Hunt v. Lewin , 4 Stew. & P. 138 ( 1833 )

Saffold, J.

The plaintiff in error filed his bill in Equity, against, the present defendants, charging, that, they were indebted to him, one thousand two hundred and twenty-nine dollars and forty-one cents. That they, being owners of a certain town Jot, were desirous to obtain longer time for payment; and, being willing to secure the complainant, they executed, on the 19th June, 1823, a deed, in th nature of a mortgage — whereby it. was expressed, that' for, and in consideration of the said sum of money, due as aforesaid, they bargained, sold, &c. to the complainant, the premises in question. But, that the 'deed was subject to the condition, (hat if Lewin and Wyser should, within twelve months from the date, pay the complainant said sum of twelve hundred and twenty-nine dollars, and forty-one cents, with lawful interest, then the deed to be void; otherwise, in full force. That, no part of said sum was paid, but default made; whereby the legal estate became vested in the complainant — redeemable, inequity, on payment of principal and interest. That the whole debt remained due. That, the lot. was, by no means, sufficient to satisfy the complainant’s demand. That the time had elapsed, and no payment, made. Whereupon,, he prayed a decree, for the sale of the lot, to satisfy the debt.

Process having been served on the defendants, it was ordered by the Court, that they should plead, answer or demur, w ithin a limited time ; or that the bill be .taken pro wfesso, and set for hearing, ex portr.

Wyser made default. Lewie filed his separate answer. He admits that the defendants were indebted to the complainant, in the sum charged ; that that they executed the instrument — that the debt has not been paid, “except the sum of-dollars. which was [laid to the complainant, according to stipulations contained in the condition of said mortgage deed, and within the time therein limited; but the bal nice remains due and owing, from tile defendants, on the security of said,, mortgaged premises — together with an arrear of interest thereon, from -to-

Bn, ibis defendant; denies, that the said mortgaged premises are a scanty security for the same; on the conlrury, he says ihey are of the value of two thousand dollars, and upwards, which is more iban the amount, for which said premises were mortgaged; that there is no oilier incumbrance on the «ame — That it was the express understanding of the parties, at. the time of executing said mortgage, that if said premises were not redeemed, at the time specified, the same' were to become the absolute right and property of the complainant; and, that he was to have no further or other remedy, for the debí, in case the same were not of that value. And that the defendant, on his part, is now, and at all times, here-lofore, luis been, willing to release bis equity of redemption, to the said complainant, in the premises, so that he mav not be farther charged, &o.

At-a subsequent term, llie parlies appearing, by their solicitors, on motion, leave was given them, to lake depositions, on giving notice.

At. a term, twelve months thereafter, lite record states, that, the canse coming on to be heard, on bill, answer and exhibits, it. was ordered and decreed, that the defendants’ equity of redemption, be, and the same was for ever barred; and that, whatever title the defendants had to the premises, should be, and the same was vested in the complainant. And the complainant pay all coshs.

The plaintiff now assigns, as causes of error — ■

1. That, in decreeing for the defendants, the Court should have decreed a foreclosure.

2. That there should have been no decree against the complainant, for costs : especially in favor of Wyser, who was in default.

3. That the instrument should have been established asa mortgage — the relief prayed, granted — the complainant’s debt established- — payment decreed — - the propeity sold, and the proceeds applied to the payment of the debt.

1. The first assignment is conceived to require but slight, consideration. The objection, 1 hat the decree, in favor of the defendants, should have been for a foreclosure, appears more technical than solid. It is, virtually, a foreclosure: it declares the equity of redemption to be for ever barred, and vests in the complainant, whatever title the defendants bad in the premises: this is deemed sufficient. Whelher it was a proper decree, according to the rules of Chancery, in a question, falling more properly under the last assignment.

2. It is furiher objected to the decree, that it awards costs in favor of the defendants; and this, when one of them, Wyser, h :d failed to answer the bill.

The circumstance of this default, and the order pro confrxso, thereupon — the answer of the other defendant, admitting the most material allegations of the bill, <uid the setting the causo for hearing on bill, answer, exhibits and prooí- — entitle the plaintiff, as I conceive, to the equity, if ary, contained in his bill; but the fail:tro to answer could net further affect the decree, in regard to the cost, or otherwise.

The prayer of the complainant, was for a foreclosure, and a sale of the mortgaged premises, for the payment of the debt: he neither alleged nor exhibited any other security for the demand, no bond or note, according to the usual course, when a farther remedy is contemplated, than the lien on on the mortgaged property.

Lewin, though he denied not the essential allegations of the bill, yet insisted, by way of avoidance, that a parol agreement, was expressed and understood, at the time of executing the mortgage, that if it was not redeemed at the time specified, the lot was to become the absolute property of the plaintiff; and that he should have no further or other security for the debt, if the property proved to be of less value: also, that said defendant tnca was, and, at all times previously, had been, willing to release his equity of redemption — and requested a decree, to that effect.

Admitting, as contended by she plaintiff, that this supposed agreement can not be regarded, for the cause, either that it is not a part of the written agreement, and would vary it, or that proof of such agreement was not produced on the hearing — yet the mortgage contains no express covenant for the payment of any balance: and the, defendant, who answers, consents to a decree, vesting the absolute title in the plaintiff.

The rule in Chancery, respecting costs is, that they do not always follow the event of the cause; but are awarded, or not, according to the justice of the cause. They rest in the sound discretion of the Court, to be exercised upon a full view of all the merits and circumstances of the case.^a

It has also been held, that “where, on a bill, to foreclose a mortgage, a subsequent mortgagee, or judgment creditor, who is made a party defendant, answers and disclaims — no application having been made to him before suit brought, to release or disclaim — he is entitled to costs, out of the fund, if it be sufficient; and if not, to be paid by the plaintiff.” Also, that where' the parties stand equally fair, in every respect, the actor, who brings the other into Court, ought to pay the expense.—Catlin vs. Harned et al.^b

There, it was conceded by the Court, that the complainant was under'the necessity of making the subsequent incumbrancer a party; and - that a very slight refusal or neglect, on his part, might have been sufficient to deprive him of costs, But that, as he had not been called upon, or requested to disclaim, by release, or otherwise, which application would probably have saved the necessity of making him a party, he stood equally fair with the complainant; and was entitled to cost.

If then, such a foreclosure, only, as was decreed in this case, was proper, under the contract—as it does not appear, the defendants were ever requested to release the equity of redemption, which they probably would have done ; but, on the contrary, the plaintiff has sought a sale of the premises, in satisfaction, or part satisfaction of the debt, which the Chancellor below has refused to decree—it does not follow that there is any error in regard to the cost.

It is true as a general principle, that a mortgagee, in. the regular prosecution of his claim on the mortgage, by bill, and where he is entitled to a recovery of the debt, is also entitled to his costs—especially if the mortgaged property be sufficient to pay both.^a Ellison vs. Wright.^b

But the right, as alieady remarked, must depend on the circumstances of the case, and the object of the bill. It has also beetle held, that, though the matter of cost is so far discretionary, in the Chancellor, that an appellate tribunal will not revise that question, separately; yet, where there is a fair and substantial question to be argued, on appeal, the decree may be varied, as to costs, though affirmed, in every other point; but it will not be varied, as to costs, where the point, which is presented as the ground of appeal, has no substance.—Attorney General vs. Butcher.^c

According to this doctrine, I would admit, that the question, whether or not a sale should have been decreed, involves sufficient substance to give this Court control of the cost alone, if the decree, respecting it, was obviously opposed to the equity of th@ case. Bat, under the circumstances, I conceive, if the main principle of the decree was correct, there is no sufficient objection to the direction of the costs, to warrant the interference of this Court.

3. The remaining question, is that presented by the third assignment, which is, substantially, that the decree should have established the complainant’s debt, and directed a sale of the mortgaged premises, in part satisfaction thereof.

In support of this assignment, I understand the argument to be, not, merely that a sale of the lot should have been decreed, and an account directed to be taken, and the amount of the debt reported to ■the Court, to ascertain the extent of the lien. If this, alone, was the object, and no recovery sought, beyond the value of the premises, the same could be equally attained, under the general decree of foreclosure, which vests in the complainant the absolute title to the lot, for sale, at his own discretion, or any other use, to which he may choose to apply it. But the object seems to be, to obtain a decree for the absolute recovery of the debt, mentioned as the consideration of the mortgage, and for a sale of the lot, in part payment — leaving the balance, thus established, to be recovered by execution, or other proceeding, in personam, against the defendant.

The point thus urged, presents a question, important, in principle, but which has been settled, perhaps satisfactorily, by various cases, in the English, and also in the American Courts. It is not pretended, that this mortgage contains any express covenant, for the payment, of the money : if it did, as will be presently shewn, it could only constitute a ..ground of action, at law.

In Dnnklin vs. Van Erse. rud odíOity,^a a bilí waT .filed to foreclose a mortgage, gtveu to secure ího payment of a bond. Tim main qúeaíion was, whether, in addition So the u.iuvl for the «alo of the premises, it should ha f '-'-h, v decreed, '•¡sai iu case of a deficiency of proceeds, the. mortgagor uhonUl pay the remainder of the debt, by a given day, or that execution should issue for the same. Chancellor Kent held that a mortgagee, oo a bill to foreclose, is confined to his remedy on the pledge: that such a suit is not intended to act. in paruonam; that a mortgagee may proceed at law on his bond or. covenant, at the same time he is prosecuting- on his mortgage in chancery ; or that after foreclosure, he may sue at law for the deficiency—(see also Lord Redesdale;^b Aylett vs. Hill;^c Perry vs. Barker;^d Dashwood vs. Blythway.^e) He there also intimates hi; concurrence in a previous opinion, by Judge Story, that such suit at law, would not have the effect to open the foreclosure and revive the equity of redemption, as had been supposed by some of the earlier cases; but that the mortgagor would be entitled to a credit for the amount of the sale.

The opinion of Judge Story, referred to, .was given in the case of Hatch vs. White.^f The action was at law, on a judgment rendered in another State, on a promissory note. To secure the same debt, a mortgage on real estate had also been given by the debt- or—the mortgage was considered as having been foreclosed. The Judge, after recognizing the current doctrine, “that a mortgage is but a mere, security for the debt and collateral to it,” ruled, that after a foreclosure of a mortgage, the mortgagee may still .recover at law, upon the attendant bond or note, the deficiency of the mortgaged property to pay the debt due — calculating the value of the property at the time of the actual foreclosure; and that such would be the case, whether the properly was sold under a decree, or remained in the possession oí the roort-' gagee, or war, cold by him, after a strict foreclosure of the equity of redemption. He also maintains that neither course -would have the effect either to satisfy the residue of the debt, otherwise secured, or to open the equity of redemption;

The Supreme Court, of New York, in the case of The Globe Insurance Company vs. Lansing,^a recognized the principie that a foreclosure and sale, pursuant toa decree in chancery, of mortgaged property, for a sum less than the debt, was no extinguishment of the balance, but that the same, if secured by bond or note, may be recovered .by suit at law, thereon.

It will be observed, however, in all these cases, that the debts had been separately secured by bond or note.

In the case of Drummond’s adm’rs vs. Richards,^b it was decided by the Cupreine Court of Virginia, that an action of covenant, does not lie upon the proviso in a mortgage (similar to the one in this case)' declaring that upon payment of a certain sum of money, the deed shall be void; that it is not an-express covenant to pay, which is indispensable to sustain the action.

The doctrine of these several cases seerns to be, that if the mortgaged property prove insufficient to pay the debt, yet that chancery can only act in rem, on a bill to foreclose. That the remainder of the .debt can only be recovered by suit at law; and to .authorise this, there must be either an express covenant in the mortgage deed, for payment of the debí, or a separate bond or note given, or other evidence of an express promise, to pay it. In this case it does not appear that any bond or note, or any written, evidence of the contract, was given, other than the mortgage, and it contains no express covenant for payment. If any other whs given, the' proceedings on this bill will not bar the complainant’s right to recover any balance of his debt which may arise from the insufficiency in value, of the mortgaged property, to satisfy it; but the presumption is, (from its not being showu) that none such exists, and that his entire remedy must be on the mortgage.

Then the question recurs, was the complainant, entitled to a decree for the sale of the premises, instead of the strict foreclosure, which has been decreed? The ancient practice was. to decree a strict foreclosure of the right, to redeem, by which means the lands became the absolute property of the mortgagee. This has continued to be the most usual practice in England, and in the New England States of the Union, at least until very recently. Some times, however, the Courts of each country, on proper application, have decreed sales of the mortgaged premises, under the direction of an officer of the Court — the proceeds to be applied towards the discharge of the incumbrances, according to priority ; and this latter practice is generally considered the most, beneficial to the mortgagor, and the most, reasonable disposition of the pledge; and is that which prevails in Ireland and in New York, Maryland, Virginia, South Carolina, Tennessee, Kentucky, and some of the other States.^a It has also been the most usual practice in our Courts, Even in England, this course bats of iaíe becu sometimes adopted, mainly for 1 he benefit of ihe moríragoro. .The case of Mondey vs. Mondey,^a .raso» a mortgage affecting the rights of an infant. Lord Eldon said, if there was no precedent there for decreeing a sale,_(as he believed there was, not) he weald bake one; and directed au enquiry, whether it. would bo for- the in-’ fant’s benefit, that the «oíate should be sold.

The main object of decreeing sales, however, has been, to secare to the morig.mprs. or their representatives, ¡my habmes of the proceeds «hat. might remain after satisfying Vue ddjts; or if insufficient, and the whole debt so secured as to be otherwise recoverable, then to ascertain the auiouni of credits to which the mortgagors were intiilod. it is remarked by Chancellor Ketit,^b that “if the mortgagee proceeds by bill for a technic-’,l foredos,uro, the estate becomes his property in the character of a purchaser; and the general understanding formerly was, that by taking the pledge to himself, he took it in «satisfaction of the debt. Bat that according to the ease of Took vs. Hartley,^c if the mortgagee soils the asíate, after the foreclosure, fairly and for the best price, he may proceed at law against the mortgagor, upon bis bond, for the difference ” Further, he remark», there has been some embarrassment and conflict of opinion manifested in tho oases, on the point, whether the mortgagee had his remedy at law after a foreclosure, and without a sale of the estate. But “ the better opinion is, that a Tier a foreclosure with or without a subsequent sale, the mortgagee may «no at law for the deficiency, to bo ascertained in the one'case by the proceeds of the sale, and in the other, by an estimate, and proof of the real value of the pledge. at. the time of the foreclosure.” On this point in Hatch vs. White, before referred to, Judge Story remarks — “the value of the estate may as well be ascertained while i.i the hands of 1,lie mortgagee, as after a sale. (bv him;) and indeed, must be so ascertained, m order to see if it was sold at. the best price.” At least, says he, “the fact is not more difficult to settle, thau many which ordinarily engage the attention of the courts and juries; and if the deficiency be once found, the same equity, to l ave il paid, exists in both cases.” In opposition to the idea, that the entire, debt musí be. considered satisfied while the mortgagee remains in possess,on ; he farther remarks, “if the debt be deemed satisfied while the estate is in the mortgagee’s hands, it is not easy to conceive how, by his own act of transfer, he can defeat, the legal el feet of that satisfaction.”

Then as it d >es not appear that complainant is entitled to any other remedy than the proceeding in rem on the bill to foreclose ihe mortgage; or if he lias any other, the strict foreclosure is not conclusive against his right to recover the balance; and as decrees for sales, though most, usual and often best adapted to the justice of the case, are mainly intended for ihe benefit of the mortgagors, and these have expressed their preference foi such foreclosure, and which can not fail to secure to ihe mortgagee the full value or benefit of the pledge, lam of opinion, there is no solid objection to the decree as rendered below. Under this view of the case, it is unnecessary to examine the effect of ihe verbal agreement or understanding avered in the answer, that, the mortgagee should have no farther remedy.

We therefore direct a general affirmance of the decree .below.

Lipscomb, C. J., riot sitting.

a Am. Chan DIg. 117, and authorities there cited.

b 3JohnsCh Rep. 61.

a 2 Madd.

b 3 Con.En. Ch.R.482 "3 Russel], 458

c 3Con. En. Ch. R. 622 4Russ.180.

a 3 Johns. ch. a. sao

b 1 Sch. & Lof. 170; 11! Vo. 90.r>.

c Uick.551.

d VA Ves. 198.

e 1 Kq. Ca. Abr. 317.

f 2Gal.52.

a 5 Cowen 380

b 2 Munf. 337

a 4 Kent’s C. 173-4

a 1 Vos & B. 22:$.

b 4 Com. 175.

c 2 Bro.125; Dick. 785, S. C.