Kreyling v. O'Reilly

97 Mo. App. 384 | Mo. Ct. App. | 1902

GOODE, J.

-On July 13, 1876, David Kreyling and Augusta Kreyling, his wife, executed a deed of trust to M. B. O’Reilly, trustee, to secure a note therein described. Under the power of sale contained in that deed, O’Reilly, the trustee, sold the property on October 18, 1901. After paying the indebtedness secured by the instrument and expenses of the sale, a surplus of $1,626.55 remained in his hands. This surplus is claimed by the plaintiffs as the widow and heirs of Kreyling, and is also claimed by the defendants Benjamin and William Horton as the beneficiaries of a junior deed of trust executed by said Kreyling and wife on April 23, 1877. After the sale, Augusta Kreyling and her children instituted suit against O’Reilly for said surplus, and as the present defendants were asserting their claim thereto, O’Reilly appeared and filed a bill of interpleader in which he stated he did not know and could not determine without hazard to himself to whom the surplus belonged, and set out facts respecting the foundation of the two hostile claims. Thereupon he was discharged and the plaintiffs and defendants ordered to interplead, which they did, their pleadings showing that their claims are based on the facts above stated.

Against the claim of the defendants Plorton, the plaintiffs pleaded several statutes of limitations; the presumption that the debt secured by the ITorton deed of trust was paid, more than twenty years having elapsed before they sought to collect it; that defendants’ deed of trust shows on its face that it was never acknowledged by Augusta Kreyling in the manner required by the law as it existed when said deed was executed, and that hence her right to the surplus proceeds is superior to defendants’ lien.

The note given by Kreyling to the Hortons and secured by their deed of trust was undoubtedly long since barred by the statutes of limitations.

None of the defenses succeeded, but "the court below gave judgment' in favor of the respondents for the money which the interpleader had paid into court.

"We think the defendants’ case was barred by the special limitation statutes, first enacted in 1891, in regard to the. enforcement of mortgages and deeds of trust after the obligations they were given to secure are barred by the statute of limitations.

Those two statutes are as follows:

“No suit, action or proceeding under power of sale to foreclose any mortgage or deed of trust executed hereafter to secure any obligation to pay money or property shall be had or maintained after such obligation has been barred by the statutes of limitations of this State. ’ ’

“Nor shall any such suit be had or maintained to foreclose any such mortgage or deed of trust heretofore executed to secure any such obligation after the expiration of two years after the passage of this act.” R. S. 1899, secs. 4276, 4277.

The first of the above sections has no application to the present case because the defendants’ deed of trust was executed prior to its enactment and by its terms it only affects securities subsequently executed. It is quoted because it throws light on the next section, which we think controls the decision of this case.

To avoid the bar of the second section, defendants' counsel contends that this suit is not one to foreclose a mortgage or deed of trust as contemplated therein, and hence is not within the intention of the law. Strict foreclosure suits, wherein the mortgagor was given a fixed time in which to discharge his debt on pain of losing his equity of redemption, are obsolete in this State, suits for the sale of mortgaged property under judicial decree and the application of its proceeds to the discharge of- the debt secured, having taken' their place. We are of the opinion that this action is one of the latter kind and within the spirit of said section if not within its letter.

The defendants as beneficiaries of the second deed of trust, acquired the right of Kreyling, the grantor, to the surplus proceeds arising from the sale of the land under the first deed of trust and are entitled to enforce the lien of their security against said surplus, as far, but no further, than they would be entitled to enforce it against the land itself. In fact, the surplus money -realized by the sale of land under a mortgage or deed of trust is treated as realty and not as -personalty in respect to the rules of law governing its disposition. It remains real estate in the hands of the mortgagee or trustee to be disposed of according to the law of real property. Moses v. Murgatroyd, 1 Johns. Ch. (N. Y.) 119; Fagin v. Loan Assn., 55 Minn. 437; Dunning v. Ocean Nat’l Bank, 61 N. Y. 497; Beard v. Smith, 71 Ala. 568; Trust Co. v. Url, 110 U. S. 718.

Where a person dies seized of real estate incumbered by a mortgage, as Kreyling did, and the mortgage is thereafter foreclosed, the surplus is regarded as realty and goes to the heirs of the decedent instead of to his personal representatives. Wiltsie on Mortgage Foreclosures, sec. 704; Kinner v. Walsh, 44 Mo. 69, and other cases cited supra.

If there had been no sale under the first mortgage, it is plain an action could not have been maintained to foreclose the Horton mortgage, because such an action would have been within the very terms of the limitation created by section 4277. It would be a narrow and inconsistent construction of the law to .hold that, while it bars an equitable suit against the land itself after the debt secured is barred, such a suit, nevertheless, may be maintained against the proceeds of the land if it happens to be sold. In either case, the thing sought to be done is the same, namely; to collect the debt secured by the enforcement of the security.

It is unnecessary for us to consider in this case the purpose of the Legislature in so phrasing section 4277 that, instead of reading “no suit, action or proceeding under power of sale to foreclose any mortgage or deed of trust” etc., as does section 4276, the words “action or proceeding” are omitted; or to determine whether section 4277 would bar the sale of mortgaged property under a power given in that instrument. That said section bars the present proceeding, we consider clear.

Defendants’ counsel argues that section 4298, Revised Statutes 1899, when read in connection with section 4277, compels a construction by which the application of the latter section will be limited to suits of foreclosure, and actions like this one be limited only by the statutes limiting the recovery of real estate; which statute requires an adverse possession for ten years to bring its bar into operation, and no adverse possession of the land covered by the defendants’ deed of trust was. shown by plaintiffs.

Section 4298 is as follows:

“The provisions of this chapter shall not apply to any action commenced, nor any cases where the right of action or entry shall have accrued before the time when this chapter takes effect, but shall remain subject, to the laws then in force.”

Just what the effect of that séction is we will not endeavor to determine as we think it unnecessary to do so in the present case. It has been held to leave a cause <ff action subject to any limitation law in. force; when it (said section 4298) was first adopted, even though the right of action had accrued before such'limitation law was adopted; thus making the words “then in force” refer to the date of the enactment of said section and not to the date of the accrual of the right. Billion v. Walsh, 46 Mo. 492; Gilker v. Brown, 47 Mo. 105; School Directors v. Georges, 50 Mo. 194.

The section in question had been on our statute books many years before section 4277 was passed, and if the latter, when reasonably -interpreted, is repugnant to the former (we do not say it is) the more' recent enactment is the governing law: and this rule of construction is not altered because both sections were incorporated in the Revised Statutes. Paul v. Brown, 98 Mo. 675; State ex rel. v. Heidorn, 74 Mo. 410; State v. Clarke, 54 Mo. 17; Roth v. Gabbert, 123 Mo. 20. We have ruled that the reasonable interpretation of section 4277 is that the limitation-therein contained applies as well to suits to enforce a mortgage or deed of trust by proceeding against the proceeds of the mortgaged land, as to those which proceed against the land itself, and hence must rule that section 4298 has no bearing on the case.

The constitutionality of section 4277 is assailed by defendant’s counsel, who argues that it reduces the time within which mortgages executed before its passage could be foreclosed after the debts secured by them are barred and thereby impairs the obligation of contracts; that prior to its passage the law was that mortgages might be foreclosed, notwithstanding the debts were barred, at any time until there had been a possession by the mortgagor or those claiming under him, adverse to the mortgagee for ten years; that said rule of law became a part of the contract between Kreyling and the Hortons and in so far as the Act of 1891 alters the rule, the act is void.

Two years were allowed by the act within which deeds of trust' and mortgages previously executed might be enforced by suit. That was a reasonable time and puts the act outside of the constitutional inhibition against the enactment of State laws which impair the obligation of contracts. Terry v. Anderson, 95 U. S. 628; Koshkonong v. Burton, 104 U. S. 668; State ex rel. v. Hager, 91 Mo. 452.

Another argument made in opposition to the validity of section 4277 is, that it is retrospective in effect. So it is in a sense, but not in the technical sense which invalidates laws or restricts their operation to future affairs. That statute, of course, affects securities given before it was adopted and was designed to do so; but it only affects the remedy and not the right. It deprived no security-holder of a vested estate or interest. All deeds of trust and mortgages remained as valid as before, and those previously given, whether the debts they secured were barred or not, were still enforcible and so continued during two years. Our bill of rights prohibits the enactment of laws retrospective in their operation. Const. of Missouri, art. 2, sec. 15. This does not mean that no statute relating to past transactions can be constitutionally passed; but merely that none can be passed which tells on such' transactions to the substantial prejudice of the parties interested. Society v. Wheeler, 2 Gall. 105; Leete v. Bank, 115 Mo. 184. The agreement in regard to the retrospective character of the section but brings forward in another guise the.point that it impairs the obligation of contracts; but as said, the law deals with the remedy, not the obligation.

We can not dispose of the appeal without deciding these constitutional questions and our jurisdiction is unaffected by them; because the record does not show defendants raised them below, though their brief states they did. But that is not enough to oust the jurisdiction of this court. Lang v. Calloway, 134 Mo. 491. To do that a constitutional question must be raised in the trial court and the benefit of some constitutional provision denied to the party who claims it. Parlin & Orendorff Co. v. Hord, 145 Mo. 117. We do not see how the question can always be shown by the record to have been thus raised and decided, nor how it can be done in this case. The defendants bad no reason to make the constitutional point Tby a declaration of law, as this is an equity cause; they succeeded in the trial court on other grounds and, therefore, had no cause to raise it by motion for a new trial. But as our jurisdiction is not challenged, and as by the decisions cited we seem to have jurisdiction, we have retained the case.

We granted permission to the plaintiffs to amend their abstract of the record by authority of the ruling of the Supreme Court in Lane v. Railway, 132 Mo. 4.

We know of no principle on which the defendants are entitled to recover and the judgment in their favor is therefore reversed and the cause remanded with the direction to' the circuit court to enter judgment for the plaintiffs for the surplus proceeds of the sale.

Bland, P. J., and Barclay, J., concur.