Dennis v. Moses

18 Wash. 537 | Wash. | 1898

Lead Opinion

The opinion of the court was delivered by

Scott, C. J.

This action was brought to foreclose a real estate mortgage given to secure a note for $1,500 bearing interest at the rate of six per cent, per annum. The mortgage contained stipulations on the part of the mortgagor waiving all benefits under, and the provisions of, sectons 3 to 10 inclusive, of the act relating to sales of property under execution (Laws 1897, p. 70), and provided that in case of foreclosure the land might be sold forthwith as lands are sold on execution to the highest bidder without appraisement, and without waiting one year as provided by statute; also waiving the provisions of the deficiency judgment act (Laws 1897, p. 98), and providing that in case of non-payment of the note there might he a decree of foreclosure against the mortgaged land, and a personal judgment upon the note, and in case the land was not sufficient to satisfy it that an execution might issue and he levied on other property of the mortgagor. It was further stipulated in the note and mortgage that the debt should be payable only in gold coin of the United States of the present standard value, and that the decree and judgment thereon should so provide, in contravention of the act relating to payment of obligations (Laws 1897, p. 91); also that the purchaser at the foreclosure sale, or his successor in interest, should have possession of the mortgaged land during the time allowed for redemption, hut should apply the rents and profits upon the debt in case it was redeemed, the mortgagor waiving all right to the possession as provided by the act granting judgment debtors right of possession during the period of redemption (Laws 1897, p. 227). The mortgage also provided in case of suit that an attorney’s fee of twenty per cent, upon the amount due should be included in the judgment and in case of a settlement of the suit before judgment an attorney’s fee of $300 should be payable, which calls in question the provisions of the act regulating attorney’s fees (Laws 1895, p. 81). The mortgage recited that the loan was obtained at a lower rate of interest than would have been fixed were it not for the stipulations and the waivers above stated. The lower court found that they were all agreed to, hut held that they were all invalid and that there must be an appraisement, that the land could not be sold for less than eighty per cent, of the appraised value, that the remedy must he confined to the property mortgaged, that it could not he sold before the expiration of one year provided by statute, that the mortgagor should have possession meanwhile, that the debt could be satisfied in any kind of lawful money, and allowed an attorney’s fee of ten per cent, instead of the one stipulated, whereupon the plaintiff appealed.

That some of the questions raised are of paramount importance is apparent. The general situation heretofore and now prevailing is well known and it is permissible to consider it for the purpose of arriving at the intention of the legislature in enacting some of the laws in question. Incident to the development of a new state it had been necessary for people to hire money, and this was done largely upon real estate security, such debts being in the main unsatisfied when said laws were passed, and the mortgages given to secure the same could not be affected thereby. If these laws are valid and must receive the construction contended for in some of the briefs, it is apparent that a large number of citizens will be prevented from negotiating loans and from obtaining a generally prevailing lower rate of interest than that previously existing, with which to satisfy present debts, or perhaps to obtain binding stipulated extensions of time upon such debts, or for the purpose of contracting new loans for building houses or constructing improvements. Homes might'be lost thereby and the development of the state seriously retarded. They were helpless so far as existing mortgages are concerned, for such laws could not affect them injuriously, under both the state and national constitutions. There is no way of compelling new loans or extensions of either foreign or local capital. Realizing the great public interest centered in the decision of these questions and desiring to be as fully enlightened as might be, the court followed a practice sometimes adopted, of inviting other competent attorneys to express their views to the court on said matters, they not being interested in the case. These gentlemen have courteously and ably responded, and, while in important particulars they have disagreed and while it will not be necessary to consider the argument presented upon some lines, it has been much to the court’s assistance. The most important questions are those arising under the act.relating to sales of property under execution, especially the matter of the appraisement, and the deficiency judgment act, as these are the most serious obstacles in the way of obtaining loans- and renewals.

Arguments have been presented in several of the briefs to the end that the provisions of the act relating to sales of property under execution as to the appraisement of land do not apply in the case of mortgage foreclosures. In the case of Swinburne v. Mills, 17 Wash. 611 (50 Pac. 489), without entering upon an extended discussion of that point, the court expressed the opinion that owing to the use of the word “decree,” etc., in the title of the act, and the direct reference to mortgages in section 10 (Bal. Code, § 5281), mortgages were included in the act, and that there must be an appraisement as to subsequent mortgages. There are other expressions of like import, such as sales “upon execution or by order of the court,” in section 2 (Bal. Code, § 5285), and “upon the return of any sale of real estate or execution,” in section 14 (Bal. Code, § 5292). Also, the evident intent of the act as a whole to deal with all sales of real estate at the suit of the private or individual creditor strengthens that conclusion and we follow it here. In the discussion of the Swinburne case, the court, after holding that the provisions of the act relating to an appraisement applied to mortgage decrees as well as to ordinary judgments, held that it was an impairment of the obligation of existing contracts and conld not affect prior mortgages, following a long unbroken line of state and federal decisions, it being a prior mortgage there in controversy. No attempt was made to interpret or construe the act further in that case, as it was not necessary to do so. But the substance of the entire act is largely involved in this case, for a construction of the particular parts questioned renders necessary a consideration of nearly all of it, to some extent, in order to harmonize and give effect to the whole.

It is a wholesome, well established rule that an act should be interpreted or construed to give effect to each of its express provisions, if practicable. In case of conflict, those susceptible of but one meaning will control those susceptible of two, if the act can thereby be rendered harmonious. The general purpose or spirit of the act must always be held in view and absurd or oppressive consequences avoided as far as possible. State, ex rel. Chamberlin, v. Daniel, 17 Wash. 111 (49 Pac. 243); People v. Jaehne, 103 N. Y. 182 (8 N. E. 374). Observing these rules, we enter upon the further consideration of this act. Eirst going back to the necessity of an appraisement, we desire to call attention to section 16 of the act (Bal. Code, § 5296), which seems to have been unnoticed from the briefs. This section clearly recognizes that there are cases where no appraisement is required. To what sales does it apply? Section 3 speaks of an estimated value to be furnished by the judgment creditor, section 4 provides that if the debtor is not satisfied therewith he may except and give his estimate, etc., and section 5 provides that the creditor may demand an appraisement, if he is not satisfied with the debtor’s estimate. But evidently section 16 did not intend to except those cases where no other appraisement than the first estimate, or estimates, was demanded. Because, if the debtor should except to the creditor’s estimate and thus bring about the further appraisement provided for at the instance of the creditor, and section 16 means the appraisement provided for in section 5 (Bal. Code, § 5276), the debtor will be punished for excepting to the creditor’s estimate by cutting off one year of his period of redemption. For, if this is the appraisement that is meant and none is had, the deed would not issue until one year after confirmátion. If an appraisement is had the deed issues immediately after confirmation. There would be no reason for providing two different periods of redemption to fit. these cases and a cogent one against it. If section 630, vol. 2 of the Code (Bal. Code, § 5890), was not repealed so an immediate sale of mortgaged lands could be had, and it should be held that no appraisement was necessary, the same difficulty and inconsistency would remain as to ordinary judgments not constituting a lien until a levy is had, and if mortgaged lands must be appraised and an immediate sale can be had under section 630, the confirmation following right along, the period of redemption would be less than one year. The legislature evidently meant to provide a uniform period of redemption in these cases, whether the land was sold under an ordinary judgment or a mortgage or lien decree of foreclosure. There is no reason why an ordinary judgment creditor should have such a preference over a mortgagee or mechanic seeking to enforce his lien. While the words,“estimated value,” are used in section 3, and “estimate,” “valuation” and “appraisement” in section 4, and “appraisement ” and “ valuation ” in section 5, they must mean the same thing, because no such absurd result with reference to the period of redemption could have been intended, if the appraisement as mentioned in section 16 only applies to the further appraisement provided for in section 5, and no appraisement in section 16 has reference to the estimates in sections 3 and 4 (Bah Code, ’§§ 5274, 5275). These estimates are appraisements—the appraisements of the parties, and it may stop after either the first or the second estimate if the other party is satisfied. The appraisement mentioned in section 5 is the final appraisement unless further proceedings are had under section 8 (Bal. Code, '§ 5279), where the matter seems to be finally and substantially left with the court under the power to compel a fair appraisement, etc. Section 16 in this respect evidently has reference to the next section—17—where it provides for certain sales without valuation. Valuation must mean appraisement or it means nothing, and if 16 and 17 (Bal. Code, §§ 5296, 5297) would control in this respect, in case of a sale by a city of land to enforce a street assessment proceeding the same uniform period of redemption of one year would be provided. Whether these would, or how far they would, control or repeal prior laws fixing different periods of redemption, as for instance section 41, p. 204, Laws 1893 (Bal. Code, ■§ 815), is another question not to be decided here. The intention is one thing, the result another. The intention may or may not be accomplished.

The first provision of section 10 of the act is, “no property shall be sold for a sum less than eighty per cent, of the appraised value thereof except that when property is not capable of partition or division then the same may be sold for the amount of the judgment debt or demand.” The second is, “when the property is capable of partition then so much thereof as may be sufficient only shall be sold to satisfy the judgment.” The third is, “in case of foreclosure of mortgages or other liens nothing shall prevent the sale of the entire premises included within the mortgage or lien.” The first clause provides for a sale for less than eighty per cent, of the appraised value, that is, if the debt should not amount to that much and the property is not capable of partition or division. The second provides that it must be partitioned, if it is capable of being divided, and only enough sold to satisfy the judgment. The third makes an additional provision as to mortgages and other liens. It provides that nothing shall prevent the sale of the entire premises included within the mortgage or lien. The other liens referred to are evidently other special liens, such as mechanics’, material men’s and laborers’, the proceedings to enforce which are largely assimilated to mortgage foreclosures. The provisions of section 10, considered separately, are explicit and are susceptible of but one meaning, according to the expressed intent.' It would seem that the first clause might stand without much qualification, considered with relation to the second'clause. The last clause, if it means anything, according to its specific provisions extends a greater benefit to mortgagees and other special lienors. If there are several parcels or even one piece susceptible of division included in the mortgage, or covered by a mechanic’s, laborer’s or other such special lien, the whole may be sold for the amount of the debt, but not necessarily for a lump sum. The last part of section 2 provides, in case of the sale of real property consisting of several known lots or parcels, they shall be sold separately when demanded by the judgment debtor or subsequent incumbrancer. A subsequent purchaser of a part would doubtless have the same right. This is a well established rule everywhere under both the common law and general statutes, and it cannot be supposed for a moment that there was any intention to provide otherwise in this act.

The first provision of section 10 allowing sales for the amount of the debt must be accorded the right or power expressed, or it is meaningless. To set this aside, if not necessarily in direct conflict with some other express provision would be judicial legislation, and not construction. If hardships result thereunder it is a matter for the legislature to remedy, but we fail to see where *its practical effects are likely to be injurious. Under the first clause an appraisement is necessary. Construed with reference to the second, in case of an ordinary judgment, if a levy has been made upon several distinct parcels or if it is capable of partition or division, it must be divided and each part appraised, but when that is done, then under the first provision, in the case of an ordinary judgment levy, doubtless the tract having the smaller value, not being capable of further partition or division, may be sold for the amount of the debt, although the debt may not equal eighty per cent, of the appraised value. This construction gives effect to each clause of the act, and a direct and salutary effect to the matter of the appraisement. Under that, the sale must be for the full amount of the debt, if the debt is less than eighty per cent, of the amount of the appraisement. Thus the spirit of the act is beneficial and tends to prevent the sacrifice of property. It compels the judgment creditor to bid up to the full amount of his debt, if it is less than eighty per cent, of the appraised value, but it says to an ordinary judgment creditor, perhaps a common laborer, who could not avail himself of the laws giving liens in some cases, but who has obtained a judgment on his demand, where the debtor has but one piece of property not capable of being divided and largely in excess of his demand, that he may sell it for the amount of his debt. Of course he is not required to bid more than eighty per cent, of the final appraised value, if that is less than his debt. If there is no final appraisement he must bid the full amount of the preliminary appraisement under the act, if his debt amounts to that much. There is no hardship in this to the debtor class surely, for a man having a tract of large value under such circumstances could raise an amount sufficient to discharge a small obligation, or an amount sufficient to redeem his property within the time provided in case it is sold. In sales under decrees of foreclosure of mortgages, mechanics’ and such special liens, where the • lien is given upon all the land included therein, by the contract or by the law it may all remain as security for the debt until it is satisfied. Where several parcels are included in the mortgage or in case of a mechanic’s lien covering two buildings built under one contract, while a separate sale of each may be had, the mortgagee or lienor is not required to bid more than the amount of his debt upon all-That is, he may segregate his debt and bid a part on each parcel. He is not compelled to bid more than eighty per* cent, of the final appraised value in any event upon any or all of it. He may buy for less, if his debt is less than eighty per cent. The same rule would apply as to the preliminary estimates as in the case of an ox*dinary judgment, making the amount the limit if the debt amounts to that much. But it would apply as to all of the property here. Othex*wise no meaning could be given to the last clause of section 10, as there may be a separate sale of parts as we harm seen. But under this provision they are all subject to the lien and for the amount bid. In the ease of State, ex rel. Purves, v. Moyer, 17 Wash. 643 (50 Pac. 492), decided a few days after the Swinburne case, it was held that the provisions of the act requiring the levy of an execution did xxot apply in case of mortgage liens, on the principle that the law does not require the performance of an idle thing, and, the decree being a lien upon specific property, there was no necessity for a levy. In view of this holding it has been argued in some of the briefs that the provisions of the act relating to the postponement of sale do not apply, axxd that a sale of mortgaged lands may be had forthwith under sec. 630, vol. 2 of the Code (Bal. Code, § 5890). It was said in that case that the sale must be postponed, axxd we think correctly. While section 19 of the act expressly repeals sections 511 to 521, vol. 2 of the Code, relating to redemption, axxd does not by express declaration repeal other laws in conflict with the act, and although repeals by implication are not favored, it nevertheless follows that conflicting prior laws must yield to later ones, and there would he a conflict here as to the time for redemption if an immediate sale could be had, an appraisement being necessary. Furthermore, it is objectionable to have a sale a year or so before title can be passed. This has been demonstrated under prior laws, and these are to be considered in construing remedial statutes. Consequently, in case of mortgages .and other specific liens, no levy being required, the special execution or order of sale should not issue until the expiration of one year from the time of the rendition of the decree, or, if issued, the sale should not be had until a year has expired, the same as in ease of an execution upon an ordinary judgment, to carry out the spirit and provisions of the act. The stipulations in this mortgage relating to immediate possession and right to rents and profits will be considered later. We have examined all the authorities cited and do not think the appraisement can be waived in the instrument itself. After default, when the situation becomes fixed, the act .permits the debtor to waive a further appraisement upon notice given of the estimation of value by the judgment creditor. This would militate against •construing the act to permit a waiver otherwise, or until default. The form would not be material. The discussion of the rents and profits provision will have a bearing upon this question also, as a measure of public policy to prevent the sacrifice of property.

The act, when considered with reference to itself, let alone other laws, is incongruous and difficult to understand. This is strikingly apparent from the briefs of those who have attempted to construe it. In making this criticism we do not desire to be understood as doing so in any captious spirit, for we appreciate the difficrilties surrounding the legislature when enacting laws, the more or less hurried consideration thereof rendered necessary, the want of individual training or education on such lines by a large number of the members, preconceived notions and tendencies of some, and the practical impossibility of carefully considering particular acts with reference to perhaps numerous other existing laws bearing on the same matters. A friendly sympathy should exist between the different branches of the government working for the common good. The general intention to do right should be accorded to all. Each fills a separate and useful field, but it is not saying too much to say that the greater safety of the people usually rests with the courts. All courts worthy of the name act deliberately upon well established lines, not swayed by popular impulse, and usually upon better information than legislatures have, and with better assistance, for courts are called upon to interpret and construe laws after they have been tested in the light of practical experience; they do not hesitate to correct their own mistakes; and they have a continuing and not a stated, periodical opportunity to do so. It happens occasionally with reference to legislative acts, and it is particularly true of this.act, that the provisions are complicated and hard to reconcile.

If it were not for the clause authorizing a sale for the amount of the debt, it might be a question at least whether the act could stand where it might prevent a recovery at all by requiring the outlay or payment of a further sum by the creditor in addition to his debt in order to have a sale or enforce collection. In the cases examined, it is sufficient to say that we have found none where such a burden has been imposed. Somewhat similar statutes have been enacted in several states, but they vary from this one in essential particulars, and the decisions thereon have not been of much aid to us in construing it. If any of such other acts have provisions authorizing a sale for the amount of the debt, such provisions have not been called to our attention. We have not seen any, but we have not examined particularly, as it is immaterial, for the act before us provides for it in unmistakable terms and this is the act we have to construe. In considering it we have called attention to some matters we have not attempted to decide, but for the purpose of showing that there may be some effect given to each provision, and that they have not been overlooked. The discussion of many points and our construction thereof regarding the act, and section 10 particularly, are rendered necessary under the mortgage here in controversy. The conclusion we have reached, while it differs materially from that contended for or suggested in the briefs attempting to deal with it somewhat in detail, seems to be the only one that will give a legitimate effect to each provision.

We will next consider the act entitled “An act relating to deficiency judgments” (Laws 1897, p. 98). Section 1 (Bal. Code, § 5888a) is as follows:

“That in all proceedings for the foreclosure of mortgages hereafter executed, or on judgments rendered upon the debt thereby secured, the mortgagee or assignee shall be limited to the property included in the mortgage.”

Section 2 repeals all acts or parts of acts in conflict with it.

The discussions in some of the briefs view the act as prescribing a method of procedure. Looking only to the title of the act and the older and later practice relating to the foreclosure of mortgages, this would in a measure be justified. If it could' be held to apply to a matter of practice only and to prohibit deficiency judgments in actions to foreclose mortgages, and the right remains intact to enforce collection of the deficiency in a subsequent suit or to waive the security in the first instance and bring an ordinary action where there is a covenant to pay in the mortgage or a separate instrument contracting to pay, then the question comes up, what measure of public policy can it serve to prohibit a waiver? All agree that if it is a matter of public policy it cannot be waived- by the parties; if a matter of private concern, it may be. It would be hard to conceive of any public interest that would be promoted in requiring a debtor to be subjected to the costs of.two actions. The cases mentioned in 2 Jones on Mortgages, § 1711, as to some states, would not apply here as such distinctions between the practice in equity and at law have been abolished for a long period, and it can hardly be supposed it was intended to take such a decisive step backwards and deprive the court of such power and compel a resort to the old common law procedure in this particular. It would be entirely foreign to the whole history and spirit of our jurisprudence. Consequently, if the power to enforce collection of a deficiency exists, the act as a method of procedure must be intended to confer a private benefit only, and its provisions can be waived. As limiting the method of procedure it is clearly worse than useless.

But the act goes further than this, and is manifestly intended for something else, and is so regarded in some of the briefs. Its language is plain and not susceptible of the construction that it was intended to prescribe a matter of practice only. The body of the act distinctly limits the right to enforce judgments on a debt for which mortgage security has been given, to the property mortgaged, and covers chattel as well as real estate mortgages. "While it might be void in this respect on the ground that the substance is not embraced within the title, graver constitutional questions arise. It affects more particularly local capital and business in relation to which chattel mortgage security is often taken; also small urban loans upon real estate; for it is a well known fact that the greater amount of capital invested in loans in the state belonging to parties residing without the state is invested in loans upon agricultural lands, although loans have been made to some extent upon town property, particularly large loans. It deprives a man to a great extent of the benefit of his general credit, especially if he has but a small amount of property. For instance, if he wanted to hire $500 to build a house or buy tools to pursue a trade, he might find a man who was willing to loan it to him by taking mortgage secruity upon such property as he had with a further reliance upon his individual credit and ability to pay.. He might be capable ■of earning good wages or have considerable property in expectancy, or prospectively. The party having the money might not be willing to loan to him otherwise, but this law says to him that if he takes mortgage security at all, his remedy is confined to that and that only, regardless of the amount of property the debtor may thereafter acquire, and the result will generally be that the loan cannot be obtained. As applied to farm lands there would not be so great an objection to such a law for sufficient security can be taken in the first instance. The value is stable and not generally liable to destruction or serious impairment, but in the case of improved town property it would be different. It is no answer to say that its value could be protected by insurance policies, for it might be damaged in ways a policy would not cover. Even agricultural lands might be damaged by floods seriously in some localities, and damage in various ways might happen without fault of either ■of the parties. Furthermore, the title might prove defective and the debtor have no interest in the property, or in case of a chattel mortgage upon live stock, the stock' might die and thus the remedy be lost entirely, or if it should be held in snch cases that the security having been lost the debt should be regarded as one upon which no security had been taken, then suppose in case of the real estate loan, a small but inadequate interest remained in the debtor after the real state of the title was determined, or in the case of a mortgage upon several horses, all but one should die, here there would be some security left, but mayhap insufficient to satisfy more than a small part of the demand. Under this law the remedy would cease when such property was exhausted.

Here also a class seems to be singled out, arbitrarily, with no apparent reason other than a matter of opinion, as the law only applies to mortgage loans, not to other special liens such as mechanics’ liens or upon debts secured by a deposit of collaterals. A deposit of warehouse receipts would create a lien upon the grain but the creditor would not be limited thereto in case it proved to be inadequate security, while in case of a chattel mortgage taken on like property for a similar purpose another creditor would be. In the case of a lien of a material man furnishing lumber for the erection of a building there would be no such limit, but the groceryman who furnished the necessaries of life and took mortgage security would be so limited. Under this law a man who holds a promissory note for which mortgage security had been originally taken, but where such security has become lost or impaired, is not given the same rights that another citizen is who simply took a promissory note without any security. A law with some general terms may be so hedged in with conditions and specifications as to limit its application to a few citizens and make it class legislation.

Furthermore, that the right to contract with reference to one’s property is a property right is well settled, and any abridgment of the enjoyment of the benefits flowing from a contract not against public policy is void.

In considering the sweeping consequences of this act, it would seem to be a propitious time for a recurrence to fundamental principles. (Constitution, art. 1, sec. 32.) Civil liberty is defined by Blackstone to be

“Ho other than natural liberty so far restrained by human laws (and no further) as is necessary and expedient for the general advantage of the public.” Book 1, p. 125.

Judge Cooley, in speaking of constitutional declarations, mentions

“Those declaratory of the fundamental rights of the citizen; as that all men are by nature free and independent, and have certain inalienable rights, among which are those of enjoying and defending life and liberty, acquiring, possessing, and protecting property, and pursuing and obtaining safety and happiness; that the right to property is before and higher than any constitutional sanction;” Cooley, Constitutional Limitations (5th ed.), p. 45, and that

“In considering state constitutions we must not commit the mistake of supposing that, because individual rights are guarded and protected by them, they must also be considered as owing their origin to them. These instruments measure the powers of the rulers, but they do not measure the rights of the governed. . . . there never was a written republican constitution which delegated to functionaries all the latent powers which lie dormant in every nation, and are boundless in extent and incapable of definition.” Cooley, supra, p. 47.

As if to emphasize this principle our constitution, sec. 30, art. 1, declares that

“ The enumeration in this constitution of certain rights shall not be construed to deny others retained by the people.”

At page 198 of his work, Judge Cooley says:

“The fundamental maxims of a free government seem to require that the rights of personal liberty-and private property should be held sacred,”

and at page 200, quoting approvingly from a Connecticut case, says:

“ ‘With those judges who assert the omnipotence of the legislature in'all cases where the constitution has not interposed an explicit restraint, I cannot agree,’ ”

but at page 205 says:

“Nor are the courts at liberty to declare an act void, because in their opinion it is opposed to a spirit supposed to pervade the constitution, but not expressed in words. When the fundamental law has not limited, either in terms or by necessary implication, the general powers conferred upon the legislature, we cannot declare a limitation under the notion of having discovered something in the spirit of the constitution which is not even mentioned in the instrument,’ ”

and at page 206, speaking of the national and state constitutions, says:

“A legislative act cannot, therefore, be declared void, unless its conflict with one of these two instruments can be pointed out.”

But while this is to be observed, it is apparent that all. declarations, guaranties of right and limitations cannot be specific, and, unless general ones can be applied to such, cases by necessary implication, they would be valueless.

Or, as said at page 432, quoting approvingly from the Dartmouth College case there cited:

“ ‘ By the law of the land is most clearly intended the general law; a law which hears before it condemns; which proceeds upon inquiry, and renders judgment only after trial. The meaning is that every citizen shall hold his life, liberty, property, and immunities, under the protection of the general rules which govern society. Everything which may pass under the form of an enactment is not therefore to be considered the law of the land.’ ”

At page 483 it is said:

“ But a statute would not be constitutional which should proscribe a class or a party for opinion’s sake, or which should select particular individuals from a class or locality, and subject them to peculiar rules, or impose upon them special obligations or burdens from which others in the same locality or class are exempt.”

At pages 486-7 it is said:

“ The doubt might also arise whether a regulation made for any one class of citizens, entirely arbitrary in its character, and restricting their rights, privileges, or legal capacities in a manner before unknown to the law, conld be sustained, notwithstanding its generality. Distinctions in these respects must rest upon some reason upon which they can be defended—like the want of capacity in infants and insane persons; and if the legislature should undertake to provide that persons following some specified lawful trade or employment should not have capacity to- make contracts, or to receive conveyances, or to build such houses as others were allowed to erect, or in any other way to make such use of their property as was permissible to others, it can scarcely be doubted that the act would transcend the due bounds of legislative power, even though no express constitutional provision could be pointed out with which it would come in conflict. To forbid to an individual or a class the right to the acquisition or enjoyment of property in such manner as should be permitted to the community at large, would be to deprive them of liberty in particulars of primary importance, to their ‘pursuit of happiness;’ and those who should claim a right to do so ought to be able to show a specific authority therefor, instead of calling upon others tO' show how and where the authority is negatived.

“ Equality of rights, privileges and capacities unquestionably should be the aim of the law; and if special privileges are granted, or special burdens or restrictions imposed in any case, it must be presumed that the legislature designed . to depart as little as possible from this fundamental maxim of government.'

The state, it is to be presumed, has no favors to bestow, and designs to inflict no arbitrary deprivation of rights. Special privileges are always obnoxious,-and discriminations against persons or classes are still more so.”

As to class legislation, see, also, Tacoma v. Krech, 15 Wash. 296 (46 Pac. 255), where the principle was held to apply.

To undertake anything like a review of the numerous decisions on these constitutional questions would extend this opinion beyond all due bounds. Many of them are cited in the briefs and these can he resorted to by those desiring to do so. The rules above quoted are sufficient to indicate the general grounds and to establish that an act limiting the rights of a citizen to contract with reference to. his property must tend to promote the public good in some way or it is an unwarranted interference therewith. Such laws must be founded on a legitimate reason. Where the reason fails the right ceases. Can such a basis be found here? The act cannot operate as an exemption law. Such laws are sustained on the principle that the state is interested in the retention by each citizen of enough property to enable him to be self-supporting, that he may be enabled to pursue his trade or calling and in order that he may not become a public charge. These matters are left to the legislature, and to say how little or how much may be exempted. Such laws are liberally construed. It clearly cannot serve any such purpose, for a mortgagor may have a large amount of other property above his exemptions aside from that mortgaged. Why should a mortgagee who has exhausted the mortgaged .property not be paid therefrom? It has been heretofore a well settled policy of the law that a man’s property in excess of his exemptions should be subjected to the payment of his debts. It could not he supported as an additional exemption, for it would operate unequally. One man might have only a small amount of such property, another a very large amount. It is no answer to say that the parties have contracted for certain security, for that may be lost or impaired without the mortgagee’s fault. The mortgagor has also contracted to pay the debt in addition to giving the security.

It does not serve the purposes of an insolvency law in any way whereby a man is enabled to turn over all of his property above his exemptions to all of his creditors and start again freed from former liablities, for here he is not absolved from the payment of.his unsecured debts; if the property he then owns is not sufficient to pay them, payment may be enforced against his future acquired property. On the other hand, he may have property largely in excess of enough to pay all of his debts whether originally secured or not. It is not a marshalling of assets or like settlements of estates, as in the case of partnership and individual debts, for the originally secured creditor would have no recourse to the property left after unsecured debts are paid.

It cannot be sustained on the basis that an undue advantage may be'taken of an unwary or needy debtor, where the law sometimes relieves him on the ground of public policy from his own stipulations, often carelessly entered into, or where he might be easily overreached, as in the case of a stipulation in an insurance policy that the agent shall be deemed to be the agent of the insured, for an instance. He has received the amount of the loan, if it is a case of hiring, and he has agreed) to return it. If the mortgage is given to secure payment for the necessaries of life or tools of trade which he has purchased, he has agreed to pay for them, and it is a direct primary part of his contract. It does not tend to prevent the sacrifice of real estate, for the sale must be for the amount of the debt or for eighty per cent, of the appraised value, if it is less. dSTo one would contend that it in any way involves the police power of the state. It rests on none of these grounds. We know of no similar law anywhere and may safely say that none like it has ever been sustained in any state of the Union.

The.results of a turbulent, restless, temporary impulse on the part of the people or majorities in any state or community may sometimes be reflected in contemporaneous legislation, which disregards the rights of individual citizens or classes. In such cases the people need protection from their own hasty acts. State constitutions are designed to serve as a check thereon. If they do not do this they are but a delusion and a snare. When'constitutional rights are in issue, a great responsibility rests upon the courts. If they are unconstitutional, it is a duty to hold them so—one not to be avoided. It is not a matter of choice to act or not, but a duty is imposed which must be discharged. It would seem that if any law could be an unwarranted interference with a citizen’s right to contract, this is one. If this law could be sustained, a law absolutely prohibiting all mortgages, debts or even the sale of property could as well be. We believe the opinion that such laws woiild be constitutional is not generally prevalent. In support of the proposition favored by a few, that legislatures are practically omnipotent and can interfere with the rights of the citizen under the constitution, imaginary cases are sometimes presented, such as if the legislature should pass bills repealing all laws providing remedies and substitute no others. Although the courts could not supply them as to future contracts, if they could hold former ones in force as to prior contracts, and while the constitution would afford but little protection in such cases, it is true, there is yet something inherent in the soeial organization itself which, prevents them, resting in the settled good sense of the people.' That any such thing, so destructive of society, would he done, is not to he thought of. Supposed cases, practically impossible because of their palpable outrageousness, can always be pursued to absurd ends in any direction. Our conclusion is that this law is void as being an undue restraint upon the liberty of the citizen affecting his property rights.

We will next consider the act granting judgment debtors the right to the possession of property during the period of redemption (Laws 1897, p. 227; Bal. Code, § 5299), together with the following clauses contained near the end of the mortgage here in controversy:

“ That the purchaser at the mortgage foreclosure sale,' or his successors in interest, shall have full and complete possession of the mortgaged property during the time allowed for redemption; and that the party of the first part and his successors in interest shall and do hereby waive all right or claim, allowed by statute, to possession during the period of redemption whether such period elapse before or after sale, but that whenever the property is redeemed the rents and profits shall be accounted for to the judgment debtor and credited as payment in part or in whole of the judgment.

“ That from the time of the levy upon the real estate mentioned in the mortgage and the decree rendered in the foreclosure proceedings thereon the judgment credit- or, being the party of the second part or his successors in interest, shall have full and complete possession of the mortgaged premises and be entitled to all rents and profits of the same; but that in case of redemption such rents and profits shall be credited upon the judgment.”

It is contended thát these provisions constitute a mortgage on the rents and profits which is binding. A mortgage may undoubtedly be given on rents and profits. 1 Jones, Mortgages (5th ed.), § 140; Chase v. Ball, 79 Ind. 311. And, if a substantial part of the agreement necessary for the security of the mortgagor, should be enforced. A mortgage in the form of a deed with a separate defeasance, the deed giving immediate possession and the right to the rents and profits, can doubtless be given, and it could be made to take effect upon a default and foreclosure. But it does not follow that such latter stipulations must be enforced in all cases. Courts of equity have always exercised a control over sales of property even to the extent of disregarding the stipulations of the parties. Bents and profits might be applied toward the satisfaction of a mortgage debt in the absence of such a stipulation as is sometimes done where a receiver is appointed before or after default, nor do we say that it would be necessary that a receiver should be appointed therefor in all cases. These are matters over which the court has control and may or may not enforce, as the justice of the particular case seems to demand. The stipulations therefor may be in the nature of forfeitures which are not favored. On a similar principle stipulations regarding the time of payment, where it is not of the essence of the contract, and as to damages, will not always be enforced. 1 Pomeroy, Equity Jurisprudence (2d ed.), §§455, 456; 1 Sutherland, Damages (2d ed.), §§ 283, 284. This is a familiar doctrine. The stipulations in this mortgage as to rents and profits add little, if anything, to the stipulation giving immediate possession after the rendering of the decree. The right to possession would take the rents and the law now would compel the application of the profits to the debt in case of redemption. It may have been but an attempt in this instance to evade the law relating to possession during the redemption period, not at all necessary for the protection of the mortgagee nor a substantial part of the contract. If so, the mortgagor could not waive the right in the instrument ereating the debt, or before default generally, when the situation becomes fixed and he is directly confronted with its effects. There was no showing in this case that the land was inadequate security for the debt. After default the law would permit a waiver. A debtor might waive his exemptions by failing to. claim the same after levy. This law declares a public policy and establishes a salutary rule. "While it operates for the benefit of debtors, it also benefits the public by benefiting a large number of citizens. It is of the same class as those laws preventing waivers in insurance policies relating to agents and otherwise, which are well known, and also declaring after what performance life insurance policies shall be non-forfeitable regardless ■of stipulations. The law permits a mortgage of a homestead, and it might be a matter of public policy that the owner should not be turned out of possession immediately upon foreclosure. He might surrender possession after default and sale, but not be allowed to stipulate therefor in the instrument creating the debt. Greenhood, Public Policy, p. 496 et seq.; Kneettle v. Newcomb, 22 N. Y. 249 (78 Am. Dec. 186); Peugh v. Davis, 96 U. S. 337; Levicks v. Walker, 77 Am. Dec. 187; Mills v. Bennett, 94 Tenn. 651 (45 Am. St. Rep. 763, 30 S. W. 748); Waters v. Randall, 6 Metc. 479; Queen Ins. Co. v. Leslie, 47 Ohio St. 409 (24 N. E. 1072); Cleghorn v. Greeson, 77 Ga. 343. ' These matters must be left with the court, and there is nothing presented in this case to warrant our disturbing the finding of the court in that particular. This also disposes of the stipulation for an immediate sale after decree, as the law fixes the time as heretofore stated.

Regarding the act relating to the payment of obligations (Laws 1897, p. 91, Bal. Code, §§ 3665-3667), I desire merely to announce the conclusion reached by the other members of the court as I understand it, viz.: that it is a subject upon which a state cannot legislate, but belongs exclusively to the general government. In its practical effects it is of no consequence, although the principle is an important one. The precise point as to whether a state can provide that no contract shall be enforced as payable in any particular money, but may be discharged in any kind of lawful money regardless of the stipulations of the parties, in the absence of national legislation permitting such contracts, does not seem to have been decided elsewhere. Personally, from the limited examination I have given it, in view of its present at least inconsequential effect and the opinion of the majority, I can see no objection to sustaining such a law. But it follows from the holding of the other members of the court that this contract must be enforced according to its terms, and that the act is inoperative.

We are all of the opinion that the act in relation to attorney’s fees (Laws 1895, p. 81, Bal. Code, § 5166) must stand. This prescribes a measure of public policy. In the absence of any statute upon the subject it would be a matter over which the courts would have control, at least to the extent of refusing to allow unconscionable fees. It is also well settled that where no attorney has been employed there can be no recovery of an attorney’s fee in the case, and it would follow therefrom that only a reasonable compensation should be allowed where' one is employed. It is intended as a matter of costs to cover the expenses of suit. The practice of allowing the parties to fix the amount of such fees under the former statute was abused more or less. Excessive fees were sometimes fixed, and it is contended in the briefs that mortgages under arrangements made with attorneys were occasionally foreclosed for a much less sum, the mortgagee retaining the balance. This certainly was a reprehensible practice, and one not to be tolerated. The finding of the lower court in this respect is sustained.

The judgment is reversed and the cause remanded for further proceedings in accordance herewith.

Anders and Gordon, JJ., concur.

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Dissenting Opinion

Dunbar, J.,

(dissenting).—I am reluctantly compelled-to dissent in part at least from the majority opinion in this case. So far as the proposition of appraisement is concerned I am forced to the opinion that the law should be held to be -of no force or effect by reason of its incongruities and contradictory provisions. Section 10 (Bal. Code, § 5281) provides that no property shall be sold for a sum less than eighty per cent, of the appraised value thereof except that when property is not capable of partition or division then the same may be sold for the amount of the judgment debt or demand. The same section further provides that when the property is capable of partition then so much thereof as may be sufficient only shall be sold as will satisfy the judgment; and the further provision of the same section is, in case of foreclosure of mortgages or other liens nothing shall prevent the sale of the entire premises included within the mortgage' or lien. It will thus be seen that the second and third provisions of the section are irreconcilably conflicting, for one provides that so much only of the property as may be sufficient to satisfy the judgment shall be sold, while the next sentence as clearly declares that nothing shall prevent the sale of the entire premises included within the mortgage or lien. I heartily concur in all that is said in the majority opinion concerning the relations existing between courts and legislatures, but when the legislature enacts a law the provisions of which are absolutely conflicting within themselves, then I think it becomes as much the duty of the court to hold the law ineffectual for any purpose as it does to hold the law unconstitutional when it plainly violates a constitutional provision. The section which I have quoted is only one example of the conflicting provisions of this law, if we hold that it applies to mortgages and not to execution sales alone; and an attempt to exempt mortgages from the operation of the bill is rendered as unsuccessful by reason of the provisions in succeeding and preceding sections. There are no rules of statutory construction or of logic which can be brought to bear in construing a statute of this kind. It simply becomes a question of guessing as to what was the intention of the legislature, if indeed it does not go further and compel judicial legislation, which is always to be avoided. This is shown by the majority opinion, which was announced after many weeks of painstaking labor, coupled with an earnest endeavor to bring order out of confusion, and to give some effect to the legislative act. But I think the effort, devoted and praiseworthy as it was, has failed, and that the announcement is really the best judgment of the majority of what the law ought to be, a result which, in my opinion, could not be avoided under an attempt to sustain this law, and I think as a matter of public policy it is far better that the laws enacted by former legislators, who were the proper law-making powers, should be held to be the laws governing transactions of this kind than a law which is the result of judicial judgment and announcement. I have read with interest the masterly presentation made by the majority on the deficiency judgment law, but am still constrained to believe that on that subject the legislature had a right to act, and that it did act within the scope of its constitutional powers, and, believing that it is a provision which cannot be waived, I think the law should be sustained. I am also of the opinion that the statute in relation to possession cannot be abrogated or modified by tbe courts, neither do I think it is a provision that can be waived. The majority opinion expresses my views on the money proposition.

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Dissenting Opinion

Reavis, J.,

(dissenting).—I cannot assent to several conclusions announced by the majority of the court in this case, and the importance of the questions involved requires further discussion. The question whether an appraisement of real estate provided for in the act of March 10, 1897 • (Laws 1897, p. 70, Bal. Code, § 5273 et seq.), relating to the sale of property under execution is applicable to mortgages was decided in the case of Swinburne v. Mills, 17 Wash. 611 (50 Pac. 189), and mortgages were there held to be included within the terms of the act. Upon complete consideration we are all agreed that the conclusion heretofore reached was correct. This litigation arises in the construction of the mortgage in suit, which contains among its stipulations upon the part of the mortgagor an express waiver of the law relating to appraisement and time of sale; also the act of March 16, 1897 (Laws 1897, p. 227, Bal. Code, '§ 5299), declaring the mortgagor- entitled to the possession and rents, issues and profits of real property sold under foreclosure during the full period for the redemption of the same; also the act of March 11, 1897 (Laws 1897, p. 98, Bal. Code, § 5888a), prohibiting a deficiency judgment in mortgage foreclosures; also the act relating to the construction of contracts between- parties for attorneys’ fees; and also the act of March 11, 1897 (Laws 1897, p. 91, Bal. Code, §§ 3665-3667), relating to payment of obligations, and declaring that 'the same may be fully satisfied with any kind of lawful money or currency of the United States. I understand the conclusion of the majority is that the waivers contained in the stipulations of the mortgage are void and cannot be enforced, but, as there is some intimation that a different state of facts from those found in the present cause might vest in the court the consideration of the enforcibility of some of the waivers, I desire to make some observations upon this question. The learned counsel for the plaintiff contend that the provisions relating to appraisement and to possession, and the rents, issues and profits in the legislation of 1897 do not in terms prohibit the waiver; that, being solely for the benefit of the debtor, he may lawfully waive the same; that such contract of waiver is enforcible in the courts, and that public policy does not concern itself with those provisions intended merely for the benefit of the debtor. I have examined every case cited upon this proposition in the briefs submitted by counsel. Stockmeyer v. Tobin, 139 U. S. 176 (11 Sup. Ct. 504), was first determined in the state of Louisiana, and the supreme court of the United States merely accepted the construction of the state supreme court in Broadwell v. Rodrigues, 18 La. An. 68, and its ruling in that case is not authority here in any sense, because the uniform rule in the federal supreme court is to accept the construction of a state statute by the court of last resort of the state without reference to the correctness of such construction. As the Louisiana case just mentioned and also New Orleans Mutual Ins. Co. v. Bagley, 19 La. An. 89, are cases presented where the waiver of an inquisition or appraisement law has been held a valid contract, it is instructive to review the reasoning of the Louisiana court in an earlier case, Levicks v. Walker, 15 La. An. 245 (77 Am. Dec. 187). The court there held such a waiver void, and observed:

“Parties regulate their own conduct by their stipulations, but they cannot prescribe rules of proceeding for public officers, nor demand that the courts of justice shall depart from tbe usual modes of enforcing their decrees. If, before judgment, the creditor may stipulate the manner in which the same shall be executed, the principle will sanction an endless variety of modes of execution of judgments.”

But in the case of Broadwell v. Rodrigues, supra, the court again had brought before it the question of waiver in connection with the construction of section 2 of article 11 of the civil code of Louisiana, which had not been before them in the former case. Construing this section of the code, the court said:

“ The law of France, in its practical application, differs but little from the law of Louisiana, and both rest on the maxim of the Koman law, which lays it down as a rule that every one is at liberty to renounce what the law has established in his favor and interests but himself.

“Est regula juris antiqui omnes licentiam habere his quae pro se indicia sunt renunciare. L. 29, G. de Pactis. But individuals cannot by their conventions derogate from the force of laws made for the preservation of public order or good morals. I. G. de Pactis, 2; 3 L. J/R, §§ <ie R. T. L. 38, §§ de Pactis, 2, 1J¡-.

“Marcedé, commenting on the last rule cited observes: * Get article en nous disant qu’on ne peut par convention d'eroger auz lois dont il parle, nous indigne assez qu’on pourra, par a moyen, d’eroger aux autres.’ Vol. 1, p. 671. And the jurisconsults who compiled our Code, while they adopted verbatim, the article 6 of the French Code, in the article 11 of our own Code, have added to that article a second paragraph which is a legislative recognition of Marcade’s doctrine, and has removed much of the uncertainty of the French article. (See, also, the doctrine of Toullier, hereinafter referred to.)

“ The second paragraph of article 11 of our Code, is as follows: ‘But, in all cases in which it is not expressly or impliedly prohibited, individuals can renounce what the law has established in their favor, when the renunciation -does not affect the right of others, and is not contrary to the public good.’ ”

The court then says:

“ Aided by the light which the French jurists have afforded us in solving this mooted queston, . . . this we apprehend to he the general rule, as relates to the renunciation of private rights. The exceptional cases are those which trench on public order; and, within those exceptional cases, is not embraced, as we conceive, the stipulation in the mortgage granted by the plaintiff in injunction.”

It will thus be seen that the present Louisiana doctrine does not in any sense overturn the principle first declared in 15 La. An., supra, but is founded on a provision of' the Louisiana statute, which had theretofore been construed by the Trench jurists, and such construction was accepted by the court. I do not therefore think the cases cited from Louisiana are authority upon the construction of the statutes under consideration here.

The case of Stockwell v. Byrne, 22 Ind. 6, is founded entirely upon estoppel of the judgment debtor who consented that an officer having charge of a writ of execution should sell without appraisement, and the court held such estoppel good. The case of Baker v. Roberts, 14 Ind. 552, was a suit on a promissory note containing a waiver of valuation laws, and the decision was based upon a statute which declared:

“ Upon any instrument of writing, made in this state or elsewhere, containing a promise to pay money without relief from valuation laws, judgment shall be rendered and execution had accordingly.”

It will be noted that the Indiana cases cannot be in point because special statutory permission authorizes the waiver of valuation laws. The case of Wray v. Miller, 20 Pa. St. 115, was where the defendant was held estopped by a waiver after sale. The sale was made without dissent and the opinion states the presumption was that defendant received the purchase money. In Mitchell v. Freedley, 10 Pa. St. 198, the defendants had estopped themselves after judgment and sale had been made. Thus the Pennsylvania cases are not in point, but it may be appropriately observed here that the courts of Pennsylvania stand almost alone in their construction of homestead and other exemption laws, and against the almost universal weight of authority in this country. But a Pennsylvania statute of 1836 seemed to authorize the waiver of inquisition or appraisement. On the validity of a waiver of the right to possession, several Iowa cases were cited, but I find in the last of those cases cited the decision based upon the Iowa Code of 1873, section 1938, which declares in the absence of stipulation to the contrary the mortgagor of real property retains the • legal title and right of possession thereto. Manifestly the statute of Iowa determines conclusively the construction of such contracts for waiver of the right to possession.

It is a well recognized legal rule that constitutional or statutory benefits may be waived unless such waiver violates some principle of public policy. A number of the states, among which are Pennsylvania, Indiana, Louisiana, Iowa, Kansas, Nebraska and Illinois, in their early history adopted what have been very pertinently termed appraisement or valuation laws. Every authority from those states, both in the state and federal courts, has sustained the validity of these laws when applied to subsequent contracts. Having thus reviewed the authorities presented by counsel to sustain the validity of a contract of waiver of appraisement and found that in no instance other than when authorized by statute such waiver was enforced, we may now examine some of the numerous and very eminent authorities which hold that analogous provisions in other laws cannot be waived by private stipulation. Our statutes, it may be mentioned, nowhere authorize a waiver of any of the provisions of the laws under consideration.

Wall v. Equitable Life Assur. Society, 32 Fed. 273, was an action on an insurance policy in the United States circuit court. It involved the question as to the force to be given to a Missouri statute as against tbe express language of the policy. Tbe court by Judge Brewer declared:

“ It evidently intended by its (tbe state’s) legislation to provide a fixed and absolute rule applicable to all cases —absolute and universal, because if it applied only in cases in wbicb tbe policies were silent, or if it could be waived or changed, a child can see that it would protect only so far as tbe insurance companies were willing. So, although no words of penalty are attached, no express denial of tbe right to waive, in fact no words of negation in any direction, yet it seems to me fair to say that tbe affirma.tive language of this statute discloses a public policy, wbicb no court ought to question or refuse to enforce. . . . Tbe legislature has by this language declared a rule in respect to forfeitures in life insurance policies; it has thus established tbe policy wbicb it believes should obtain in this state, and, though sitting on tbe federal bench, it is my duty to administer tbe laws of this state in tbe spirit in wbicb they were enacted, and to uphold both their letter and their spirit.”

This doctrine is also approved by the supreme court of the United States in Society v. Clements, 140 U. S. 226 (11 Sup. Ct. 822), and other cases in that court. State v. Edwards, 86 Me. 102 (29 Atl. 947, 41 Am. St. Rep. 528); Havens v. Germania Fire Ins. Co., 123 Mo. 416 (45 Am. St. Rep. 570, 27 S. W. 718); Reilly v. Franklin Ins. Co., 43 Wis. 449 (28 Am. Rep. 552). In the last case the court says:

“ Bow the law is well settled, that where a statute is founded upon public policy, a party cannot waive its provisions even by express contract.”

In the case of Minneapolis Threshing Machine Co. v. Beck, 95 Iowa, 725 (63 B. W. 637), it was held that:

“ Under Code, § 3100, providing that ‘ personal property levied upon and advertised for sale on execution must be appraised before sale/ etc., such appraisement cannot be waived.

“ Though it was stipulated in a chattel mortgage that the mortgagor waived appraisement, and the mortgagee was present at the foreclosure sale, the mortgagee is not precluded from moving to set aside the sale on the ground that there was no appraisement, as is required by statute.”

The case of Latimer v. Equitable Loan & Inv. Co., 81 Fed. 776, involved the right of withdrawal of a stockholder in a building association after giving thirty days’ notice thereof, and to receive back the amount paid in by him together with his shares of the profits. The court held:

“ The statutory right of a stockholder in a building association to withdraw therefrom after giving 30 days’ notice, and to receive back the amount paid in by him, together with his share of the profits (Rev. St. Mo. § 2810), is one evidencing a public policy, and cannot be waived, even by an express declaration in the certificates that there shall be no right of withdrawal until 100 months from the issuance of the stock.”

A strong analogy is also found in the uniform rule that the equity of redemption cannot be waived in a mortgage or in any other instrument executed at the same time. This has been the settled law for over two centuries in English and American courts. The supreme court of the Unites States in Peugh, v. Davis, 96 U. S. 332, discussing the waiver of the equity of redemption, said: undoubtedly be made to tbe mortgagee. There is nothing in the policy of the law which forbids the transfer to him of the debtor’s interest. The transaction will, however, be closely scrutinized so as. to prevent any oppression of the debtor.” Teal v. Walker, 111 U. S. 242 (4 Sup. Ct. 420).

“ This right cannot be waived or abandoned by any stipulation of the parties made at the time, even if embodied in the mortgage. This is a doctrine from which a court of equity never deviates. Its maintenance is deemed essential to the protection of the debtor, who, under pressing necessities, will often submit to ruinous conditions, expecting or hoping to be able to repay the loan at its maturity, and thus prevent the conditions from being enforced and the property sacrificed.

“ A subsequent release of the equity of redemption may

The language quoted is an answer to the proposition affirmed by counsel for plaintiff that the public is not concerned as to how much or when the property of the debtor is taken in foreclosure. The whole reasoning relative to the right to waive the equity of redemption and the principle upon which it is founded is ápplicable to the construction of the statute before us. The rule also- held by the courts of equity from time immemorial that the mortgagor cannot waive at the time of the execution of the mortgage the right to the possession of the mortgaged premises during the period of redemption is analogous. This is for the special benefit of the mortgagor and the authorities have always been at one in refusing to enforce such waivers. But it has been argued that the statutes of 1897 relating to appraisement do not evince a public policy or the intention of the legislature to declare a uniform rule relative to sales under execution and foreclosure of all real estate at judicial sales. Section 3, Laws 1897, p. 71 (Bal. Oode, § 5274), is mandatory in its language:

“It shall be the duty of the judgment creditor . . . when the judgment is to be satisfied in whole or in part from real estate, or any interest therein, to deliver to the sheriff a true statement, signed by himself or attorney, containing a description of the property levied upon, the estimated value of each separate description, and serve a copy upon the judgment debtor or his attorney.”

Thus it will be seen that before the sheriff can take a single step under his execution after levy the appraisement must be made by the judgment creditor; it is a part of the process as necessary as the notice of sale; but if it were desirable to derive tbe intention of the legislature from surrounding circumstances and conditions then existing, it is also easy to deduce the rule of public policy. For a few years preceding the legislative session of 1897 it was a matter of universal knowledge in this state that real property exposed to sale under execution was sacrificed. A severe financial stringency and absolute dearth of money in general circulation destroyed the value of real property, and at such sales generally the only bidder was the judgment creditor, who in effect could and did bid so much as he chose for property, and thus the mortgage which, when executed, was deemed secured by property of thrice its value frequently was purchased by the mortgagee for a small portion of the amount secured, and a deficiency judgment left standing against the mortgagor for the balance, often the larger portion of the claim. It is plain to my judgment that the legislature intended by these statutes to prevent the undue sacrifice of property. Whether the statute is the best that could be framed for that purpose or whether it is wise legislation are matters which the courts cannot control. The question at the outstart ought to be Is the statute constitutional? I understand the court is agreed that the legislature has the power to enact such laws. I have examined the numerous cases cited by counsel upon the question of the constitutionality of this statute, and my conclusion is that with the exception of the mechanic’s lien and slaughterhouse cases all the cases cited are those involving class legislation, and as • such would probably be held void under art. 1, sec. 12,- of our constitution. These cases hold the acts under consideration void for the reason that they limit the right to contract to certain classes, to-wit: Shaver v. Pennsylvania Co., 71 Fed. 931 (railroad employes); Low v. Bees Printing Co., 41 Neb. 127 (59 K W. 362, 43 Am. St. Rep. 670), (all laborers except on farms); Commonwealth v. Perry, 155 Mass. 117 (28 N. E. 1126, 31 Am. St. Rep. 533), (weavers); State v. Goodwill, 33 W. Va. 179 (10 S. E. 285, 25 Am. St. Rep. 863), (laborers in mines and factories); Millett v. People, 117 Ill. 294 (7 N. E. 631, 57 Am. Rep. 869), (coal miners); Leep v. St. Louis Ry. Co., 58 Ark. 407 (25 S. W. 75, 41 Am. St. Rep. 109), (railroad employes); In re Jacobs, 98 N. Y. 106 (50 Am. Rep. 636), (cigarmakers in tenement houses); Ex parte Kuback, 85 Cal. 274 (24 Pac. 737, 20 Am. St. Rep. 226), (employes on public contracts); In re Eight Hour Law, 21 Colo. 29 (39 Pac. 328), (laborers in mines, factories and smelters); In re House Bill No. 203, 21 Colo. 27 (39 Pac. 431), (coal miners).

The statutes here in question embrace all those entering into the relation of debtor and creditor, which is not only a relationship based upon its own peculiar characteristics, but is one recognized from the earliest times and under all forms of constitutions as subject to legislative control without the suspicion of being answerable to the charge of class legislation. The objection to the constitutionality of the provisions relating to appraisement being untenable, the important duty of the court is their construction.

2. And here I am unable to agree with the construction of the majority of the court. I concede that section 10 of the appraisement act is inartificially framed, and there is much difficulty in the harmonious construction of the several provisions included in the section. Section 2 provides, when the sale is of real property and consisting of several known lots or parcels, they shall be sold separately when demanded by the judgment debtor or a subsequent incumbrancer. This is merely declaratory of an' ancient equitable rule in mortgage foreclosures. The act is clear in the procedure on the appraisement. It is simple and direct. If the judgment creditor’s appraisement is satisfactory, notice of sale is given; if not satisfactory to the judgment debtor, then the appraisers are appointed by the clerk of the court and they shall appraise the real value of the property or interest of the judgment debtor therein. Section 8 (Bal. Code, § 5279) seems to commit finally the fairness of the appraisement and the propriety of another valuation of the property to the court. The difficulty in construction is found in section 10 (Bal. Code, § 5281). I think this section may be fairly read as follows: no property shall be sold for a sum less than eighty per cent, of the value thereof. All that follows in section 10 are exceptions or provisos. The well recognized canon of statutory interpretation, that- in the event of absolute repugnancy between a proviso and the body of the section and intention of the whole act, the proviso must yield, ought to be applied here, and the exceptions or provisos taken together would qualify the section that the property cannot be sold for less than eighty per cent, of the appraised value, the whole thereof may be sold if necessary to pay the debt at eighty per cent, of the appraised value, but if a portion of the property appraised at eighty per cent, will pay the debt no more can be sold. State, ex rel. Chamberlin, v. Daniels, 17 Wash. 111 (49 Pac. 243). As I view the construction given to section 10 by the court, the whole appraisement is so emasculated that nothing of value is left of it. The plain intention of all the preceding sections of the act is the appraisement of real property so as to avoid its sacrifice at the sale, and, while such legislation relating to execution sales is novel in this state, it is by no means new in the general legislation of our sister states. Very similar provisions relative to appraisement, as we have seen heretofore, existed in a number of the states, and one uniform intention pervaded all of them. There is nothing specially different in the results to the judgment creditor in our statutes from those found in the statutes of the other states. In fact we have in our prohate procedure long recognized a control over sales of property for the satisfaction of debts. An appraisement is mandatory in all administration sales, and the court is by statute authorized to set aside any sales, if in its_ judgment upon a hearing a larger amount can be obtained for the property; and without any statutory provision the courts in the exercise of their equitable powers continually in receiverships fix limits upon the bids which shall be received for property offered at sale. This court has approved such an order when made by a superior court of property under mortgage foreclosure in the custody of its receiver! All the arguments used against the fairness of the statute are equally applicable to probate sales and to receivers’ sales. As seen, section 8 of the statute reposes in the superior court the final determination of the fairness of the appraisement. Imaginable cases may be suggested where the appraisement might incidentally postpone the sale; but I think the general presumption of fairness in judicial procedure and that judicial officers will perform their duty will relieve the statute of any imputation of an intention to postpone collections on execution or to require anything but a fair sale of property.

3. The act relating to deficiency judgments (Laws 1897, p. 98) is clear and mandatory in its provisions and therefore not the subject of construction, and the only question litigated here is its constitutionality. As a mere question of procedure in a foreclosure suit it ought to be controlling. By legislative authority only in this state has the power to enter a deficiency judgment in a foreclosure of a mortgage been found. Without such statutes for authority to enter a deficiency judgment in the same proceeding, or where large discretion is given by equity rules, I think no court has entered such a judgment. But the broader question of the constitutionality of the statute which limits the recovery of the debt to the mortgage security has been fully discussed by counsel and by the court. It is objected that the statute is obnoxious, first, to article 5, section 1, and article 14, section 1, of the constitution of the United States, and article 1, section 3, of the constitution of Washington, in substance as follows: “ Ho person shall be deprived of life, liberty or property without due process of law;” and second, to article 14, section 1 of the federal constitution, “Ho state shall make or enforce any law that shall abridge the privileges or immunities of citizens of the United States.” Section 10 of article 1 of the federal constitution, that “no state shall pass any law impairing the obligation of contracts,” has been cited. The latter citation is so manifestly not in point here that I do not deem it necessary to refer to it again. The first provision does not say that the state may not deprive a person of life, liberty or property and stop there, but declares that it shall not be done “without due process of law.” The state is continually depriving persons of life, liberty and property, but it must be done according to due process of law.

“ Due process of law does not mean a statute passed for the purpose of working a wrong.” Cooley, Constitutional Limitations (1st. ed.), p. 353.

These words are held to be synonymous with the words “law of the land.” Ibid., p. 352, and this means— *

“ General public- law, binding upon all the members of the community under all circumstances, and not partial or private laws, affecting the rights of private individuals or classes of individuals. Millett v. People, 117 Ill. 297 (7 N. E. 631, 57 Am. Rep. 869).

And it is also that law which hears and condemns only according to recognized judicial usages. The second constitutional inhibition against making or enforcing any law which will abridge the privileges or immunities of citizens of the United States has been frequently considered by the supreme court of the United States. In Butchers’ Union Slaughterhouse, etc., Co. v. Crescent City, etc., Slaughterhouse Co., 111 U. S. 746 (4 Sup. Ct. 652), Mr. Justice Bradley observes:

“ I hold that the liberty of pursuit—the right to follow any of the ordinary callings of life—is one of the privileges of a citizen of the United States.”

And the application of this article of the federal constitution has generally been directed against some discrimination by the state in favor of its own citizens and against other citizens of the United States. . The protection of life, liberty and property and the enforcement of private rights has been uniformly held by the federal supreme court to devolve upon the state. The state unquestionably may regulate contracts between its citizens and control them as best accords with its own views of public policy, and it has always done this, and this policy may be changed at the will of the state so long as it does not impair the obligations of prior contracts. The questions relating to its policy have been in all our state constitutions committed to the legislative department of the government. In fact I believe almost without exception the English speaking race has entirely placed these questions within the domain of legislation. They belong to the field of political economy, morals and the general science of government, and people differ materially in their views upon them. At one time the legislature might deem it sound policy to encourage speculative loans of capital in the state. It might deem any exemption laws unwise. It might, as has heretofore been the rule, by legislative enactment in this state provide that the possession of real property should go to the mortgagee before the period for redemption expired without such mortgagee’s accounting for rents, issues and profits when redemption was made. It might, as was the law for some time of this state, abolish the equity of redemption in mortgages and in redemption of real estate sold at execution; and the court has tmiformly sustained such enactments as being peculiarly within the power of the legislature. The state may also appropriately through the legislative department change such rules. It may deem speculative loans objectionable. It may deem exemption laws wise. It may determine that the equity of redemption in mortgage foreclosures shall be preserved in the future. It may provide for a redemption of property sold on execution or it may provide that contracts may be made between the borrower and lender of money at such rates as they choose; but if it should adopt other views it may appropriately through its legislative department limit the right to borrow money to a certain rate of interest, and may, in my judgment, regulate and control the contract of mortgage and limit the amount and value in security embraced in a mortgage and the amount of the recovery thereon. It has been held that a state might forbid the assignment out of the state of claims against the recovery of which the exemption laws of the state of the residence of the parties would be a protection: Sweeny v. Hunter, 145 Pa. St. 368 (22 Atl. 653); declare after what performance contracts of insurance shall be non-forfeitable: Equitable Life Assur. Society v. Clements, 140 U. S. 226 (11 Sup. Ct. 822); regulate the weight and price of bread: Mobile v. Yuille, 3 Ala. 140 (36 Am. Dec. 441); restrict the removal and sale of cotton in seed: State v. Moore, 104 N. C. 714 (17 Am. St. Rep. 696, 10 S. E. 143); declare that railroad and telegraph companies cannot by private agreement divest themselves of liability for acts as snch: Liverpool & G. W. Steam Co. v. Phenix Ins. Co., 129 U. S. 397 (9 Sup. Ct. 469). But many illustrations might be offered of the principle that the regulation and control of contracts, and the procedure for their enforcement, are not inhibited by either of the two provisions of the federal constitution heretofore mentioned. I apprehend the true rule can be formulated thus: If a public

policy is obviou’s from the statute and it is not arbitrary or partial its validity is assured. The public policy must be such as to induce the legislature to act, and its motives must not be merely whimsical and arbitrary, and the law cannot be merely partial but must affect all alike. Whether the policy inducing legislative action is wise does not come within the province of judicial inquiry. When the statute fairly discloses such a policy the act is valid, unless contravening some other constitutional provision. I think the policy of the act prohibiting a deficiency judgment in mortgage foreclosures is fairly deducible from the evident intention of the several acts which have been under discussion here and all enacted by the same legislature. We have seen the legislature repeal the law giving to the mortgagee or judgment creditor the immediate possession after sales of real property without any liability to account, in the appraisement law to secure fairer sales of real property on execution and to limit the recovery of a debt secured by mortgage to the property included in the mortgage. The conditions existing in the state were before the legislature. Large numbers of its citizens, many of them active and energetic business men, were retired from business or from any productive occupations because of existing deficiency judgments against them after mortgage foreclosures. The same considerations from this point of view might affect the legislative mind that could be adopted in the enactment of a state insolvency law, and the unbroken current of judicial authority in this country now sustains the validity of such insolvency laws enacted by the states, when they do not impair prior contracts. The state is interested in the activity and capacity of its citizens, and if any considerable class of them be deprived of their capacity to engage in productive occupations or business there is so much loss to the public. Something here of the same principle as underlies the exemption laws is found. A just motive existing in the legislative intent relieves the act of any objection that it is arbitrary. The next objection that is suggested to this law is that it is class legislation, but no authority has been called to our attention which would suggest such an objection. Mortgages have been the subject of legislative control both in the terms of the contract and in the procedure enforcing the mortgage contract throughout our history. It is a general and natural division, the subject of legislation. There can be no doubt of the power of the legislature to fix the rate of interest on money. That is a matter exclusively within its policy. This rate may be made so low as to largely interfere with the power to borrow money. In a number of the states the power to mortgage a homestead is forbidden, and in the state of Texas, notably, the real estate homestead is so large that, as has been observed by some jurists, it is a practical inhibition upon the mortgage generally of real property in that state. Yet though the constitutionality of this law has been challenged, it has uniformly, so far as my examinations have extended, been sustained. I understand, without legislative sanction, the right to mortgage chattels without taking possession is denied in many jurisdictions. The rule in the state of California seems to be that only such chattels as are specified in the various legislative acts are subject to mortgage unless the possession be delivered to the mortgagee. In the case of Bronson v. Kinzie, 1 How. 311, the supreme court of the United States had under consideration a law passed in the state of Illinois which provided that the equitable estate of the mortgagor should not be extinguished for twelve months after sale on decree, and which prevented any sale of the mortgaged property unless two-thirds of the amount at which the property had been valued by appraisers should be bid therefor. The question before the court was as to the impairment of existing contracts by the retroactive provisions of this statute. The court by Mr. Chief Justice Tauey declared:

“ Mortgages made since the passage of these laws must undoubtedly be governed by them; for every state has the power to prescribe the legal and equitable obligations of a contract to be made and executed within its jurisdiction. It may exempt any property it thinks proper from sale, for the payment of a debt; and may impose such conditions and restrictions upon the creditor as its judgment and policy may dictate. And all future contracts would be subject to such provisions; and they would be obligatory upon the parties in the courts of the United States, as well as in those of the state.”

This I understand to be the established rule enforced by the supreme court of the United States.

4. The effect of the statute making the contract for specific money soluble in lawful money of the United States involves a federal question and seems to have been determined by the controlling authority—the supreme court of the United States. The power of the state to declare a legal tender is limited to gold and silver coin. All “lawful money ” of the United States is not a legal tender for private obligations by the laws of the United States; but under the grant of power to coin money and regulate the value thereof the federal supreme court has, I think, decided that the question relating to final payment in private contracts is one exclusively of federal jurisdiction and vested in congress. The legal tender and gold contract decisions, taken in connection with the recent case of Woodruff v. State of Mississippi, 162 U. S. 291 (16 Sup. Ct. 820), are controlling here. The jurisdiction of the federal court would not in this case have been sustained on any other principle than complete federal control of such contracts. This conclusion I think is manifestly apparent from both the majority and minority opinions given in the case. A different question would be presented in contracts made by the state or municipal corporations controlled by the state.

My conclusions are that, with the exception of the solution of the contract in suit in lawful money of the United States, the judgment of the superior court is correct.

Case Details

Case Name: Dennis v. Moses

Court Name: Washington Supreme Court

Date Published: Feb 15, 1898

Citation: 18 Wash. 537

Docket Number: No. 2737

Court Abbreviation: Wash.