McNair v. O'Fallon

8 Mo. 188 | Mo. | 1843

Scott, Judge,

delivered the opinion of the Court.

This was a bill in chancery, filed by Margaret S. McNair, the widow and administratrix of Alexander McNair and the heirs of the said McNair, against the defendants, the executors and heirs, and devisees of John Mullanphy, deceased.

It is alleged in the bill, that Alexander McNair, being indebted to John Mullanphy, on the 26th day of January, 1820, executed to him his bond for the sum of $5,500, payable one year after date; and to secure the payment of the said sum, McNair and his wife executed to Mullanphy a mortgage in fee on the following described parcels of land and lot in the county and city of St. Louis, viz.: A lot of ground about six miles north of St. Louis, 2 arpens in front and forty in depth; also, a tract adjoining the last mentioned parcel on the north, seven arpens in front and forty in depth, both bounded on the east by the Mississippi river, and formerly owned by Antoine Morin; also, a lot in the city of St. Louis, on Main-street, 150 feet deep, bounded on the east by Main-street, and on the north by a lot formerly owned by Patrick Lee.

On the 30th November, 1820, McNair executed another bond to Mullanphy, in the penal sum of $1,000, conditioned for the payment of $500 one year after date. To secure the payment of this bond, the tracts of land above described were again mortgaged by a deed executed by McNair on the 16th December, 1820.

By a deed bearing date 17th April, 1821, McNair and wife mortgaged in fee to Mullanphy, for the purpose of securing the payment of another sum of $3,951, with interest, many other lots in the city of St. Louis and town of St. Charles, and lands in the counties of St. Louis and Jefferson.

Mullanphy, on the 18Lh day of August, 1823, commenced an action of debt against McNair, on the bond for the sum of $5,500, and recovered judgment against him on the 2d day of July, 1824. On this judgment, an execution was issued returnable to the October term', 1824, of the St. Louis Circuit Court, under which the sheriff seized all the property that was mortgaged, to secure the debt for which the judgment was rendered; and also all the property situate in St. Louis county and city, mortgaged on the 17th day of April, 1821, to secure the payment of the debt of $3,951. At the sale, Mullanphy became the purchaser of all the property included in both mortgages, for the sum of $2,700, except one lot, 38 feet wide and 120 feet deep, included and described in the last mortgage, which was purchased by Robert Rankin, for eighty dollars.

It is also alleged in the bill, that Mullanphy attended the sale in person, bid for each piece of property as it was offered, and, for the purpose of intimidating purchasers, and causing a ruinous sacrifice of it, in his own favor, proclaimed to the bystanders that he had heavy incumbrances on all the property, and exposed to their view papers.which he said were mortgages.

In consequence of such conduct, many persons were deterred from purchasing the property, and the same, .with the exception aforesaid, was knocked down to Mullanphy.

After this sale, on the 13th December, 1824, Mullanphy filed his petition in the St. Louis Circuit Court, against McNair and his wife, to foreclose their equity of redemption to all the lands and lots included in the third or last mortgage, situate in St. Louis county. On this, such proceedings were had that a judgment was entered in these words: “ That, if the said Alexander McNair, and Margaret S., his wife, do not well and truly pay, and satisfy, to the said John Mullanphy, or his legal representatives, the sum of five thousand five hundred and sixty-four dollars, and twenty-two cents, the debt and interest in the petition mentioned, with legal interest on the sum of three thousand nine hundred and fifty-one dollars, together with his costs and charges, on or before the third day of November next, (1825,) then the sheriff of St. Louis county is required and commanded to sell, on the said third day of November next, the mortgaged premises in the petition mentioned.”

No steps have since been taken to carry into effect this judgment. The first two mortgages were never foreclosed, otherwise than by the sale above mentioned, after which Mullanphy took and retained possession of all the property he purchased at the sale, until his death, which occurred on-the 18th day of September, 1833, having made a will, and appointed John O’Fallon one of his executors. McNair died on the 18th day of March, 1826. The bill charges that the mortgage debts have been paid, or might have been paid, out of the rents and profits of the land and lots purchased by Mullanphy, and prays for an account and permission to redeem.

Upon filing the bill, the judge of the St. Louis Circuit Court being a party to the cause, it was sent to the Court of Common Pleas.

Robert Rankin, who was made a party, admitted, in his answer, that he was present at the sale on the 6th October, 1824, and became the purchaser of a lot, as charged, for which he received a deed from the sheriff. He did not know that McNair set up any claim to the lot; that he purchased it in good faith, and has paid the purchase money. The answer of. Rankin being excepted to, for not responding to that part of the bill in which oppressive conduct is charged against, Mullanphy at the sale, and for not stating the value of the property sold, and the exceptions being sustained, he further answered, that he was at the sale; that Mullanphy was present, and proclaimed to the bystanders that whoever purchased any part of the property offered, would purchase a law-suit; that he held a mortgage on the property for a large amount; that when he, Rankin, bid for the lot he purchased, Mullanphy warned him not to bid, that he was buying a law-suit. He cannot state the value of the property purchased by Mullanphy, but his .opinion then was, and still is, that Mullanphy obtained it for much less than its real value, and for. much less than it would have sold for, but for his interference and threats.

The answer of the executor and heirs of Mullanphy to the bill, admits the recovery of the judgment on the bond for $5,500 on the 2d July, 1824; the award of the execution on the same on 20th August, returnable to the October Term, 1824; that, under said execution, on the 6th October, the sheriff sold all the property included in the two mortgages, except that in the counties of St. Charles and Jefferson, and that Mullanphy became the purchaser for $2,700 of all the same, save that he sold to Rankin; that, on the 16th October, the sheriff executed a deed to Mullanphy for the property purchased by him; that neither Mullanphy, before his death, nor his representatives since, have attempted any further to enforce said judgment. They know nothing of the conduct of Mullanphy at the sale: that, as to the mortgages mentioned in the bill, they supposed they were executed as they appear. They did not know when Mullanphy entered into possession of the property, or any part of it, or what rents he received. That they were at some expense in defending suits against part of ’the property, in which B. Ames and others, claiming the same by title paramount to McNair’s, prevailed. To this answer, a replication was filed, and on the hearing, evidence in relation to the conduct of Mullanphy at the sale, and as to the value of the property, was introduced. The exhibits were also read in evidence. The court entered a decree dismissing the bill, from which the complainants appealed to this Court.

Many points were made in the argument of this cause, to all of which we shall not advert, deeming it unnecessary, but will confine ourselves to the most important, and those in which the merits of the cause are involved.

The first question made was, whether an equity of redemption could, before the revised laws of 1825, be sold on an execution at law ? This question has been twice argued very elaborately in this Court, and it must be confessed, is not without its embarrassments. It may be admitted that, in England, there cannot be a sale of an equity of redemption upon a mortgage for a term of years; but if we consult the decisions of the American courts, authorities entitled to great respect are to be found in support of either side of the question, and this contrariety of views must, in a great measure, be attributed to the different lights in which a-mortgage is viewed in courts of law and equity. The severe features of the ancient common law in relation to mortgages have been relaxed, and the opinion that a mortgage is a mere security for a debt has been steadily gaining ground in courts of law. This is the equity view of the subject, and Chancellor Kent remarks, that courts of law have, by a gradual and almost insensible progress, adopted the equity views of this subject, which are founded in justice, and accord with the true intent and inherent nature of every such transaction ; and he continues, that in this country the rule has very extensively prevailed, that an equity of redemption was vendible, as real property, on an execution at law. In the case of The King vs. St. Michael’s, Doug., Lord Mansfield declared, it would be an insult to common sense to say the mortgagor is not the real owner of the mortgaged property. Lord Hardwick, in the case of Cashborn vs. Inglis, 1 Atk., 603, said an equity of redemption had always been considered as an estate in the lands, for it might be devised, granted, or entailed with remainders, and such entails and remainders might be barred by fine and recovery, and therefore it could not be considered as a mere right only, but must be taken to be such an estate whereof there might be a seizin: that the person, therefore, entitled to the equity of redemption, was considered as the owner of the land. A husband may be tenant by the courtesy of an equity of redemption. To’ perfect this right four things are necessary,— marriage, issue, death of the wife, and seizin in fact. As to the latter requisite, it is laid down, that an equity of redemption was not to be considered as a mere right only, but must be taken to be such an estate whereof there might be a seizin. The chancellor, in the case of Waters vs. Stewart, 1 Caines’ Cases in Error, 47, holds that a mortgage is merely a lien, until it is foreclosed, or the possession acquired by the mortgagee; that the mortgagor, until either of these events occur, is the beneficial owner; he takes the rents and profits without any account; he is a freeholder, qualified to vote as such; and he is deemed the owner of a landed estate, within the English settlement laws. Judge Spencer, in the same case, remarks, that where a statute speaks of a seizin, an equitable seizin may be as well intended as a legal one, and Ihe term is applicable to both. ' He could perceive no substantial objection to the sale of an equity of redemption under an execution at law. Chancellor Kent says, in the same case, if the mortgagor is to be regarded, as respects his own acts, and the acts of the world, the owner, subject only to the lien of the mortgagee, it is neither unreasonable nor improper that courts of law should treat the land as his, under the same limitations. There’is no more inconvenience in subjecting the land to execution because there is a mortgage upon it, than there is where a prior judgment has bound it. The vendee, in both cases, will purchase subject to the lien, and he can calculate the value, deducting the incumbrance, as correct!y in the one case as the other. In the case of Jackson vs. Parker, 9 Cowen, it was held, that one in possession of land under contract of purchase, has a real estate in the land which is bound by a judgment in a court of record, and that his interest might be sold under an execution at law. (Jackson vs. Scott, 18 J.R.,94.) In the case from Cowen, it was said, that possession was an interest in lands, subject to the lien of a judgment, and might be sold under an execution. The interest of a party in possession is not a mere equity, like the interest of a mortgagor out of possession. The cases above cited were decided in New York, in which State lands, tenements, and real estate, are subject to sale under execution. Real estate includes every possible interest in land, except a mere chattel interest. The term estate is very comprehensive, and signifies the quantity of interest which a person has, from absolute ownership, down to naked possession. It is the possession of lands which renders them valuable, and the quantity of interest is determined by the duration and extent of the right’ of possession. A mere equity cannot be sold, but an equitable interest, coupled with the possession, may be sold on execution. The interest of a mortgagor or mortgagee in possession is bound by a judgment, and may be sold, but out of possession, neither has-an interest npon which the lien of a judgment can attach.— Jackson vs. Parker, Ibid.

The statute in force here, under which the sale now the subject of consideration took place, is in these words: — “All lands, tenements, and heriditaments whatsoever, within this territory, where no sufficient personal estate can be found, shall be liable to be seized and sold, upon judgment and execution obtained.” This act was passed in the year 1807. The act of January 11,1822, made judgments a lien on the real estate of the person against whom they were rendered. It seems, that in subjecting real estate to the lien of a judgment, it was designed that it should be sold on execution, for the lien of a judgment may always'be enforced by execution. Then, if real estate could be sold under execution, our law was similar to that of New York, under which the case of Waters vs. Stewart,, above cited, arose, in which it was held, that an equity of redemption might be sold by an execution at law.

It is a sound moral principle, that every species of property owned by a debtor should be subject to the payment of his just debts. At the date of the act above referred to, subjecting lands to sale under execution, nearly all the titles in the territory were equitable. The'fee was in the Government, and had passed to but few. There was no court of equity as contradistinguished to a court of law. Courts of equity were not organized until the year 1811. (Geyer’s Digest, 105.) As considerable estates might be mortgaged for small debts, it would follow, if the equity of redemption could not be sold under execution, the creditors would be deprived of one of the resources for payment of their debts. There is no doubt, that by the common law, equitable interests in lands might be subjected to the payment of debts by suitable proceedings in a court of equity. The strife was, whether they should be liable to execution at law. Then, there being no court of equity here, as contradistinguished from a court of law, all equitable interests in lands would be freed from the payment of debts; an exemption we cannot think contemplated by the legislative power. In Pennsylvania, where law and equity are blended in their system of jurisprudence, and equity, as contradistinguished from law, is unknown, at least in the administration of justice, it is a well-settled principle that a judgment is a lien upon every kind of equitable' interest in land, and that such interests could be sold by execution at law. (Carkhuff vs. Anderson, 3 Bin., 8.) Such seems to have been the system of jurisprudence in this territory from 1804 to 1811; and if, during that time, equitable estates might be sold under execution, and the terms, “ lands, tenements, and hereditaments,” comprehended such interests, the mere creation of a court of equity afterwards would not restrain their signification to legal estates only.

Again: The 66th section of the act concerning judicial proceedings, (Geyer’s Digest, 267,) in force at the time of the sale now under discussion, directed, that the sheriff, after a sale on execution, should give the buyer a deed, duly executed and acknowledged in court, for what is sold, which deed shall recite the execution, purchase, and consideration, and shall be effectual for passing to the purchaser all the estate and interest which the debtor had, or might lawfully part with, in the lands, at the time the judgment was obtained. If all the estate and interest which the debtor could part with passed by the sheriff’s deed, then all his interest and estate were sold; for surely it was not the intention of the legislative power that the purchaser should have a deed for more than he purchased, — that he should taire an interest for which he paid no consideration. The section which directs that lands, tenements, and hereditaments may he sold under execution, should be taken together with that prescribing the effect of the sheriff’s deed, without regard to the order in which they stand, and their joint signification is, that all the estate and interest of a debtor, in lands, tenements, and hereditaments, which he may lawfully part with, shall be sold under execution. It may be said that the terms, estate and interest, mean legal, and not equitable, estates. We have before observed, that at the date of the act now under consideration, almost all the titles in this territory were equitable, in the common law sense of that term. But, independently of this consideration, on what principle are these terms to be held applicable only to legal estates ? If a word, or term, by itself, includes several species or kinds, each of which can only be designated bj1 a descriptive epithet, if that word, or term, is used without an epithet, showing that a particular species or kind was intended, then it is to be understood as comprehending all the varieties included in it. This is the natural construction of language. In the case of Waters vs. Stewart, before cited, we have seen that Judge Spencer held, that when a statute speaks of a seizin, an equitable seizin may as well be intended as a legal one. The term is applicable to both. To the same effect, Chancellor Kent, in the same case, remarks, “ The word seizin, in a statute, is frequently construed to apply to an equitable, as well as a strict legal seizin.” The application is always according to the subject-matter, and to give the statute complete effect. Now, what was there then in existence to limit the construction of the terms, estates and interests, to mere legal titles ? These words were introduced in the year 1807, before the organization of a court of equity, and at the time of their introduction it was necessary to construe them as including equitable estates, in order to effect the intention of the law-makers, which was, to subject all lands, tenements, and hereditaments whatsoever, to sale on execution; and having this signification when first placed on the statute-book, neither the organization of a court of equity afterwards, nor the introduction of the common law, would restrain their import.

The next question we shall examine is, whether a mortgagee could institute a suit at law to recover the debt secured by the mortgage, take out execution, and sell the equity of redemption of the property mortgaged to secure the debt for which suit was brought ?

In an examination of the books, cases are found in which such proceedings have been tolerated. I say “ tolerated,” for no case can be produced in which the question between the mortgagor and mortgagee arose, that has received the unhesitating sanction of a court. The confusion and embarrassment consequent upon such a step would disincline any court to give it its countenance. What is the sense of the thing, when the mortgagee, under execution, sells the equity of redemption of the property mortgaged to satisfy the debt? It is an admission that it is worth something over and above the mortgage debt. If not, why sell? What object can the mortgagee have, unless it is to unite the legal and equitable estates, and thereby defeat a redemption? If the mere equity of redemption is sold, that is, the mortgagor’s interest, after satisfaction of the mortgage debt, and the mortgagee becomes the purchaser, whatever sum he pays for the equity of redemption will belong to the mortgagor; for, as the mere equity is sold, he, by becoming purchaser, admits the mortgaged property is worth more than his deb’, by the sum bid, and consequently, the debt is extinguished, and the sum bid will belong to the mortgagor. So, in fact, it is nothing but a new mode of foreclosure. But suppose a third person becomes the purchaser, (and it is a singular kind of auction where but one particular person can become a purchaser,) what, is the consequence ? Say, that he bids the amount of the mortgage debt; that amount is paid by the sheriff to the mortgagee; his debt is thereby satisfied, and the purchaser holds the property freed from the mortgage debt; and although he has bid the amount of the mortgage debt over and above it, yet the mortgagor receives nothing, and his equity is entirely sacrificed. To make this matter plain, let us suppose a case. A. has a debt of $500, secured by mortgage on property worth $1,000; he sues at law for his debt, takes out execution, and levies it on the equity of redemption of the mortgaged property: at the sale, B. becomes the purchaser for $500; that is, B. is willing to pay $500 for the property, after paying the mortgage debt; the sheriff takes B.’s $500, hands it over to A.: A.’s debt is thus paid; the mortgage is extinguished, and B. takes the land, freed from the mortgage debt, and so, in fact, gets it for $500,; when he bid $1,000; so the equity of redemption is sacrificed, and the mortgagor loses $500. The same consequences ensue, though not to a like extent, when a purchaser bids less for the equity of redemption than the debt. The case of Tice vs. Annan, (2 J. C. Rep.,) would remedy this, by compelling the mortgagee to assign his debt and- mortgage to the mortgagor, and thereby substitute him for the mortgagee, by which he can compel the purchaser to pay him the amount of the mortgage debt. But that very ease shows there are circumstances under which this cannot be done, and so the mortgagor will be remediless. I do not consider the case of Tice and Annan as warranting such a mode of procedure. In the case of Jackson vs. Hull, (10 Johns. Rep.,) the question did not arise, for it was a controversy between the mortgagee and the purchaser, of the equity of redemption. It was held, in the case of Youse vs. McCreary, (2 Blackford,) that by such a manner of proceeding, the mortgage was waived, and it was likened to a foreclosure, as the whole estate was deemed to have been sold. The case of Lyster vs. Holland, (1 Ves.,jun.,) decided by Lord Thurlow, contains something in relation to this subject; and although that cause went off on another point, yet the propriety of such a proceeding was very much doubted by the chancellor. “Was there,” says he, “ever an instance of such a proceeding as this? It was a new case to him, that this case obtains in mortgages.”

But we will not rest our opinion on the opinion on the considerations above stated. The cases above cited all occurred where there were no statutory provisions on the subject of the foreclosure of mortgages, especially provisions of a character beneficial to the mortgagor, and which guarded and protected his equity of redemption against too speedy a foreclosure. Hence, in those States where such provisions obtain, it has been held that such sales are void. In Massachusetts, where the effect of such a course of procedure was, to reduce the length of time to which the mortgagor was entitled, to redeem, the sale was declared inoperative. In the case of Atkins vs. Sawyer, 1 Pick., where a mortgagee had caused a sale to be made of the equity of redemption on execution, for the purpose of paying the debt secured by the mortgage, the court said, if the sale of the equity be operative, its operation will be repugnant to the statute regulating the foreclosure of mortgages ; it enables a mortgagee, at his will and pleasure, to reduce the mortgagor’s right of redemption from three years to one, thus, depriving him of an important advantage secured to him by the statute. In Kentucky, where similar statutory provisions prevail, the like doctrine obtains. — 7 Dana, Goring vs. Shrieve.

The statute of 1807, concerning the foreclosure of mortgages in force when the sale took place, which is now the subject of consideration, conferred on the mortgagor rights of some importance, of whioh he was deprived by selling his equity of redemption, at the suit of the mortgagee, for the mortgage debt. That statute, in proceedings to foreclose, required twenty days’ service of process before the return day, whereas, in ordinary proceedings at law, service fifteen daye before the return term was sufficient. Moreover, the statute directed that the sale of the mortgaged premises should be at least nine months from the commencement of the process of foreclosure. The statute, in declaring that the sale should be postponed at least nine months from the commencement of the suit, did not intend that that should be the precise period at which the sale should take place, but from the manner in which it is worded, it is clear that the court had a discretion, and might, and, no doubt, would, upon showing sufficient cause, extend the time. All that was required was, that the sale should not take place in less than nine months; if that time was prolonged by the court, there was nothing in the statute to prevent it. In proceedings to foreclose mortgages in England, nothing was more usual than to extend, from time to time, the right to redeem. In the ordinary course of proceedings, lands might be sold in less than nine months, and this actually occurred in this cause. The method of procedure adopted by the mortgagee deprived the mortgagor of advantages secured to him by law; we are therefore of the opinion the sale was void.

The determination of this point establishes the right to redeem the land included in the first mortgage. It remains to be ascertained whether the complainants have a right to redeem that included in the third. It seems strange that we should be called upon to decide this question, when there is a solemn admission by Mullanphy that Lhis right exists.

There is a decree of foreclosure in evidence, that unless A. McNair pay to John Mullanphy the sum of $5,564 22, on or before the 3d day of November, 1825, that the mortgaged premises be sold. Mullanphy, before his death, nor the defendants since, have carried this decree into effect; it is unreversed, and is still binding; and is a solemn admission of McNair’s right of redemption. That judgment or decree is an estoppel, and the defendants are precluded from denying its justice and validity. In the case of Offutt vs. John, decided at this term of the court, after a review of all the authorities, it was held, that to make a judgment a bar, in cases where an attempt is made to litigate a second time a matter in which a court of competent jurisdiction had pronounced its sentence, it was not requisite to plead the former judgment in order to make it an estoppel, but'it is sufficient if it was given in evidence, and that its force and conclusiveness were the same when given in evidence as when pleaded. And we are gratified to state, that the conclusion to which the oourt came in that case meets with the concurrence of Professor Greenleaf, a jurist whose learning and abilities have everywhere commanded the respect and admiration of the profession. (Greenleaf’s Evidence, 567.) But had it been determined otherwise, the rule requiring a judgment to be pleaded, in order to constitute an estoppel, was never extended to cases in which the party relying on the judgment was precluded, hy the form of proceeding, from pleading it. If he is denied that opportunity by the mode of procedure, he may show it in evidence, and it will in general have the same effect as pleaded.— Howard vs. Mitchell, 14 Mass. Rep.; Starkie, vol. 1.

The determination of the two last points settles this controversy, so far as the representatives of Mullanphy are concerned. To what extent, and in what manner, O’Fallon and Rankin may be affected, we give no opinion, nor, in alluding to them, do we mean to intimate that they will be effected by the decree which will be pronounced in this cause. We have mentioned them merely, that it might not be supposed they were overlooked. Nothing having been said in the argument in relation to the liability of the property held by them to redemption, we have deemed it most advisable to suffer that question to be determined in the court to which the cause will be remanded.

Decree reversed, and cause remanded.

Tompkins, J., dissenting.