Lincoln Savings Bank v. Ewing

| Tenn. | Dec 15, 1883

Cooper, J.,

delivered the opinion of the court.

Bill by a mortgagee to remove a cloud from the title of the mortgaged land by a judgment lien claimed by the defendant. The chancellor granted the relief sought, and the Referees have reported in favor of affirmance. The exceptions open the whole case.

On October 25, 1876, D. M. Perkins conveyed the land in controversy, with other property to the Lincoln Savings Bank in mortgage to secure certain specified debts, conditioned to be void if the mortgagor ■should pay off the debts on or before the 25th of October, 1878, and with a power.of sale in the mortgagee in case of default. The conveyance includes a large and valuable tract of land of over 800 acres, a number' of horses, mules, cattle and hogs, and 150 barrels of corn raised on the land that year. The possession arid use of the property are not reserved to the grantor by the terms.of the deed. But the deed contains this clause: “If any time before the 25th of October, 1878, it should he thought best from any cause to sell any of said property, said bank, through its agents, officers or attorneys, is authorized and hereby empowered so to do, first getting my consent to do the same.”

The bill was filed August 25, 1878, by the Lincoln Savings Bank, upon the title and interest acquired under the foregoing mortgage to the tract of land therein mentioned, for the purpose of enjoining the defendant, who is a judgment creditor of D. M. Perkins, from selling the land by virtue of an execution on. his judgment, upon the ground that the sale would be a cloud upon complainant’s tifie. The defendant demurred to the bill, but the demurrer was overruled. It is now insisted that the demurrer should have been sustained because the complainant, as a mortgagee, cannot file a bill to remove a cloud from the title of the mortgaged land, and because the mortgage deed “is void upon its face.”

The first of these grounds is based upon the assumption that a mortgagee before condition broken has no legal estate in the land, and, .therefore, has no claim to the aid of the court to remove a cloud from the title. For. this position a large number of decisions of the courts of our sister States is cited, and a still larger number might easily have been adduced. But in this State it has been invariably held that the legal title to the property conveyed vests in the mortgagee, and he is entitled to the immediate possession, unless the mortgage otherwise provides: Maney v. Kil-lough, 7 Yer., 440; Henshaw v. Wells, 9 Hum., 568; Vance v. Johnson, 10 Hum., 214. And the legal title being in the trustee or mortgagee, he may file a bill to have a receiver appointed before default for the protection of the property: Bramley v. Tyree, 1 Lea, 531; Hamilton v. Wynne, 2 Leg. Rep., 287. He may go into equity in order to settle conflicting rights to the property which affect its value: Carpenter v. Huddleston, 7 Hum., 452; Peck v. Peck, 9 Yer., 301. And, like a vendee or other person having the legal title, he may file a bill quia timet, in a proper case, against a judgment creditor of the mortgagor to prevent a cloud upon the title: Merriman v. Polk, 5 Heis., 717. The jurisdiction of equity to aid a creditor in removing obstacles in the way of a sale of the debtor’s property, so as to prevent a sacrifice, is beyond question: Kerr v. Kerr, 3 Lea, 224.

The contention that the mortgage deed is void upon its face is based upon the fact that it undertakes to convey corn which is consumable in its use. If, in addition, there had been a reservation in favor of the grantor of the possession and use of the property conveyed, that would have rendered the mortgage fraudulent in law: Trabue v. Willis, Meigs, 584; Wade v. Green, 3 Hum., 554. In the absence of such a reservation, the. circumstance that some of the property conveyed was consumable in the use and was retained by the grantor would be only a strong badge of fraud as matter of fact, not law: Darwin v. Handley, 3 Yer., 502; Simpson v. Mitchell, 8 Yer., 417; Masson v. Anderson, 3 Baxt., 290, 308.

It is urged in argument that the complainant, being a corporation, is incapable of taking to itself a mortgage or trust conveyance, because unable to comply with the provisions of the Code, sec. 1974, by taking the required oath before proceeding to execute the trust. But a corporation may take and hold estates as a trustee or mortgagee, and execute trusts in which it has an interest within the scope of its business: Perry on Trusts, secs. 42, 43. And a failure or inability to comply with the provisions of the statute would not affect the validity of the deed, or divest the title vested by it: Vance v. Smith, 2 Heis., 343; Young v. Cardwell, 6 Lea, 171.

The merits of the case turn upon the effect of certain facts on the lien of the defendant’s judgment. On November 16, 1871, Samuel Watson, as trustee of the Bank of Tennessee, recovered a judgment in the circuit court of Lincoln county, against D. M. Perkins and Cornelius Allen, for $14,509.58. Perkins alone appealed in error from this judgment. On March 5, 1873, the judgment was affirmed by this court, and judgment rendered in favor of Watson for the debt and interest against Perkins, and his sureties of appeal, Cornelius Allen and W. H. Moore. Execution issued on this judgment at once, and on the 19th of the same month Perkins caused to be tendered to the plaintiff, Watson, the. amount then due upon the judgment in the circulating notes of the Bank of Tennessee known as the new issue, paying the costs in lawful money. On the same day, Watson gave to Perkins an acknowledgment in writing, that the amount of tbe principal and interest then due upon the judgment had been tendered to, and refused by him. On April 12, 1873, Perkins filed a petition stating these facts, and asking that further proceedings on the judgment be stayed, and obtained from one of the judges of this court an order staying the proceedings accordingly, upon his giving bond with security as required. The circulating notes thus tendered were not brought into court with the petition, and there is testimony tending to show that this was not done at the request of the clerk of this court, who was reluctant to receive the funds, and with the assent of Watson. On May 11, 1875, Watson received and receipted for $5,000 of “new issue” notes paid by Perkins on the judgment. On January 5 1878, the death of Watson was suggested in the cause and admitted, and the judgment of March 5, 1873, was revived in the name of Robert Ewing, receiver of the assets of the Bank of Tennessee. On the same day, a hearing was had upon the petition of Perkins, and it was adjudged by this court that the issues of the Bank of Tennessee, which had been tendered to Watson, were receivable in payment of the judgment, and that the sureties on the supersedeas bond were not liable thereon, the main object of the petition, which was to ascertain whether the judgment could be paid in the “new issue,” having been attained. But this court at the same time rendered a judgment in favor of Robert Ewing, receiver, against D. M. Perkins, and W. H. Moore one of the defendants, as the surety of appeal of Perkins, in the judgment of March 5, 1873, the other defendant surety being then dead, for the amount of that judgment with interest, after deducting the payment of $5,000 as aforesaid, and awarded execution. The court adjudged that the judgment was dischargeable in any of the issues of the Bank of Tennessee, and. directed the clerk in the entry to endorse upon the execution that it was so payable. The execution upon this judgment was issued July 4, 1878, levied upon the land in controversy August 5, 1878, and enjoined by an injunction sued out under the present bill during the same month.

By statute a judgment obtained in any court of record of this State, in the county where the debtor resides at the time of rendition, shall be a lien upon the debtor’s land from the time the same was rendered, subject to be lost unless an execution be taken out and the land sold within twelve months after the rendition of. the judgment: Code, sections 2980, 2982. Code, section 2983, is: “ If the sale within the twelve months is prevented 'by injunction, writ of error, appeal in the nature of a writ of error,, or other adverse proceeding in court, the lien will be continued, provided the creditor shall issue execution and sell the land within one year after the injunction is dissolved, the judgment or decree affirmed, or other adverse legal proceeding dismissed.”

The original judgment of YYatson against Perkins was. in an action at law in the circuit court of the county of the defendant’s residence, upon a bill of -exchange, and the only modes of bringing the case to this court were by appeal in error or writ of error. In either case the lien of the judgment would be-continued upon affirmance: Cooper v. Savings Bank, 5 Baxt., 636; Bangees v. Partee, 1 Leg. Rep., 87. So the supersedeas of an execution, either as ancillary to a writ of error for appeal, or eoram nobis, would be within the statute: Brinkley v. Welch, 7 Lea, 278; ''Planters’’' Bank v. Union Bank, 5 Hum., 304. Prima faeie, therefore, the original judgment lien of the defendant would be kept alive by the adverse proceedings which prevented its enforcement within the year.

It is insisted that the judgment of affirmance of 1873 was not a lien on the land in controversy, because it is provided by statute that where a bank obtains judgment against any person, no clerk or justice shall issue execution thereon until two years from its rendition, unless the bank offers to endorse on the execution that its notes will be taken in payment of' such execution: Code, sec. 1829. But if it be conceded that the statute applies to the judgment in question, and that its provisions are not merely directory to the officer authorized to issue the execution, the lien of the judgment would not be affected if executed within the year, and non constat that the endorsement would not have been made, and the land sold in the time prescribed, if the sale had not been prevented by the adverse proceedings. And this is-also the answer to the irregularities alleged to exist in the execution actually issued. The court cannot know that these irregularities and omissions would not have been cured, and the land sold in time if' the adverse proceedings had not been instituted. The ■statute expressly saves the lien if the sale is prevented by such proceedings.

It is also argued that inasmuch as the Supreme Court in the supersedeas case rendered a new judgment against Perkins, instead of directing an execution to issue from the old judgment, there was no lien of the new judgment to attach to the land previously conveyed to the. complainant. But a new judgment is always rendered by this court upon the affirmance of the judgment of an inferior court brought up by an appeal in the nature of a writ of error, or by a writ of error. It is a mere renewal or continuance of the old judgment. And it has never been supposed that the lien, which is expressly saved by an affirmance, would be affected by the form of entry. The form of entry upon the dismissal of a superse-deas cannot have any greater effect. It was discretionary with the court to dismiss the supersedeas, and leave the original judgment in force, or to render a new judgment in affirmance of the old. The lien would be saved by the statute in either case.

The Referees hold that the tender of the “ new issue” by Perkins to Watson in March, 1873, had the effect to discharge the lien of the judgment. They put their report upon the ground that this court, in its adjudication upon the supersedeas, treated the tender as continuous, and, under the circumstances, as a full and perfect legal tender. In this conclusion the Referees are clearly mistaken. If the court had considered the tender as continuous, they would have held it to be a release of the interest and costs as to Perkins, although not a discharge of the debt: Gracey v. Potts, 4 Baxt., 395. And if they had considered the tender, under the circumstances, as full and perfect, they 'would have held it to be a release of the sureties of appeal against whom the original judgment was also rendered. On the contrary, this court gave judgment against Perkins and Moore, his surviving eo-debtor, for the full amount of the former judgment, with interest, less only a payment made long after the tender. The adjudication plainly was that the judgment-debtor was entitled to pay the judgment in the “new issue” of the Bank of Tennessee, and therefore the supersedeas was properly sued out, but inasmuch as the debtor had not kept the new issue, and brought it into court, the creditor was entitled to the benefit of his original judgment, after deducting only the actual payment made. To this extent the supersedeas was in effect dismissed. So far as Perkins is concerned, the defense of tender was not made out, and the judgment lien was saved.

The question remains, whether what was done operated to discharge the judgment lien on the land in controversy in favor of the complainant. The conveyance of Perkins to the Lincoln Savings Bank is only to secure pre-existing debts. The bank is therefore not a bona fide purchaser for value, and there is no pretense of want of notice. Both parties are creditors of a common debtor whose equities are equal, and whose legal rights must turn upon diligence and strict law. The defendant occupies no fiduciary relation to the complainant that compelled him to active diligence, or forbade him from refusing a tender or releasing securities.

At common law, which has always been the law of this State, a tender never was a bar to the debt, and . only stopped interest and costs if always kept ready,, and brought into court: Bac. Abr. voce Tender; McNairy v. Bell, 1 Yer., 502; Keys v. Roder, 1 Head, 20; Miller v. McKinney, 5 Lea,. 93; Code, secs. 2926, 2940, No. 9. The tender in question did not, therefore, pay the judgment, nor, as- we have seen, stop the interest thereon. It has been held,, however, that where a tender is expressly made to redeem a chattel held as security for a debt, and is-wrongfully refused, the special property of the pledgee in the chattel ceases: Ball v. Stanley, 5 Yer., 199. The same rule has been applied to other liens or chattels, where title passes without writing. At common law, a mortgage was regarded as an estate upon condition, and a tender upon the day necessarily satisfied the condition and terminated the mortgage. A tender after the day could have no such effect, for the estate had then become vested: Currier v. Hunt, 9 Allen, 522; Shields v. Lozear, 34 N. J., 504. And equity, as said by Lord Eldon, never would compel a creditor to part with his security till he has received his money: Postlethwaite v. Blythe, 2 Swanst., 256. In those States which treat á mortgage as passing no title, the authorities are in direct conflict as to the effect of a tender on the mortgage: 18 Am. Law Beg., 182; Jones on Mort., sec. 886, et seq. It bas never been held in any State which treats a mortgage as passing title to realty, that a tender would divest the title.

The ease before us presents the question whether the lien of a judgment can be discharged by a tender which leaves the judgment itself in full force. For, as we have seen, this court has already adjudged in the supersedeas proceedings that the tender did not affect the judgment. A judgment is the highest form of security for a debt, and the lien is made to inhere in it. Payment would seem to be, and so it has been held, the only act by which the defendant can discharge the lien. The doctrine of tender, strictly speaking, is not applicable; for a tender cannot be made after action commenced: Keith v. Smith, 1 Swan, 92. And the remedy of the debtor, if a tender be refused, is to apply to the court to restrain the sale, and enter satisfaction of the judgment by the money brought in: Jackson v. Law, 5 Cow., 248, affirmed 9 Cow., 641; Tinney v. Woolston, 41 Ill., 219; Freeman on Judgments, sec. 384. The reason is, says an eminent judge and professor, that a judgment, being a debt of record, is not discharged by a tender, as it is, in no case, the effect of a tender to discharge the debt. The judgment could only be extinguished by actual satisfaction. As long as it remain in force it must, by its very nature, as prescribed by statute, be a lien on the land. If its existence continue, it cannot be deprived of its ordinary and usual characteristics. The. case is very different with a pledge or mortgage, or lien of any kind collateral to the debt: Per Dwight, Com., in Tiffany v. St. John, 65 N.Y., 314" court="NY" date_filed="1875-05-05" href="https://app.midpage.ai/document/tiffany-v--st-john-3585853?utm_source=webapp" opinion_id="3585853">65 N. Y., 314, 320. We think the.lien of the defendant’s judgment has not been lost by any thing shown in the record, and that it antedates the complainant’s mortgage.

The report of the Referees must be set aside, the decree of the chancellor reversed, and the bill dismissed with costs.

TuiíNEY, J.,

delivered the following dissenting opinion:

By statute a lien is given to judgment creditors on the lands of debtors for twelve months after rendition of judgment or decree. If the sale within twelvemonths is prevented by injunction, writ of error, appeal in the nature of writ of error or other adverse proceeding, the lien will continue for twelve months-after injunction dissolved, judgment affirmed, or adverse-proceedings dismissed: Code, secs. 2980, 2982, 2983,

In the case at bar a judgment had been obtained,, execution issued, and the debtor tendered Bank of Tennessee notes in payment, which being refused, the-debtor superseded the execution. This court held the tender to be sufficient and discharged the sureties on. the supersedeas bond, but as the tender was not followed up by bringing the money into court, gave-judgment against the principal for the full amount of his debt with interest.

The adverse proceeding (the petition for supersedeas), was not dismissed but fully accomplished the object for which it was filed, viz, to have the tender declared legal. The judgment under the petition goes so far as to give to the debtor the right to discharge it by payment of Bank of Tennessee issue. Under this state of facts I do not think the lien was continued by the provisions of the statutes cited. The supersedeas proceedings were successfully prosecuted — a dismissal was necessary to the continuance of the lien. •

If the tender released personal securities, upon what ground can it be held that it did not also release real security. The lien given is but a security, and stands upon no higher ^ground than personal security. The act that will release the one will release the other. Can a creditor be permitted to say to his debtor, “the law gives me a lien upon your realty, and although you come to me within an hour after judgment rendered and tender my debt in full, nevertheless I will not accept, but will hold your property encumbered, and restrain you from its disposition for twelve months”? I think not. All the creditor is entitled to is his money; to secure that the lien is given; when it is tendered he must receive it. If he refuses, the lien is gone, the security discharged, and the debtor at liberty to dispose of his property. By his refusal to accept the tender the creditor elects, to release all security, and look alone to the debtor for the payment of his judgment.

Upon petition to rehear, Cooper, J., said:

JEt is not claimed by the petition for rehearing in this case, or by the accompanying arguments that any material fact in the record was overlooked by the court, or that any position assumed by the counsel of the petitioner in the discussion had been passed over without notice. The greater part of the arguments now submitted consists of a restatement of the points relied on at ihe hearing, and of the reasoning used in support of them. Not a single new authority really pertinent to the issues involved has been adduced. The case was an important one, both on account of the questions of law raised aud the amount in controversy. The matters of litigation were, therefore, carefully considered, and the conclusions reached deliberately weighed. It woulcf be useless to go over the same ground, notwithstanding the able elaboration by counsel of the former argument, for the opinion delivered undertakes to meet the points relied on, and another opinion would only be a substantial repetition.

In the printed argument submitted, one new point is made. The point is thus stated: “ Perkins being only a surety for the debt, the lien of the judgment as to His lands was necessarily discharged by the tender, even if the court should hold that the tender was not in effect a continuous tender.” This court held, when the judgment now enjoined was rendered, that the tender was not a continuous tender, for the judgment was for the original debt with interest. And it is impossible to see how it could have beld otherwise under the law and the facts. The judgment being against Perkins himself, and the tender not continuous, it is not easy to see how the lien of the judgment on Perkins’ land could possibly be affected by the fact that be occupied the relation of surety to some .other party to the original cause of action, who is not sued. The lien is an incident to the judgment, and, as we have seen, necessarily inheres therein for the statutory period, so long as it exists. If the principal debtor bad made the tender, then a different question altogether would have arisen. The surety would be released by the surrender by the creditor of a fund to which the surety would be entitled to be subrogated upon pay-ment of the debt. But a tender by the judgment debtor himself, no matter whether he be principal or surety, can have no effect upon the judgment unless kept up so as to be a payment.

Another position assumed in argument is, that to entitle the creditor to a continuance of his judgment lien under the Code, sec. 2983, the action of the creditor must be wrongfully arrested. That is to say, if the adverse -proceeding in court, which stays the sale is occasioned by the wrongful act of the creditor, the statute does not apply. And the argument is that the adverse proceeding in this case grew out of the wrongful act of the creditor in refusing a proper tender. The argument* is ingenious, but it ignores the fact that the test of the statute is the dissolution of the injunction,- the affirmance of the judgment, or the dismissal of the adverse legal proceeding. There is nothing either legally or morally- wrong in refusing a tender in order to test a right, and the wrong is in not keeping up the tender so as to make it a satisfaction in the event the court should determine that the . party was entitled to make it. As said in the former opinion, this court in effect dismissed the adverse proceeding by rendering a judgment for the entire debt with interest, and thereby holding that the tender was not kept up so as to constitute a legal defense.

It is also said, that although the judgment lien be extended letween defendant and Perkins, it cannot be extended against complainant, because, says the argument, when the last judgment was rendered complainant had a bona fide lien, and stood upon the same ground as if he had bought for value and without notice. But if be had bought for value and without notice, he would stand in no better attitude than the debtor from whom he bought, where the law requires him to take notice at his peril. And how a beneficiary under a trust assignment to secure a pre-exist-ing debt due him can be a bona fide purchaser for value, and without notice, under the uniform decisions of this court, it is difficult to understand. Such a person stands in the shoes of his grantor as to existing equities and liens except in cases falling within the terms or 'the policy of the registration laws: Anderson v. Ammonett, 9 Lea, 1.

The re-hearing must be refused, and the petition dismissed.