Anderson v. Hooks , 9 Ala. 704 ( 1846 )

COLLIER, C. J.

There” can be no question but it is competent for a mortgagee with a power to take possession of and sell personal property, upon the mortgagor’s default, when the property is levied on after the forfeiture of the mortgage, to interpose a claim and try the right as the statute provides. [Planters’ and Merchants’ Bank of Mobile v. Willis & Co. 5 Ala. Rep. 770.] Yet it by no means follows, that the mortgagee may not waive his legal right, and resort at once to a court of equity, where all interests may be adjusted, and more ample justice dispensed. We have repeatedly held, that although it is competent for a mortgagee to execute a power of sale contained in a mortgage, yet he is not bound thus to avail himself of his security. He may, if he prefer it, go into Chancery, and pray a foreclosure and sale, under the sanction of the court. [Chambers, et al. v. Mauldin, et al. 4 Ala. Rep. 477; The Heirs and Adm’rs of Hitchcock v. U. S. Bank of Penn., 7 Ala. Rep. 38.] In this latter case it was decided, that a mortgagee who has purchased the equity of redemption, and thus united in himself prima facie the legal and equitable estate, may apply to a court of equity for a foreclosure and to quiet his title.

Where, in the language of some of the books, there is a cloud hanging over the title of lands, which would prevent it from selling for a fair market value, Chancery frequently entertains suits to adjust the pretensions, or settle the priorities of conflicting claimants. The object of the complainant’s bill proposes nothing more.

Although Hooks is made a trustee by the deed of Harris as it respects Stocks, and could perhaps have been treated as such by the Bank, had it asserted a right to the security, yet he is, so far as it provides an indemnity for him, a mortgage with a power of sale. The deed preferred him to Stocks, and even if the latter had been a bona fide creditor, whose demand was not controverted, it would still have been competent for Hooks to have sought a decree of foreclosure in equity. So that in any view in which the cause can be considered, the bill is not obnoxious to the objection, that it does not disclose a case for equitable interposition'.

The second section of the statute of frauds, in declaring that every, gift, grant or conveyance of lands, tenements, or hereditaments, goods or chattels, or of any rent common, or profit out of the same, by writing or otherwise, had or made and continued of malice, fraud, <fcc;, to the intent or purpose to delay, hinder, or defraud creditors, shall be utterly void, &c., is but declaratory of the common law. The introduction of the term “purpose” into the act, does nót impartió it any additional potency. It is only the synonym for design, intention, aim — is but a mere expletive, intended to convey the idea which the legislature had in view more strikingly, and might be stricken from the act without affecting its interpretation in any manner.

In respect to the indebtedness of Harris to the Bank, and the suretyship of Hooks as stated in the deed, so far from being disproved, or rendered doubtful, it is abundantly apparent from the evidence in the record; and if the purpose of the deed was to secure its payment directly to the Bank, or to provide Hooks with the means for that purpose, it would be confessedly unobjectionable. But it is supposed, that as the object of the deed was to provide for a simulated debt, ■which was a fraud upon the creditors of the grantor, it cannot be recognized for any purpose, but must fail in toto.

It was said by Lord Hobart, in Norton v. Simmes, (Hob. Rep. 12 c. page 48,) “that the státute is like a tyrant, when he comes he makes all void; but the common law is like a nursing father, makes void only that where the fault is, and preserves the rest.” See also Maleverer v. Redshaw, 1 Mod. Rep. 35. This remark of Lord Hobart has been often quoted to prove, that a contract void in part by statute, is void in toto, but it establishes no such principle. It is a mere declaration as applied to the case then under consideration, that where a statute prescribes the form of an obligation, and enacts, that one taken in any other form shall be void, if the terms of the statute are departed from, no obligation is incurred by the party undertaking to bind himself. Thus far, there can certainly be no objection to it.

In Kenison v. Cole, 8 East’s Rep. 236, the instrument in question was a bill of sale and mortgage of a ship, which by statute was declared to be “ utterly null and void, to all intents and purposes.” In the writing was a covenant to repay the money lent. Mr. Justice Lawrence remarked, that the decision of Lord Hobart did not apply to different and independent covenants and conditions in the same instrument, which may be good in part and bad in part, and that the undertaking to repay the money, was good as a personal covenant.

Lord Chief Justice Gibbs, addressing himself to the consideration of the argument, that if a deed be void in part, it must be void as to the whole, says, “ if the objection had been derived from the common law, it is admitted that it would not be -the consequence. But it is urged, that the statute makes the whole deed void. The truth is, there is no difference betrveen a transaction void at common law, aiid void by statute. If an act be prohibited, the construction to be put on a deed canveying property illegally, is, that the clause which so conveys is void, equally, whether it be by statute or common law. But it may happen, that the statute goes further, and says that the whole deed shall be void, to all intents and purposes; and when that is so, the court must so pronounce, because the legislature has so enacted ; and not because the transaction is illegal. I cannot find in this act any words which make the entire deed void, &c. I think this grant of that interest in land, which, by the terms of the grant, is to be applied to a charitable use, is void ; and that the deed, so far as it passes other lands, not to a charitable use, is good.” This is the clear result of the English authorities, say the Supreme Court of the United States, in The United States v. Bradley, 10 Peters’ Rep. 343. In this latter decision, it was said, “ There is no solid distinction in cases of this sort, between bonds and other deeds containing conditions, covenants, or grants, not malum in se, but illegal at common law; and those containing conditions, covenants or grants, illegal by the express prohibitions of statutes. In each case the bonds or other deeds are void as to such conditions, covenants or grants which are illegal, and are good as to all others, which arejegal and unexceptionable in their purport. The only exception is, when the statute has not confined its prohibitions to the illegal conditions, covenants, or grants; but has expressly, or by necessary implication, avoided the whole instrument, as to all intents and purposes.” To the same effect is my opinion in Bates and Hines v. The Bank of the State, 2 Ala. Rep. 485-6-7-8. See the cases there cited.

Prince v. Shepard, 9 Pick. Rep. 176, if not identical in its facts to the present, is strikingly analagous in principle. The court there said, where property is assigned by a debtor to two persons, by one instrument, to “ hold to them respectively, in the proportions in which the debts due to them respectively bear to each other,” and the assignment is proved to be fraudulent and void, as to one of the assignees, it is nevertheless valid in respect to the other, who is innocent of the fraud; their interest in the fund being several, though if the instrument were valid in the whole, they would take as tenants in common.

We need add nothing to these citations. They show the law to be well settled, that although a deed may be void in part', by a statute, yet it will be valid for the residue, unless the statute avoids it for all purposes. The statute of frauds merely declares, that the “ gift, grant, or conveyahce,” if made with the intent or purpose to defraud creditors, is “ clearly and utterly void.” Now a single deed may evidence a gift, grant, or conveyance, to different individuals, and of distinct objects, and may be invalid as to one of the grantees without affecting the other. In respect to the consideration, they may be wholly disconnected, so that the fraud of the one could not implicate the other in any dishonesty of purpose. The facts of the present case do not as we have seen, show that Hooks lent himself to Harris, to enable him to defraud his creditors; and he cannot be prejudiced, because the deed for his indemnity, makes provision also for the pretended debt to Stocks.

Hooks, then, for any thing appearing to the contrary, being a bona fide mortgagee, without notice of an intended fraud, cannot be divested of his surety by the malafides of Harris, the mortgagor. To make a grantee answerable for the covinous intention of the grantor, it must appear that he participated in it. [Stover v. Herrington, et al, 7 Ala. Rep. 142.] The embarrassment of Harris, his relationship to Hooks, and the contiguity of their residences, are not sufficient, under the circumstances, to warrant the imputation of fraud to Hooks.

This view is decisive of all the points raised at the bar, and the consequence is, that the decree is affirmed.