Stewart v. Anderson , 10 Ala. 504 ( 1846 )

COLLIER, C. J.

It is conceded by the defendant’s counsel, that the mortgage to Page was not avoided by the proceedings in bankruptcy, which resulted in the mortgagor’s discharge from his debts, which were proveable under the commission. As the case is presented upon the record, this is the obvious conclusion from the last proviso of the second section of the act of 1841. The question is, whether the defendant by his purchase under the mortgage from Page to the bank acquired a title to the premises which he could successfully assert against his mortgagee ? It is stated as a principle of the common law, that a mortgagor cannot dispute his mortgagee’s title against his own solemn act, nor can he while in possession, bar his title by fine or recovery. [Coote on Mort. 347.] In accordance with this rule it has been held, that a mortgagor shall not be heard to alledge that he had no estate in the premises. By the mortgage, he professes to eonvey, and thus declares that he had an interest co-extensive with that he undertook to transfer; and he will not be hoard to say, in contradiction of his own deed, or in opposition to a claim founded thereon, that he was guilty of a falsehood, and had no estate or interest therein. [5 Hols. Rep. 102; Id, 156; 12 Johns. Rep. 201; 3 Wash. C. C. Rep. 546; 2 Rand, Rep. 93.]

Powell, in his Treatise on the Law of Mortgages, 190, lays down the law thus: “If a mortgage be made of an estate to which the mortgagor has not a good title, and then he who has the real title conveys to the mortgagor, or his representatives, with a good title, the mortgagee will be entitled in equity to the benefit of it; for it will be considered there, as a graft into the old stock, and as arising in consideration of the former title.” Again: “if the mortgagor obtain a renewal, or the grant of a fresh term in remainder, without the privity of the mortgagee, such fresh term will be considered as held in trust for the mortgagee. And though the mortgaged lease may be surrendered, or expired by efflux of time, still the fresh term must be assigned to the mortgagee, to hold till the debt is satisfied. [Id. note, (0. 2.) The case cited by the plaintiff’s counsel, from'2 Harris & J. Rep. depends upon the same principle, and maintains that the intervention of insolvency, and the discharge of the mortgagor from his debts in consequence thereof, did not authorize him to hold, divested of the lien of the mortgagee, a paramount title to the premises, which he had afterwards acquired.

It i? supposed by the defendant’s counsel, that the doctrine we are considering, rests upon the ground, either of privity between the mortgagor and mortgagee, or because the mortgage contains a warranty of title, and it is insisted that neither of these grounds exist in this case ; that the privity is destroyed by the bankruptcy of the mortgagor, and the mortgage contains no warranty that would carry the subsequently -acquired title to the mortgagee. In respect to the debt intended to be secured, it may be conceded, that as it cannot be recovered by action after the mortgagor’s discharge as a bankrupt, all privity between himself and mortgagee has thus far ceased to exist. But the bankrupt law expressly excepting from its operation all liens, &c. which were valid in their inception, it would seem to follow, that the rights and remedies of the mortgagee in respect to the mortgage in question, were wholly unaffected by it, and that the relation of the parties remains undisturbed. The 20th section of the act of 1803, “respecting conveyances,” (Clay’s Dig. 166,) enacts, that “in all deeds to be recorded in pursuance of this act, whereby an estate of inheritance in fee simple shall hereafter be limited to the grantor, (grantee,) or his heirs, the words, grant, bargain, and sell, shall be adjudged an express covenant to the grantee, his heirs and assigns,» to wit: that the grantor was seized of an indefeasible estate*in fee simple, freed from incumbrances done or suffered from the grantor, (except the rents and services that may be reserved,) as also for quiet enjoyment against the grantor, his heirs and assigns; unless limited in express words contained in such deed: and the grantee, his heirs, executors, -administrators and assigns, may in any action assign breaches, as if such covenants were expressly iñserted.” The deed, it is true, does not convey an absolute estate in fee simple, yet it confers an interest in the land, with the right of possession, which may, if enjoyed by the mortgagee, ripen into a fee, unless the mortgagor shall elect, before that event, to avail himself of the condition, and avoid the conveyance. Or perhaps, to speak more pointedly, the mortgagee was vested at law with a fee simple estate, defeasible upon condition subsequent. This toeing the case, and the terms, “ grant, bargain, sell,” being employed to pass the property, the mortgage at least comes.within the spirit and intention of the statute, and must be construed equally effectual as if it contained such an express covenant as the act implies.

At the time the defendant was declared a bankrupt, the mortgage in question, as a security, was unimpaired by any act done, but was operative against him, and he now seeks to defeat it by setting up an interest subsequently acquired by himself, the successful assertion of 'which would be a breach of his warranty. This cannot be done. If it were allowed, the mortgagee might perhaps make it a ground of action, against which the defendant could not set up his certificate ; because it would have accrued after the decree adjudging him a cankrupt. [Owen on Bank, 161 to 165.] It would be strange if the complainant could be defeated in equity, when the ground of defence showed such culpability as subjected the defendant to an action growing out of his neglect of duty.

Although we have considered the case upon the argument of the defendant’s counsel, we are not prepared to admit that the reason why a title acquired by a mortgagor, inures to his mortgagee, depends upon the fact whether the former has warranted the title which he has undertaken to convey to the latter. ^It rests upon higher ground, viz •: that as the mortgagor has, by his deed, impliedly asserted a right to pledge the premises by a conveyance in fee, he shall not be .allowed to insist that he had a less estate, and whatever interest he afterwards acquires, shall vest in the mortgagee to make good the title which he professed to transfer. In this •view, it is immaterial whether the mortgagor’s purchase was made after he was declared a bankrupt or not — he cannot gainsay the title which he professedly conferred^

In considering this case, we have endeavored to forget the moral aspect of the defence, though it cannot be disguised, •that the defendant presents himself in a most ungracious attitude ; and we will no deny that we are better pleased with our decisions, wheil they result in the harmony of municipal with moral justice.

The decree»’of the court of chancery must be reversed, and the cause remanded.

GOLDTHWAITE, J.

Waiving the consideration of the first point, I prefer resting my concurrence in this case upon the second ground considered, viz: That the implied warranty estops Anderson from setting up a title acquired subsequently to the execution of the mortgage, to defeat his mortgagee, or the complainant who claims by assignment.