Frank v. Colonial & United States Mortgage Co.

86 Miss. 103 | Miss. | 1905

Whitfield, O. J.,

delivered the opinion of the court.

' The question which must control this case is simply this: Is the power of sale vested in a trustee in a deed in trust or in a mortgagee in a mortgage with power of sale revocable by the death of the grantor? Or, to phrase it differently, is such a power a power coupled with an interest? And, similarly, is the power of substitution of a new trustee granted in a trust deed or mortgage to the beneficiary a power coupled with an interest or not? In our view, both are solvable on the same *113principle. It may be stated at the outset as a conceded principle that at the common law and in all the states of this union in which the mortgagee or the trustee in a deed in trust is regarded as having an estate in the thing conveyed, legal or equitable, such power of sale and substitution are both powers coupled with an interest, and so not revocable by death. Learned counsel for appellant fully concede this, but they insist that since a mortgagee in a mortgage and a trustee in a deed in trust have been uniformly held in this state not to have any, the slightest estate, legal or equitable, in the thing conveyed, and since, also, as a consequence, it has been uniformly held in this state that such beneficiary in a deed of trust or mortgage has a mere right to resort to a sale of the thing conveyed for the payment of his debt, a mere lien or security upon the property conveyed, and not an estate in it, therefore we should now hold that such power of sale in a trust deed or mortgage is a mere naked power, not coupled with an interest, and hence revocable by the death of the grantor. It is doubtless true that this court has held that the beneficiary in a trust instrument or a mortgage has no estate, legal of equitable, in the thing conveyed, and the writer of this opinion desires to express now what he has long held — the firm opinion that all these decisions are utterly unsound, and that it has heen a misfortune for the jurisprudence of the state that such view should ever have been declared. The legal title is expressly conveyed in such instruments. Both the trustee and mortgagee may maintain ejectment, after condition broken, on the strength of that legal title; and without now pausing to point out the various incidents connected with the idea that the mortgagee or trustee has no legal or equitable estate in the thing conveyed, it is enough now to record my conviction that this view is an unsound one, leading, to absurd conclusions. It is no answer to say that the recovery referred to in ejectment is simply for the purpose of enabling the plaintiff to pay off his debt, etc. He never could have recovered in *114ejectment without a perfect legal title, and we are thus forced into the remárkable attitude of holding that, although one had a perfect legal title — of course only for the purpose of b)ie instrument — he nevertheless did not have any legal estate at all in the thing in which he had such legal title. As said, I have never assented to this view, and only followed it in Adams, State Revenue Agent, v. Colonial Mortgage Company, 82 Miss., 263 (34 South. Rep., 482; 100 Am. St. Rep., 633), because of an unbroken line of authorities asserting it. The statute itself provides that the legal title shall remain in the grantor until condition broken, clearly implying that after condition broken it is in the trustee or mortgagee: This court, notwithstanding that holding, has held in three cases expressly that such a power of sale is a power coujded with an interest. In Walker v. Brungard, 13 Smed. & M., 763, this court say: “A deed of trust is but a power, coupled, perhaps, with an interest.” In Hyde v. Warren, 46 Miss., 29, the court said: “The grant of the power is irrevocable; it does not cease on the death of the mortgagor.” In Clark v. Wilson, 53 Miss., 128, 129, the court, on this point, say: “A power to the mortgagee to sell is an example of the former kind. Being annexed to the estate, it is not personal, or in gross, and would not terminate at the death of the mortgagor”—citing 1 Caine’s Cas., 15. The case cited is Bergen v. Bennett, 2 Am. Dec., 281, and it may be said that there has never been any improvement on the statement of the .law on these points made by Chancellor Kent in this case. Chancellor Kent says: “It is admitted that a naked authority expires with the life of the person who gave it; but a power coupled with an interest is not revoked by the death of the grantor. In my opinion the power contained in the mortgage is of the latter description. A power simply collateral and without interest, or a naked power, is when, to a mere stranger*, authority is given to dispose of an interest in which he had not before, nor hath by the interest creating the power, any estate whatsoever. But when power is given to a person who derives, *115under tbe instrument creating tbe power or otherwise, a present or future interest in tbe land, it is then a power relating to the land. These last powers are subdivided into powers annexed to tbe estate and powers in gross. Both are considered as powers with an interest, because tbe trustee of tbe power has an interest in tbe estate as well as in tbe exercise of the power. If, as one of tbe old cases expresses it, tbe person clothed with tbe power bath at tbe same time an estate in the land, tbe power is not collateral, because it savors of tbe land. Tbe power now in question answers exactly to this definition of a power with an interest, because the mortgagee has at tbe same time a vested estate in tbe land; and it does not answer at all to tbe definition of a power simply collateral, for that is but a bare authority to a stranger, who has not, or ever bad, any estate whatsoever. . . . There is a very striking analogy between tbe case of a devise of land to executors to be sold and a mortgage of lands with power to sell. In both-cases tbe estate passes to tbe person clothed with tbe power, and in both cases tbe power is given in trust to answer a specific purpose. I cannot discern any distinction between tbe cases sufiicient to render tbe power in the one instance naked and in tbe other coupled with an interest. It is not a power with an interest in tbe executors, because they may derive a personal benefit from tbe devise; for a trust will survive, though no ways beneficial to tbe trustee. It is tbe possession of tbe legal estate, or a right in tbe subject over which the power is to be exercised, that makes the interest in question; and where an executor, guardian, or other trustee is invested with the rents and profits of land for the sale or use of another, it is still an authority coupled with an interest, and survives. It has been thus frequently adjudged. This case is also still more analogous to the one of a conveyance of property by way of pledge or in trust with an agreement for tbe mortgagee to sell in case of default. This is a practice known in tbe English law, and it was taken for granted by the Lord Chancellor in the case of Tucker v. Wilson, 1 P. Wms., 261, that, *116where there existed' such an agreement, the mortgagee might sell after the death of the mortgagor. It seems to have been admitted not to have been competent for the mortgagor to revoke this authority to sell, because it was granted for the benefit of the mortgagee. He might, perhaps, embarrass the execution of the power by a subsequent mortgage or judgment, but the power would still remain in full force, although the lands in the hands of the purchaser under the power might become subject to such subsequent lien. In short, this power is altogether different from that of a mere letter of attorney given to a stranger to the estate, as in the instance given by Coke of a letter of attorney to make livery of seizin. 1 Inst., 52b. This is revocable by the grantor at his pleasure in his lifetime, and is absolutely revoked by his death. - The grantee of such a naked power, having no interest connected with the power, has, of course, no interest affected by the revocation. The present power is, in every view, distinct from the other. I conclude, therefore, that the power to sell was not revoked by the death of the mortgagor.”

We have quoted thus much from the opinion of Chancellor Kent both because it is the authority on which Justice Simrall rested his opinion on this point in Clark v. Wilson, showing that the court held in Clark v. Wilson that such a power is coupled with an interest, and also because of the masterly clearness of the opinion itself. Great reliance is placed on Hunt v. Rousmanier, 8 Wheat., 114 (5 L. ed., 589), for the opposite view, but this arises from a misconception of that case. In Hunt v. Rousmanier there was no mortgage or trust deed, but a mere letter of attorney; and the whole point of the decision was that, since nothing had been conveyed by the letter of attorney — as from its nature there could not be — and since all that the attorney could do was to execute the power granted in the name of the grantor, his principal, he could not, after the death of his principal, of course, execute the power in the name of his principal then dead. This is plainly shown by the argu*117ment of Mr. Wheaton for the appellant, especially at p. 186 of 8 Wheat. (5 L. ed., 589), and by the opinion of Marshall, C. J., at p. 203 of 8 Wheat. (5 L. ed., 589), where the 'court say: “This general doctrine that a power must be executed in the name of the person who gives it — a doctrine founded on the nature of the transaction — is most usually ingrafted in the power itself. Its usual language is that the substitute shall do that which he is empowered to do in the name of his principal,” and these words “in the name of his principal” are italicized by Chief Justice Marshall himself. And so because, and only because, the instrument in that particular case was the old common-law letter of attorney, not possible of execution save in the name of the principal, it was said that, the principal dying, the agent, of course, could not execute the power in the name of a dead principal. The court expressly pointed out in the first sentence of the opinion, after stating the case, that “the instrument contained no words of conveyance or of assignment, but was a- simple power to sell and convey.” But, further, the argument made in that case by Mr. Wheaton was that there was an agreement for a mortgage of the vessel in the case before the letter of attorney was executed; and his insistence whs (which prevailed) that the court should execute the intention of the parties, and decree as if the mortgage had been entered into; he arguing, and Chief Justice Marshall plainly assenting to, the proposition, that, if it had been a mortgage, and not a mere letter of 'attorney, the power of sale would have been a power coupled with an interest. Chief Justice Marshall says on pp. 205 and 206 of 8 Wheat. (5 L. ed., 589): “A power to A. to sell for the benefit of B. may be as much a part of the contract on which B. advances his money as if the power had been made to himself.” And he held that such a power was a power coupled with an interest, saying, “Every day’s, experience teaches us that the law is not as the first case put would suppose. We know that -a power to A. to sell for the benefit- of B. ingrafted on an estate conveyed to A. -may be exercised at *118any time, and is not affected by the death of the person who created it. It is, then, a power coupled with an interest, although the person to whom it is given has no interest in its exercise. His power is coupled with an interest in the thing which enables him to execute it in his own name, and is therefore not dependent on the life of the person who created it.”

It will thus be seen that Hunt v. Rousmanier is a clear authority, in those states where it is held that the mortgagee or trustee has an estate or interest in the thing conveyed, that such power to sell is a power coupled with an interest. We are therefore driven to decide whether such power of sale is a power not coupled with an interest, in this state, because of the holding that a mortgage or a trust deed is a mere right to resort to the thing for payment of the debt, and that the mortgagee or trustee has no estate, legal or equitable, in the thing conveyed. As pointed out, this court has already three times held that it is a power coupled with an interest. What is held by1 authority elsewhere on this proposition? In Am. & Eng. Ency. Law (1st ed.), vol. 26, p. 875, it is said: “Under the common-law doctrine that a mortgage vests the legal title in the mortgagee a power of sale conferred upon him as such is a power coupled with an interest in the land to which it relates, and therefore irrevocable by any act or change of circumstances on the part of the mortgagor, and upon principle the power is equally coupled with an interest in the land, though possibly not in the strictly technical sense of the term, under the equitable doctrine that the mortgagee has merely a lien to secure his debt. The correct principle would seem to be that, whether the mortgagee’s interest be considered as in the land itself or only in the proceeds, the power is essentially coupled with an interest, and not a mere naked power subject to revocation. It is accordingly held by most authorities that the death of the mortgagor does not revoke or suspend the power, or require the mortgagee to wait for the appointment of an administrator. ... In a few states, however, the doctrine prevails that, as the mortgagee *119has no estate in tbe land, a power of sale to him is not coupled with an interest, and therefore does not survive the death of the mortgagor or grantor in a trust deed. It is said to be a ‘collateral’ power, and one which the mortgagor himself cannot revoke during his lifetime.” In the second edition of the same work the doctrine is more emphatically sated, vol. 28, p. 757, et seq.j, and the array of authorities there quoted is quite decisive of the view that, even in states which hold like ours, such power is, by the overwhelming weight of authority, held to be one coupled with an interest. It is to be noted that in the second edition of this work it is said that “the power of sale in the deed of trust or mortgage is almost universally declared to be coupled with an interest, and therefore irrevocable.” And an examination of the cases in Colorado, South Carolina, and Georgia shows that those states are weakening in their view of the matter. For example, the later view in Georgia is well represented by the case of Ray v. Hemphill, 97 Ga., 566 (25 S. E., 485), where the court say: “In the case of an ordinary agency there is generally no reason why the principal should be precluded from revoking thé agency. The agent is the servant of the principal, and the law compels no man to employ another against his will or to continue to repose trust and confidence in another after he has seen fit to withdraw it. If the revocation is unreasonable, and constitutes a breach of contract, whereby the agent sustains injury, the law affords him redress in an action for damages. In this case, however, the relation of the parties was not merely that of principal and agent. The power in question concerned the disposition of property, upon which the person on whom the power was conferred held a lien as security for a debt, and was a part of the contract creating the security, and was granted for the purpose of effectuating that security, and it was expressly stipulated as a part of the consideration moving to the mortgagee that the power should be irrevocable. Upon principle as well as authority it seems *120to us clear that, whether such power is revoked by death or not, the grantor should not be permitted to revoke it himself.”

This is the precise ground on which we put it in the case of Allen v. The Alliance Company, 36 South. Rep., 287, where we said: “And it may further still be said that, whén reference is had to the nature of this delectus personae doctrine, this doctrine of reposing confidence and trust because of known integrity, on the one hand, and, on the other, to the nature and legal constitution of a corporation, it ought to be manifest that the doctrine can have no proper application to a corporation, but that a court should always hold on this point (construing this sort of power vested in a corporation by this sort of instrument) that the grantor did not give the power to the corporation under the influence of the delectus personae doctrine, but that the power so to appoint was purchased by the corporation as a part of the consideration named in the instrument, to be irrevocably exercised by it.” And in Darrow v. St. George, 8 Colo., 598 (9 Pac., 791), the court expressly says of that case this “is not a case where a valuable consideration has been advanced or paid for an agency.” It should be specially noted that the Georgia supreme court in Ray v. Hemphill pointed out clearly that the relationship between the grantor and the trustee or the mortgagor and mortgagee, so far as regards this power of sale, is not merely that of principal and agent, but is, as we pointed out in Allen v. Alliance Trust Company, a relationship arising out of the contract, under which the power of sale is based on the consideration for the contract, and is to be irrevocably exercised by the beneficiary. The last clause in the Ray v. Hemphill case, supra, authorizes the prediction that Georgia will fall into line upon more mature consideration.

In the case of Muth v. Goddard (Mont.), 72 Pac., 626, the court said: “From the foregoing authorities it clearly appears to us -that the power of sale included in the trust deed in- question is- a power coupled with an interest. But, irrespective of this, the legal title to the property having passed to the trustee *121and' from tbe mortgagor, the death of the latter could in no wise affect the trustee’s right to carry out the trust which the mortgagor had reposed in him.” And to the same effect are Carter v. Slocomb, 122 N. C., 475 (29 S. E., 720; 65 Am. St. Rep., 714); Reilly v. Phillips (S. D.), 57 N. W., 780—where the court said: “Appellants insist that the rule of these cases is not applicable in this jurisdiction, because, under our law1, the mortgagor retains the title to the estate mortgaged contrary to the law prevailing in most of the states whence these decisions come; but we apprehend that upon principle that fact ought not to make any difference in respect to the survival of the power.”

Another observation important to be noted is this: That in Illinois, and perhaps some other states, it is by statute expressly provided that the power of sale in a trust deed or mortgage shall be revoked by the death of the grantor, and that the decisions on this subject in Texas are the result of a statute in that state. See these two statutes referred to in Am. & Eng. Ency. Law (2d ed.), vol. 28, 760d. In the same volume, at p. 758, it is said (paragraph 1) : “The exercise of the power is consequently not affected by an attempted revocation on the part of the grantor, or by any other act on his part.” See specially the cases referred to in note 3 to that clause. Jones, in his work on Mortgages (6th ed.), vol. 2, sec. 1792, says: “The death of the mortgagor does not revoke a power of sale, even though the mortgage is held merely to give a lien on the property. This, being coupled with an interest in the estate, cannot be revoked or suspended by the mortgagor. Of course, after his death the power cannot be exercised in his name, but the authority, to execute it in the name of the grantee continues. The execution of the power is the grantee’s act by virtue of the power. It is not a mere power of attorney.” He refers to the contrary view in sec. 1794 as held in “some states,” but in the authorities cited to support the statement made by him in see. 1792 it is easy to be seen that the modern doctrine is plainly as stated by *122him in. tbe text. Whether, therefore, the mortgagee or the trustee is esteemed to take, by the conveyance, a legal or equitable estate in the thing conveyed or not, the sounder and better view manifestly is the one pointed out by us in the case of Allen v. Alliance Trust Co., supra—to wit, that the trustee or mortgagee in such instruments is not a mere ordinary agent at all; that the power to sell is based on- the consideration on which the contract is bottomed, is part of that security and that contract, and is hence stipulated for and bought by the beneficiary in the instrument, whether trust deed or mortgage, and is a power coupled with an interest, and hence not revocable by death.

Without particular notice of the other assignments, which have received our careful consideration, it is enough to say that we do not regard any of them as tenable o'n the terms of this instrument and the facts of this case.

And the decree is affirmed.