City of San Francisco v. Lawton, 18 Cal. 465

City of San Francisco v. Lawton

18 Cal. 465 | Cal. | 1861

Field, C. J. delivered the opinion of the Court

Cope, J. concurring.

The object of the suit to foreclose a mortgage, under our law, is to obtain the sale of the estate which the mortgagor held at the time he executed the mortgage, and the application of the proceeds of the sale to the payment of the demand, for the security of which the mortgage was given. All persons who are beneficially interested, either in the estate mortgaged or the demand secured, are proper parties to the suit. This rule, as a general thing, will only embrace the mortgagor and mortgagee, and those who have acquired rights or interests under them. Where prior incumbrancers are made parties, it is only for the purpose of liquidating the amount of their demands, and paying them out of the proceeds of the sale. Adverse titles to the premises held by parties claiming by conveyance from the mortgagor prior to the mortgage, or from third parties prior or subsequent to the mortgage, are not the *474proper subjects of determination in the suit. Such titles must be settled in a different action, giving rise, as they generally do, to questions of purely legal cognizance. (Eagle Fire Co. v. Lent, 6 Paige, 637; Corning v. Smith, 2 Seld. 82; Holcomb v. Holcomb, 2 Barb. 23.) The foreclosure operates, except in a single instance, only upon the estate or interest which the mortgagor possessed at the time, and the sale under the decree passes, with the like exception, only such estate or interest. The exceptional instance, to which we refer, arises where the mortgagor has, subsequent to the execution of the mortgage, acquired a title which enures, by way of estoppel, to the benefit of the mortgagee. In such case, the foreclosure operates upon the subsequently acquired title to the same extent as if originally held by the mortgagor, and the sale under the decree passes it. In all other cases, the estate mortgaged is the only estate brought under the consideration of the Court, and the only estate affected by its decree. (Clark v. Baker, 14 Cal. 612.)

In the present case, the defendants, Howard, Perley, Gould and Smith, who alone appeal from the decree, set up in their answer title to a portion of the mortgaged premises, under a grant from the former Mexican Government, bearing date in May, 1839, and a patent of the United States, issued upon its confirmation, in March, 1858, and also under a deed executed by the Tax Collector of the city and county of San Francisco, upon a sale for unpaid taxes for State and county purposes, for the fiscal year ending in June, 1856. On the trial, they produced the patent, and traced title thereunder to the defendants Howard and Perley. They also produced the tax deed, .and traced title thereunder to Perley. The record does not disclose any evidence of title in either Gould or Smith under the patent or the tax deed. Of the value of the titles conferred by those instruments, it is unnecessary to express any opinion. Their validity is not the proper subject of determination in the present suit. It is only necessary to look into them so far as to see that they are asserted in good faith, and are not mere pretenses for delay; and this being seen, the rights of the defendants Howard and Perley should have been reserved in the decree. If there were no other reasons than the assertion of these adverse *475titles for making them parties, the suit should have been dismissed as to them. But there were other reasons. Mowry, the mortgagor, subsequent to the mortgage, sold and conveyed all his right, title and interest in the premises to Sawyer, and Sawyer quit-claimed a portion of the premises to Howard, Perley and Thorne, and the balance to Perley alone. Thorne subsequently conveyed his interest to Gould and Smith. The appellants thus succeeded to whatever estate the mortgagor possessed, and as such successors were proper and necessary parties to the foreclosure. (Goodenow v. Ewer, 16 Cal. 461; Boggs v. Hargrave, Id. 559.) The estate thus acquired, whatever it may have been, was subject to foreclosure and sale under the decree of the Court. This the appellants do not question ; but Howard and Perley, who claim under the patent and tax deed, insist that they are not estopped by the acceptance of the quitclaim of Sawyer from denying that he ever possessed any estate—that is, title or interest in the premises—and from showing that the legal title derived from an independent and paramount source was in fact in them at the time; and in this position they are undoubtedly correct. The evidence of Sawyer shows that at the time he executed the quitclaim, Howard, Perley and Thorne claimed to hold an adverse title to the premises, and demanded possession, and threatened a suit in ejectment against him, and that with his conveyance he acknowledged their title. It is not material that such threat was made, or acknowledgment had, but they furnish an illustration of the good sense of the rule which permits a vendee to dispute the validity of the title of his vendor. Parties possessing undoubted titles may often find it to their interest to buy out settlers and trespassers on their premises rather than, incur the delay and expense of establishing their rights by litigation. It would be strange if, under such circumstances, they should be estopped from denying the title of the grantors; and if a grantor had previously executed a mortgage upon the premises, that their rights under their previous titles were subordinate to those of the mortgagee. The law does not even look that way. A quitclaim deed only purports to release and quitclaim whatever interest the grantor possesses at the time. He does not thereby affirm the possession of any title, and he is not precluded from subsequently ac*476quiring a valid title and attempting to enforce it. If he does not possess any title, none passes; and he may subsequently deny that any passed without subjecting himself to any imputation of a want of good faith. So, too, a grantee in a quitclaim may deny that he received any estate by the conveyance. (Sparrow v. Kingman, 1 Coms. 242.) More than this, a grantee in fee may deny that his grantor had any title. With the execution of the conveyance the transaction between the parties is closed. Thenceforth the grantee holds the property for himself, and is neither bound to surrender possession to his grantor, nor to maintain the validity of his title. In Osterhout v. Shoemaker, (3 Hill, 518) Mr. Justice Bronson, in delivering the opinion of the Supreme Court of Hew York, said: “ There is no estoppel where the occupant is not under an obligation, express or implied, that he will, at some time or in some event, surrender the possession. The grantee in fee is under no such obligation. He does not receive the possession under any contract, express or implied, that he will ever give it up. He takes the land to hold for himself, and to dispose of it at pleasure. He owes no faith or allegiance to the grantor, and he does him no wrong when he treats him as an entire stranger to the title.” And in Sparrow v. Kingman, (1 Coms. 253) Mr. Justice Wright, in delivering the opinion of the Court of Appeals of the same State, observed that “ there is no relation existing between the grantee in fee and his grantor as will raise even an implied obligation on the part of the former against a denial of the title and estate of the latter.” (See also to the same effect Bright's Lessee v. Rochester, 7 Wheat. 548 ; The Society for the Propagation of the Gospel v. The Town of Pawlet, 4 Pet. 506; Watkins v. Holman, 16 Id. 54; Barker v. Salmon, 2 Met. 32; and Averill v. Wilson, 4 Barb. 180.)

The case of Clark v. Baker (14 Cal. 612) is cited by the respondent as authority for the position that the appellants, claiming under the patent of the United States and the tax deed, are estopped from asserting their title against the title of the mortgagor. We do not understand the decision in that case as sustaining the position. The facts were these : Clark, without having the legal title, conveyed to Baker certain premises; Baker, to secure the purchase *477money, mortgaged them back to Clark. The conveyance and mortgage were simultaneous acts, and both purported to be of the premises in fee. Subsequently, Baker purchased the outstanding legal title, and executed a second mortgage to Touchard. This last mortgage Touchard foreclosed without making Clark a party; and the purchaser at the sale under the decree claimed to hold adversely to Clark, and not in subordination to the first mortgage. The Court held, that the thirty-third section of the act concerning conveyances applied to mortgages equally as to conveyances absolute in their form; and that by its provisions the mortgage of Baker, being of the premises in fee, operated upon the outstanding title, afterwards acquired, as effectually as if it had been originally possessed by him; in other words, that the subsequently acquired title enured to the benefit of the first mortgagee, and that the purchaser under the second mortgage took in subordination to him. And the Court also held that the mortgagor was under obligation, from the nature of the mortgage contract, to preserve the property pledged for the purposes of the original security, and hence on grounds of public policy, and to insure good faith and fair dealing, was estopped, independent of any covenants of warranty, from denying the existence of the lien which he had attempted to create, or defeating its enforcement against the property upon which it was placed, and that parties claiming under the mortgagor were equally estopped; in other words, that the mortgagor could not, nor those claiming under him, set up to defeat the mortgage, the title which he had subsequently acquired. There is nothing in that case which conflicts with-the views we have expressed in this opinion. Here the mortgagor has acquired no outstanding title' which enures to the benefit of the mortgagee, and the appellants, Howard and Perley, are not setting up any title derived from him to defeat the enforcement of the mortgage upon the property. Whatever estate, if any, they have acquired from him, is as much subject to the mortgage as it was previous to his conveyance to Sawyer. So far as they claim under him, they are estopped equally with him from denying efficacy to the mortgage. But so far as they claim under other parties by an independent title, they are not bound by the mortgage. They can assert any rights which they may possess from *478that source against the mortgage, and the conveyance received from the mortgagor. Their rights in that respect should have been saved in the decree, and for the omission in that particular, the decree must be reversed.

There are several other objections taken by the appellants to the action of the Court below, but upon them we express no opinion. With a clause in the decree saving to the appellants their rights under the patent and tax deed, it is not probable that they will feel disposed to press the objections. On the further hearing it will not be necessary to take anew the testimony. The parties can use that already embodied in the transcript, and add such further testimony as they may deem essential to the proper presentation of the case.

Judgment reversed, and cause remanded for further proceedings.