GORDON v. SMITH et al., 62 F. 503

PARDEE, Circuit Judge, after stating the facts, delivered the opinion of the court. The conceded facts of this case require that, as between Smith and Gordon, the latter’s title to the land in controversy, as deeded by the Wolf Creek Coal Company, the validity of the mortgage made by the Wolf Creek Coal Company to secure the issue of $50,000 of bonds, and Gordon’s rights, as pledgee of such bonds, to a good title to the land in controversy, if Smith can give it, shall be recognized.

Now, when we consider that in fact Smith had nothing to convey, nothing to pledge, but an interest in the property subject to mortgage rights and outstanding judgments, there is no question that, in equity, Smith is estopped from setting up any of these things as a reason why he should not make good his representations and promises; and it is clear that if he has or had any control over or interest in these outstanding incumbrances, or if he subsequently acquired any other or further interest in the property, he is compelled, as a matter of equity, to use his rights for the benefit of his covenantee, Gordon.

The specific performance to which Gordon is entitled, as against Smith, is not necessarily barred by the intervention of the rights and claims of the Eirst National Bank of Columbus. Such a bar exists only if it is impossible for these rights and claims to be divested on equitable terms. See Breitling’s Adm’r v. Clarke, 49 Ala. 450; Moore v. Crawford, 130 U. S. 132, 9 Sup. Ct. 447.

If Cordon has the right to a specific performance ¿gainst Smith, then, considering Smith’s representations, his present insolvency, and his neglect and refusal to act, it seems clear that Gordon is so far subrogated to the rights of Smith, including the" rights that Smith ought to acquire and secure for his benefit, that Cordon may himself, in a court of equity, assert and compel such rights, at ieast to the extent that such rights are transferable.

How, at the time Smith, on representations of perfect title to the property in controversy, obtained Cordon’s money, lie (Smith) had the statutory right to redeem the properly soid under the power in the Rucker mortgage, and this right to redeem fully existed at the time the bill was filed in the canse.

The case further shows that, prior to the loan obtained by Smith from Gordon, negotiations were pending between Smith and the agents of the bank, looking to the redemption of the property by Smith from the sale under the Rucker mortgage, as well as under the judgments in favor of the bank and in favor of Gibson, and that after the loan was obtained from Cordon such negotiations were partially carried into effect by the appropriation of 81,000 of the money obtained by Smith from Gordon to the purchase by the agents of the bank of the Bollock & Co. and other judgments against Gibson, with the acknowledged intent and pur-j>ose of offsetting the same against the judgment obtained by Gibson against Smith, and thereby reducing the amount which Smith would have to pay in order to obtain a clear title. ' It is true that the bank and its agents, in their sworn answers, deny that they at that time knew that the moneys which Smith, through the bank, was collecting from Gordon, were moneys obtained from Gordon; but the circumstances of the case, in connection with the sworn answer of Smith, are very strong to charge the bank with such notice.

Be Ibis as it may, the bank acknowledged to have received the $1,000 from Smith for the purpose of acquiring the judgments against Gibson in the interest of Smith’s redemption of the property. On no other theory than that there was a contract between Smith and the bank that Smith should be allowed to redeem the property can the payment and appropriation of the $1,000 be accounted for.

It is true that the bank claims that the redemption contemplated on the part of Smith, which was to be facilitated by the purchase of the judgment against Gibson, was the strict redemption provided for by the statute, and that thereby Smith acquired no greater right than the right given him by the statute; but in our opinion, if there was a contract between Smith and the bank that Smith should be allowed to redeem, and the bank accepted part of the redemption money, leaving the balance to be thereafter paid, Smith’s right to redeem thereafter was founded upon contract right, as well as upon the statutory right.

There may be some question whether Gordon, as the equitable assignee of Smith, in the absence of other equities, could be let in to exercise Smith’s statutory right oí redemption. In Paulling v. Meade, 23 Ala. 505, it was- said: “That the judgment debtor has the right to sell his equity of redemption cannot be questioned; and, when sold, the purchaser becomes substituted to all the rights and remedies which the statute confers on the debtor himself, and is subjected to the duties which by law devolve on his vendor.” So, in Bailey v.

Timberlake, 74 Ala. 225, 226, the right of the as-signee of the equity of redemption under the statute was recognized. In Powers v. Andrews, 84 Ala. 289, 4 South. 263 (a case decided since the institution of the present suit), Bailey v. Timberlake, supra, was overruled by a divided court: and it was decided that the statutory right of redemption is confined to the persons upon whom it is expressly conferred, and it is not conferred upon a junior mortgagee' or assignee of the equity of redemption. Following the decisions of Powers v.

Andrews, February 27, 1889, the redemption statute was amended so as to read as follows: “Where real estate or any interest therein is sold under execution, or by virtue of any decree in chancery, or under any deed of trust or power of sale in a mortgage, the same may be redeemed by the debtor, his vendee, junior mortgagee or assignee of the equity of redemption from the purchaser or his vendee within twq years thereafter; in the manner following,” etc.

The supreme court of the United States has said that the construction of a state statute given by the highest court of a state is a part thereof, and, when a contract has been made under protection of it, it will not allow a change of construction by a state court to impair the rights of the parties under it, any more than it would allow

an act of the legislature to have such effect. Douglass v. County of Pike, 101 U. S. 677; Clark v. Bever, 139 U. S. 117, 11 Sup. Ct. 468.

We do not, however, find it necessary, in this case, to determine exactly whether Cordon, as the equitable assignee of Smith, had a right to exercise Smith’s right of redemption under the statute; for we are of the opinion that, as between the parties to this case, and growing out of their dealings and conduct, Smith’s right to redeem was taken out from under the statute, and founded upon a contract, the specific performance of which can be enforced by Smith, and should be enforced in favor of Cordon, as the equitable assignee of Smith. See Butts v. Broughton, 72 Ala. 294; Anthe v.

Heide, 85 Ala. 236, 4 South. 380; Bates v. Kelly, 80 Ala. 142; Moore v. Crawford, 130 U. S. 122, 9 Sup. Ct. 447. The defenses urged in this case merit examination. It is urged that Cordon does not occupy the position of a bona fide purchaser, because he was advised by the letters of Smith to him, and particularly by the letters of July 7 and 10, 1886, of the bank’s claim upon the property.

There is no doubt, under the evidence in this case, that Cordon showed little of the shrewdness and caution of the ordinary money lender, and that by the letters in question he was advised of circumstances which should have put him on inquiry. At the same time the evidence impresses us that Gordon, in advancing the money which he did to Smith, believed Smith’s verbal representations, and that Re was getting a good title.

In the original aspect of Gordon’s bill, wherein he seeks, not only the right to redeem the property, but a recognition of priority of lien over the First National Bank of Columbus, the question of Gordon’s absolute good" faith is a very serious matter; but in the aspect given to his case by his amended bill, wherein he seeks no priority, but the simple right to redeem, and particularly in view of the admitted fact that the First National Bank of Columbus obtained, and still retains, the benefit of at least $1,000 advanced by Gordon to Smith, Gordon’s absolute good faith, within the strict definition of an innoeent purchaser for value, is of very little importance.

It is also urged in defense that Gordon’s right to redeem must be denied because he has not made a sufficient tender in fact, or in his bill.

Before Smith’s right to redeem, under any view of the case, expired, Gordon, as the holder of bonds of the Wolf Creek Coal Company, which bonds were secured by deed of trust or mortgage on the lands in controversy, offered to redeem the said lands from the sale under the Rucker mortgage, and for this purpose tendered to the purchaser (for the tender was both to the First National Bank of Columbus and to Williams, the nominal purchaser) the sum of $3,000, the price paid by the purchaser at the sale of the property, with 10 per cent, interest thereon, and in addition thereto all lawful costs and charges on said land accruing after the purchase.

This tender was rejected for the assigned reason that Cordon had no right to redeem, and that a redemption by Smith, or on his part, must be in amount sufficient to cover, in addition to the amount of the Rucker mortgage, the judgments in favor of Gibson and in favor of the bank; for it is on this theory only that the amount required would be near as much as the $8,500, which was the amount given by Williams for himself and the bank as the minimum for which redemption would be permitted.

In the original bill the complainant offers to redeem from all the liens claimed by the defendants, when the same shall have been justly and truly ascertained according to law; and in I he amended bill, after reciting the tender as aforesaid, the complainant offers to pay into court the amount tendered, or any sum which the court may determine to be proper, and to do and perform whatever may appear equitable' and right in the premises.

Under the circumstances of this case, considering the involved character of the title, hv reason of the judgments against Bmith, the inability of Gordon to know, until after an account should be taken, exactly what sum would be necessary to redeem, and considering the equity resulting in favor of Gordon from the denial of the First National Bank of Columbus and its representatives lhat any sum had been furnished by Smith towards acquiring the Gibson judgment, and further considering that when the tender was actually made on behalf of Gordon the First National Bank of Columbus, by its representatives, denied his right to redeem, and, as to a redemption on the part of Smith, insisted upon an amount based upon the par value of the Gibson judgment, without any credit whatever for the $1,000 advanced by Smith, we are inclined to the opinion that.complainant’s offer to do equity is all that equity requires. “The complainant below has brought his bill within the time allowed by the statute.

He offers to pay (and proposes to bring the money into court for that purpose) any sum which the chancellor may decree to be paid by him as the consideration on which he should redeem, and the amount to be paid is yet to be ascertained by the master. Until it is ascertained, it is not incumbent on the party to bring the money into court. He does not know how much to bring. That the offer made by the bill is sufficient, see Smith, Ch. Pr. 8; Daniell, Ch. Pr.; Colombian Government v. Rothschild, 1 Sim. 94; Nelson v. Dunn, 15 Ala. 515.” Freeman v.

Jordan, 17 Ala. 500. “If the purchaser only objects to the amount tendered, and declares that he is not satisfied that the complainant is a bona fide creditor, he cannot afterwards raise an objection to the authority of the person through whom the tender was made, nor to the fact that the money was tendered in bank notes.” Couthway v.

Berghaus, 25 Ala. 393. “The right to redeem is not perfect, and cannot be enforced in equity, until there has been either a full performance by the plaintiff of all the statutory requisitions, or a valid and sufficient excuse for his nonperformance, without any fault or neglect on his own part; and when the bill alleges an excuse for such nonperformance the excuse must be accompanied with an offer in the bill to perform all the statute requires.

If the bill does not show that tile tender was made before it was filed, a tender made in it is not sufficient to authorize a decree of redemption, unless, in connection with such offer, the bill also shows a valid and sufficient excuse for the omission to make the tender before it was filed.” Spoor v. Phillips, 27 Ala. 193. “An offer in the bill to do equity is sufficient, a good and proper excuse being shown for not having made a tender of the amount admitted to be due prior to the filing of the bill.

It is made clearly to appear that Tulane had conveyed the property to Louis Bates, and that each of them repudiated the claim set up to it by the complainant. The offer would have been fruitless, and the law never requires the performance of a nugatory act. Robbins v. Battle House Co., 74 Ala. 499; Elliott v. Boaz, 9 Ala. 772.” Bates v. Kelly, 80 Ala. 142. See, also, Pryor v. Hollinger, 88 Ala. 405, 6 South. 760.

It is also urged that the tender and the demand for redemption made on behalf of Gordon cover, as does the prayer of Gordon’s bill, 120 acres as a part of the 840 acres which is included in the mortgage of Smith to Rucker, but which is not included in the deed of trust of the Wolf Greek Goal Company to Quintard, trustee, and that, therefore, Gordon is seeking to redeem a large quantity of land, in which he can claim no equity whatever. To this it is to he answered that Smith, in his letters, assured Gordon that he would give him a first lien on the 840 acres purchased from Gen.

Rucker, and the Quintard mortgage describes the property as 840 acres conveyed, to wit, by W. J. Smith, and expressly convenanted for all further requisite deeds and assurances for conveying the premises, and that it would warrant and forever defend the same. When, therefore, Gordon made the formal tender by his attorney in fact, and renewed it in his bill, to redeem the 840 acres described, his tender and the. other allegations in the bill concur, and are correct.

The appellees invoke the statute of frauds, hut, if such statute would he otherwise applicable in the case, it cannot be applied against Gordon exercising the right of Smith, because, as between Smith and the appellees, there has been partial performance by the payment and application of the $1,000. See Anthe v. Heide, 85 Ala. 236, 4 South. 380.

Other defenses, mainly consisting of irregularities, are urged against the appellant, such as not making actual tender before ailing original bill, and the failure to take a second decree pro con-i'esso against Smith after filing the so-called amended bill, and before final submission of the cause. We do not think that the failure to make a tender before the fill tig of the original bill necessarily defeats complainant’s equity, under the circumstances developed.

On a remanding of the cause, which is necessary in our view of the case, and particularly if the case was heard in the circuit court before issue joined, it will not be too late, before entering another decree, ro take a. pro confesso against Smith.

Our conclusion on the whole case is that the decree appealed from should be reversed, and the cause remanded to the circuit court, with instructions to enter a decree in favor of the complainant, to the effect that an account be taken of the amounts of the several liens due on the 15th of July. 1SS7, on the property described in complainant’s bill and held in the names of the defendants Johnston, Williams, and the Eirst National Bank oí Columbus, or either of them, crediting upon the same the sum or sums paid on account thereof by the complainant, Gordon, and the defendant Smith, or either of them, together with such deductions for rents and profits as equity may require, and, after such accounting, that complainant, Gordon, be allowed to pay off the said liens, as so .ascertained, and redeem the lands described in the bill, within a reasonable day, to be named by the court, and, further, that the amount of said liens, when paid by the complainant, Gordon, shall be added to his own Him for $5,000, with interest, and that the property described in the complainant’s bill be sold to satisfy said complainant’s lien, as so ascertained and determined; and it is so ordered.