Eppes v. Thompson

While I concur in the conclusion reached in this case, I do not fully indorse the opinion of the majority and prefer basing my opinion on the following propositions: There is no doubt of the fact that Thompson Bros. Co., in conjunction with Ebersole and Tyler or through them perpetrated a fraud upon the respondent Eppes, by the insertion in the deed from Ebersole to him a clause whereby the said Eppes assumed payment of the pre-existing mortgages. Indeed, the books present but few, if any, cases disclosing what might be termed a more complete "frame-up" by a set of city sharps against an unsuspecting business man in a rural section, and counsel do not controvert the fact that Eppes is not liable, unless their client S.E. Thompson was an innocent purchaser of the mortgage from Ebersole to Roy C. Thompson. Eppes never saw the deed before it was recorded and never agreed to assume the existing mortgage. He told Tyler that Henry was going to Birmingham and would look at the property, etc., and if he thought well of it, he could send him (Eppes) the deed. The deed was not sent to Eppes, nor was it physically delivered to Henry according to his version, which should be accepted. He had no dealings with Ebersole, the grantor, but upon going into the office he remarked to Tyler that he could send the deed to Eppes, whereupon one of the Thompsons said the deed had been executed and suggested that it first be recorded before sending it to Eppes, to which Henry assented, though it seems not to have been sent to Eppes for months and not before the complainant claims to have purchased the mortgage. Henry never read the deed, but was led to believe by the parties, Tyler or Thompson, one or both, in the presence of each other, that the only recourse of the mortgagee would be to foreclose if the $2,000 *Page 148 mortgage was not paid at maturity, but that they would in the meantime collect the rent for Eppes. It is true, Henry may have assented to the recordation of the deed, but only to such a deed as Thompson and Tyler led him to believe had been executed, though it does not appear that Eppes authorized Henry to have the deed recorded. It is therefore quite doubtful as to whether or not Eppes was legally responsible for accepting the deed, or in permitting it to be recorded under the circumstances. It may be conceded, however, that Eppes was legally responsible, but which would not hold, as for the acceptance of the deed and for its reaching the record, then the question arises as to whether or not the complainant is such a bona fide purchaser of the mortgage as would entitle him to relief. The proof fails to connect this complaint with his namesake in the transaction with Eppes, and the record does not disclose any evidence charging him with actual notice of the fraud perpetrated upon Eppes, and I am willing to concede that if he purchased the mortgage in good faith upon the strength of the assumption clause and without notice of Eppes' defense he would be protected, provided, of course, Eppes accepted the deed or was responsible for the recording of same. While no actual notice is shown to this complainant of the infirmity of the deed or of the fraud practiced upon Eppes, there are several pertinent circumstances connected with this case which should have aroused the suspicion and put upon inquiry an ordinary prudent business man before purchasing the mortgage. The complaint says he saw the deed and abstract. In whose possession was the deed, and who exhibited it to him? Not Eppes or any agent of his, but the agent of Thompson, the mortgagee, who was trying to sell complainant the mortgage. Why was the mortgagee, Thompson, in possession of a deed from the third person to Eppes months after the execution and registration of same? Again, we find the agent of Roy Thompson making several visits to the complainant endeavoring to sell him this mortgage and the notes and finally selling them to him, aggregating $810 for $500, a discount of something over 50 per cent., for a period of less than nine months, said mortgage being secured upon property which the complainant regarded as being worth as much as all the mortgages upon same, including the one in hand and having also been assumed by a "wealthy banker." Why was Roy C. Thompson so anxious to sell this complainant notes secured by mortgage and which had also been assumed by a "wealthy banker" amounting to $810 and due within nine months at the greatly reduced price of $500, unless there was something wrong? The negotiations were pending for several days; the complainant could have easily reached Eppes by mail or telephone before closing the transaction at the extortious discount of over 50 per cent. on paper which he deemed well and adequately secured. It is true, the law does not prevent people from making profitable trades or charge a purchaser with notice of infirmity in a vendor's title from inadequacy of price alone, unless the price is so inadequate as to arouse the suspicion of an ordinary prudent man, and a discrepancy in price would no doubt have to be greater in the sale of ordinary chattels to produce such a result than in choses in action as to which there is little or no doubt as to the financial ability of the parties liable thereupon to meet the same when due. Hickey v. McDonald Bros., 160 Ala. 300, 48 So. 1031. I, of course, realize the rule that the purchaser of a note at a greater discount than the legal rate of interest, if the transaction is not tainted with usury, is not thereby prevented from being a bona fide purchaser, but stands in the shoes of an ordinary purchaser of goods and chattels, but this rule does not extend to the degree of protecting him under any and all circumstances, regardless of the surrounding circumstances and the grossly inadequate price paid for same. Moreover, this is not the purchase of a note executed by this defendant, but of one for little more than half its supposed value which it is contended the respondent assumed, and I think that the circumstances were such as put the complainant on inquiry as to whether or not Eppes had accepted the deed with knowledge of said assumption of the mortgages.