214 P. 137 | Or. | 1923
This suit was brought in Marion County to obtain the cancellation of a mortgage of real property situated in Douglas County. The Circuit Court entered a decree canceling the mortgage, and from this decree the defendants have appealed.
Their first contention is that the court had no jurisdiction of the subject matter of the suit, for the reason that the suit was not brought in the county where the mortgaged land lies.
Under Section 396, Or. L., suits in equity “ (1) for the partition of real property; (2) for the foreclosure of a lien or mortgage upon real property; (3) for the determination of an adverse claim, estate or interest in real property or the specific performance of an agreement in relation thereto,” shall be commenced and tried in the county where the land or some part thereof is situated. “In all other cases the suit shall be commenced and tried in the county in which the defendants or either of them reside or may be found at the commencement of the suit.”
If a suit for the cancellation of a mortgage of real property is a local one, then this suit should have
At common law, a mortgage was ‘£ an estate created by a conveyance, absolute in its form, but intended to secure the performance of some act, such as the payment of money and the like, by the grantor or some other person, and to become void if the act is performed agreeably to the terms prescribed at the time of making such conveyance,” and was “there
“As ordinarily understood, a lien upon land does not imply an estate in it, but a mere right to have it, in some form, applied towards satisfying a claim upon it. The peculiarity of mortgages is that, while in some States they combine the character of lien and estate, in others they form a lien only upon the land.”
In this state a mortgage upon real property does not combine the character of a lien and an estate in the lands mortgaged, but it creates nothing more than a lien or an encumbrance on the land as security for the payment of a debt or the fulfillment of some other obligation.
In the case of Anderson v. Baxter, 4 Or. 105, this court said:
“Formerly, a mortgage, of real property was regarded as a conveyance of the legal title, subject, of course, to be defeated by the performance of a condition, and this doctrine still prevails to some extent. Courts of equity, however, have always regarded a mortgage as a mere security of a debt, and the foreclosure thereof as a proceeding to satisfy the debt secured thereby; and Courts of law as well as Courts of equity, in many of the States, have taken the same view; that is, that a mortgage was a mere lien or pledge, and that the general title to the mortgaged property was in the mortgagor. In the language of one of the authorities, ‘The mortgagee has neither a jus in re nor ad rem, but a specific lien, similar in character to a general lien created by a judgment upon the land of the judgment-debtor.’ (3 Denio [N. Y.] 232.) However this may be, as a matter of strict law, I am satisfied that a suit to foreclose a mortgage is not for the determination of any right or claim to, or interest in real property, but a pro*76 ceeding to have the mortgaged property adjudged to be sold to satisfy the debt secured thereby; at least this is in accordance with the express provisions of our statute. (Civ. Code, § 410.) In such a suit the title to the mortgaged premises is in nowise drawn in question. The adjudication is merely as to the fact of the execution of the mortgage, the amount due thereon, and the sale of the property to satisfy the debt secured. It is the mere collection of a debt charged upon specific property by resorting to the property as a means of satisfying it. If it were a suit to divest a party of title, or to establish some right regarding the title to real property, it would stand upon a different footing; but the mortgage being in equity only a chose in action, a suit to foreclose it is more analogous to an action upon a sealed instrument, and should be governed by the same rule of limitation.”
Said Mr. Justice Lord in Sellwood v. Gray, 11 Or. 534, 537:
“In this state, a mortgage does not operate, as at common law, to vest in the mortgagee an estate upon condition, the breach of which works a forfeiture of the estate, and renders it absolute. It is, in fact, what the parties intended, and as equity treated it, a mere security for the repayment of the debt or obligation, and serves simply to create a lien or encumbrance upon the property. The title, both before and after condition broken, remains in the mortgagor until foreclosure and judicial sale. The mortgage works no change of ownership in the property. It is still the property of the mortgagor, in law and in equity; is liable for his debts; may be sold under execution, conveyed or devised; is subject to dower, or may be again mortgaged, as any other estate in land. Nor do any of the qualities or incidents of an estate in land attach in the mortgagee; he has but a lien upon the land as a security for repayment, and which cannot operate to affect the possession of the mortgagor without his consent, or to transfer his estate in the land, except after default, and by force of a*77 judicial sale under a decree of foreclosure. But before such proceedings are had, payment of the' debt by the mortgagor will extinguish the lien and free the estate from the mortgage.”
Said this court again in Marx v. La Rocque, 27 Or. 45, 47 (39 Pac. 401):
“It [the mortgage] vests no title or right to the possession in the grantee but simply creates a lien or encumbrance on the land. * * whatever may be the form of the instrument, if it was executed as security for a debt, it will be treated merely as a mortgage, and the title and right to possession will remain in the mortgagor until foreclosure and sale. (Citing authorities.) Prom this it necessarily follows that plaintiffs have no legal estate in or right to the possession of the land sought to be partitioned, and cannot maintain a suit for that purpose.”
The doctrine announced in these cases has been followed by this court in the • following cases: Renshaw v. Taylor, 7 Or. 315, 320; Thompson v. Marshall, 21 Or. 171, 176 (27 Pac. 957); Adair v. Adair, 22 Or. 115, 131 (29 Pac. 193); Security Sav. & Trust Co. v. Loewenberg, 38 Or. 159, 169 (62 Pac. 647); Dekum v. Multnomah County, 38 Or. 253, 256 (63 Pac. 496); Kaston v. Storey, 47 Or. 150, 152 (80 Pac. 217); Noble v. Watkins, 48 Or. 518, 520 (87 Pac. 771); Kaiser v. Idleman, 57 Or. 224, 233 (108 Pac. 193, 28 L. R. A. (N. S.) 169).
Under these decisions a mortgage of real property in this state does not convey the title nor does it create an interest or an estate in the mortgaged property. It merely creates a lien or an encumbrance against the property as security for the payment of a debt or the fulfillment of an obligation, and becomes void on payment of the debt or the fulfillment of the obligation. Equity regards the debt as the principal thing, and the land as a mere incident
Until foreclosure and sale the mortgage is a mere chose in action secured by a lien upon the land, which gives to the mortgagor no title or estate whatever to the mortgaged premises. The mortgagor has no interest in the mortgaged premises which he can sell or which can be sold separately from the debt itself, and the transfer of the mortgage, without a transfer of the debt intended to be secured thereby, is a mere nullity: Trimm v. Marsh, 54 N. Y. 599 (13 Am. Rep. 623). A mortgage given as security for the payment of a note may be transferred either by the indorsement of the note and the surrender of its possession or, if the note is payable to bearer, by the mere delivery thereof and the surrender of its possession, and this transfer of the note, without any formal transfer of the mortgage, transfers the mortgage: Barringer v. Loder, 47 Or. 223 (81 Pac. 778); Hillman v. Young, 64 Or. 73 (127 Pac. 793, 129 Pac. 124).
The full, legal and equitable ownership of the mortgaged premises remains in the mortgagor, and can be divested through or by means of the mortgage only by foreclosure and judicial sale.
The right conferred upon the mortgagee by the mortgage is the right, upon condition broken, to have the mortgage foreclosed and the mortgaged property sold to satisfy his demand. This is the only right the mortgagee can acquire through the mortgage other than the mortgagee may take all needful measures to protect his security, but nothing more. The
But, it is not necessary for us to decide whether a mortgagee in this state does acquire an adverse claim in or to the mortgaged premises within the meaning of the term “adverse claim” as used in the statute, for, however that may be, while a local suit, such as one affecting real property, must be brought in the county where the land is situated, as otherwise the true venue is not laid, yet the direction contained in Section 396, Or. L., is merely a statutory declaration of the rule which existed independently of statute, and by Section 397, Or. L., where the suit has not been commenced in the proper county and the motion is not made for the purpose of delay, and these facts appear from the affidavit of either party to the suit, the court, on motion of such party, may change the place of trial. In construing Sections 396 and 397, Or. L., Mr. Chief Justice Lord, in Johnston v. Wadsworth, 24 Or. 494 (34 Pac. 13), in a suit brought in Multnomah County for the specific performance of a contract affecting real property located in Jackson County, after pointing out that a suit for the specific performance of a contract proceeds in personam, said:
‘ ‘ The relief sought by this suit is not to determine title, but to recover the price stipulated to be paid for the land. The decree is in personam and not*80 in rem, and it would seem, therefore, when the parties are within its jurisdiction, a court of equity may make its decree in personam for the specific performance of a contract for the sale of land in another county, notwithstanding Section 387. (§ 396, Or. L.)
“However that may he, if the plaintiff brought his suit in the wrong county the defendant waived this objection under Section 388 (§ 397, Or. L.) by not availing himself of the right to a change of venue to the proper county. We think, therefore, that it is too late<to raise this objection after a suit has been tried on its merits.”
We think that this decision is decisive of the objection urged here, even if this suit is a local one. It was within the legislative power to prescribe that suits affecting title to real property should be brought in the county where the land was situated and to provide that where a suit affecting land was not brought in the county where the land lies, but was brought in any other county in the state, the court, having jurisdiction of the parties to the suit, should have jurisdiction to hear and determine any matter affecting the title to lands in another county, unless objection to the power of the court was made before answer, and to direct that unless such objection was so made, the court to which the action was brought, should have power to determine the matters affecting the lands so involved.
We think that the provisions of Section 397, Or. L., as held in Johnston v. Wadsworth, supra, applies whether the suit affecting the land proceeds in personam .or in rem. Ordinarily, in the absence of statute, the equitable remedy awarded in a suit for the cancellation of a deed or other instrument affecting land, operates in personam, by requiring the party to execute a conveyance, or other instrument releasing and discharging the instrument sought to be can
In this suit the court had jurisdiction of the persons of the defendants. The defendants appeared in the action and filed their answer, and the cause was put at issue. A trial was had and upon the trial this objection was urged for the first time. It was, therefore, too late, as this objection, under the statute, was then waived and the court had jurisdiction to try and determine the cause, and to render a decree in accordance with and having the effect given to it by Section 414, Or. L. After the defendants had waived the objection that the suit was not brought in the county where the land or some part thereof is situated, the Circuit Court of Marion County had jurisdiction to hear and determine this suit and to cancel the mortgage in question, under the principle that “where the defendant in the original action is liable to the plaintiff, either in consequence of contract, or as trustee, or as the holder of a legal title acquired by any species of mala fides practiced on the plaintiff, the principles of equity give a court jurisdiction, wherever the person may be found, and the circumstance, that a question of title may be involved in the inquiry, and may even constitute the essential point on which the case depends, does not
Defendant’s next contention is that this suij cannot be maintained because the plaintiff is not the real party in interest. This objection is based upon the fact that before the suit was commenced the plaintiff had conveyed the mortgaged premises to her sister. The objection was made, for the first time, at the trial. The defendant neither moved against the complaint nor demurred'thereto; nor does the answer contain any allegation that the plaintiff is not the real party in interest. “If the complaint states facts sufficient to constitute a cause of action, it cannot be dismissed at the trial for irrelevancy or redundancy in its allegations, nor for indefiniteness or uncertainty which might have been corrected by motion, nor from misjoinder or duplicity, nor for defect of parties, nor because plaintiff is not the real party in interest, or has not legal capacity to sue.” Abbott’s Trial Brief on the Pleadings (1891 ed.), § 691, p. 583. By her deed of conveyance the plaintiff covenanted with her sister that the premises were free from all encumbrances and that she would warrant and defend the same against the lawful claims of all persons whomsoever. It is not necessary for the plaintiff to prove ownership in order to establish her cause of suit as by the covenants of her deed she is the party who ultimately would have to pay the mortgage if it were sustained. She, therefore, has a substantial interest in this litigation.
“These remedies [reformation and cancellation] may be obtained on behalf of either a legal or an equitable interest, by either a legal or an equitable owner.” 1 Pomeroy’s Equitable Bemedies, §4.
This rule was applied and followed in Blaser v. Fleck, 96 Or. 187 (189 Pac. 637), and in the cases there cited. The cancellation of this mortgage at the suit of plaintiff necessarily puts at an end all possibility of any further litigation seeking a cancellation of this mortgage. We therefore conclude that this objection is not well taken.
Defendants also contend that it was the duty of the court, under the evidence offered at the trial, to enter a decree sustaining the mortgage. It appears from the testimony that on September 14, 1920, the plaintiff was indebted to various parties in amounts greater than, at the time, she was able to pay; that, at that time, she was the owner of the 520 acres of land described in the complaint and also of various other tracts of land; that she consulted, in respect to her financial difficulties, with the defendant Purdy who was a real estate dealer; that he represented to her that if she would convey all of her property to him as trustee, he would so handle the property as to raise sufficient funds with which to pay her creditors and to save a part of the property for her; that, having confidence in his integrity, and believing that he had the ability to carry out his representa
On January 7, ,1921, without any consideration therefor, he executed a deed conveying the 520-acre tract of land to the defendant corporation. At that time he was the president of the defendant corporation; his daughter was secretary; his wife was treasurer, and all of the officers and directors of the corporation, and, so far as the record discloses, all of the stockholders of the corporation, were members of his own family. The defendant corporation mortgaged the premises to the defendant Purdy to secure the payment of a note given by the corporation to Purdy for $1,800, payable one year after date, and, subject to said mortgage, by deed reconveyed the premises to the plaintiff. The deed contained a recital that the grantee assumed and agreed to pay said mortgage. This deed was placed of record by the defendants and, after it had been recorded, was mailed by the defendants to the plaintiff. The deed from Purdy to the corporation is dated January 7, 1921, and it purports to have been acknowledged on that day. The mortgage from the defendant corporation to Purdy was dated and acknowledged on February 3, 1921, and was recorded on February 8, 1921, while the deed of reconveyance from the corporation to Purdy was dated and acknowledged on January 3, 1921. Hence, on the face of the record as made by the defendants, the mortgage was executed one month subsequent to the day that the premises were reconveyed to the plaintiff and four days prior to the conveyance of the premises to the defendant corporation by Purdy. The deed to plaintiff from the defendant corporation contains full covenant of warranty except it recites that the prem
Plaintiff testified that the conveyance from Purdy to the corporation and the execution by the corporation to Purdy of the mortgage were made without any authorization by her and without her knowledge or consent, while the defendant Purdy testified that these conveyances were made with her full knowledge and approval.
The testimony in this cause was taken in open court. The learned judge who heard this testimony had the opportunity of seeing the witnesses, of observing their demeanor upon the stand and of judging their credibility. He found that the property was encumbered by this mortgage without plaintiff’s knowledge or consent, and that the transaction was unauthorized and was fraudulent and void.
A careful consideration of the testimony convinces us that the trial judge was right in his conclusion and that these premises were conveyed by Purdy to the defendant corporation in order to enable Purdy, through the corporation, to obtain a mortgage upon plaintiff’s land in fraud of her rights and in violation of Purdy’s trust agreement.
For the reasons stated the decree appealed from will be affirmed. Affirmed.