48 Miss. 372 | Miss. | 1873
This appeal brings into review the order of the chancery court appointing a receiver.
Estell filed his bill to have the execution of a deed of trust, given to secure the purchase money for lands and other property sold and conveyed by him to the appellant, Wm. Gr. Myers, and also to enforce the vendor’s lien, claimed as extending to one-third of the lands not embraced in the deed of trust. The trust security embraces two-thirds of the land conveyed to Myers; the vendor’s equity is asserted to the other third. It was held in Wolfe v. Dowell, 13 S. & M. 108, and repeated in Carpenter, Ex’r v. Bowen, 42 Miss. 50, that deeds in trust are of the same sort of security as a mortgage, subject to the application of the same principles. Both are pledges as indemnity for the debt. The distinguishing difference is, that one communicates a power of sale, while the other ordinarily does not.
At the first argument, the decree was questioned
1. If the mortgagee or beneficiary in the trust deed do not stipulate for the rents and profits of the estate, ordinarily they are not entitled to them. It is well settled that they have no claim upon them until the mortgagee has taken possession. The purpose of the appointment of a receiver may be two-fold: First, to preserve the estate from waste, spoilation or decay; or, secondly, that the rents may be got in and applied to the debt.
Upon what principles may a receiver be appointed pending a foreclosure suit ? Unless there be a stipulation in the contract that the mortgagee shall have the rents, he has no claim merely on the ground that the debt is due and the title has become absolute. He may enter after default made, or he may recover possession at law, and out of the rents and profits satisfy the debt; that is one of his remedies more commonly employed in Great Britain than in this country. But if he proceeds to foreclose, he elects to raise the money by a sale of the property. Receivership is one of those remedial agencies devised orginally in order to preserve the fund or thing from removal beyond the jurisdiction, or from spoilation, waste or deterioration pending the litigation. This was the original purpose: a preservation of the thing, so that it might be appropriated as the final decree shall appoint. Injunctions rest a good deal upon the same reason, by restraining from the doing of a wrongful" act, which might altogether defeat the complainant’s right or
The mortgagee or trust creditor, if he has no lien upon the rents, must rest his claim to them on the ground that the property is insufficient to pay the debt, and that without this redress he will lose the residue of it; or he must go upon the predicate that it is necessary to interfere with the mortgagor’s possession in order to prevent the removal of the property beyond the reach of the court, or to save it from wasture and deterioration. In these latter circumstances, the debtor perpetrates a positive wrong, which either endangers altogether a realization of the fruits of the suit, or diminishes the value of the security. The election of the chancery forum is to prefer to convert the property into money and pay the debt, rather than the legal remedy to get payment out of the rents and profits. In this case, the application is to be maintained, if at all, upon the allegation of the insufficiency of the property to pay the debt. If the only means or source of payment was out of the property, the creditor would present a very urgent reason why the property should be made to produce the utmost farthing pending the litigation. But suppose the debtor is abundantly able to pay the deficit, upon sale of the mortgage premises, and there is therefore no apparent danger that the creditor will lose any part of his debt, must a receiver be appointed ? The bill does not in terms allege that Myers is personally insolvent, or that he is unable to pay an expected deficiency on foreclosure sale.
Some of the American courts have gone further than the English chancellors on this subject. The British rule is to deny to the mortgagee a receiver merely to get in the rents, for the reason, as expressed by Lord Eldon, in Berney v. Sewell, 1 Jac. & Walk. 627, he has
But few cases have arisen in this court on this subject. The cases of Whitehead v. Wooten, 43 Miss. 526, and Ross et al. v. Woods, Ex’r (MSS.), were adjudged on the insufficiency of the notice of the motion, although there is some reference to the general principles which should govern the court. In Hill v. Robertson, 24 Miss. 373, it does not appear from the report whether the mortgagor was insolvent or not; the property, however, was inadequate. In the Bank of Ogdensburg v. Arnold, 5 Paige, 40, the chancellor apparently puts his judgment on the ground that the debt was due, and the mortgaged premises insufficient in value; but a careful examination will show that the mortgagor, who had deceased, was insolvent, and the case harmonizes with the subsequent decisions referred to.
The authorities are uniform, that the appointment of a receiver lies very much in discretion, and therefore the circumstances of each case must be looked to. Whilst this may be so, many principles have been well settled, and where the facts come within their operation discretion ceases and the rule applies.
But whilst the mortgage and deed in trust are alike in many respects, there may be a radical difference in others. The mortgagee and trustee both take the legal title; the latter, however, for the purpose of
Upon default made in the payment of the debt, and after the expiration of eighteen months from the maturity of the last installment, the condition was that the trustee should advertise and sell. Such security does not contemplate a right or duty in the trustee to take possession, or recover it at law for the purpose, like the mortgagee, of paying his debt out of the rents and profits, and, when that is done, restore the property to the mortgagor.
In this deed the title is conveyed to Wilson, in trust, and, upon the condition of default made, that he may sell and convey, and apply the proceeds to the debt. The effect is to give the trustee the legal title, for the single purpose to sell and convey, and pay the money to the creditor. In this particular, this, an ordinary deed in trust, differs from the mortgage; the latter conveys a defeasible title, which becomes absolute on condition broken. And thereupon, the mortgagee, under his absolute right at law, may enter; but he holds as mortgagee, subject to an account for the income to the mortgagor, who may redeem. The trust which Wilson engaged to perform “was to advertise and sell, and pay over the proceeds.” It is not within the scope of his engagement to enter, and receive the income, and apply that until the debt is satisfied. The law would not impose upon him larger duties and responsibilities than he has assumed by the contract. Nor is it necessary that Wilson should recover possession, in order to execute the trust. He is invested
In dealing with this deed in trust, a court of equity, regarding it as a security made by the debtor for his creditor, will give that creditor the substantial benefit of it. It is to be deduced from the scheme of the sale and purchase, that Myers might reasonably be able,, from the products of the property, and perhaps some other resources, to pay the entire debt within the three years, the limit of the credit; but out of abundant caution he stipulated in the deed that a sale under it should not be made until eighteen months after the maturity of the last note; thus, in effect, so far as the security was concerned; insuring a credit of four years and six months.
When nothing was paid during this intended credit, it might well be supposed that the creditor would insist, after its expiration, upon a rigid enforcement of his remedies. Hence we find that he causes suit upon the notes, an ejectment for the possession to be brought, and the trust property to be advertised for sale. We attach no importance to the ejectment suit, except as it evinces a peremptory determination to insist upon the enforcement of his debt. In this posture of things, overtures and persuasions were employed successfully by Myers to induce Wilson to dismiss the ejectment and withdraw the advertisement of the sale. Wilson so far yielded as to abandon the trust and to decline
The non-payment of taxes, or suffering the title to be embarrassed by a tax sale (Wall Street Ins. Co. v. Loud, 20 How. Pr. 96), or the unfairness of the covenant of the mortgagor, will justify the appointment of a receiver. Finch, Adm’r v. Houghton, 19 Wis. 158; Callahan v. Shaw, 19 Iowa, 183. We think that the combined influence of the circumstances of this case authorized the chancéllor to appoint the receiver.
The remaining question is, how much of the estate shall the receiver take in charge ? The complainant insists that it shall extend to the entire plantation, including the one-third not embraced in the deed in trust. The answer to that depends upon the question whether he has a charge or lien upon it for his debt.
Is there, then, an equitable lien on that portion of the land not embraced in the deed in trust ?
It was laid down in an early case (Bond v. Kent, 2 Vern. 281), and recognized as sound in Clover v. Rawlings, 9 S. & M. 128, that where a party had carved out his own security the law will not create another in aid. In Gilman v. Brown, 1 Mason, 212, Judge Story, after a careful examination, states, “that he found no case where the taking of collateral security was not considered a waiver; and was inclined to consider that as the better rule.” The experienced equity judge, in Cole v. Scott, 3 Wash. C. C., thought that the lien was lost quite as effectually by taking a
The lien is implied from the presumed intention of the parties. Judge Story says: “It is manifestly founded on the supposed conformity to the intention upon which the law raises the implied contract, and therefore it is not inflexible that it shall be inferred, but ceases to act when the circumstances of the case do not justify such conclusion. 1 Mason, supra; Gilman v. Brown, 4 Wheat. 272; Servis v. Beaty, 32 Miss. 80; Fonda v. Jones, 42 ib.
Testing the transaction between these parties by the principle so reasonable and just: “ That the equity is founded on a supposed conformity to the intention of the parties; that it is an implication of law, which arises or not according to the circumstances,” what are the rights of the vendor ?
Upon a sale of the property, including some personal property on the premises, $31,000 are paid down, and the balance, $40,000, is deferred in installments. What amount was estimated for the personal effects does not appear. To secure the credit installments, a deed of trust covering two-thirds of the land is executed, with the provision that a sale should not be made under it until eighteen months after the last installment was due. The creditor has selected his security. The circumstance that it does not reach to all the property, suggests, that in view of the large cash payment, but $9,000 less than half the price of the entire estate, it was supposed to be ample, although the land itself was all that could be looked to. But, in addition, the vendor had the personal engagements of the vendee falling due from year to year. The fair inference is, that Estell was content to rely upon the limited security on the land, and the personal security of the notes; and therefore the equitable lien was within the intendment of the parties. The recitation in the
It is difficult to form a distinct idea of the vendor’s equity. In defining what it is, jurists have been driven to the negative mode of declaring what it is not. Thus, in 1 Mason, 221, supra, Story, J., says: “ It is not of so high and stringent a nature as that of the judgment creditor. It is not an equitable estate in the land itself, although that appellation has been loosely applied to it.” So in this court, in Trotter v. Evans, 27 Miss. 778, it is described as having some of the incidents of a mortgage, though of a very distinct nature. The mortgage is a conveyance of the legal estate upon which the mortgagee may recover the possession. In its form it is separate and distinct from the debt, and an additional and more solemn acknowledgment of and security for the debt, whereas the vendor’s lien consists solely in the debt, and has no form apart from it.” Judge Story says: “ It is a right which has no existence until it is established by the decree of the court in the particular case.” Myers so framed his specific security as that he should not be molested in his possession until eighteen months afte^ the last installment was due. This indicates that the
We are of opinion, therefore, that the complainant ought to have a receiver on the undivided two-thirds of the property embraced in the deed in trust; not, however, to interfere with any leases made to tenants or to disturb their possession.