Opinion
79-201.
January 16, 1981. As Modified on Denial of Rehearing March 6, 1981.
Appeal from the Circuit Court, Baldwin County, Roy Mayhall, J.
Bert S. Nettles, Mobile, for appellants.
Champ Lyons, Jr., of Coale, Helmsing, Lyons Sims, Mobile, and J.B. Blackburn, Bay Minette, for appellees.
This is the second appeal to this Court by Plaintiffs-Appellants. The first appeal was from an order of the trial court granting Defendant E. Davidson's motion to dismiss. This Court, per Mr. Justice Bloodworth, reversed and remanded on July 9, 1976 (Hinesley v. Davidson, 335 So.2d 380 (Ala. 1976)). On October 31, 1979, after a hearing on the merits, the trial court entered a final judgment against the Plaintiffs. This appeal is taken from that action.
While Appellants adopt the fact summary from the prior appeal to this Court, Appellees are quick to point out that such reliance is misplaced because that appeal disposed of a ruling by the trial court on the pleadings which had not progressed beyond the stage of Defendant's motion to dismiss. After remand, the Defendants filed answers raising factual issues which were supported by a comprehensive stipulation at the time of trial.
At the outset, we note that our inquiry concerns whether Appellees' "additional evidence," via the joint stipulation, was of a character and sufficiency to cause us to deviate from the principles enunciated in our initial opinion. Hinesley I. To this query, we answer in the negative. Again, we reverse and remand.
Stanley M. Waters, the father of Appellants and of the Defendant Stanley L. Waters, died on November 15, 1936, while a resident of Baldwin County, Alabama, leaving certain real property in Baldwin County, Alabama. In his will, Stanley M. Waters left all his property to his wife (who is now Virginia Waters Daw, a Defendant herein and mother of the Appellants and of the Defendant Stanley L. Waters) for the term of her natural life and, on her death, to Appellants and Defendant Stanley L. Waters, share and share alike.
The estate of Stanley M. Waters, at the time of his death, was subject to two encumbrances from Stanley M. Waters and Virginia B. Waters to the West Florida Naval Stores Company. Additionally, a vendor's lien, reserved in a certain deed from J.T. Bradley and Agatha Bradley his wife, to S.M. Waters, dated June 5, 1935, was transferred and assigned by J.T. Bradley to the West Florida Naval Stores Company, by written assignment, on June 19, 1937. These mortgages and lien, and the indebtedness secured thereby, were duly transferred and assigned by West Florida Naval Stores to the Appellee Davidson, and H.L. Taylor, by written assignment, dated February 6, 1941. No formal foreclosure proceedings were ever undertaken by Davidson and Taylor under the mortgages and lien, but in February, 1941, Davidson and Taylor took possession and control of the subject property, except for the 40-acre "home place."
At the time Davidson and Taylor took possession and control of the property, approximately $3,500.00 was due and owing on the debts of the deceased father, secured by the mortgages and lien. Davidson and Taylor paid the taxes on the land after taking possession, and, subsequent to the death of H.L. Taylor, taxes were paid by Davidson and successors to Taylor.
After Stanley M. Waters's death, and at the time of the purchases of the mortgages and vendor's lien by Davidson and Taylor, the mortgages and lien were in default and all the lands referred to in the mortgages and lien had been sold for taxes in two separate sales. After these tax sales, and after their purchases of the mortgages and lien, Davidson and Taylor redeemed all the land, paid all the back taxes, and thereafter had all the lands assessed in their names, except the Waters home place, to which they make no claim.
With the exception of the home place, Davidson and Taylor were in uninterrupted, exclusive possession of the subject property from 1941 until the present. By way of stipulation, the parties agree that, "[a]s of March 10, 1961 [the date of majority of the youngest child], all of the Waters children and the widow became charged with notice of the claims of Taylor and Davidson." This action commenced on March 28, 1974.
Additionally, the stipulation states: "The possession and claim of ownership of the property made the basis of this action by Davidson and Taylor [were] known to the adult members of the Waters family when Davidson and Taylor were placed in possession of the property and the other plaintiffs have each known of the possession and claim of ownership of Davidson and Taylor since reaching their respective majorities and, certainly, since the year of 1961."
As heretofore stated, our focus is narrowed to whether, on this appeal, Appellees' supplementation of those facts originally before this Court in Hinesley I is of a degree sufficient to compel a reversal by this Court of that earlier decision. While we now discern additional factual assertions by Appellees, not developed by the case as postured and presented in the first appeal, our response to the above inquiry remains in the negative.
Appellees argue in brief that, by virtue of the stipulation, "[T]he appellees were assignees of the mortgagees and, after the death of the testator, it became obvious to all appellants that the appellees claimed an interest in the property other than the homeplace which was openly hostile to their status as remaindermen. The record is also undisputed that (1) the time frame on this period of knowledge is at least ten years prior to the bringing of this action and, (2) the appellees paid taxes on the property assessed in their names under color of legal title throughout this period."
I. Possession of a Mortgagee after Default in Payment of the Mortgage Debt.
Appellees correctly cite Killian v. Everett, 262 Ala. 434, 79 So.2d 17 (1955), for the proposition that "possession of a mortgagee after default in payment of the mortgage debt, without any recognition of his relation to the mortgagor, is adverse, and if such possession is continued for ten years, without recognition of any right in the mortgagor, will bar a recovery by the mortgagor." See, also, Ward v. Chambless, 238 Ala. 165, 189 So. 890 (1939).
Appellees juxtapose Killian, supra, with their claim of adverse possession against Appellants as remaindermen. While the authority of Killian is clear, we beg to differ with Appellees' interpretation and its application to the instant case. To adopt Killian, literally, as support for Appellees' claim of adverse possession against Appellants, as remaindermen, would, in our opinion, abrogate the general rule in this realm. This, we cannot do.
As a general rule, the statute of limitations does not run against remaindermen during the existence of the life estate for the reason that no cause or compelling right of action is in them; nor can there by any possession adverse to the remaindermen, there being no immediate right of possession in the remaindermen. Pickett v. Doe, 74 Ala. 122 (1883); Bolen v. Hoven, 143 Ala. 652, 39 So. 379 (1905); Dallas Compress Co. v. Smith, 190 Ala. 423, 67 So. 289 (1914); Bishop v. Johnson, 242 Ala. 551, 7 So.2d 281 (1942). See, also, 51 Am.Jur.2d Life Tenants and Remaindermen § 15 (1970).
II. Appellees' Claim of Adverse Possession.
While Appellees concede the general axiom that remaindermen are not subject to claims of adverse possession against their future interests, they assert Duncan v. Johnson, 338 So.2d 1243 (Ala. 1976), for the proposition that their claim against Appellants falls without that purview. We cannot agree.
In Duncan, supra, the Court noticed an exception to the general rule as follows:
"Our cases, we think, are to the effect that in the absence of some special equity in an interest in property in addition to that of one's interest as a life tenant, or a tenant pur autre vie, and knowledge or some reasonable notice thereof on the part of the remainderman, there is no duty on the remainderman to institute a proceeding to remove a cloud upon title of the remainderman, and the rights of the remainderman as such are not destroyed by the mere expiration alone of a period of time, whether ten years, twenty years or longer." (Emphasis added.)
Duncan v. Johnson, supra, at 1254.
Appellees point to the joint stipulation, not previously before this Court, whereby it is conceded that their possession and claim of ownership of the subject property was known to the adult members of the Waters family. Appellees equate this stipulation with meeting the burden of proof sufficient for the trial court to infer compliance with the exception spoken to in Duncan.
While we admit to difficulty in ascertaining a precise, and possibly unambiguous, definition of "special equity," we, again, in face of what we deem a strong social policy undergirding the basic rule, reject Appellees' claim of title against these remaindermen via adverse possession. Here, though not called upon to set the outer limits of the objective effect of the "special equity" exception, we hold that the broad, generalized, conclusory language of the stipulation that the remaindermen had knowledge of Davidson's and Taylor's possession and claim of ownership of subject property falls short of the requisite proof to revoke the operation of the general rule.
Were we to adopt the position enticingly dangled before us by Appellees, one need thereafter only show possession coupled with a claim of ownership and notice thereof, and the protection afforded remaindermen per the general rule would be reduced to ashes. Suffice it to say that our careful study of the evidence of record, aided by the excellent briefs of counsel for Appellees, fails to disclose that the additional factual assertions contain any objective facts or circumstances from which the trial court could reasonably infer that Appellees had any "special equity" in an interest in the subject property so as to impose upon the remaindermen any duty to earlier assert their claim to it.
Consequently, we are disinclined to divert our path from that laid down by Mr. Justice Bloodworth in his initial interpretation of this cause in Hinesley I. Therefore, the trial court's order denying the remaindermen's right of redemption is reversed; and this cause is remanded for further proceeding to adjudicate the respective parties' redemptive rights.
REVERSED AND REMANDED.
All the Justices concur, except TORBERT, C.J., who dissents.
I respectfully dissent.
Generally, in a suit for possession of land brought by a remainderman, neither the defense of laches nor the running of the statute of limitations, during pendency of the life estate, is available to the defendant. Hammond v. Shipp, 292 Ala. 113, 289 So.2d 802 (1974). An exception to the rule, however, was thoroughly discussed in Duncan v. Johnson, 338 So.2d 1243 (Ala. 1976). For the following reasons, I believe the instant case falls squarely within the exception.
I.
In Alabama, a mortgage operates in law as a conveyance, transferring to the mortgagee the estate of the mortgagor. Hawkins v. Snelling, 255 Ala. 659, 53 So.2d 552 (1951). By virtue of the conveyance, the mortgagee has legal title to the property, but, in equity, the mortgagor retains an interest — the equity of redemption. Id. The mortgagor's equity of redemption is an equitable interest in land, Cunningham v. Andress, 267 Ala. 407, 103 So.2d 722 (1958), and the interest is the right of the mortgagor to legal title of the mortgaged property, once the mortgage debt is discharged. See Code 1975, § 35-10-26. As an equitable interest in property, the equity of redemption can be conveyed, but the transferee of the mortgagor takes only the equity of redemption, while legal title remains in the mortgagee. Trauner v. Lowery, 369 So.2d 531 (Ala. 1979).
On default of the mortgagor, the estate of the mortgagee becomes absolute, subject only to the mortgagor's equity of redemption. Charles B. Teasley, Inc. v. Dreyfus, 252 Ala. 41, 39 So.2d 377 (1949). However, the mortgagor's equity of redemption may be terminated by valid foreclosure, either by proceeding in a court of equity or by power of sale. Hawkins v. Snelling, 255 Ala. 659, 53 So.2d 552 (1951). See Code 1975, §§ 35-10-1 to -10. A valid foreclosure creates the statutory right of redemption (Code 1975, §§ 6-5-230 to -246), but until a valid foreclosure, the equity of redemption is not extinguished. Summerford v. Hammond, 187 Ala. 244, 65 So. 831 (1914).
Applying the foregoing principles to the instant case, it becomes apparent that plaintiffs' suit is one to enforce their equity of redemption. Since the mortgage was never discharged and plaintiffs claim through S.M. Waters, the mortgagor, plaintiffs hold only the equity of redemption. Defendants, as assigns of the mortgagee, never foreclosed the mortgage, but instead they took possession of the mortgaged property. Because no valid foreclosure extinguished the equity of redemption, plaintiffs may redeem the mortgaged property, providing their application is timely.
II.
The statute of limitations for recovery of possession of land (Code 1975, § 6-2-33), may limit the time for exercise of the equity of redemption where the mortgagee is in possession, see, Cunningham v. Andress, 267 Ala. 407, 103 So.2d 722 (1958), or, to the same effect, the mortgagee may adversely possess the equity by reason of Code 1975, § 6-5-200. See, Charles B. Teasley, Inc. v. Dreyfus, 252 Ala. 41, 39 So.2d 377 (1949); Ward v. Chambless, 238 Ala. 165, 189 So. 890 (1939). Apparently the fiction developed that the mortgagor's equity of redemption, an equitable interest in the mortgaged land, is terminated by the mortgagee's adverse possession of the mortgaged land. The equity may also be defeated by prescriptive use for twenty years, Cunningham v. Andress, 267 Ala. 407, 103 So.2d 722 (1958); Oxford v. Estes, 229 Ala. 606, 158 So. 534 (1934), although it is difficult to imagine an instance when the ten-year limitation would not be applicable. Finally, laches, an equitable defense, may bar the equity, and although laches is sometimes analogized to the statute of limitations, no strict time limit is followed. W.T. Smith Lumber Co. v. Barnes, 259 Ala. 164, 66 So.2d 77 (1953).
The question then arises whether plaintiffs' equity of redemption is barred by the passage of thirty to forty years from the time of S.M. Waters's default on the mortgage and mortgagee's possession of the mortgaged land, until the filing of this suit by plaintiffs. Although plaintiffs are remaindermen who have never had the right to possess the disputed land, I believe that equity requires they have acted sooner to redeem the land. I would hold that the plaintiffs' equity of redemption is barred by laches.
III.
Because a remainderman has no immediate right to possess the estate, there can be no possession of the estate adverse to the remainderman during pendency of the life interest. Hinesley v. Davidson, 335 So.2d 380 (Ala. 1976). Likewise, until the remainderman's interest becomes possessory, he has no cause of action for the possession of land, and the statute of limitations cannot run against him. Id. For these reasons neither the running of the statute of limitations nor adverse possession, during pendency of the life estate, is a defense against a remainderman attempting to exercise his equity of redemption. Id.
Laches is a defense against a plaintiff who has failed to do something equity requires to be done, id., and as we said in the previous appeal of this case, "[W]hile the remainderman may maintain an action to remove a cloud on his reversion during the pendency of the life estate, he is under no duty to do so. . . ." Id. at 382, quoting from Hammond v. Shipp, 292 Ala. 113, 289 So.2d 802 (1974). But equity at times imposes a higher duty than the law, and notwithstanding our recitation of the general rule in the previous appeal, see id., there are circumstances which require that a remainderman bring suit to clear his interest in order that he may escape the charge of laches. W.T. Smith Lumber Co. v. Barnes, 259 Ala. 164, 66 So.2d 77 (1953). See, Duncan v. Johnson, 338 So.2d 1243 (Ala. 1976).
As was discussed in 21 C.J. Equity § 213 (1920), the applicability of the doctrine of laches depends on the nature of the right asserted and the relief sought.
In reference to the nature of the right asserted and the relief sought, there is a well recognized and fundamental distinction between two classes of cases into one or the other of which all the cases fall. The first class includes those cases where protection is sought against a violation of a present vested property right or what has been termed an "executed interest." The second class includes those cases in which plaintiff's right is not vested in possession but lies in action, and it is necessary to obtain the peculiar relief afforded by courts of equity in order to invest plaintiff with the right claimed. This kind of right or interest has been termed "executory." In the case of executory interests, the doctrine of laches applies fully, and in order to obtain relief plaintiff must come into court without unreasonable delay. Where, however, plaintiff comes into equity, not for the creation or establishment of an executory right, but for the mere protection of an executed or vested legal right, the doctrine of laches has little, if any, application. The rule here applied is that, unless the statutory period of limitations has run or sufficient time has elapsed to create a presumption of grant, no mere delay is a bar to equitable relief in support of the legal right, and that plaintiff is precluded from relief only by such conduct as creates an abandonment of the legal right itself, or an estoppel to assert it against defendant.
Id. at 215. (Footnotes omitted, emphasis supplied.) See also 30A C.J.S. Equity § 113 at 29-30 (1965). Since the plaintiffs seek purely equitable relief, i.e., enforcement of the equity of redemption, they seek enforcement of an "executory" interest, and the doctrine of laches is fully applicable to the case.
Alabama cases support the view that a remainderman may be guilty of laches for failure to timely petition for equitable relief from an impediment to his interest. In each case sustaining laches against a remainderman for failure to timely assert title to his remainder interest, the remainderman was "seeking the enforcement of an equitable right upon the establishment of which [his] title and interest depend[ed]." W.T. Smith Lumber Co. v. Barnes, 259 Ala. 164, 169, 66 So.2d 77, 81 (1953) (suit by remainderman to set aside allegedly void foreclosure sale and to exercise equity of redemption). See, Duncan v. Johnson, 338 So.2d 1243 (Ala. 1976). Cf. Ward v. Chambless, 238 Ala. 165, 189 So. 890 (1939) (suit by remainderman to set aside foreclosure and to exercise equity of redemption); Huey v. Brock, 207 Ala. 175, 92 So. 904 (1922) (suit by holder of foreclosure deed to quiet title or to extinguish remainderman's equity of redemption); Woodstock Iron Co. v. Fullenwider, 87 Ala. 584, 6 So. 197 (1888) (suit by remainderman to set aside allegedly void administrator's sale). The rule is that the remainderman's knowledge of his equitable cause, plus his laches in failing to timely assert it, will bar his subsequent suit to clear or redeem title.
Here, the remaindermen not only had knowledge of the outstanding mortgage, but also had knowledge of the mortgagee's possession for fifteen to twenty years after the youngest remainderman reached the age of majority. Application of the doctrine of laches requires that defendant be prejudiced by plaintiff's delay, Meeks v. Meeks, 245 Ala. 559, 18 So.2d 260 (1944), see, W.T. Smith Lumber Co. v. Barnes, 259 Ala. 164, 66 So.2d 77 (1953), and under the facts, there can be no question that the mortgagee in this case was prejudiced by the remaindermen's delay in prosecuting the suit. Certainly plaintiffs are guilty of laches, and their suit to redeem should be barred.
I do not think my views would abrogate in any way the opinion of this court on the previous appeal of this case. That appeal was from the granting of a Rule 12 (b)(6) motion to dismiss. On that appeal, we considered only the pleadings, but whether or not there has been laches turns on the particular facts of each case. See, W.T. Smith Lumber Co. v. Barnes, 259 Ala. 164, 66 So.2d 77 (1953).
In short, plaintiffs had a purely equitable cause to regain legal title to their remainder interest. Knowing that the legal title — the mortgage — was outstanding, plaintiffs delayed for fifteen to twenty years before instituting suit on their equitable cause. All the while the mortgagees were in open and hostile possession of the valuable and appreciating property, having color of title through the mortgage and paying the property taxes. Under these facts and the authorities cited, I believe plaintiffs are guilty of laches.