107 N.W. 68 | N.D. | 1906
Lead Opinion
The purpose of the plaintiff’s action is to remove a cloud from plaintiff’s title. The complaint alleges: “That the defendants on behalf of the estate of David A. Murray, deceased, claim a lien or incumbrance on said real estate, adverse to these plaintiffs, which said lien or incumbrance is further claimed by said defendants by virtue of a certain mortgage made, executed and delivered by one William N. Buswell and Margaret A. Bus-well, his wife, to the said David A. Murray, covering said real estate, which mortgage bears date November 10, 1882, and was recorded in Book M of Mortgages, on page 236, in the office of the register of deeds of the territory of Dakota, now state of North Dakota, on November 25, 1882, at nine o’clock a. m.” “That said mortgage does not constitute a lien * * * and is invalid,” and “constitutes a cloud upon the title of plaintiffs” — and prays (1) “that said claim be adjudged null and void: (2) that the title be quieted in these plaintiffs; (3) for general relief.” The defendants’ answer admitted that they held the mortgage set up in paragraph 6 of the complaint, but denied its invalidity. The
There is no dispute as to the facts. The only ground urged for cancellation is that proceedings for the foreclosure of the mortgage are barred. The mortgage was given on November 10, 1882, and secures a note for $700, due November 10, 1887. On November 30, 1899, Margaret A. Buswell, the mortgagor, gave a quit claim deed to her daughter, Susie M. Young, for a nominal consideration of $25. The testimony shows that the land is worth about $2,000. All of the five witnesses for plaintiffs testified to the fact of nonpayment of the debt. Mrs. Buswell and her daughter, Susie M. Smith, one of the plaintiffs herein, testified that nothing had been paid since October 1, 1885, when an interest payment was made; and it is stipulated in the record that the debt has not been paid, and it appears that the plaintiff knew at all times that the debt was not paid. She received the quitclaim deed from her mother with that knowldge. It is clear that she is in no better position to ask relief at the hands of a court of equity than her mother, the mortgagor. For the purposes of this case we may assume, without deciding the question, that the statute of limitations is available as a defense against the enforcement of the mortgage either by action or power of sale. The majority of this court has reached the conclusion, upon a rehearing, that the plaintiff must fail Equity and good conscience require that she should pay the debt secured by the mortgage as a condition to its cancellation. The maxim “that he who seeks equity must do equity” voices a just and universal rule in determining the equitable rights of suitors, and should always be applied in cases like this. The action, even if treated strictly as a statutory action to determine adverse claims, is equitable (6 Pomeroy’s Equity Jurisprudence, section 735), and is governed by equitable principles. The plaintiff seeks equity. They must do equity. Every man should pay his just debts. It is right that he should do so. The fact that he may not be coerced to discharge them by legal means affects only the legal character of his obligation. It does not alter the primary fact that he owes an obligation which in equity and good conscience he should pay. The Supreme Court of California, in applying this principle in a similar case (Booth v. Hoskins, 75 Cal. 276, 17 Pac. 227), said: “Common honesty requires a debtor to pay his just debts if he is able to do so, and courts, when called upon, always enforce such
This doctrine was applied by this court in Satterlund v. Beal, 12 N. D. 122, 95 N. W. 518. In that case the plaintiff sought to cancel a mortgage against which the statute had run. The defendant counterclaimed for its foreclosure. The plaintiff attempted to plead the statute, but his pleading was insufficient. Upon a trial de novo, the court denied the prayer for cancellation and awarded judgment of foreclosure. The doctrine that a mortgage will not be canceled merely because the statute of limitations has run against an action to enforce it, and without payment of the amount justly due thereon, is of general acceptance. Our attention has been called to but two cases wherein cancellation has been awarded without payment. In Selby v. Sanford (Kan. App.) 54 Pac. 17, a mortgage was canceled on the sole ground that the statute had run against it. The opinion makes no reference to the equitable rule which is applicable to such cases. The case rests neither upon
Dissenting Opinion
(dissenting). I am unable to concur in the conclusions of my associates in this case. It seems to me that their reasoning is unsound, because the case is not within the reason for the rules applied. The action is one to determine adverse claims under sections 5904-5913, Rev. Codes 1899,- as amended by chapter 5, p. 9, Laws 1901. This was conceded by the appellant until the first opinion was handed down in this case. The appellant then petitioned for a rehearing, claiming, among other things, that the action was not one to determine adverse claims, as it was assumed to be in the first opinion. Further consideration of the case on rehearing has served to confirm me in the conviction that the first opinion was right on this question, as well as on all the questions involved. This dissent will therefore be largely a reiteration of the proposition upon which we all then agreed.
The complaint, although otherwise in statutory form, unnecessarily disclosed that defendants claimed to have a lien on the land by virtue of the mortgage in question; but the complaint did not admit that it was then or originally a valid lien. The prayer for relief was that prescribed by the statute, to the effect that the defendants set forth their adverse claims, whatever they were, to the end that their validity be determined, and plaintiffs’ title
This action is one provided by statute, whereb)' the plaintiff can require all adverse claimants to come into court and establish, if they can, that they have some valid adverse claim, by lien or otherwise, upon the premises in question. The only fact necessaiy for the plaintiff to prove or plead, in the first instance, is that he has some estate in or lien upon the property. In other words, he is required to show, if the fact is denied, that he has the right to.maintain such an action. The defendant must then establish prima facie the adverse claim which he pleads. Now, it seems to me that it is merely to state a truism to say that, if the adverse claim pleaded is a lien, it must be an enforceable one — a lien which the defendant can use as a means of compelling payment of the debt it secures in some appropriate action or proceeding instituted for that purpose. A lien which exists only on paper, but which cannot be enforced, is for all practical purposes no lien. It is, like a shadow, without substance. As said by Chief Justice- Corliss in Wells County v. McHenry, 7 N. D. 246, at page 265, 74 N. W. 241, at page 248: “A lien that cannot be enforced is no lien at all.” In Burwell v Tullis, 12 Minn. 572 (Gil. 486), a case very similar to this, Chief Justice
It is true that the statute operates on the remedy only, and it is often said that the obligation remains, even though the remedies are barred. The obligation remains only in a limited sense. Although all remedies are barred, the obligation, though outlawed, is a good and sufficient consideration to support a new promise; and an action to enforce it may also be maintained after the time limited by the statute, unless the defendant pleads the statute in bar. The rule that the statute is tolled by a new promise and is waived by the defendant’s failure to avail himself of it is a logical result of the theory upon which such statutes are based. The reason for the enactment of statutes of limitations is that it is contrary to public policy to permit the litigation of stale demands. The object of the statute is to compel claimants to enforce their claims while the transaction out of which the claim arose is fresh, and while the best evidence of the' facts involved is available. The courts are forbidden to undertake the investigation and determination of the merits of a cause of action after the time limited, because after so long a time it is presumed that the evidence in relation to the transaction is not reliable. There is no ground for this presumption, however, when the defendant has acknowledged the validity of the claim by a new promise in writing, or a partial payment within a less period of time before commencement of the action than is required to raise the presumption. So, also, the defendant’s failure to rely on the statute is a waiver of the defense, because such failure to urge it is
Right here, it seems to me, lies the fallacy of the majority opinion. They assume that the mortgage is valid. It is only by making that assumption that it is possible to assert that equity requires the payment of it as a condition precedent to equitable relief. As stated above, this assumption is unwarranted, and consequently the entire argument of the majority falls to the ground. If the mortgage is presumptively valid, as asserted by' my Brethren, it seems to me that consistency requires that the presumption should be carried to its logical conclusion. If the mortgage is valid, the appellants are entitled to a decree establishing and confirming their lien, and also to a decree declaring Tracy’s tax deed invalid, instead of being dismissed from the court without relief if the plaintiff does not pay. Again, if the mortgage is presumptively valid, then clearly it is not a conclusive presumption. The defendant should be permitted to show the contrary. But that would involve a trial of the merits. My Brethren seem to agree that such a trial is not permissible. The result, then, is that the mortgage is presumed to be valid, and the respondent is denied an opportunity of showing the contrary. In other words, the presumption is in effect conclusive, after the limitation statute has barred all remedies, unless the respondents forego their statutory defense. The respondents must choose between the horns of a dilemma. They must either forego the statutory right to decline to litigate an outlawed mortgage, or they must pajr it in order to remove it as a cloud on their title. Viewed from a practical standpoint, the rule as established by the majority seems to me absurd. The mortgage is an unenforceable one, because public policy will not permit any inquiry into the merits of the claim. It must remain, however, as an eternal cloud on the title, unless the owner of the property will consent to litigate the merits notwithstanding the statute, or pay what the mortgagee sees fit to demand. Such was the conclusion
Two reasons are given for declining to afford equitable relief from on outlawed mortgage in that form of action: First, it is said the statute of limitations is an odious and inequitable defense; second, it is said that the statutory bar is “a shield and not a sword,” and hence must be relied upon as a defense and not as a ground for affirmative relief. Neither of these reasons is applicable in this state to an action to determine adverse claims. The idea once prevailed that the statute of limitations was not a meritorious defense, but that idea has long since been abandoned by nearly all courts, and has been expressly repudiated in this state. Wheeler v. Castor, 11 N. D. 347, 92 N. W. 381, 61 L. R. A. 746. A court of equity is as much bound to observe and enforce the statute as a court of law. The reason for prohibiting litigation of stale demands is just as cogent in one court as in the other. Moreover, to exact payment of an outlawed mortgage on the theory that he who seeks equity must do equity necessarily postulates that the mortgage is presumptively valid. As already stated, this assumption is unwarranted. The second reason for declining relief in such cases — that the statute is a shield and not a sword — may be sound if properly applied; but it is not applicable to this form of action. It goes only to the form of the remedy, not to the substantial right. The statute is a protection against the litigation of stale demands, and hence the statute requires the party relying on it to plead the statute. It is well settled that this provision of the statute means that the statute of limitations must be pleaded as a defense if there is an opportunity to do so. If an outlawed demand is pleaded in an answer, then the statute must be pleaded in the reply; but, if the rules of procedure do not provide for a reply, then the statutory bar need not be pleaded, but may be relied upon and urged at the trial. Enc. of Pl. & Pr. vol. 13, p. 187; Dreutzer v. Baker, 60 Wis. 179, 18 N. W. 776: Cur
I said above that the Indiana case (Cassell v. Lowry [Ind. Sup.] 72 N. E. 640) was the only case in point cited in the majority opinion. It will be found upon examination that all the cases cited (except the Indiana case and the Calif orina cases) were suits where the lien was attacked for specific reasons, and hence, as stated above, the attacking party admitted the validity of the adverse claim unless he established the specific invalidity alleged. In such cases, of course, the plaintiff must fail, because he cannot use the statute of limitations as a sword. Some of the cases from California were actions to determine adverse claims. In those cases, however, the defendant answered and alleged title in himself by virtue of apparently absolute deeds. The plaintiff, claiming that these deeds were in fact mortgages, had the burden of showing that" these apparently absolute deeds were in fact given as security; and hence he could not be relieved of them except by performing the conditions of the contract pursuant to which they were given. I fully agree with the conclusions announced in those cases. They are clearly distinguishable from the case at bar. In those cases the plaintiff had the burden of showing that the deed was not what it purported to be, and, in order to be relieved of the deed, he must redeem the mortgage which his own proof showed the deed to be. In other words, he was in the same position he would have been in if he had brought an ordinary suit in equity to cancel the deeds. In this case the plaintiff simply asserts his statutory right to decline to litigate the merits of an outlawed lien pleaded by defendant, who has the burden of proving its validity
I think the majority opinion is unsound in principle and violates both the letter and spirit of the statute of limitations, and is supported by no authority except the Indiana case. Even in that case the court said (72 N. E. 641) : “It must be understood that our decision is limited to the right of a debtor himself to have his title to land quieted where it appears that the purchase money is unpaid.” Thus the court which rendered that decision expressly declare that it should not be taken as a precedent in a case like the one at bar, when the plaintiff is. not the debtor. I confess, however, that I do not see any good ground for such a distinction. It seems to me that my associates have not only misapplied the maxim that “he who seeks equity must do equity,” but have overlooked, and consequently have failed to give effect to those two other equally important maxims, “Equity aids the vigilant, not those who sleep on their rights,” and “Equity follows the law.” It must be borne in mind that modern statutes of limitation do not create any presumption of payment, satisfaction or other extinguishment of the claim in litigation, and that the statute is equally binding on a court of equity as on a court of law. The old controversy as to whether equity applied the principles of the statute of limitation by analogy or in obedience to the statutory rule was settled long ago in favor of the latter view. Angelí on Limitations, sections 25-27. As already shown, there is no presumption of extinguishment by reason of the expiration of the limitation period. Proof of nonpayment, therefore, is no reason for declining to apply the law. Quite the contrary. Nonpayment simply shows nonacknowledgement. Relief is barred by the statute, because it is against public policy to try the merits of a stale demand. This is the reason why courts of equity would not entertain a stale claim, even though not within the letter of the statute. The legislature having fixed the time required to constitute a bar by reason of the claimant’s neg
I further maintain that this decision violates the spirit and intent of section 5845, Rev. Codes 1899. It is plain that this statute was enacted for the purpose of placing the remedy of foreclosure under the power on the same footing as an action to foreclose, that is, to enable the mortgagor to summarily require the foreclosure to be made by action, if there is any dispute as to the validity of the mortgage, or the amount due on it, and also to enable the mortgagor to prevent a sale under the power, if a foreclosure by action could not be had. The policy of the law plainly was to require all disputed questions concerning the mortgage, or the amount due thereon, to be litigated in an action to foreclose, instead of compelling resort to the more circuitous suit in equity to enjoin the sale under the power. To permit the mortgagee to establish the validity and amount of his mortgage in this form of action, after the mortgagee by his own laches has lost the right to enforce his mortgage by action or otherwise, it seems to me, is a flagrant disregard of the will of the legislature. If the mortgagee is forbidden to enforce his mortgage because it is contrary to public policy to permit the merits of so stale a claim to be tried in an action to foreclose, why should that reason by ignored in this action? How can the court consistently adjudge valid a mortgage which cannot be enforced, and as to the merits of which it is forbidden to inquire, unless the mortgagor waives the statutory bar? The reasons which forbid the litigation of an outlawed mortgage are just as true in this action as in any other, and a mortgage containing a power of sale is just as much within the reason as a mortgage not containing that stipulation.
It may be urged that the remedy under the power is not barred until an injunction under section 5845 has been granted. The same argument would apply with equal force in the case of an