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Langley & Watters, LLP v. Gamble

Supreme Court of Alabama

November 30, 2018

Langley & Watters, LLP, and Richard L. Watters
v.
Michael Gamble, as personal representative of the Estate of Barbara Long

          Appeal from Mobile Circuit Court (CV-14-900620)

          PER CURIAM

         AFFIRMED. NO OPINION.

          Stuart, C.J., and Bolin, Parker, Main, Wise, Bryan, and Mendheim, JJ., concur.

          Shaw, J., concurs specially.

          Sellers, J., dissents.

         I concur to affirm the judgment of the Mobile Circuit Court without an opinion. I write specially to address Justice Sellers's dissenting opinion. Under the ore tenus standard of review, I believe that there was sufficient evidence to support the trial court's judgment that an equitable mortgage existed in this case.

         Barbara Long executed a deed to certain property she owned in Conecuh County. The issue in this case is whether the execution of the deed was an outright sale of the property or was intended to be collateral for a loan, thus creating an equitable mortgage.

"'At common law, a deed of conveyance of land absolute and unconditional on its face, but intended and understood by the parties to be merely a security for the payment of a debt, will be treated in equity as a mortgage, conferring upon the parties the relative rights and remedies of the mortgagor and mortgagee, and nothing more.'"

Smith v. Player, 601 So.2d 946, 949 (Ala. 1992) (quoting Andress v. Parish, 239 Ala. 67, 69, 193 So. 727, 729 (1940)).

"To prove an equitable mortgage, it must be shown that: (1) the mortgagor has a mortgageable interest in the property sought to be charged as security; (2) a definite debt is due from the mortgagor to the mortgagee; and (3) the intent of the parties is to secure the debt by mortgage, lien, or charge on the property."

Hall v. Livesay, 473 So.2d 493, 494 (Ala. 1985). So, although the deed on its face indicated that Barbara conveyed the land, if it was actually intended to be a security, mortgage, lien, or "charge on the property" for a debt, the law will treat the purported conveyance as an equitable mortgage.

         In this case, it is alleged that Barbara needed a loan so she could pay a tax lien on or redeem the property and that Ted Langley agreed to loan her that money. It is further alleged that the deed, which purports to transfer the land to Langley & Watters, LLP ("the partnership"), was intended to be collateral for that loan. Langley contended, however, that the transaction was actually a sale of the property to the partnership but that Barbara had the option to repurchase it within a certain period.

         The intent of the parties--whether the deed represented an absolute sale of the property or instead security/collateral for a loan of money to pay the taxes--was hotly debated at trial. At that point, Barbara was deceased, and we have no testimony by her as to her intent. However, in the course of the proceedings before the trial, which also dealt with other issues, much evidence was generated regarding the transaction. Richard L. Watters, Barbara's attorney and a partner in the partnership who facilitated the transaction, had previously executed an affidavit, portions of which were read into evidence at trial. The affidavit stated, in part: "Shortly before the [tax] redemption time had run [Barbara] contacted me and asked me if I could find someone to loan her the funds for the redemption." In depositions taken before trial, portions of which were read into evidence, Watters and Langley both identified the transaction as a "loan" for which no interest was charged, both testified that Barbara would "repay" the loan (within 30 days, according to Watters, or three months, according to Langley), and both indicated that the deed to the property was "collateral" for that loan:

"[Counsel:] What was the next conversation with [Barbara] as far as what was going to happen and how was this all going to work?
"....
"[Watters:] I called her up. [Langley] didn't want to do a mortgage. He just wanted to do a straight loan. At first he just wanted it paid back within a week. But then I got him to agree to thirty days and [Barbara] said that she could get the money up in thirty days."

(Emphasis added.)

"[Counsel:] This loan from [Langley], was it ever put down on paper as to the actual terms, interest rate, anything?
"[Watters:] There was no interest. He didn't want any interest. He just wanted the money paid back within thirty days."

(Emphasis added.)

"[Counsel:] But you were willing to loan [Barbara] this money but the collateral you needed was a quitclaim deed, not just a mortgage?
"[Langley:] Correct.
"[Counsel:] Okay. Was there any discussion between you and your brother[1] about the terms of the loan other than what we just discussed?
"[Langley:] Just that it was going to be interest free. I was lending the money. All I wanted was my money back. If they repaid it then we were going to use the money for another interest that we had.
"....
"[Counsel:] How long was the loan supposed to be?
"[Langley:] You know, my recollection of the period seems to differ from what I heard Richard testify. But I remember it being three months and that I'd give her ...

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