112 P.2d 570 | Wyo. | 1941
Lead Opinion
This is an action brought by plaintiff Frank Rasch against L.V. Stryker, defendant, to quiet title to a piece of ground in the town of Lovell, described as the south half of Lot One of Block 9 in that town. Plaintiff took possession of the premises pursuant to contract with one Robertson who had purchased the lot from Big Horn County. He is not, accordingly, in privity with the mortgagor herein mentioned. He pleaded that he entered upon the premises on April 28, 1928, and has ever since been in actual, open, notorious, continuous, hostile and exclusive possession thereof against the world; that defendant Stryker claims an interest therein, which is, however, without foundation, and should be held to be barred. Plaintiff's evidence showed that he had been in such adverse possession for twelve years prior to the commencement of this action, and that fact is not disputed by the defendant Stryker. The latter, however, filed a cross petition in the case, setting forth that one Kelsy, *40 then owner of the premises, on November 30, 1921, executed to him a note for $700 and a mortgage on the premises to secure it, and he asked that the mortgage be foreclosed, and held to be prior in right to that of the plaintiff. By his reply the plaintiff alleged that he did not know anything about this mortgage, but that if it exists, it is of no avail against the title of the plaintiff. It was stipulated by the parties, and by Kelsy, who was also a party to the action, that the note in question "is an unpaid promissory note, the amount due thereon being as specified in the cross petition, and that the mortgage described in the cross petition is a duly recorded mortgage, and has never been released or satisfied." The court entered judgment for plaintiff, from which the defendant Stryker has appealed. The parties will be referred to herein as in the court below.
The statutes which have a bearing in this case are Section 89-406, Rev. St. 1931, which provides that "an action for the recovery of the title or possession of lands, tenements or hereditaments, can only be brought within ten years after the cause of action accrues," and Sections 89-408, -409, which provide that an action on any contract in writing is barred within ten years after the cause of action accrues.
1. Plaintiff claims that his title by adverse possession is good against the world, in all cases, including a mortgagee, while the defendant claims that no adverse possession can avail against a mortgagee, while the mortgage exists, for the reason that, until such mortgage is foreclosed, the mortgagee has no right to bring an action for the recovery of the real property, and he calls attention to the fact that an action of foreclosure is not such action (Balch v. Arnold,
Plaintiff in this case relies upon the rule stated in 2 C.J.S. 804, that "liens against the true owner which are dependent on his title are destroyed by possession for the statutory period adverse to the true owner since the title acquired by adverse possession is not a derivative but an independent paramount title." Much of what is said by the majority in McClanahan's Adm'r. v. Norfolk and Western Ry. Co.,
2. In the case at bar, the mortgage was given before the adverse possession commenced, and what follows herein relates to such situation. Does the same rule apply as when adverse possession is prior? It may be argued that if in the latter case a mortgagee takes subject to the rights of the adverse possessor, an adverse possessor who has actual or constructive knowledge of a mortgage should take subject to the rights of the mortgagee. A mortgagor's possession is not ordinarily adverse to the mortgagee (1 Am. Jur. 812), and it appears to be a general rule (the full extent of which we need not determine), that the successors in interest of a mortgagor, and in privity with him, such as grantees, ordinarily, at least, take no greater right than the grantor, and acquire the land subject to a mortgage given by the grantor, of which they have actual or constructive knowledge. Jones on Mortgages (8th ed.) Sec. 1540; Doyle v. Mellen,
A mortgage has occupied an anomalous position in the law almost since the time of the advent of equity, and while it was considered as conveying the title to the mortgagee at law, equity treated it as a lien. Its nature is not treated uniformly in the various jurisdictions in the United States even now. Jones, Mortgages, supra, Sec. 18 sqq. However, it is generally held that the mortgagee is not entitled to possession against the mortgagor until after default. And in many states, as in this (Robinson Merc. Co. v. Davis,
3. There can be no doubt, accordingly, we think, that if the defendant in this case had brought an action to foreclose his mortgage within the time allowed him by the statute, his right to do so, with full effect, could not have been defeated by a claim of adverse possession. But the defendant brought no such action within that time. And that brings us to the crucial question in this case. While the agreed statement of facts is not clear, counsel for the defendant seems to construe it as meaning that the indebtedness secured by the mortgage is still an enforceable obligation at least as to the mortgagor. Perhaps that is true, in view of the fact that Kelsey joined in the statement, and we shall consider the case in that light. A material question then seems to be as to when adverse possession is initiated against a mortgagee. We take it that it would be at once, if the adverse possessor has no actual or constructive knowledge. Perry v. Markle, 127 Nebr. 29, 254 N.W. 693. So it becomes important only to inquire whether that is true also in case the adverse possessor has actual or constructive knowledge of the mortgage. In this case he had constructive knowledge, when he initiated his adverse possession. The primary purpose and result of adverse possession is, of course, to divest another — the true owner, if any — of his rights in the property. And while we need not say that possession might not be adverse to a lien holder or mortgagee, while it is adverse to the true owner (see 28 Yale L.J. 221), it would seem that ordinarily at least, if the possession *49
is actually adverse, it is adverse to every one who may have an interest in the property, in so far as the law allows it to be so. Several cases already cited are to that effect. It is held that a person who has an interest in the land may set up the fact that the mortgagee is barred from bringing his action of foreclosure. 37 C.J. 718; Graves v. Seifried,
"The very purpose of the law in providing for prescriptive title is to extinguish the claims of all others in the land. If such adverse possession ripened into title that was good only as against those having no claim to the land, the law would be useless and could serve no purpose. The manifest purpose of the law is to establish title that is good against all legal and legitimate rights and title formerly held by others, but forfeited by reason of adverse possession. Whether such rights are founded upon a mere lien such as a mortgage, upon title for a limited purpose such as a security deed, or upon absolute and unconditional title makes no difference."
If that is correct, and we believe it is, then it is reasonable to hold that title by adverse possession is, at least in the absence of facts or circumstances showing the contrary, initiated against a mortgagee from the *50
time when hostile and exclusive possession is taken of the property, in harmony with the Massachusetts and other cases above cited that disseisin of the mortgagor is a disseisin of the mortgagee, but with the results necessarily modified as herein mentioned by reason of the modern difference in the relationship of the mortgagee to the property. It has been said that such adverse possession is ineffectual, or not a true adversary holding against a lien while the latter may be lawfully enforced. Parker's Adm'r. v. Clarkson, and Pratt v. Pratt, supra. That, in a sense, is true. A somewhat different, and perhaps better, way to express the situation, in the light of modern rules relating to mortgages, is, that in such case the rights of a lienholder or mortgagee against an adverse possessor are rights to interrupt this possession within the time allowed by statute and thus break the period required by statute to acquire title by adverse possession. This puts the situation in a clear, harmonious and logical light, and includes within the rule, which would not otherwise be true, a case in which the lien or mortgage has not been enforced within the time allowed by statute, and the lien-holder or mortgagee thus has failed to avail himself of the opportunity to protect himself. A mortgagee, then, may commence his action to foreclose within the time permitted by statute, that is, in this state, within ten years after the mortgage becomes due, and if he does so then, at least if he makes the adverse possessor a party (see Jones, supra, Sec. 1541; Thornely v. Andrews,
This holding, we think, fully protects the mortgagee. He is given (1) the time from the execution of the mortgage until the due-date thereof, under an agreement made prior to the adverse entry; (2) ten years thereafter; (3) the additional time between the due-date of the mortgage, and the time when adverse possession is taken, provided that the rights against the mortgagor are not barred during this additional time. Should he have the further right of extending the time for payment and for foreclosure after adverse possession has been initiated? We must bear in mind the fact that the courts have given a broad construction to the statute relating to the time for bringing an action to recover real property, and they have almost universally held that such statute is not merely a statute of limitation, but that when adverse possession for the statutory period is held, the adverse possessor is vested with full, new and distinct title. 2 C.J.S. 803-804; 16 N.Y.L.J. 535 sqq; 1 Am. Jur. 794, 796. In England it was deemed advisable to make that the rule under a special statute more than 200 years ago, after former statutes had been found to be insufficient. 2 C.J.S. 804, note. We are not disposed to create an irritant among this almost universal holding. We shall, accordingly, while protecting a mortgagee to an ample extent, not put a construction on the statute relating to actions for the recovery of land which would in many cases almost annul it. If a mortgage may be extended after adverse possession commences, it would follow that by such extension, perhaps by agreement between the mortgagor and mortgagee, title by adverse possession could be defeated for an unlimited time — for 50 or 100 years. In Schafer v. Hauser and LeRoy v. Rogers, supra; Lemker v. Unknown Claimants,
Affirmed.
RINER, Ch. J., and KIMBALL, J., concur.
Addendum
It is further contended that, even though the plaintiff may set up the statute, he did not do so in this case, and that such failure requires a judgment for the cross-petitioner herein. In that connection counsel complains because we assumed that the mortgage became due some time in 1922. The agreed statement of facts showed that the note was due, but did not show the time thereof. Hence it is in no manner inconsistent with our assumption. For some unaccountable reason the cross-petitioner failed to state in his pleading when his note and mortgage became due, and we, accordingly, assumed it to be due at once or within a reasonable time. We asked his counsel on the oral argument as to the due date, but he was unable to inform us. He knew, accordingly, that we were searching for light on the subject in order not to do any injustice, but he has failed to give it even in his petition for rehearing. In all probability, accordingly, and particularly when we take business usage into consideration, the note and mortgage of the cross-petitioner is actually barred, and to send the case back merely to give the plaintiff the opportunity to amend his pleadings — which in any event we should do under the circumstances of this case if it were necessary — would subserve no good purpose, and we might well deny the petition for rehearing on that ground.
It is ordinarily true that a claim that a cause of action is barred by the statutes of limitation must be specially pleaded. 37 C.J. 1213. A suit such as that before us involves two statutes of limitation, one, relied upon by plaintiff, relating to the time in which an action to recover real property may be brought — conferring title in the absence thereof — and one relating to the time in which foreclosure of a mortgage may be *54 instituted. The periods happen to be the same under our statute — ten years. Counsel for the cross-petitioner argues that plaintiff should have pleaded specifically that the foreclosure of the mortgage is barred pursuant to the statute relating thereto — in other words, that plaintiff, relying on the statute relating to adverse possession, did not by that fact rely on the statute governing the time in which foreclosure of a mortgage may be had. Counsel for plaintiff argued that the bar of any statute has been sufficiently pleaded in the petition. Plaintiff alleged that he acquired title by adverse possession during a period of ten years, and that the cross-petitioner is barred from asserting whatever rights he had by reason of not asserting them during that period. Perhaps the allegations of the petition do not go quite far enough, on the theory of counsel for the cross-petitioner, in that they do not state that the rights of the cross-petitioner are barred by reason of not asserting them within ten years after the cause of action accrued, unless, possibly, that may be gathered from the implied statement that the cross-petitioner should have asserted his rights within that time. However that may be, assuming that it would have been better if plaintiff had been more specific, we do not think that the failure in that respect, particularly in view of the rule hereinafter stated, should be held to be fatal in this case. Courts, if they can, will avoid deciding a case on technical grounds. It must be borne in mind that the rule requiring the statute of limitations to be set up has its basis, in a case involving a contractual debt, first, in the fact that it is an affirmative defense, and second, that a debt is not extinguished by the statute, but that a moral obligation to pay remains; that, accordingly, the right to set up the statute is a privilege which may be waived, and that it is waived if not set up. Thus Wood, Limitations of Actions (4th ed.) Sec. 7, states that the debtor must *55 interpose the plea of limitation. In a case like that at bar, in which the adverse possessor is not the debtor, no moral obligation for him to pay exists or remains, and such case cannot be treated in the same way as a case in which the bar of the statute is interposed by the debtor, and the only reason why he should do so is that the plea is an affirmative defense. And in the ordinary case, to which this case should be likened in this connection, the main, if not the only, reason for requiring such defense to be set up is to give the opposite party notice thereof, so that he may be able to meet it. Plaintiff's petition fully advised the cross-petitioner that all of his rights, of whatever nature, were claimed to be barred. The allegations thereof are wholly inconsistent with the recognition of any rights of the latter under the mortgage.
Furthermore, the rule appears to be that such affirmative defense is not necessary in cases in which the statute extinguishes the right or title. 34 Am. Jur. 339. The rights of the cross-petitioner were not extinguished by the statute relating to the time when foreclosure of a mortgage may be instituted. But they were extinguished, under the conditions and limitations set forth in our original opinion, pursuant to the statute under which title by adverse possession may be acquired. We held in the original opinion that adverse possession applies against the world from the time when such possession is first taken, and that the right of the mortgagee is substantially a right to interrupt that possession during the time within which he has the right to foreclose his mortgage. In other words, the right of the mortgagee to foreclose operates in the nature of an exception to the rule that adverse possession ripens into title during the prescriptive period. It has been held that when an adverse claimant has shown proper adverse possession during the prescriptive period, the burden to show that the period *56
was interrupted is on the party who seeks to benefit thereby. Vance v. Ellerbe,
We see no reason for rehearing, and the petition therefor is, accordingly, denied.
Rehearing denied.
RINER, Ch. J., and KIMBALL, J., concur. *57