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(100 So.) damages recoverable, we here state a few It would seem that an offer to sell an abgoverning rules of law.

solute title is the same in effect as an exUnder the early common law the maxim press claim of such title. On principle, we caveat emptor was applied with all its rigor do not perceive the difference in legal duty to sales of chattels. No implied warranty and obligation. of title was recognized. But later the courts The nature of a sale may enter into the of England and America adopted the rule of question. One incident of a sale is delivery the civil law. This rule has been thus of possession, actual or constructive. If the stated:

property is at the time in the actual adverse “It is understood that the seller of personal merely the assignment of a chose in action,

possession of another, the transaction may be chattels impliedly stipulates that the article gold is his own, and that he will indemnify or an incomplete executory contract of sale. the buyer for the loss, if the title is in another The facts of the case before us do not appear person.” Ricks' v. Dillahunty, 8 Port. 134, to make it necessary for us to decide the 137.

question here. "The law, in the absence of proof to the con [3,4] The corn was cribbed on the lands of trary, a warranty of title in the sale Mrs. Sailors, had been hers and in her posof chattels.” Williamson v. Sammons, 34 Ala. session. Plaintiff's testimony is to the effect 891. 693.

that the defendant, Edwards, there on the "In the absence of anything to the contrary, ground offered him the corn as his own,

* the sale of a chattel carries the implication of a warranty of title thereto." Gray claimed to have bought it from Mrs. Sailors, v. Hayhes & Bro., 164 Ala. 294, 297, 51 South. that plaintiff bought and paid for it, where416, 417.

upon the defendant turned him over the key, "Where the vendor of chattels is in posses-assisted in nailing up the crib, and the plainsion, and sells in his own right, the law implies tiff took possession and proceeded to haul the & warranty of the title, for the breach of which

corn away, when Mrs. Sailors gave notice an action lies in favor of the vendee.” Hafer V. Colc, 176 Ala. 242, 246, 57 South. 757, 759. to quit. On plaintiff's evidence defendant

"In ordinary sales of chattels the law will was at the time in apparent possession and imply a warranty of title, though none be ex- | control, and no notice was given plaintiff of pressed in the contract, whether it be in writ- any adverse claim of title. ing or by parol.

This rule of good

The defendant's testimony as to an actual faith between vendor and vendee was recently extended, in the case of Corry v. Sylvia y Cia, sale and delivery of possession is not ma192 Ala. 550, 68 So. 891, where it was held terially different. The chief issue is wheththat the seller's silence in regard to incum- er it was sold as defendant's corn or the corn brance upon or defect in title, with knowledge of Mrs. Sailors. Defendant insists that he of the purchaser's ignorance thereof, is a sold the corn for Mrs. Sailors at her in. fraud amounting to an actionable deceit." Consumers' Coal & Fuel Co. v. Yarbrough, 194 stance, the money being paid to defendant on

a mortgage held by him on the corn. We Ala. 482, 488, 69 South. 897, 900.

think that in either view of the testimony

there was an implied warranty of title to [2] The point is made in argument that no the corn to this plaintiff. The issue made implied warranty arises where the seller is by the evidence is, who made the warranty? not in possession, and that this rule should

[5] It is the right, and may be the duty, of be given effect in the case at bar.

the buyer of personal property to yield the It is stated on good authority that the pre-possession to the true owner on demand. If railing rule in this country is that no im- he does so, however, he assumes the burden plied warranty arises when the seller is not of proving he yielded to a paramount title in possession, but the actual possession is in in an action against his vendor for breach of another. 35 Cyc. p. 395; 24 R. C. L. p. 185, 8 warranty. In case of doubt, common pru456.

dence dictates he should defend his posses. This rule is stated by the same author-sion. Hafer v. Cole, 176 Ala, 242, 57 South. ities not to be uniform; and where the seller 757. If the buyer is sued for possession, bas constructive possession or expressly as he may give proper notice of the pendency of serts the title to be in him, the implied war- the suit to his vendor, and, if a judgment is ranty arises. 24 R. C. L. p. 185, $ 456. obtained against him under paramount title.

Mr. Mechem, however, says there is a ten- without fraud or collusion, it is conclusive dency to break away from the rule that an against the seller. Salle v. Light's Ex’rs, 4 implied warranty does not exist where the Ala. 700, 39 Am. Dec. 317. seller is out of possession, and that the The purpose of the notice is to give the modern rule in the United States is in ac- vendor the opportunity to direct the course cord with the later English rule as stated by to be pursued. The seller has open to him Mr. Benjamin, namely:

three courses of action: (1) He may admit "That where the seller, whether in or out of the superior title and direct no defense to be porsession, purports to sell an absolute title. made, thus saving the costs of needless litithe warranty of title will attach.” 2 Mechem gation. (2) He may undertake and conduct

the defense of the suit. (3) He may say

on Sales, $ 1302.

nothing, or tell the buyer to take his own, the vendor, Edwards, and Mrs. Sailors, was course.

tried in the detinue suit. The record of that An implied warranty of title to chattels suit was properly admitted in evidence. does not warrant against wrongful disturb- [6] The costs of the detinue suit, with the ance of possession, nor against a suit for pos- reasonable attorney's fees incurred by plainsession by one with po superior title. Hence, tiff in seeking to sustain his title, were propit often occurs that the seller adopts the er elements of damage. Rowland's Adm'r v. hands off policy, which is the equivalent of Shelton, 25 Ala. 217; Chestnut v. Tyson, 105 saying to the buyer, “I sold you a good title, Ala. 149, 163, 16 South. 723, 53 Am. St. Rep. and you should protect it.”

101; 17 C. J. p. 809, 8 135 ; 24 R. C. L. p. 270, But, in order for the seller to be concluded $ 549; 2 Mechem on Sales, p. 1440, § 1798. by the judgment, it is essential that he have [7] We need not decide whether a recovery opportunity to make the election above out- should have been allowed for the attorneys' Kned. The notice need not be in writing, fees paid as damages on the bond for seizure but must afford the seller opportunity to de- in the detinue suit. The plaintiff after judg. fend the title he has warranted. Salle v. ment rendered voluntarily remitted an Light's Ex'rs, 4 Ala. 700, 39 Am. Dec. 317; 24 amount equal to the item so claimed. This R. O. L. p. 270, § 549; 35 Cyc. pp. 479, 480; would cure any error in that regard. 2 Mechem on Sales, p. 1440, 8 1798.

The rulings of the court below were in acIn the case at bar it must be noted that cord with the above opinion. The judgment no suit was brought against the vendee, but will be affirmed. the claimant took possession without suit. Affirmed. The complaint avers that plaintiff advised this defendant of that fact and of the claim ANDERSON, C. J., and SOMERVILLE and of paramount title, and that the detinue THOMAS, JJ., concur. suit was brought with the knowledge and approval of defendant.

The evidence for plaintiff was that he wrote defendant about Mrs. Sailors' claim

HOUSTON CANNING CO. et al. v. VIRGINIA ing the corn, also notified him in person,

CAN CO. (4 Div. 59.) and asked, "What about it?” That defendant replied, “I can't do anything because (Supreme Court of Alabama. Feb. 14, 1924. they have sued me," and told plaintiff to go Rehearing Withdrawn May 13, 1924.) ahead and get the corn the best way he

1. Corporations Om 672(4)-Foreign corporacould. This

before suit brought. tion suing on contracts must aver compliance Plaintiff testified he notified defendant of the with Constitution and statutes. suit after it was brought. It further ap- A foreign corporation suing on contracts pears defendant was a witness in the detinue constituting transaction of business in state suit, and that his counsel advised him to must aver compliance with Constitution and keep hands off in the detinue suit of plain-Code 1907, &$ 3642_3644, 3651, 3653. tiff against Mrs. Sailors. Defendant's testi-2. Corporations w642(1)-Leasing machines mony on cross-examination touching the no- to be used in state held not "transaction of tice before suit was, in substance, the same business in state." as that of plaintiff—that he told plaintiff Lease of machines to be used in state for 3 “that he would have to take care of his own years was not transaction of business in state, troubles," "I haven't anything to do with under Code 1907, 883042-3614, 3651, 3653, it," etc.

relating to foreign corporations, where maIn this case the proper time for the chines were shipped into state and lessee was notice was before bringing suit. That was lease, though lessor agreed to furnish mechanic

to pay freight and return at termination of the time for the seller to determine what to make adjustments after lessee set up macourse he would take, if any, to make good chines. his warranty. The testimony fully sustains the conclusion of the jury that he had prop

3. Insurance 580(1)-Lessor of machines er notice, that he treated this notice as an

held entitled to portion of proceeds of fire

policy. invitation to protect his vendee's title, that he declined so to do, and threw the responsi-them insured, and they were included in policy

Where lessee of machines agreed to keep bility on the vendee.

taken out by lessee, lessor, in case of loss by The vendee had the alternative to let the fire, was entitled to its proportion of proceeds; corn go, and assume the burden of disproving such proceeds constituting trust fund. his own title, or to test the title by suit in detinue. If successful, this would protect

4. Insurance 580(1)-Held to arise under both the vendor and vendee.

principle of treating that as done which

should have been done. We conclude he was within his rights in

Under principle of treating as done that bringing the detinue suit.

which should have been done, equity will esThere is evidence, especially of the wit-tablish a lien on portion of proceeds of a fire ness Dixon, that the issue of title between policy in favor of lessor of machines, where

ma For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

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(100 So.) lessee agreed to insure the machines and in The respondents, separately and severally, cluded them in insurance taken out.

demurred to the bill as amended and parts 5. Insurance 624 (7)-Person claiming lien thereof, which demurrers were by decree of on property held proper party in suit to es. the court overruled. This appeal is prose tablish equitable lien on insurance proceeds. cuted by the defendants from such decree,

In suit by lessor of machines to have equi- and it is the error assigned. table lien declared in its favor for pro rata The defendants insist the bill as amended share of proceeds collected under fire policy, is demurrable because it affirmatively apcovering its machines, one with whom policies pears therein that the complainant is a forwere hypothecated and who had lien on lessee's eign corporation, and it was engaged in or real estate was a proper party.

transacting business in this state as shown 6. Corporations ww515-Ultra vires character by its two lease contracts upon which the of contract not appearing on face of bill must reiief is predicated, and it fails to aver, bem be set up by answer or plea.

fore making these contracts and engaging in If contract involved was beyond power of that business, evidenced by them, that it had defendant corporation to make under its char: complied with the Constitution and statutes ter, such fact should be presented by answer or of this state. Sections 3642_3644, 3651, and plea, and not demurrer, if it does not appear on face of bill to be ultra vires.

3653, Code 1907.

[1] This bill alleges the complainant is a 7. Equity E39(1)-Equity having jurisdic. corporation organized under the laws of the tion for one purpose will retain cause for all state of Virginia, and its principal place of purposes.

business is in the city of Roanoke, Va, It Equity having jurisdiction of cause for one purpose will retain it for all purposes to settle should also aver compliance with the Constiall matters involved growing out of contracts tution and statutes of this state before enconstituting subject-matter of suit.

tering into these lease contracts, if it ap

pears from the face of the complaint that the Appeal from Circuit Court, Houston Coun- relief sought is predicated on these contracts, ty; H. A. Pearce, Judge.

and they, under the facts averred, constitute

engaging in or transacting business in this Bill in equity by the Virginia Can Company state by the complainant. Ashurst v. Arnold, against the Houston Canning Company and etc., Co., 201 Ala. 480, 78 South. 386; Chrisothers, to have an equitable lien declared in | tian v. 'Am., etc., Mtg. Co., 89 Ala. 196, T its favor. From a decree overruling demur. South. 427; Farrior v. New Eng. Mfg. Co., 88 rer to the bill, respondents appeal. Affirmed. Ala. 275, South. 200; Muller Mfg. Co. v.

Farmer, Merrill & Farmer, of Dothan, for First Nat. Bank, 176 Ala. 229, 57 South. 762. appellants.

[2] The relief of complainant rests primariHarry K. Martin, of Dothan, for appellee. ly on two contracts entered into by it with

the Houston Canning Company. They are MILLER, J. This is a bill in equity filed not sale contracts, but are lease contracts. by the Virginia Can Company, a corporation One is attached to and made part of the bill organized under the laws of the state of by exhibit, and the bill avers the other conVirginia, against the Houston Canning Com- tained the same terms and conditions. One pany, a corporation organized under the laws / contract is dated June 8, 1918, and the other of Alabama, the officers and directors of July 25, 1919. The complainant by the forthis corporation, the Firemen's Insurance mer leased for three years from June 8, 1918, Company, a foreign corporation qualified to to this defendant a can-closing machine for do business in Alabama, and J. D. Flowers. No. 3 cans; and by the latter complainant

The complainant by the bill as amended leased for three years, from July 25, 1919, to seeks to have an equitable lien declared in this defendant à can-closing machine for its favor for its pro rata share of the pro- No. 242 cans. In the contract the complainceeds collected under two insurance policies ant is called the lessor and the Houston Canon its property (two automatic closing can ning Company is called the lessee. In these machines) held by the Houston Canning Com- contracts the “lessee agrees to pay the lessor pany as lessee, which with the property of an annual rental of $50 per annum for each this defendant were covered by the insur- machine and rental to be paid in cash at ance policies, all of which was destroyed by time of delivery.” The bill avers this defire

. The Firemen's Insurance Company ad- fendant is indebted to the complainant now mitted an indebtedness under the policies in the sum of $100 for rent, and the value aggregating $3,666.67. It filed an interplead- of each machine was $1,300. The machines er, and was allowed by the court to pay this were shipped from Roanoke, Va., to this desum to the register and be discharged from fendant at Dothan, Ala., and the defendant further liability. The Houston Canning Com- was to pay the freight and the defendant pany was allowed by the court pending this after the termination of the lease contracts, proceeding to receive the proceeds of this in- was to return the machines, carefully crated, surance, by executing bond for its return to freight prepaid, to complainant at Roanoke, answer the final decree of the court.

Va. The 'lessee contracted to keep the maw For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

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chines fully insured for the benefit of the les- y for this additional attention to the machine." sor, forwarding the policies to it. This the It does not appear that the lessor keeps a lessee failed to do. The lessee was to buy mechanic in this state for that purpose; nor cans from the lessor to be used in the ma- does the bill state that its mechanic gave chines. The lessor agreed that after the ma- such instruction or adjusted the machines in chines are set up and ready for operation by this state. This was an incident of the leaslessee

ing and an inducement for the lessee to enter "where it is necessary for further adjustment into the contract, and does not destroy its by lessor, it will furnish a mechanic to adjust character as a single act of interstate comthe machine and give all necessary instructions merce. Puffer Mfg. Co. v. Kelly, 198 Ala. for proper operation; and, if for any reason or 131, 73 South. 403. It does not affirmatively cause lessee requires further, attention to said appear from the lease contracts and the facts machine by lessor's mechanic, lessee agrees to averred in the bill as amended that the compay lessor the entire expense for this additional plainant, by entering into them with the de attention to machine."

fendant, was engaging in or transacting any It does not appear where the contracts business in this state which would require were executed. It appears the last lease was it to comply with the Constitution and statsent to complainant as an order by the les-utes of this state in order to make valid the

These machines were shipped by the leases. Authorities supra. lessor from Virginia to the lessee at Dothan,

The defendant had two insurance policies Ala.; they were installed in the factory soon issued by the Firemen's Insurance Company after the execution of the leases; and they -one for $1,500, and the other for $2,500. were destroyed by fire with the building, in- Each policy was issued on (1) the building, cluding other goods and machinery therein etc., (2) machinery of every description, and on January 2, 1921.

(3) boiler and engine, etc., pro rata, accordIn 12 Corpus Juris, 37, § 36, head note 33, | ing to a fixed amount for the property in we find the following: “Under some circum- the three items. stances the business of leasing chattels may The bill clearly alleges these two machines constitute commerce.” In these contracts were included in each policy of insurance as the machines are leased by the foreign cor- part of the machinery. The insurance comporation to the domestic corporation to be pany without contest voluntarily paid into used by the lessee for three years in its fac-court $3,666.67, the amount due by it under tory in this state. The machines are shipped the policies. The bill alleges these two maby the lessor from Virginia to the lessee in chines were destroyed by the fire, that they Alabama, the lessee is to pay the freight, and were included and covered in each policy the annual rental is to be paid when the of insurance, and a part of the insurance machines are delivered. After the termina- money paid by the company into court was tion of the leases the machines are to be re- on the value of these two machines, and that turned to the lessor in Virginia by the lessee, it is entitled in equity to a pro rata part of freight prepaid, by the lessee. The lessee is the proceeds. to keep the machines during the lease fully [3, 4] The Houston · Canning Company insured in favor of the lessor against loss agreed in writing with complainant to keep by fire. The leasing of these machines un- these machines fully insured, and to send der the contract and the facts constitute in the policies to complainant. This it failed to terstate commerce. Similar contracts of leas- do, but it insured said machines in two poliing chattels by a resident of one state to a cies with other property, in its own name, resident of another state have been held to and the property was destroyed by fire. The constitute interstate commerce, and the les- insurance company, without contest, paid into sor was not thereby engaging in business or court the insurance on the two machines and transacting business in the state of the less other property referred to in the policies. see, which made the lessor subject to the This insurance money is a trust fund for the conditions imposed by the statutes of the benefit of complainant and the Houston Canstate of the lessee. 12 Corpus Juris, 37, head ning Company, whose property was lost in note 33; U. S. v. U. S. Mach. Co. (D. C.) 234 the fire, and which was covered by the poliFed. 127; Mergenthaler Co. v. Hays (Mo. cies. Each is entitled to its proportion of App.) 181 S. W. 1183; Bogata Merc. Co. v. the proceeds; the complainant has an equiOutcoult Adv. Co. (Tex. Civ. App.) 184 S. W. table right under the facts averred to partici.

pate in the proceeds of this trust fund. There The only business to be performed by the is equity in the bill as amended The comlessor in this state under the lease contracts plainant had contracts with the Houston Can. is to furnish a mechanic to adjust the ma- ning Company to keep these machines fully chine after it is set up for operation by the insured for its benefit; and, in disregard lessee, and give all necessary instructions for of the contract, the Houston Canning Comproper operation, and, "if for any reason or pany insured the machines and other propercause the lessee requires further attention to ty in its own name, and resists payment of said machine by the lessor's mechanic, the any of the proceeds to complainant. Under lessee agrees to pay lessor the entire expense the circumstances of this case, “equity will

333.

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(100 So.) upon the principle of treating as done that poses to settle all matters involved growing which should have been done, establish a out of these lease contracts between the parlien on such proceeds” in favor of the com- ties. 5 Michie Dig., pp. 470, 471, 8 31 (1) plainant for its pro rata part. Shadgett v. and (2). Phillips & Crew Co., 131 Ala. 478, 31 South. The decree of the court is free from error, 20,56 L. R. A. 461, 90 Am. St. Rep. 95; Snow and it is affirmed, 1. Carr, 61 Ala. 363, 32 Am. Rep. 3; Durand Affirmed. 5. Thouron, 1 Port. 238; Watkins v. Durand, 1 Port. 251.

ANDERSON, C. J., and SAYRE and GARD [5] J. D. Flowers is a proper party to the NER, JJ., concur. cause. The bill alleges the Houston Canning Company purchased some real and personal property from said Flowers, for which he holds a lien on the real estate for the balance THOMPSON V. MENEFEE. (2 Div. 835.) of the purchase price, and the insurance poli. cies were hypothecated with him. We find (Supreme Court of Alabama. April 24, 1924.) in one of the policies of insurance this clause: 1. Mortgages En 455–Averment of readiness, “It is agreed that any loss or damage that

willingness, and ability to perform contract

held sufficient. may be ascertained and proved to be due the assured under this policy shall be held payable

Averment of cross-respondent's readiness, to J. D. Flowers. This applies to the machin- willingness, and ability to perform contract alery purchased from the said W. R. Flowers leged in cross-bill offering to set off damages Lumber Company only as his interest may ap- from complainant's breach thereof against pear, subject nevertheless to all conditions of mortgage debt sought to be collected by forethe policy."

closure held sufficient.

2. Mortgages 415(3)-Mortgagor or succes, It is evident that J. D. Flowers is material sor may, in foreclosure suit, set off against iş interested in the proceeds of the policies, mo ge debt any debt due him from comand this makes him a proper party to the

plainant, if damages are capable of pecuniary cause, so his claim and interest in the trust

measurement. funds can be presented to and passed on by

In suit by mortgagee, his assignee or transthe court. Winn v. Fitzwater, 151 Ala. 171, feree, to foreclose mortgage against mortgagor 44 South. 97; Ross v. Am. Banana Co., 150 or owner of land or part thereof under him,

respondent may maintain cross-bill to set off Ala. 268, 43 South. 817; 20 Corpus Juris, 258, against mortgage debt any debt, liquidated or ( 253, head note 15.

not, between him and complainant at [6] The appellant insists the bill as amend- mencement of suit, whether ex contractu or ex ed is demurrable as a whole and in part be- delicto (Code 1907, § 5858), if damages are cause it seeks damages for breaches of the capable of pecuniary measurement, as in case lease contracts, for the failure of the Hous- of damages for breach of contract to convey ton Canning Company to comply with the lands in consideration of satisfaction of judgcontracts, in which it agreed to keep the ment for respondent in another case, release of machines fully insured for the benefit of the claiins, etc., though contract is not germane to Virginia Can Company, forwarding the poli- that complainant is nonresident or insolvent or

mortgage contract and cross-bill fails to allege cies to them. This does not require the Hous- that respondent will suffer irreparable injury if ton Canning Company to insure the ma- set-off is not allowed. chines, but obligates it under the contract to

3. Mortgages M455–Parties claiming interest procure insurance policies from insurance

in land subject of mortgage foreclosure held companies on the machines for their full

properly joined in cross-bill to set off damvalue for the benefit of complainant, and to ages for breach of another contract. send the policies to complainant. The con Parties claiming interest in land embraced tracts, the breaches of them, and the injuries in mortgage sought to be foreclosed held propproximately caused thereby, appear sufficient-erly joined as parties in respondent's cross-bill ly in the facts averred, to constitute a cause to set off damages for complainant's breach of of action. If this part of the contract was another contract, though they were not parties beyond the power of this defendant to make thereto and had no interest in damages susunder its charter, then it should be present

tained. ed by answer or plea, and not demurrer, be- 4. Subrogation 28—Right of purchaser ascause it does not appear on the face of the

suming part of mortgage debt to subrogation bill as amended to be an ultra vires contract

on making certain payments held defeated by of this defendant. Ala. Red Cedar Co. v.

failure to pay entire debt. Tenn. Valley Bk., 200 Ala. 622, 76 South.

Vendee, assuming payment of part of debt 980.

secured by mortgage on tract, including that 11. There is equity in the bill as amended, sold, held not subrogated to rights of mortga:

gee's assignee against other purchasers likeas hereinbefore shown. The circuit court in wise assuming portions of mortgage debt beequity has jurisdiction of the cause for one cause of his payment of taxes on all land and purpose, and it will retain it for all pur- l entire interest on whole principal for certain

Em For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

com

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