson & Boy, with Cochean & Dawson, for appellants. — The general denial of a mistake by Caldwell is a mere evasion. His answer shows that the misdescription of the lands conveyed, as to which there can be no doubt, was considered by him as a mistake on the part of the attorneys only, for which he was not responsible. But the law will not permit him to shield himself behind such technical evasion and indirect denial. The evidence shows that he intended to convey his entire plantation, and he supposed that he had done so eight years afterwards, when he executed the power of sale, describing the lands therein as “ a plantation and tract of land near Allenton.” That the numbers and description of the lands in the mortgage, as furnished by him, correspond with the numbers and description in the first mortgage to George, is corroborative of the mistake as alleged. The mistake being shown, the principle is well settled, that a court of equity will reform and correct the deed; and the corrected deed will relate back and operate from the day of its date, except as against a bona fide purchaser for valuable consideration without notice. — Stone v. Sede, 17 Ala. 559; Whitehead v. Broion, 18 Ala. 682; Pierce v. Brassfield, 9 Ala. 573; 1 Story’s Equity, §§ 153-5, 165; Williams v. Hatch, 38 Ala. 341. That George is not a purchaser for valuable consideration, within the meaning of this rule, see Wells v. Morrow, 38 Ala. 129; Boyd v. Beclc, 29 Ala. 713, and authorities there cited. S. J. CüMming, Jones & Jones, and B. Gaillabd, contra.— Equity will grant relief against alleged mistakes in written instruments, only where there is a plain mistake, common to both parties, and established by clear and convincing evidence. Here, tbe defendant positively denies any mistake on bis part; and if tbe evidence tends to establish any mistake, it is not tbe mistake alleged in tbe bill. If tbe parties intended to include in tbe mortgage three hundred and twenty acres of land to which tbe mortgagor bad title, instead of tbe three hundred acres to which be bad no title, bow is tbe court to determine which particular lands of the entire tract were to be thus included ? Tbe uncertainty of tbe proof on this point, and tbe variance between it and the allegations of tbe bill, are fatal to relief. — Lockhart v. Garrieron, 29 Ala. 355 ; Humbly v. Stdinion, 24 Ala. 712; Hair v. LaBrouse, 10 Ala. 548; Hogan v. Smith, 16 Ala. 600; "Willard’s Equity, 75; 1 Story’s Equity, § 157, and notes; Burns v. Hamilton, 33 Ala. 210. Tbe bill alleges that tbe intention was to mortgage tbe whole plantation; but tbe answer explicitly denies this allegation, and there is no evidence whatever to support it. Tbe general words of description contained in tbe power of sale, on which tbe appellants rely, are bmited and controlled by tbe particular description contained in tbe mortgage. — 1 Shep. Me. 430; 7 N. H. 241; 5 N. H. 536; 15 Pick. 428 ; 3 B. Mon. 594; 5 Mason, 410; 14 Pick. 128. [MAJORITY — STONE, J. —] STONE, J. — Tbe mortgage to George, on tbe lands in controversy, was executed December 5th, 1868. Tbe debt it was made to secure bad been long due. George does not, therefore, occupy tbe position of a purchaser, which, even if without notice, would give him a paramount right over older equities. In fact, there is no question of bona fide purchaser presented by this record. — See Wells v. Morrow, 38 Ala. 125. On tbe 5th day of November, 1860, Caldwell made and executed a mortgage on lands to Patrick, Irwin & Co., to secure a large debt, also past due. We do not doubt the bona fides of either of tbe debts; that to Patrick, Irwin & Co., or that to George ; although, according to the testimony, there must have entered into tbe latter a large amount of usurious interest. This, however, is not made a question in this cause. The bill charges that tbe mortgage and sale to George were intended to delay, hinder, and defraud tbe creditors of Caldwell. This is denied, and tbe charge is not sustained by tbe evidence, although some suspicious circumstances are shown. The real gravamen of the present bill lies in the averment, that there was a mistake in the mortgage to Patrick, Irwin & Co., in this, that it conveys to them three hundred and twenty acres of land not intended to be conveyed, and leaves out lands that were intended to be conveyed. It so happens that no person who participated in tbe preparation and execution of tbe mortgage, except Oaldwell, tbe mortgagor, was living when tbe error or mistake in tbe mortgage was discovered. Tbe prayer of tbe bill was for a reformation of the mortgage ; and a sworn answer was required from tbe defendants, one of whom was Oaldwell, tbe mortgagor. Tbe answer and testimony of Oaldwell deny that be made any mistake in the mortgage, or that be intended to mortgage any lands other than those expressed in tbe mortgage. Before entering on tbe discussion of tbe testimony, we feel it to be our duty to say, that what is alleged to have been said by Caldwell at the sale under tbe Patrick, Irwin & Oo. mortgage, December 14th, 1868, testified to by tbe witnesses Davidson, Alexander, and McNeill, occurred after tbe amended mortgage was made to George — December 5th, 1868; and such declarations, although provable against Oald-well, are not evidence against George. Tbe declarations, proved by McNeill and Wolfe to have been made by Caldwell on the 24th September, 1868, rest on a different principle. Oaldwell then held tbe title to tbe land, and what be then said is competent evidence, and affects George, who after-wards acquired bis title from him. — 1 Brick. Dig. 834, § 433. As we have said before, tbe only person who participated in tbe preparation and execution of tbe mortgage to Patrick, Irwin & Co., and who knew what lands were intended to be therein conveyed, who was living at tbe time tbe present litigation was commenced, is Caldwell, tbe mortgagor. Patrick, Irwin & Co. bad no agency in tbe negotiation, and, hence, have no personal knowledge on tbe subject. They intrusted tbe claim to Beck & Thompson, attorneys, resident in tbe county with Oaldwell, that they might obtain security for its payment. Negotiations between Beck & Thompson and Oaldwell resulted in tbe draught by tbe former, and tbe execution by tbe latter, of tbe mortgage bearing date November 5th, 1860. Both Beck and Thompson died before tbe present controversy arose. On tbe 5th November, 1860, Oaldwell owned, near Alien-ton, Wilcox county, a plantation comprising about eleven hundred and forty acres, in one connected body. Tbe lands lie in sections 1 and 2, and in the north halves of 11 and 12. His lands in sections 11 and 12 are tbe east half of northeast quarter of section 11, and the northwest quarter and west half of northeast quarter of section 12. He owned no lands in tbe south half of either of said last named sections. Pie owned the west half of section 1, less twenty acres in tbe northwest corner; and be owned all of section 2, except tbe north half of tbe northwest quarter, tbe northwest quarter of the northeast quarter, and twenty acres off the south part of the southwest quarter. "We append a diagram of the lands. Those marked P. I. & Co. are the lands described in the mortgage of 5th November, 1860, to them. Those marked * are lands to which Caldwell claimed no title or interest. Those marked G. 1, are lands described in the mortgage to George, of February 14th, 1861. Those marked G. 2, are lands conveyed in the mortgage to George, of December 5th, 1868. It is thus shown that these three hundred and forty of the eight hundred acres conveyed by Caldwell to Patrick, Irwin A Co., and the entire three hundred and twenty, acres conveyed to George on 14th February, 1861, were lands to which Caldwell had no claim whatever. When parties to a contract fail, by mistake, to express any material term of the contract they have mutually agreed to make, chancery will reform the contract, and make it express what the contracting parties mutually intended. But the courts will not interfere, unless the mistake is shown by clear and satisfactory proof. If uncertain in any material respect, it will be held insufficient; and while the courts may feel that great wrong has been done, they can grant no relief by reason of the uncertainty. — Lockhart v. Cameron, 29 Ala. 355; Humbly v. Stainton, 24 Ala. 712; Hair v. La Brouse, 10 Ala. 548; Hogan v. Smith, 16 Ala. 600. The bill in the present case prayed and obtained a discovery on oath from defendant Caldwell. He was also examined as a witness for himself and defendant George. It is not our intention to comment at length on his answer and testimony. Some features of them stand out saliently, and we feel it our duty to notice them. He shows clearly that it was not his intention to convey by mortgage, either to Patrick, Irwin & Co., or to George, any lands of which he was not the owner. "We are convinced that, when he made the first two mortgages, his purposes were sincere. He conveyed, in November, 1860, to Patrick, Irwin & Co., three hundred and twenty acres of land in the south halves of sections 11 and 12, to which he neither then asserted, nor now asserts any claim. Three months later, he mortgaged these identical three hundred and twenty acres of land to George. He impliedly admits that he furnished to George the numbers, by which the latter was governed in drawing his mortgage. The first mortgage to George contains no other lands than these. The mortgage to Patrick, Irwin & Co. expresses the quantity conveyed at about eight hundred acres ; and the power of sale executed by Caldwell in September, 1868, to the then holders of the mortgage, calls for the like quantity of eight hundred acres. Of the lands described in this mortgage, Caldwell owned and claimed only some four hundred and sixty, or four hundred and seventy acres. He admits there was a mistake in the first mortgage to George, and that lands are inserted therein which he did not intend to insert; but he does not state what lands he did intend to convey to him in the first mortgage. In the second, or what is called the corrected mortgage to George, there is embraced about double the quantity that is expressed in the original mortgage to him, and the lands are entirely different; yet, notwithstanding the well-established facts, that Caldwell attempted to convey to Patrick, Irwin & Co. eight hundred acres of land owned by him, and did not intend to convey any lands not owned by him ; that he actually conveyed to them only four hundred and sixty, or four hundred and seventy acres of land, of which he was the owner,and, in the same instrument, conveyed to them three hundred and forty acres to which he asserted no claim ; that three months afterwards, in executing a mortgage to George, there was inserted in it, on information that must have been furnished by him, the identical three hundred and twenty acres of land, to wbicb be set up no claim, which had been expressed in the mortgage to Patrick, Irwin & Oo., and that the insertion of these numbers in the mortgage to George was by mistake; still he denies, and reiterates the denial time and again, that he made any mistake in the execution of the mortgage to Patrick, Irwin & Co. He goes much further than this, and testifies as follows: “ I did not intend to convey by mortgage to Patrick, Irwin & Co. any lands that I afterwards mortgaged to John H. George. * * The lands belonging to me, mentioned in the mortgage to Patrick, Irwin & Co., were the only lands that I intended to mortgage to Patrick, Irwin & Co., that belonged to me.” The second mortgage to George conveyed to him all the lands Caldwell owned at either of the dates, except the four hundred and sixty or four hundred and seventy acres previously conveyed by him to Patrick, Irwin & Co. We suppose this seeming discrepancy is sought to be reconciled on the hypothesis, stated by him, that he furnished to Beck & Thompson the means of learning the numbers of his lands; that they inserted the numbers in the mortgage; that he, Caldwell, having confidence in them, executed the mortgage without hearing it read; and that if any mistake was made, it was the mistake of Beck & Thompson. This excuse is too narrow and technical. We are clearly convinced that Caldwell intended to convey about eight hundred acres of the plantation owned by him'; that for about eight years he believed he had so conveyed that quantity of his own land, when, in truth and in fact, he had conveyed only four hundred and sixty or four hundred and seventy acres of such plantation. This, on this most favorable view for Caldwell and George, was a mistake by Caldwell in the execution of the mortgage, clearly shown by the proof. A second question, equally important with the one above discussed, here presents itself: What lands did the contracting parties intend to convey, instead of those, not owned by Caldwell, which were inserted in the mortgage ? The bill avers that the intention was to mortgage the whole plantation. The answers deny this. We have scrutinized the testimony closely, and we cannot find that this averment is clearly proved. On the contrary, we think the intention was to convey only eight hundred acres, or about that quantity. And of the six hundred and sixty acres then owned by Caldwell and not conveyed, what part was intended to be conveyed ? The testimony entirely fails to inform us. Two clues are given in the record : First, the statement by Caldwell, when McNeill and Wolfe visited him, in September, 1868, that he had conveyed only eight hundred of the eleven hundred acres, because his title to three hundred was not at the time perfected. Second, the lands then shown and pointed to, by Caldwell, in his interview with them, as being the lands conveyed in the mortgage. Taking these data as a starting point, it is possible the correct numbers could have been ascertained and identified. There is nothing in the •record to enable us to do so ; and the result is, this suit must fail on that account. The decree of the chancellor is affirmed.