Annely v. Saussure

12 S.C. 488 | S.C. | 1879

Lead Opinion

The opinion of the court was delivered by

Willard, C. J.

The action is for the foreclosure of a mortgage. The complaint alleges that J. W. Lewis gave a mortgage to the plaintiff, Amelia L. and to Anna Maria Annely, to secure two several bonds, one to the said Amelia and one to Anna M., covering the undivided one-fourth part of certain wharf property in the city of Charleston, known as the commercial wharves. That Anna M. has died, leaving a will, of which the plaintiff, Julia A. Blake, is executrix; that J. W. Lewis, the: mortgagor, has died also, and that the defendant, W. G. De Saussure, is his executor. The proper parties appear to be before the court.

The executor of the mortgagor, J. W. Lewis, and the Commercial Wharf Company, answered, setting up a contract of purchase, under which the Commercial Wharf Company claim to have become the owners of the wharf property, made by the executor of J. W. Lewis, under a testamentary power of sale, and by the other parties owning the remaining three-fourths of the property, and claim to have made valuable improvements on the property, greatly enhancing its value, rendered necessary by injuries arising from various causes to the structures on the wharf property. It does not appear by the answer that the mortgage has ever been satisfied, or the mortgaged land released by the mortgagees, but certain matters are set forth which are claimed to have extinguished the right of the mortgagees under this mortgage, and to have subjected them to certain equities set forth by the defendants, as arising out of their contract of purchase. The nature of these claims will be stated in connection with the discussion of the question raised upon them.

The case was heard before a referee, and a decision rendered sustaining the claims of the defendants.

The report was confirmed by the Circuit Court, and the plaintiffs now appeal, alleging exceptions to various points of decision made by the report of the referee.

The referee holds that the plaintiffs are bound by the contract made by the executor of the mortgagor, on the ground of acquiescence. He says: “ I am, therefore, forced to find that the mortgagees relied on the judgment of their said attorney to foreclose the mortgage, as he might deem best for their interests; that they knew of the plan adopted by him for that purpose, and of his appointment of the said broker to execute it; and that they acquiesced before the sale in the said plan and appointment.”

The foregoing implies that W. G. De Saussure, executor of the mortgagor, was also the attorney of the mortgagees, and that whatever he thought advisable to do in this double character, bound them, as the act of their attorney, to such extent, at least, that, unless they expressly objected to his action, they were bound, by the principle of acquiescence, to the extent of destroying the lien of their mortgage. Although his conclusion is stated by the referee as a conclusion of fact, it is evidently a mixed conclusion of law and fact.

It is doubtful, on the face of the answer of Mr. De Saussure and the testimony, whether either the plaintiffs or Mr. De Saussure himself considered that the relation of attorney and client existed between them at any time subsequent to the death of J. W. Lewis, the mortgagor. Mr. De Saussure says, in his answer, that in the summer of 1872 the plaintiffs “placed the said bonds and mortgages in the hands of this defendant, professionally, to foreclose said mortgages, and the papers, by way of summons and complaint, were prepared for the purpose, but in consequence of an objection made by the said John W. Lewis, the said plaintiffs instructed this defendant not to proceed further in the matter. The said bonds and mortgages remained in the hands of this defendant until January 26th, 1875, when they were delivered up to the plaintiff, Amelia L.” This is the only statement of the relations of the parties in question that we can find in the answer of Mr. De Saussure, and it falls far short of claiming that the relation of attorney and client existed between himself and the plaintiffs after the decease of Mr. Lewis. We find no evidence in the testimony of the existence of such relation after Mr. De Saussure became the executor of Mr. Lewis. The continuance of that relation cannot be presumed, for the obvious reason that when Mr. De Saussure became the executor of the mortgagor he assumed responsibilities inconsistent with his acting as the professional adviser and representative of the plaintiffs.

Finally, it is clear that Mr. De Saussure did not regard himself as acting in the interest of the plaintiffs, for it appears by his own testimony, as well as that of another witness, that when in consultation as to the possible effect upon the treaty with the Commercial Wharf Company of the refusal of the plaintiffs to assent to such contract, he assumed the ground that if their consent was withheld the title might be made through the forfeiture of the land for non-payment of taxes. If Mr. De Saussure had supposed that he was under an obligation to pursue the interests of the plaintiffs, he could not and would not, as we are bound to say, have devised any mode of carrying out the plans of the other parties in disregard of their interests. In this respect it is apparent that the 'referee has done Mr. De Saussure unintentional injustice.

But if Mr. De Saussure had been the attorney and counselor of the plaintiffs it would not follow that without special authority he could make a contract that would so far bind his clients that they could only discharge such obligation by express notice repudiating his authority.

The relation of attorney and client implies authority to enforce the demands of his client, of obtaining either voluntary or coercive satisfaction of such demands, and to bind the client as a party litigant in certain matters appertaining to the conduct of causes; but it does not confer a general power of attorney to contract independently in relation to such demands, nor to transfer such demands to a third party. The proper duty of a counselor is to advise his clients; if he becomes a negotiator, a business manager, it is through some other form of authorization than that implied in being selected as a legal adviser merely.

The evidence shows no authority in Mr. De Saussure to bind the plaintiffs by any contract whatever.

The first proposition of law by the referee, adverting to the fact that the property had become forfeited in the state for nonpayment of taxes, says: “ It had been forfeited to the state, and that discharged the lien of the mortgage, but such discharge was at any time capable of being set aside by the redemption of the property, either by the mortgagor or his personal representative,, or, if he failed to redeem them, by the mortgagees.” If this be taken as a correct statement of the rights of the parties as against the state, then the forfeiture to the state was not absolute, but leaving outstanding a right of redemption; whether legal or equitable, the state would be regarded as holding title as security for a debt, and its rights would be in the nature of a mortgage prior to that of the plaintiffs. How the existence of such a prior mortgage could extinguish the lien of a subsequent mortgage,, when there was a clear right of redemption for the latter to act upon, is inconceivable.

It may be as well in the present connection to notice the general question as to how far the consequences of the forfeiture of the land to the state by the failure to pay taxes can be brought into the case, thus anticipating the fifth proposition of law.

Only the right existing between the plaintiffs and defendants can properly be considered in the present case. Can a mortgagor, in a suit for foreclosure, set up title in a third person, not a party to the suit, and in which he has no interest ? Clearly he cannot. If so, then in case the mortgagee was let into possession, on condition broken, and the mortgagor put to his bill to redeem, the mortgagee could plead as against such right of redemption title outstanding in a third person, with which he was disconnected.

The action is based upon the rights existing between mortgagor and mortgagee. The mortgage being established, as between the mortgagor and the mortgagee, and a breach shown, the only right of the mortgagor that can be considered is that of the right of redemption.

If the mortgage binds nothing by reason of title outstanding in a third person, then the equity of redemption is valueless, .and the mortgagor has no interest to defend.

Nor could the title of such third person be examined unless he is made a party. The state is not a party in the present case,

• neither is any person a party claiming to have derived title or to hold,under the state.

When a mortgagor remains in possession of the mortgaged premises, as was the case here, he is entitled to the rents and profits of the mortgaged lands without liability to account. He should accordingly pay annual taxes, as he has the fund out of which they should be paid, namely, current income. If there happen to be no income, that does not change the legal relations of the parties. The mortgagor is not bound to hold possession, and may throw the entire, burden of protecting the mortgaged lands upon the mortgagee by surrendering possession. If he does not choose to do so he can gain no advantage by suffering taxes to accumulate or allowing the land to become forfeited or sold for taxes. Certainly, in a court of equity, he would stand in a bad light, alleging that through his failure to keep down taxes the mortgagee had lost the lien of his mortgage, and thus •claim to be left, or that his assignees may be left, in undisturbed enjoyment of the mortgaged premises as against the mortgage.

Whether the land mortgaged has been forfeited for non-payment of taxes, or whether there is or is not a right to redeem them by law in the parties to the suit, or whether the lands are in the position of being chargeable with state or city taxes, are circumstances altogether immaterial to the present question. If the taxes claimed to be due to the state and city are to be regarded as still operative as a lien on the lands in the hands of the proper legal owners, then, as was held in Smith v. Gatewood, 3 S. C. 333, they are to be regarded as liens prior to that of the mortgage, and title made under a decree for the plaintiffs must be subject to such liens, unless provision is made for the payment of such taxes out of the proceeds of the sale of the mortgaged lands. To accomplish this it is not necessary or proper that either the state or the city should be made parties to such action. The state and city have a right to choose their own methods, as allowed by law, of enforcing their taxes, and should not be subjected to the expense of becoming parties to all suits incidentally involving questions of taxation, as was said in Smith v. Gatewood. Under proper administrative orders the officer authorized to sell for foreclosure may apply the proceeds of sale to the payment of taxes. If there is a question as to the legality of the taxes imposed, the course to be pursued can be fixed in suitable administrative orders.

It, therefore, follows that all that is decided by the referee in regard to an outstanding title in the state for taxes, and as to the proper mode and effect of redemption, and as to the effect of unpaid state and city taxes, the right of the parties, is foreign to the issues in the present case.

The conclusion of the referee, that forfeiture to the state discharged the mortgage, was erroneous.

The conclusions as to the powers of the executor of the mortgagor to pay taxes, are quite immaterial to the present case. They may tend to show that the mortgagor had not, by any intentional default, suffered the lands to become forfeited by non-payment of taxes, but as no such charge is made by the plaintiffs the inquiry is immaterial. The fact that the executor of the mortgagor has had no means of keeping down the taxes, cannot benefit the assignee of the mortgagor or prejudicially affect the rights of the plaintiffs, as mortgagees, in any way.

The second conclusion of law is based upon the finding of fact in reference to acquiescence on the part of the plaintiffs in the action of Mr. De Saussure, and is already disposed of by the conclusion of fact above stated, that no authority in Mr. De Saussure is shown sufficient for a foundation for the application of the principle of acquiescence.

The third proposition advanced by the referee holds that F. P. Lewis and J. W. Lewis, Jr., co-devisees with the. plaintiff, Julia A., under the will of Anna M. Annely, deceased, and made defendants to the complaint, are bound to the other defendants, on the ground of acquiescence.

F. P. Lewis and J. "W. Lewis, Jr., are not before us as appellants from the decree, and, therefore, it must stand as against them. It cannot, however, bind the plaintiff, Julia A. Blake, in either of the characters in which she sues, viz., as devisee of A.. M. Annely or as executrix of the latter. As devisee, it leaves her share of the estate of her testator unaffected. As executrix, it excludes her from claiming in the right of F. P. Lewis and J. W. Lewis, Jr., co-devisees, as equity will look through her title, as executrix, to the substantial rights it covers, and finding that F. P. Lewis and J. W. Lewis, Jr., have bound their interests in the manner determined by the decree of the Circuit Court, it will not permit the executrix to set up in their right, what they themselves could not demand as against their co-defendants. But, for all that appears before us there may be other interests, as that of creditors of the testator, entitled to such protection, who would not be affected by any act of such devisees, and who are not parties to the action • as to such possible rights there must be an inquiry in the Circuit Court, under proper orders, to be made conformable to the judgment of this court, and the rights of such third parties, if any there be, placed on the same footing with those of the executrix and devisee, Julia A.

The referee also holds that the plaintiffs, Miss Annely and Mr. Blake, are bound to the defendants also, on the principle of acquiescence, independently of the authority conferred upon their alleged attorney, constituting “an equitable foundation for a decree of specific performance.”

This conclusion states, as its grounds, two facts. First, their silence while the defendants were purchasing, without notice from them, from other tenants in common. Second, the additional fact of such silence, while the purchasers were, making valuable improvements on the premises. This proposition is not correct, unless a general rule can be stated to this effect, that a mortgagee of an undivided interest in lands, under a recorded mortgage, is bound to give express notice of a refusal to be bound by a sale made by his co-tenants, holding in common with the mortgagor,.when such co-tenants are known to be dealing with the land in contravention of such mortgagee’s rights. This is an extraordinary conclusion which, if sound, will tend to impair materially the value of mortgage securities of that class.

One who purchases lands bound by a recorded mortgage, buys with notice. It is equally so whether the mortgage effects an undivided interest in the land or the entire interest. The statute determines what the notice shall be and nothing more can be exacted either at law or in equity. The purchaser purchases at his peril, having the right to demand access to the instruments that constitute the title he is purchasing, and all legal encumbrances upon it.

It is said that the purchase was made in the belief that the executor of the mortgagor had authority from the mortgagee to release the mortgage; then it was the obvious right and duty of the purchaser to demand proof of such authority. It was not to be assumed that the mortgagee would place in the hands of the executor of the mortgagor unlimited power of negotiation, and of canceling or discharging the mortgage. It does not appear that Mr. De Saussure ever asserted that he had such authority ; on the contrary, it appears that he looked to the right of the state in virtue of forfeiture of the lands for non-payment of taxes as the means of making title in the purchaser in case the plaintiffs would not concur in his plans. There is no evidence to show that any conduct on the part of the plaintiffs, or either of them, contributed to impress the minds of the purchasers with the idea that Mr. De Saussure possessed the authority they now allege that they thought he possessed. There is no foundation in the evidence, or the reasonable presumptions therefrom, for applying to these plaintiffs any limitation of the rule of conduct affecting all other mortgagees of undivided interests in lands.

The referee, in discussing this question, refers to the right of partition that existed among the tenants in common, and says: “ But they did not exercise that right because of their belief at that time that all parties in interest had agreed to a private sale, and to that end had united in a contract of sale, which purported to give the purchaser a good title to the whole property.”

The fact that they did not exercise the right of partition is of importance, but the reason why they did not is altogether unimportant, unless that reason involves something tending to affect the equities or legal rights of the plaintiffs. The statement here is simply as to the belief of the purchaser founded on the contract of purchase itself. That contract was in writing, and did not purport to contain the signature of the plaintiffs, or of any one assuming to sign in their behalf. They could have drawn no such inference from the contract.

The referee, further discussing the same question, goes on to state that the contract was advantageous to the parties, and if the plaintiffs “ had, in time, given notice of their refusal to complete the sale, and the other tenants in common had made them parties to a suit against the purchasers for a specific performance, upon the proof offered before me in this case, they would have been compelled to perfect title in the purchaser.” If the referee here means to say that the court would have specifically enforced the contract on general equitable considerations, independently of proof of authority in Mr. De Saussure to bind the plaintiffs, it is not easy to see what ground there is for the conclusion. Of course, it will not be contended that one tenant in common can compel another by suit for specific performance, or in any other manner, to consent to and be bound by the contract of the former to sell the land held in common, upon the ground that the contract is advantageous to the latter.

It may be that the referee contemplated partition proceedings in his remark. If so, his conclusion is equally erroneous, for in .partition the court would not have adopted a private sale by one tenant in common as the basis of a decree enforcing such contract of a sale as against one refusing to be bound by it, however advantageous it might seem. Individuals make contracts for themselves; not the courts for them. The courts merely enforce that which is accomplished in the right and by the mind of the parties.

The result of a partition would have been the sale of the land •at public sale, if it could not be actually partitioned with reasonable convenience. Perhaps, in such a case, the land might have brought less than the purchaser was willing to pay for it. That is a matter for the consideration of the parties, who are not wards of the court or dependent on its assistance.

The referee is equally in error in holding that in such a writ “ the court would have regarded the true interests of all the parties before it, and would not have permitted one co-tenant or •the mortgagees of a co-tenant to defeat a sale so manifestly proved to be advantageous to all who had any interest in the property, unless some proof had been offered that it was possible to make a better sale.” The courts do not undertake to enforce the interests of parties sui juris, but to enforce their rights. They may not allow their views of interest to prevail against rules of law and equity, but will not supplement their errors and fallibilities nor coerce their stubbornness from a more enlightened view of their interests than they themselves are willing and able to take. These principles are fundamental to enlightened jurisprudence. Nor would the court look to the interests of the ■tenants in common as a class as distinct from their individual interest, for there is no other bond, legal or equitable, between them than that their several rights meet in the same subject of property. There is nothing in the nature of an obligation arising from a contract, express or implied, existing between them that equity can lay hold of to give shape to their common rights .and conduct. They are neither a legal corporeity nor related by any fiduciary tie nor obligation to pursue a common object. Both law and equity can, under certain circumstances, apply as between them certain modifications of the oi’dinary rules relating to ownership in severalty. So equity may intervene to disasseverate their possession by dividing or selling the property for division of the proceeds, but that is accomplished not to carry out any equity implied in the relation, but to sever it on equitable principles.

The referee further says: “ In such a case as between tenants in common and against the consent of one or more of them, it-would even have the right to assign the property to one of the co-tenants at an appraised value.” It is not necessary to inquire whether as between tenants in common, like the present, deriving their title from distinct and independent sources, and not distributees or devisees from a common ancestor, the court could exercise the right here indicated; it is enough to know that no-such authority has been exercised.

The essential feature of this proposition is the idea that one-tenant in common may sell the entire lands held in common as if they were his own in severalty, and if called into a court of equity may validate his action, if he can show that under a proceeding in such court for purchase he might have by some means been enabled to reach the same practical result.

The purchasers do not ask a decree in the nature of partition based upon the rights of the parties as they stood at the time of suit brought. But what they ask is a decree' of the character that would have been made had partition been obtained at the time they became purchasers of the property. They do not want the value of the property, as it stands, the basis of partition, but its value at the time of purchase. The proposition of the referee is, then, that the act of the co-tenants as affecting the-plaintiffs, considered as representing the interests, subject to-mortgage, was equivalent to a decree and sale in partition, subject to the right of the court to say that it was not well grounded in equity. Thus the co-tenants are the court of original jurisdiction, and the Circuit Court a revisory body to record its-decrees, if not found wanting equity.

The court of equity often applies the principle of approving,, when done without its authority, that which it could have authorized, and which it clearly appears it would have authorized. It will not be pretended that the court could authorize one tenant in common to exercise the .power of partition as against his co-tenant or one claiming in his right, nor will it sanction that which it could not authorize. The act of the co-tenants, under whom the purchasers claim, was an assertion of dominion merely; what is essential to separate tenancies in •common is judicial authority; the court cannot make the one the equivalent of or the substitute for the other.

The referee adds : “ If such would be the power of the court as against a tenant in common who holds the legal title, its power is certainly no less, but rather greater, against the mort.gagee who holds only an equitable title.” It is true that he does not hold the title to the land while the mortgagor remains in possession, but he holds the lien or security on the land by a legal title. Simons v. Bryce, 10 S. C. 354.

It is erroneous to suppose that a mortgagee holds only an equitable title to his security. The statute (Gen. Slat. 536) only takes away possessory action by the mortgagee while the mortgagor is in possession, but by so doing recognizes that the mortgagee has a legal title to the security. The equitable doctrine that a mortgage is a mere security for debt, on which the statute was founded, does not affect the character and nature of the title passed by the mortgage, for that existed independent of equity, but limits the use of that title against the mortgagor. A right created at law is none the less a legal right in its nature, because equity holds it affected by equitable considerations.

The statement of the referee, that in foreclosing “ the court may make such decree as shall best protect the rights and equities of all parties to the suit,” is correct, but may be misunderstood. The object of foreclosure is clear and definite. It is to sell the land by judicial sale, bar the equity of redemption, and give a personal decree, when demandable, for any deficiency of the proceeds of sale to pay the mortgage debt. The rights of mortgagors and mortgagees may become affected by and complicated with many circumstances giving rise to legal or equitable consequences that can be observed by the court. This does not, however, authorize the court to leave the beaten track of a familiar proceeding to devise more perfect methods of subserving the real or supposed interests of the parties.

The referee further adds that the court “ may sell the mortgaged property at public or private sale, and in such terms as may seem best to the court.” We know of no authority to sell at private sale under a decree of foreclosure in inmtwrn. To a-certain extent the court may fix the terms of sale, but an order for that purpose is made for the mutual benefit of all concerned, based solely on the ground of placing the property in the best marketable condition; it cannot b.e construed into a right to change the relative rights of the parties as they stand under the1 mortgage.

He finally concludes, on this point: “What the court would have done in favor of the equities of the other tenants in common, in case they had been compelled to apply to it for a decree of sale in partition, it will now do in favor of an innocent purchaser, who has contracted for the whole property, and who, believing that he was finally to get a good title for the whole, accepted the conveyances of the other tenants in common, and,, without any notice that his title was not to be forfeited, made improvements on the common property which considerably exceed in cost and value the price at which it could have been sold before it was improved.” The basis of this proposition we have considered and denied, namely, that upon partition the co-tenants, other than those represented by the plaintiffs, could have compelled the plaintiffs to accede to their contract of sale, because it was advantageous. If, then, the purchasers have equities against the plaintiffs, it must be upon other grounds than that these expectations are disappointed. Equity does not deny the fundamental principles of law. It does not assume to equalize among men the consequences of errors of judgment or misfortune. It is not a chimerical expediency, but a resolute system, looking to rights according to their proper equitable-interpretation. It sometimes exercises providential care in the-right of those incapable of representing themselves or protecting their own interest, but independently of this peculiar jurisdiction, inapplicable to the present ease, it is contented to see that the dealings of men are just and equal, without attempting to insure that the practical and material results of those dealings shall be distributed with theoretical equality. To do this would transcend the offices of Divine Providence.

If there are any equities in favor of the views presented by the referee, they must arise from the proposition that it is inequitable and unconscionable for the plaintiffs to avail themselves of the benefits conferred on the mortgaged property by the improvements put upon it by the purchaser, and of the enhanced value of the property resulting from such improvements. This is not equivalent to asking whether, in the forum of private conscience, the plaintiffs could justify the acceptance of these benefits procured by the means and effects of others. Equity does not administer the dictates of private conscience, but certain rules that have been justly called the conscience of the court. If, therefore, the claims of the plaintiffs are inequitable and unconscionable, it is because they contravene fixed rules and principles of equity. Do they ?

It is clearly inequitable for a party to demand the fruit of fraud, misrepresentation or dissimulation. The plaintiffs are free from any such charges. It is not inequitable for a mortgagee to claim the benefits of all improvements put on the mortgaged premises. The mortgage is a security for a fixed sum, that cannot be decreased by injury to or destruction of the property, or increased by adding value to it. In the present case, the value of the mortgaged premises was impaired by the casualties of war and tempest. Had the mortgagor himself rebuilt, there would not have been a question but that in legal and equitable consideration, the right of the mortgagee to go upon the improvements for the satisfaction of his mortgage, would have been perfect. How can the plaintiff’s rights be less, so far as restoration has been accomplished by the assignee of the mortgagor. If a mortgaged house is consumed by fire and rebuilt by the mortgagor or his assignee, has there ever been a question whether it was equitable for the mortgagee to assert his mortgage, as it regards such improvements? So far as it regards the question of improvements made jointly by the assignee of a tenant, subject to mortgage, and his co-tenants, not affected by such mortgage, or as in the present case, by a parly uniting both these characters, no inquiry has been made and findings of fact presented, enabling this court to determine whether the improvements are of a nature, and the property so circumstanced, as to call for the recognition of equitable severalty in them, as regards the undivided interest derived under different titles. Williman v. Holmes, 4 Rich. Eq. 475. For the want of a proper basis of fact, that question cannot be considered kqthe present stage of the case; but there should be an inquiry into such facts and proper action thereon.

But should it appear that the improvements must enure to the benefit of the plaintiffs, it is not inconsistent with any rule of equity that they should insist on such demand. On the other hand it would be entirely inconsistent with equitable rules to deny to the plaintiffs relief to which they are entitled, simply because it imposes hardship on the purchaser.

'We cannot say that the purchaser, if compelled to suffer hardships, is free from fault in the matter. It was the plainest dictate of prudence to perfect their title before expending upon the improvement of the property. If the purchaser felt secure on account of the forfeiture to the state, that expectation rested on a speculation that contemplated the entire loss to the plaintiffs of their mortgage security through taxation, and its failure entails upon the plaintiffs no duty to submit to the destruction by the arm of equity of that which has escaped the hardships of taxation.

Nor is there any reason to say that the plaintiffs have received benefit from the improvements by the purchaser, and, therefore, an equity rises against them. The object of the defence is not to obtain compensation for benefits conferred, but to deprive the plaintiffs of the right themselves. But the conclusive answer to the proposition under consideration is, that improvements put upon mortgaged lands, are not, in equity, regarded as benefits conferred on the mortgagee, nor can this conclusion be changed by the circumstances of the particular case, as it regards the sufficiency of the security without the improvements.

The application made to the case by the referee of the betterment law, and the equitable principles analogous to those to which that law relates, rests upon two grounds. The first has already been disposed of, inasmuch as it involves the supposed acquiescence of the plaintiffs; the other will be considered.

Referring to Lowndes v. Chisolm, 2 McC. Ch. 455, the referee says: “ On the authority of the above case, I hold that if it were possible in this ease to conclude, as matter of fact, that the mortgagees of Lewis never assented to, and acquiesced in, the sale made in this case by Mr. De Saussure, their attorney, and that, without their consent, it was sold by him as executor, solely under the power conferred on him by the will of Lewis, yet even in that case, as he believed when he made the sale, that the said authority conferred on him was sufficient to enable him to convey to the purchaser a valid, unencumbered title, and so advised the purchaser, and, as they looked to him as their legal adviser in that behalf, if he was mistaken in law,' and by that mistake causéd the purchaser to make improvements on the property, believing that the title to it was good, they will be compensated for their improvements out of the lands to the extent added thereby to their value.”

In other words, if the mortgagor, being the legal adviser of a third party, says he has authority to make good title as against a recorded mortgage, and such third person takes title under such assurance, he shall be so far released from the mortgage as to be protected as to all improvements made on the premises, whether such representation was correct or incorrect. If correct, he holds through its truthfulness; if incorrect, in virtue of its being a mistake.

The attention of the referee evidently was not called to McDow v. Brown, 2 S. C. 95, where the equitable relief afforded by equity in cases of mistake, was considered very fully upon the authorities. It will not be necessary again to develop that subject. It is enough for the present case to quote the language of Chancellor Dargan in Murrel v. Murrel, 2 Strob. Eq. 148, who says: “ A party fully competent to protect himself, under no disability, advised as to all circumstances by which he may be saved his rights, or in a situation where he might, by due diligence, be so advised, not overreached by fraud, concealment or misrepresentation, nor the victim of mistake, against which prudence might have guarded, has no right to call the courts of justice to protect him.” This is sufficient to deprive the purchaser of the equitable relief demanded, as we have already seen.

It is held in McDow v. Brown, as to mistakes of fact, that “ when a mistake has arisen without the fault of either of the justices * * * relief is granted only when the mistake is mutual.” In the case, as presented by the purchaser, the mistake, if any was made, was one of fact as to whether the executor had been authorized to act for the plaintiffs in the manner contended for. That question has been considered in this case as one of fact alone, for it is not pretended that the executor had any implied or presumable authority whatever, or any other authority, except such as might be conferred by some act of the plaintiffs susceptible of proof as matter of fact. It was not a mistake as to the relationship or rights of the parties, nor as to the construction of a power in a will, deed or contract, nor in any other sense a mistake of law. Had there been a mistake of law on the part of the legal adviser of the purchaser, it is not clear how the consequences of that mistake could have been visited on the plaintiffs, especially when, by prudence, it might have been avoided, but the case presents no such question.

In McDow v. Brown, the case of Lowndes v. Chisolm is considered, and it is said that it “ did not necessarily depend on the power of equity to grant affirmative relief on a bill alleging mistake, but upon the principle that when parties are before the Court of Equity seeking equity, the court will look into transactions collateral to and dependent upon the principal subject of inquiry, in order that full justice may be done.”

Lowndes v. Chisolm stands upon the equities between a surety on a bond, additionally secured by mortgage, and the obligee of the bond subsequently becoming purchaser of the mortgaged property. The question of relief in equity for mistake of law is there discussed, but not with the view to lay down any final rule on the subject. But with that doctrine we have no concern at present.

The question of taxation raised by the fifth proposition of the referee, has already been disposed of. The conclusions of the referee as to interest, being based upon views from which this court dissents, are erroneous.

The decree of the Circuit Court and the report of the referee, so far as inconsistent herewith, should be set aside, and the cause remanded for proceedings conformable to what is here determined. As has already been said, there should be an inquiry under proper orders to ascertain whether there are parties other than the devisee, Julia A. Blake, and the co-devisees, entitled to participate in the assets of the estate of Anna M. Annely, who, on the foregoing principles, ought to be considered. An inquiry should also be made into the situation and circumstances of the mortgaged property, with a view to determine whether actual partition can be made, and a decree made for the sale of the undivided one-fourth part of the property, in case such actual partition cannot be had, with liberty to the defendants, if they desire, to have the whole property and improvements sold, as for partition among them, to have it decreed accordingly, application of the proceeds of such sale to the payment of the amount found due on the mortgage to be made, as to their extent upon the principles of this decision, and in accordance with the determination of this matter reserved for further consideration by the Circuit Court.

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Dissenting Opinion

McIver, A. J.,

dissenting. This was an action to foreclose a mortgage executed by the testator, John W. Lewis, to secure the payment of two bonds held by the plaintiffs respectively. The mortgage covered an undivided fourth part of the commercial wharves, a property situate in the city of Charleston.

The issues of law and fact were referred to a referee whose report contains such a full and clear statement of the facts as to render a repetition of them here wholly unnecessary.

To this report various exceptions were filed by the plaintiffs, all of which were overruled by the-Circuit judge, and from his judgment this appeal is taken upon the same grounds as are set forth in the exceptions to the referee’s report.

It is very manifest that if the conclusions of fact reached by the referee and confirmed by the Circuit judge can be sustained, there is no ground for this appeal.

The rule that the findings of fact by a referee, concurred in by the Circuit judge, will not be set aside unless they are without any evidence to sustain them, or are manifestly against the weight of evidence, is so well settled and has been so frequently announced by this court that it is not necessary to cite the cases establishing it. Without entering upon a detailed examination of the testimony in this case, with a view to justify the conclusions of the referee, which is as unusual as it would be unnecessary in this case, it is enough to say that, in my judgment, after a careful examination of the testimony, there is no sufficient ground for disturbing the findings of fact by the referee, concurred in, as they are, by the Circuit judge.

It certainly cannot be said that the conclusions of fact reached by the referee are without any evidence to maintain them, and I do not think that they are manifestly against the weight of the evidence. On the contrary, it appears to me that there is very strong support for the main finding of fact that Mr. De Saussure, in making the sale, acted with the knowledge and assent of the mortgagees, in the undisputed fact that they were disappointed in the results of the sale.

This shows two things: First, that they knew of the terms of the sale, as otherwise there would be no reason in their expressing dissatisfaction; and, second, that they then understood that the. entire fee was sold and not merely the equity of redemption. For, if it was merely the equity of redemption which was sold, then there was no conceivable reason why they should express disappointment at the sale, as their rights could not possibly be prejudiced thereby, but they would, on the contrary, be actually benefited. The testimony leaves no doubt, not only of the fact that the property was sold for its full fee simple value, but that by selling the whole property together, rather than the one undivided fourth separately, upon which alone the plaintiffs had a lien, that fourth brought more than it would have done if sold as an undivided share. It is impossible, therefore, to believe that a mortgagee would express dissatisfaction at a sale of the equity of redemption in the property covered by his mortgage for a price equal to its full fee simple value, as by that means his chances for realizing the whole of his debt would be legally increased, especially in a case like the present, where the property mortgaged constituted the sole security, (the mortgagdr being insolvent,) and was encumbered by a large arrearage of taxes which would have to be first paid out of the proceeds of a sale ordered to foreclose the mortgage. Act of March 19th, 1874, § 126, 15 Stat. 774. In addition to this it may be remarked that the testimony tends to show that the disappointment of the mortgagees arose, not from the fact that the sale was an absolute sale of the entire interest nor from the price obtained, but from the apprehension that the proceeds of the sale of the share upon which their lien rested would be wholly, or to a large extent, consumed in the payment of taxes and other charges, leaving but little, if anything, to be applied to the mortgage.

Another circumstance which tends to strengthen the conclusion of the referee is that neither of the plaintiffs has ever yet denied the authority of the executor to make the sale, or their full knowledge of an acquiescence in his proceedings up to the time of the sale, neither of them having been examined as witnesses in the case. Numerous references were held, continuing from day to day, and although it was manifest from the course of the testimony that the defendants relied upon the fact that the executor in making the sale acted with the knowledge and assent of the mortgagees, as evidenced by the testimony in regard to conversations between Blake and Lewis, who were alleged to be the agents of the plaintiffs, and the executor, and the message sent to them by the executor before concluding the contract of sale, yet neither' of the plaintiffs were put upon the witness stand to disavow the authority of the executor to sell, or to deny any knowledge of, or assent to, his proceedings.

Another circumstance in support of the view taken by the referee is to be found in the condition of things existing at the time, which rendered it highly probable that the mortgagees would have done just what the referee has found they did do for the protection of their own interests. Here were mortgagees holding a mortgage as the sole security for their debt which was rapidly increasing in amount, no payment having been made in about ten years upon property on which large arrearages of taxes had accumulated, which the mortgagor had no means of paying, and which the mortgagees do not appear to have taken any steps to provide for, though the property covered by the mortgage had been forfeited for non-payment of taxes, and the time allowed for redemption was rapidly drawing to a close, in which event the security would be wholly lost. Under these circumstances the most ordinary prudence would seem to prompt the mortgagees not only to assent to, but gladly adopt any scheme by which the property could be sold to the best advantage and at the least cost possible, whereby a portion at least of their debt might be saved. This is exactly what was done. The testimony places it beyond dispute that the mortgaged property was sold to the best possible advantage, without cost to the mortgagees, and after relieving the tax encumbrance, a balance is left to be applied to the mortgage debt. Thus, the result has proved the wisdom of the course adopted by the executor, with the knowledge and assent of the mortgagees, as the referee finds, and as I must believe from all the circumstances of the case.

The apparent inconsistency of Mr. De Saussure’s acting both as executor of the mortgagor and as attorney or agent for the mortgagees is more apparent than real. He states in his answer what all the circumstances of the case confirm, that he qualified as executor only for the purpose of enabling him to benefit the mortgagees. The estate of the mortgagor was confessedly insolvent, and the only source from which the debt of the plaintiff could be paid was the mortgaged property, which, under the power of sale contained in the will, could be sold by the executor without delay and expense incident to an action for foreclosure. He was, at the time he qualified, the attorney of the mortgagees, entrusted with the bonds and mortgage for the very purpose of effecting a sale of the mortgaged premises, “ all parties consenting,” which possession continued until after the sale was made without any change in his instructions; and as the course which he adopted, in the condition of things then existing, was, as we have seen, undoubtedly the best for the interest of the mortgagees, as well as for the estate of the mortgagor, I am unable to perceive any real inconsistency in his conduct.

Nor do I think any weight should be attached to the remark attributed to Mr. De Saussure — that if the mortgagees refused to recognize his action they could be forced to do so by reason of the fact that the property had been forfeited for taxes — because, it will be remembered, that this remark was not made until after the sale, and after he had discovered that the mortgagees were disposed to repudiate his action in making the sale. It cannot, therefore, be fairly argued that this plan of perfecting the title in the purchaser was present to or influenced his mind at the time he made the sale.

A more reasonable inference would be that it was the offspring of a natural irritation at finding that the mortgagees were disposed to repudiate his action,- taken, as he supposed, and as he had good reason to suppose, with their assent and for their benefit.

The point raised by the appeal on the part of the executor of John W. Lewis does not appear to have been taken before the referee or in the court below, and is not properly before us for consideration.

I am satisfied, therefore, that the judgment of the Circuit Court should be affirmed.

Decree reversed.

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Concurrence Opinion

Haskell, A. J.

I concur in the opinion that the judgment should be reversed, upon the ground that there is a total lack of evidence to support the conclusion that the executor of Lewis, either in that character or personally, had authority to act for the mortgagees, or that the mortgagees ratified his action as to them by acquiescence or otherwise. I concur further in the opinion that such parties in interest as have not taken an appeal are bound by the Circuit decree. The mortgage, therefore, to the extent not thus affected, remains a lien on the interest held by Lewis. What that interest is,-has not been considered by the Circuit judge, for the whole case turned upon the point which is error, and the right to foreclose being thus denied, the question of partition was never reached.

In concur, therefore, in the opinion that the case should be remanded for such further proceedings in the court below as may be necessary, in conformity with the views expressed by the Chief Justice on the points above indicated.