3 Md. 82 | Md. | 1852
Lead Opinion
delivered the following opinion:
The present appeal comes before us upon an agreed statement of facts, It appears that the appellant, Charles, sued out an attachment against John A. Grimes, as a non-resident debtor, and caused the same to be laid upon certain real estate in Washington county as the property of the said Grimes.
It must be conceded, that but for the interposition of the trustee in this case, there could be no question as to the character of the deed. It would clearly be a simple mortgage, and as such, within the law.
It is a well established principle of law, in construing acts of Assembly, that the intention and meaning of the legislature are to be collected from the law itself, and the circumstances which produced it. Beall vs. Harwood, 2 Har. & Johns., 171. The design of the act of Assembly which we are now called upon to interpret, is obvious. Its purpose manifestly was, to prevent conveyances for pretended considerations in fraud of bona fide creditors, and there can be no doubt but that the deed before us comes within the mischief which the law intended to prevent. But it has been urged upon us, with great force and ability, by the appellee’s counsel, that inas
The same principle is more fully recognised and enforced in a previous case, The State vs. Boyd, 2 Gill and Johns., 374. “Statutes are sometimes,” the court say, “extended to cases not within the letter of them, and cases are sometimes excluded from the operation of statutes, though within the letter, it being an acknowledged rule in the construction of statutes, that the
It is by no means my purpose to intimate that the instrument before us, would be regarded as a mortgage for every purpose — indeed it is not necessary even to say that it is a mortgage for any purpose. My design is merely to say, that in my opinion it is embraced within the meaning of the act, call it by whatever name you please. It is contended, that if this deed be a mortgage under the act of 1846, it must also be treated as one under the act of 1825, ch. 203, sec. 3, and subject to all the incidents of that law. This by no means follows. The legislature may have designed to have embraced such a case in one act, and to have excluded it from the operation of the other. But we are not called upon to interpret the act of 1825. It has no application to the point
I am nevertheless constrained to admit, that there are questions arising out of this subject which are not free from difficulty. This difficulty, however, relates rather to the extent to which the principle is to be carried in its application to future cases, and by whom the affidavit in such cases is to be made. Though we are not required to decide more than the present appeal, yet I have no hesitation in saying, that I would not extend the principle which has been contended for, to general and absolute deeds of trust for the benefit of creditors, without the equity of redemption. In such cases the grantor parts, without any reservation, with all control over his property, until the purposes of the trust have been subserved. But whenever he retains in himself, by the terms of the deed, the power to defeat the conveyance by paying or satisfying the claims provided for, then such a deed is within the act. The distinction would seem to be, that in the latter case the debtor reserves to himself, where the transaction is fraudulent,
As an insuperable objection to the foregoing views, it has been asked whether the act of 1846 would be extended to a deed of trust for the benefit of a number of creditors, some of whom might be infants of tender years, and therefore not able to make the affidavit? If the grantor reserved to himself the equity of redemption, I have no doubt that it would. This is rather an argument showing the defects of the law, than one supporting a particular construction of it. And this is manifest from the fact, that the same argument would apply with equal force to a simple mortgage, to secure the debts of a number of individuals, among whom were infants. In that case the law would clearly apply, although the difficulty of making the affidavits would be equally as great.
It is contended, that unless all the creditors named in the deed respectively made the affidavit, the deed would be void as to those even who did. To this view neither, can I assent. The deed in such a case would be pro tanto, good as to those who made the affidavit, and void as to the others. 1 do not wish to be regarded as the apologist of this law. Its wisdom and policy are one question, while its construction is another. Our duty relates exclusively to the true construction of the act, and the argument, that it is against public policy and convenience, should have no weight in this court.
In conclusion, I will barely remark, that, in my opinion, all deeds like the present, in the nature of a mortgage, for the purpose of securing specific debts to particular creditors,
For the foregoing reasons, jt is my .opiuion, that this judgment ought to be reversed.
Concurrence Opinion
delivered the following opinion, in which Tuck, J., concurred.
The question to be decided in this case is, whether the deed of the 1st of May 1851 is void, for want of the oath in regard to the consideration prescribed in the act of 1846, ch. 271?
The deed is between J. A. Grimes and wife, of the first part, Samuel Clagett of the second part, and D. and H. Clagett of the third part. The recital states a debt of $6000, due to D. and H. Glagett by J. A. Grimes, which he is anxious to secure, and then conveys the property in controversy to S. Clagett and his heirs, in trjist; so that if within on,e year from the date of the deed, Grimes should pay the $6000, then the property should be “released and reconveyed to him, his heirs and assigns, discharged of the lien thereby created.” But in case of failure in payment within the year, then S. Clagett is authorised to sell the premises, and out of the proceeds to pay “the expenses of the trust,?’ the principal and interest of the debt, and if any surplus remains, the same is to be paid over to Grimes. The deed concludes with a warranty of the premises, from Grimes to S. Clagett, his heirs and assigns.
Th.e act of Assembly provides: “ That no deed of mortgage or bill of sale shall be valid and effective, except as against the mortgagor or mortgagors, grantor or grantors, unless there be endorsed thereon an affidavit of the mortgagee or mortgagee?, grantee pr grantees, sworn to before’? certain officers
It has been insisted by the appellant’s counsel, that inasmuch as the deed in controversy was intended to secure the payment of a debt, and contains what he terms a redemption clause, it is a mortgage, within the meaning of 1he statute. If this be true, it is difficult to perceive, why is not also a deed conveying all the grantor’s property to a trustee, with power to sell after a time limited, and apply the proceeds to the‘payment of all his debts, if he, the grantor, should' fail to pay them by the appointed time, providing for a reconveyance, in case of payment by him within the time. Should the oath of each creditor be necessary under such a deed, if the creditors were numerous, it would, in many instances, be exceedingly difficult, if not impossible, to comply. The same rule which would require the oath of one of such creditors vrould, of course, embrace all.
It was said in argument that the cestui que ttusis, and not the trustee, wrere the mortgagees who were bound to make the oath. According to this theory, under a deed of this description, providing for a large number of creditors, they, being the cestui que trusts, would be the mortgagees, and each required to make the affidavit. Some of them might be infants of tender years, not old enough to understand the nature of an oath, or if they were, might be wholly ignorant of any claim due them.
Once admit that the word mortgage in this statute includes any other instrument than a purely technical mortgage, under which there is not only the equity of redemption in the mortgagor, but on failure of payment, the mortgagee may recover possession of the premises, take and retain the rents and profits, and has the right of foreclosure, and it will be exceedingly difficult to say what deeds are, or what are not, within the act. it will be no easy task to define the dividing line between mortgages and deeds of trust.
There are instruments which are mortgages only by equita
In my opinion, the act of 1846 should be construed as including mortgages, technically, such. It is only necessary to mention one class of instruments which have been held in equity to be mortgages, to show, beyond controversy, that the statute could never have been designed to embrace all equitable mortgages. A deed absolute on its face by mistake, if intended to be a mortgage, will be so declared by a court of equity, and I presume it will not be said that if such a deed is without the oath, it will be void under the act. If there are any equitable mortgages not embraced by the statute, why may it not be construed as only applicable to those of a technically legal character? In so doing, much confusion and embarrassment will be avoided, especially in reference to making provision for securing payment to a considerable number of creditors, by deeds, which have been treated and considered as deeds of trust.
In 2 Story’s Equity, sec. 1013, note 2, mortgages and trusts are treated of at some length, arid with great ability. Much fault is found with the indiscriminate and improper extent, to which, in some instances, these subjects have been blended, and particularly in applying the term trustee to a mortgagee. The names of mortgagor and mortgagee are considered the most proper to characterize the relation. These are, “characters as well known, and their rights, powers and interests as well settled, as any in the law.” This is introduced as the remark of Mr. Justice Buller, in Birch vs. Wright. Of course he had reference to a mortgage, technically such, and not one which is so considered, merely by equitable construction.
When we resort to the elementary writers for the definition of a mortgage, it will be seen that on failure in payment, the legal title and the right of possession are in the mortgagee, with the privilege of foreclosing at his pleasure. 2 Cruise’s Big., 81, title Mortgage, ch. 1, sec. 13; and same title, ch. 2, sec. 12 of the 4th Jimer. Ed. 2 Crabb’s Law of Real Pro
In the present deed the legal estate is conveyed to the trustee; the cestui que trusts, who have been called the mortagees, in no event are entitled to possession, nor have they any right of foreclosure.
Mortages, with power of sale, are treated of at marg. p. 124 of 1 Coote, in 69 Law. Lib., 170; and this authority was much relied upon by the appellant’s counsel, as sustaining his view of the subject. Where the power of sale is given to a mortgagee himself, or to a third person, merely as a naked power to sell, it need not, nor do 1 presume that it does, at all, impugn or interfere with the ordinary and usual rights of a mortgagee, which exist in a mortgage, similar, in all other respects to such a deed, except in regard to this power. But when the estate is conveyed to a third party in fee, in trust to sell, the deed is but a quasi or equitable mortgage.
This power of sale is regulated in New York and some other States by statutes.
Our act of 1825, ch. 203, on this subject, particularly the third section, has been insisted upon by the appellant’s counsel, as conclusive authority, for holding the present deed to be a mortgage within the meaning of the act of 1846. So far from agreeing with him, I do not think the law of 1825 has any reference whatever, to a deed of this description.
The third section is: “That no sale of any lands, tenements, or hereditaments, or chattels, made, or to be made, in virtue of this act, by any mortgagee or others thereunto authorized by special power for that purpose, from any person entitled to the equity of redemption therein, shall be defeated to the prejudice of any bona fide purchaser thereof, in favor or for the benefit of any person claiming such equity of redemption: Provided, that nothing herein contained shall be construed to prejudice any other mortgagee of the same premises, or any part thereof, whose title accrued prior to such sale, or any creditor to whom the mortgaged premises, or any part thereof, were before bound by any judgment at law or
According to my opinion, this provision relates to such mortgages as give special powers of sale to the mortgagees, or to others:- the special powers to'others meaning merely naked, powers, and n'ot conveyances of estates, to third persons' in trust, to sell.'
At one time doubts' were entertained as to the validity of sales, under powers contained in' mortgages, unless ma'de with' the concurrence of the mortgagor, or the sanction óf a court of equity.- And it would seem' that some' such Consideration' induced the legislature to pass the atft of 1825. Sales made before, as-well as those by virtue of the'act, are included in' it, and made valid against any person claiming the equity of redemption. The first proviso in the third section exempts from the provisions of the law any other mortgagee and creditor, upon judgment or decree, whose lien binds upon the premises', and existed prior, not to the mortgage under which the sale is made, but simply to the sale itself.’
The term poioer is also used in the second proviso. And here the purchaser under the power is not protected, whether his purchase be made before or after the law, unless the party executing the deed creating the power be at least twénty-five • years of age.
If doubts existed in regard to the validity of sales under powers in mortgages, as above stated, and the act of 1825 was passed on that account, still it does not follow, that there were doubts also, as to the efficacy of a sale under a deed, in which the debtor has conveyed, in fee, his estate, tó a third party in trust, to sell and apply the proceeds to the payment of one, several, or all of his creditors, containing a clause of redemption, the creditors having no right of possession, in case of failure to pay. I cannot suppose that such a deed required legislation to give it effect, or that- a- sale under it
In Virginia where deeds of trust to third persons are frequently used, to secure the payment of claims, there never has been any doubt as to the validity of sales under them', because of an equity of redemption. But a sale under a power given to the mortgagee, will not, in that State, bar the equity of redemption, unless the sale is ratified or confirmed by the mortgagor. Chowning vs. Cox, 1 Rand., 306. Taylor’s Adm’rs vs. Chowning, 3 Leigh, 665.
The first section of the act of 1846, required the oath to be made before the officer taking the acknowledgment of the deed, and “at the time of the acknowledgment.” From, this it would seem to be a legitimate inference, that the legislature had in view, such persons only as would be cognizant of, and actually participating in the transaction, and not all those who might be beneficially interested, as creditors or cestui que trusts, under a deed of trust, providing for the payment oi debts due to a few or to many persons, some of whom might be ignorant of the arrangement. And yet this latter class of persons would be mortgagees, within the meaning of the act, according to the doctrine insisted upon by the appellant, whenever the deed contained a redemption clause. We very frequently meet with such deeds of trust as those just mentioned, in which a large number of creditors are intended to be provided for, when many of them know nothing about it until the affair is consummated, and the deed put on record. But it rarely, if ever happens, that what is commonly called a deed of mortgage, is executed for the benefit of more than
As the oath is required, by the original act of 1846, ch. 271, to be taken when the deed is executed, surely the provision must have been introduced upon the hypothesis, that the instrument in contemplation was such that the parties under it bound to make the affidavit, were such as would be informed of it and might reasonably be expected to attend. This view of the subject strongly confirms my belief that the act, in its provisions relating to mortgages, was designed, exclusively, to apply to those- which are strictly and technically such, and not to instruments which are but equitable or quasi mortgages.
No doubt the intention of the legislature in passing the act of 1846, was a good one, but it is, nevertheless, exceedingly doubtful, whether the law is not, in fact, more injurious to the community than beneficial. The multiplication of oaths is, of itself, an evil óf no trifling consideration, and when connected with transactions which present strong temptations to the commission of perjury, as those under consideration necessarily do, the evil is' greatly increased. Among honest men the law is entirely unnecessary, and in truth can have no effect whatever, except to- annoy and give them trouble, in arranging their business; as for instance, when several mortgagees reside in different places very remote from each other. With the dishonest it will have but little effect. A man corrupt enough to participate in an instrument intended to defraud others, would not, in many instances, hesitate about taking the requisite oath. His conscientious scruples would not exercise much influence over him. Nor would fear of punishment for perjury stop him, in any case, where, there would be difficulty in proving the fraud. And such transactions are generally gotten up with some degree of plausibility. Even in civil suits it is no easy task to unravel and expose a fraud, and the difficulty would be greatly enhanced in a criminal proceeding. The party knowing this would have little fear of a- conviction for perjury. And if the design of effect
My brother Tuck concuis in this opinion, and of course, the affirmance of the judgment must follow.
Judgment affirmed-
