Bacot v. Varnado

47 So. 113 | Miss. | 1907

Lead Opinion

Whitfield, C. J.,

delivered the opinion of the court.

The general doctrine that a valid mortgage may be executed to pass after-acquired property is too well settled to require citation of authorities. The precise question presented for decision on this record is simply this: Can husband and wife execute a mortgage on an after-acquired homestead, which shall be good to bind that after-acquired homestead when it comes into existence ? Some things are perfectly clear:

First. ■ A man may execute a mortgage, good at law or in equity, on what he now actually owns.

Second. A man may execute a mortgage, good at law or in equity, on what he does not now own actually, but what he potentially owns, as a crop to be grown in fifteen months. Everman v. Robb, 52 Miss., 653; 24 Am. Rep., 682; White v. Thomas, 52 Miss., 49; Stadeker v. Loeb, 67 Miss., 200; 6 South., 687. Within this class of cases, where the mortgagor only potentially owns the property granted in the mortgage, fall crops not yet planted, wool then on the backs of the sheep, freight on cargoes not yet earned by ships, etc. These are familiar instances.

Third. It is equally elementary that a man may execute a mortgage, not valid at law, but valid in equity, on property that he does not then own, either actually or potentially, but which he may afterwards acquire. In all such cases the principle is that such an instrument is treated as a contract to convey the after-acquired property, when the acquisition takes place in the future. Nothing can possibly be added to the clearness and force with which this whole subject is treated in 2 White & Tudor’s Leading Cases in Equity, pt. 2, p. 1605 et seq. A mere expectancy or possibility or hope of something to come, as the hope that the grantor may acquire property by devise from one still living and who has not made his will, are good in equity within this principle, though utterly void at law. In Wilson’s Estate, 2 White & Tudor’s L. C., pt. 2, p. 325, a conveyance by a woman, in contemplation of marriage, of all the estate which she then had, or should thereafter acquire for her separate use during life, and after her death to her children, was held to confer an equitable title to property which was subsequently bequeathed to her by an uncle. The great Chief Justice Gibson of Pennsylvania delivered the opinion in that case, and in the course of it said: “ Indeed, it is no more than the familiar principle that he who executes a conveyance on valuable consideration, purporting to pass a title before it is in him, will be bound to make it good whenever he acquires it.” The principle is stated in many ways, and is illustrated by an overwhelming array of authorities, from which we select one or two. In the note referred to, at page 1606, supra, it is said: “ It has notwithstanding been held that such possibilities, and even the expectancy of one who has no present claim of any kind, may be assigned in equity, or rather that a court of equity will interpret such an assignment as a contract to convey when the estate or interest vests, which may be enforced specifically, if shown to have been made in good faith and for a valuable consideration.” Judge Story stated it this way in Mitchell v. Winslow, 2 Story, 631, Fed. Cas. No. 9, 673: “ The authorities establish the proposition wherever the parties by their contract intended to create a positive lien or charge, either upon real or personal property, whether it is then in esse or not, it attaches in equity as a lien or charge upon the particular property, as soon as the assignor or contractor acquires a title thereto, against the latter and all persons asserting a claim thereto under him, either voluntarily or with notice, or in bankruptcy.”

Perhaps the clearest and best statement anywhere to be found is that of the Lord Chancellor in the House of Lords, in Holroyd v. Marshall, 10 House of Lords, 191, which'is given in full because of its great clearness; “ It is quite true that a deed which professes to convey property which is not in existence at the time is a conveyance void at law, simply because there is nothing to convey. So in equity a contract which engages to transfer property which is not in existence cannot operate as an immediate alienation merely because there is nothing to transfer. But if a vendor or mortgagor agrees to sell or mortgage property, real or personal, of which he is not possessed at the time, and he receives the consideration for the contract, and afterwards becomes possessed of property answering the description in the contract, there is no doubt that a court of equity would compel him to perform the contract, and that the contract would, in equity, transfer the beneficial interest to the mortgagee or purchaser immediately on the property being'acquired. This, of course, assumes that the supposed contract is one of that class of which a court of equity would decree the specific performance. If it be so, then immediately on the acquisition of the property described the vendor or mortgagor would hold it in trust for the purchaser or mortgagee, according to the terms of the contract; for if a contract be in other respects good and fit to be performed, and the consideration has been received, incapacity to perform it at the time of its execution -will be no answer when the means of doing so are afterwards obtained.”

The doctrine is also stated with very marked clearness by Mr. Pomeroy in his work on Equity Jurisprudence (Student’s Ed.), § 1236, and also sections 1285-1291. In section 1288 Mr. Pomeroy says: “ In other words, the doctrine of equitable assignment of property to be acquired in future is much broader than the jurisdiction to compel the specific performance of contracts. In truth, although a sale or mortgage of property to be acquired in future does not operate as an immediate alienation at law, it operates as an equitable assignment of the present possibility, which changes into an assignment of the equitable ownership as soon as the property is acquired by the vendor or mortgagor; and because this ownership thus transferred to the assignee is equitable, and not legal, the jurisdiction by which the right of the assignee is enforced, and is turned into a legal property, accompanied by the possession, must be exclusively equitable, a court of law has no jurisdiction to enforce a right which is purely equitable. This, in my opinion, is the only correct and sufficient rationale of one of the most distinctively equitable doctrines in the whole scope of equity jurisprudence.” These citations are abundantly sufficient to correctly and clearly and accurately state the true principle upon which the doctrine rests in equity that a mortgage of after-acquired property, or of any expectancy' or possibility, is good in equity to pass that future interest, whenever it shall be acquired, by virtue of the mortgage as between the parties. It will, of course, be understood that we are not speaking here of a ease in which the rights of any creditors or any third parties whatsoever are involved. The question is one arising simply between the original parties to the instruments.

All three of the propositions which we have thus far stated are elementary. There is no room for any controversy as to the accuracy of each one of these statements, nor of the accuracy of the fourth proposition, which is this: That husband and wife may execute a valid mortgage on a homestead which they own presently at the time of the execution of the mortgage. The manifest and plain logic of the case makes just as clear the fifth proposition, which is that husband and wife may execute a valid mortgage on after-acquired property, even if that after-acquired property, when acquired, shall be used or appropriated by them as a homestead.

Counsel for appellee give as their reason for denying the power of husband and wife to do this, as between the original parties, that public policy is somehow or other infringed. There is no public policy as to homesteads, except that which the statute has declared; and that public policy, so far as contracts are concerned, like a mortgage upon a homestead, is confined exclusively to providing that such instruments shall not be valid unless joined in by the wife in the manner marked out by the law. This mortgage, in this case, was properly executed by husband and wife for a valuable consideration in the manner provided by law, and, that done, there is no element of public policy with regard to homesteads in this case that can be said to have been infringed. It was perfectly competent for the husband and wife to execute the mortgage, or not to execute it. They had perfect liberty and freedom to so contract or not — ■ to execute the mortgage or not. There is nothing on earth in it, except whether they did desire to make that sort of contract, and did make it, and did make it in the manner marked out by the law. Whenever it is conceded, as, of course, it must be, that husband and wife may execute a valid mortgage in prcesenti on a homestead which they now own, it must follow inexorably that they may also execute a mortgage on a homestead which they may thereafter acquire. Public policy as to homesteads is no more infringed by a mortgage on a homestead to be acquired than it is by a mortgage on a homestead then owned at the time of the execution of the mortgage. There is nothing but the mere element of time — the then and the thereafter — involved in any such case. The principle is the same, the power to so contract- — -that is to say, to execute a mortgage on the homestead — is the same, whether such mortgage be .executed to bind a homestead then in existence or one thereafter to be acquired. May not husband and wife jointly contract to convey their homestead in possession at a future day, on terms to be then complied with ? There questions must be answered in the affirmative, and, if they may, why does not a conveyance of a homestead to be acquired in the future by their joint act bind them? Their jus disponendi is unlimited by statute. Why place a limitation upon it which serves no good purpose, and which may effect two very evil purposes: First, which may disable them to advantage themselves by getting through such a mortgage the means whereon to live, etc., and which, in the second place, if they are disposed to perpetrate frauds, puts it in their power to so perpetrate frauds by investing the money secured on such mortgage in a homestead to be acquired, to the injury of their grantee — such mortgage ? In short, how can the proposition be escaped that to deny the right of the husband and wife, by mortgage properly executed, to convey a homestead to be acquired in the future, is to deny, simply and directly, their right to contract — their freedom to contract ? How can it be said that husband and'wife have perfect power, by contract, to convey all other property, property of every other kind than a homestead, such property to be acquired in the future, and yet they have no power so to convey a homestead to be acquired in the future ? How can any rational distinction in the law be drawn between merely the two kinds of property ?

It is not a question of the kind of property which may be bound under an after-acquired clause in a mortgage. No such distinction as that will stand the test of logic. It is a question, merely and simply, of whether a mortgage of any property to be acquired in the future is good in equity between the parties. The only distinction which the statute mentions is that, when it is a homestead that is to be bound as after-acquired property, the mortgage must be joined in by the wife in the form prescribed by law, and it is only with respect to this veto power that the wife has over the conveyance of an after-acquired homestead that public policy has any room for play at all. When, therefore, the wife has, by solemn contract duly executed in the form required by law, joined the husband in a conveyance of a homestead to be acquired in the future, what possible ground is there for saying that public policy as affecting homesteads is infringed, or for drawing any distinction between a homestead and any other sort of property? This distinction is not as between different hinds of property. The distinction is merely as to the mode in which a conveyance conveying a homestead is to be executed, and that mode has been complied with in this case. We repeat, and with that close our view of the case, that whenever it is conceded that the husband and wife may execute a mortgage on a homestead they now own — in other ■words, that they have powel so to contract away the homestead — it must inevitably follow, so far as the power to make such a contract is concerned, conforming to the statute as to the mode in which the instrument is executed, they have the power to contract away a homestead to be acquired in the future. It is a mere matter of right to so contract; the only difference being that if it be a homestead the wife must join in the manner the law marks out. How can it be rationally contended that all property except a homestead may be bound by a mortgage carrying after-acquired property in equity, and yet that this single kind of property, homesteads, may not be by contract so conveyed ? How can it possibly be that the time of the execution of a present mortgage and a future mortgage should alter the principle of the power to mortgage the homestead ?

Finally, it is palpable that counsel have fallen into a manifest error with respect to public policy affecting homesteads by misapplying the doctrine of Trotter v. Dobbs, 38 Miss., 198, and other like gases in this state, to this the case of a contract. The books are full of statements with respect to the policy of the law to protect homesteads, and to encourage the establishment of homesteads, and to shelter homesteads from sales under execution or attachment. Sales under execution or attachment are judicial dispositions of the homestead; dispositions in invitum; dispositions or sales in respect to which the husband and wife are not consulted and have no say whatever. That is one class of cases; and it is that class of cases alone, in respect to which all the declarations about the sanctity of homesteads, and the necessity for encouraging and protesting homesteads, relate. They have no sort of application to that wholly different class of cases, like the one we are discussing, in which the husband and wife have by their own voluntary, solemn contract, founded on a valuable consideration, bargained away their homestead. The distinction is so plain that we find it impossible to make it clear'er by further discussion.

The claim of Charles Varnado for $150 and interest, purchase money of the land, is, of course good on the facts of this case against the mortgage. The result is that the decree of the court below on direct appeal is reversed in so far only as it denied the liability under the mortgage of the after-acquired homestead. Such homestead will, as. we hold, pass under said mortgage, subject to the claim of $150 just specified.

Judge Calhoon concurs in this opinion, but desires to express strongly his view that the legislature should pass an act .making any mortgage of an after-acquired homestead void, and in this expression I myself heartly concur.

On the cross-appeal the decree is also reversed. -It is for the Louisiana courts to adjudicate as to lieu and sale of lands in Louisiana. In all other respects the decree is affirmed.

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Dissenting Opinion

Mayes, J.,

delivered the following dissenting opinion.

I cannot agree with the court in its announcement of the law in this case. The only point of difference is upon the question of whether a husband and wife, by uniting in giving a deed in trust containing an after-acquired property clause, can prospectively so waive their exemption as to defeat the future acquisition of a homestead during the life of the mortgage ? In discussing this question I deem it unnecessary to enter upon any general discussion as to the validity of the after-acquired property clause frequently found in contracts of the character now under review. It is enough to say that these clauses have been frequently upheld in proper cases by the courts of almost every state. Our own court, however, has made it plain that these clauses have their limitations. In the case of Fidelity, etc., Co. v. Sturtevant Co., 85 Miss., 509, 520; South. 783, 784; 109 Am. St. Rep. 716, this court said: “We do not wish to be understood as having committed ourselves to the broad doctrine that a mortgage of chattels thereafter to be acquired is unlimited, and in all circumstances to be sustained.” Again the court says: “ A careful study of the cases will disclose: (1) That in each instance the contract had reference to some particular designated property, which may, in the ordinary course of things and with reasonable certainty, come into existence. (2) The assignor or mortgagor must, at the date of the contract, have an actual interest in or concerning the subject. There must be an interest in prcesenti, of which the future acquisition is the product, or in such wise incident to or connected with it, constituting a tangible and substantial predicate of a contract.” It is thus seen, from the authorities in this state, that where a mortgage is given on certain designated property then existing, having in it a clause including property to be thereafter acquired by the mortgagor, this court has clearly indicated that such clauses have their limitations. The provision in this trust deed is not in express terms a waiver by the husband and wife of the right to acquire exemption. If this were the ease, we hardly think it would be contended that such a stipulation would have any validity; but the effect of the deed in trust, if it is upheld, when sought to be enforced against a homestead subsequently acquired, makes ika waiver. The mortgage as to the after-acquired property is executory, and is a mortgage of a mere possibility. In the case of Teague v. Weeks, 89 Miss., 360; 42 South. 172, this court held that an executory contract of a debtor to waive exemptions allowed by law was void as against public policy. In section 153, vol. 1, Jones on Mortgages, it is said: “A conveyance of what does not exist does not operate as a present transfer in equity any more than it does at law. The difference is merely that at law the conveyance, having nothing to operate upon, is void; while in equity what is in form a conveyance operates’by way of present contract, to take effect and attach to the subject of it as soon as it comes into being. The agreement to convey then ripens into an actual transfer. Equity considers that as done which the mortgagor has distinctly agreed to do, and is in consequence bound to do.”

The only validity which attaches to this kind of conveyance is derived from the equity courts. But, in order to enforce future-acquired property contracts in mortgages, equity will not act in eases where it destroys the public policy of the state. The equity of the public in the preservation of so necessary a policy of the state as that of the right -of a citizen to acquire the exemption allowed by law is stronger and higher than can possibly be in the equity of a creditor to contract away the right from the debtor. When certain formalities have been complied with, the homestead may be sold or incumbered. While the exempt property may be sold or incumbered, and its natural increase mortgaged, when it is actually owned, we have found no authority which holds that the debtor may preclude himself by any sort of an executory contract from the right to acquire a homestead. Such an executory contract is void, both in law and in equity. In section 354, vol. 1, Page on Contracts, it is held that “ a covenant in a contract whereby the promisor agrees in advance to waive his right of exemption in his property is void in most jurisdictions, on the theory that the statute is enacted for the protection of necessitous debtors, and to allow them to contract away their right in advance would be to defeat the purpose of the statute.” In Greenhood on Public Policy, p. 497, it is said, if the waiver of exemptions is to prevail, “ a few words contained in any note or obligation would operate to change the law between those parties, and so far disappoint the intentions of the legislature. If effect shall be given to such provisions, it is likely that they will be generally inserted in obligations for smaller demands, and in that way the policy of the law will be completely overthrown. Every honest man who contracts a debt expects to pay it, and believes he will be able to do so without having his property sold on execution. No one worthy to be trusted would therefore be apt to object to a clause subjecting all his property to levy on execution in case of nonpayment. It was against the consequences of this overconfidence, and the readiness of men to make contracts which may deprive them and their families of articles indispensable to their comfort, that the legislature has undertaken to interpose. . . . The law seeks to mitigate the consequences of men’s thoughtlessness and improvidence, and it does not allow its public policy to be evaded by any language which may be inserted in the contract.”

The reason of the law applies with just as much force to the waiver of the prospective right to acquire a homestead by virtue of the future-acquired property clause in a deed in trust as it does to the waiver of exemption by the debtor from execution. In truth, there is more reason to apply this rule to the future-acquired clause contained in trust deeds, for the reason that, if it is ripheld, it is not only a waiver of exemption, but it is a waiver before the debtor ever acquired the property on which the waiver is to operate. The limitations on the rule as to the upholding of contracts in reference to future-acquired property should not be relaxed, but should be more rigid. No rule of law could be announced which would be more inimical to the policy of the exemption laws, and open wider the door to oppression, than to hold that a party taking a mortgage could incorporate in it an after-acquired clause to operate prospectively and defeat the right of a debtor to acquire future exemptions. To uphold this stipulation in a deed in trust, when it is sought to take away from a debtor the right to acquire a homestead, necessarily makes it apply to all after-acquired property, irrespective of its character, and under it a debtor’s home may be stripped of all that is in it. Whatever this contract may be called, its effect cannot be escaped, and it is exactly the same in its effect as if the wife and husband had executed this mortgage on certain specific property and additionally waived their right to acquire any property in the future which might be exempt under the law. They have not said this in express words, but the effect is to say this. In the case of Moran v. Clark, 30 W. Va., 358; 4 S. E. 303; 8 Am. St. Rep., 66, are to be found many authorities on this subject, all of which hold that a. contract waiving the right to claim exemptions is a nullity.

I rest my view of this case on the broad ground that a clause-of this sort in a deed in trust cannot operate to defeat the acquisition of future exemptions, by the mortgagor. If a mortgagor own a homestead or other exempt property actually in existence at the time, he may mortgage that property, though it be exempt, and the increase of that property. He may mortgage his homestead and the crops to be grown on his homestead, because these things have a potential existence; but he may not in his mortgage convey away prospectively his right to acquire a homestead. No creditor ever took a security from his debtor, relying on property to be after acquired as sole security. Eew debts would be made if the creditor had to rely for his security on the future possible acquisitions of a debtor. The creditor relies on more tangible security. This exact case has not been before decided by this court; but all the authorities unanimously hold that a debtor cannot waive his exemption right, and that is what this contract does.

The authorities quoted in the opinion in chief have no application to this case. There was no question of exemption discussed there, or thought of.