Norton v. Lewis , 3 S.C. 25 ( 1871 )

The opinion of the Court was delivered by

Willard, A. J.

The question in the case is, whether a purchaser with notice, from a mortgagor, of part of the mortgaged land, can avail himself of the defence of having held the land for the period purchased by the statute of limitations. The defendants who resort to this defence, do not allege anything in the character of their possession amounting to an active opposition to the claim of the mortgagee, but rely on the naked fact of holding as purchasers under title derived from the mortgagor. The decree declares, that the possession of all the grantees “has been absolute and in accordance with their deeds, without any acknowledgment of the mortgage,” except as to one of the grantees, as to whom there was a question of actual acknowledgment.

This conclusion of fact does not show a state of controversy, as to the defendants’ possession, such as might, when commensurate with the statute period of limitation, establish adverse possession, as a proposition of fact.

The question is resolved into this: Does the naked fact of possession, for the statute period, of land bound by a mortgage, by a purchaser with notice, holding under a deed from the mortgagor, constitute a bar to foreclosure? Wright vs. Eaves, 5 Rich. Eq., 81, distinctly decides that it does not. Chief Justice Dunkin, in that case, declares that such is the settled law of this State. It would be supposed that a declaration so clear and explicit, coming from a source so eminent and judicious, and sustained, not only by the judgment of the Court, but by the concurrence of all the Judges who heard the case, would have been regarded as finally decisive of this point.

The Circuit decree re-opened a controversy, maintained with much ability on both sides, but which appeared to have ended with Mitchell vs. Bogan, 11 Rich., 686.

In Thayer vs. Cramer, 1 McC. Ch., 395, Judge Nott unfortunately referred to the mortgagor in possession as a trustee for the mortgagee, and hence concluded that neither he nor his grantee could hold adversely to the mortgagee. Although that conclusion standing by itself would have led to the judgment pronounced by the Court, yet the opinion lays down a proposition more difficult to controvert, and leading to the same conclusion. He holds that as the mortgage was recorded, the purchaser must be regarded as having notice, and holding subject to the incumbrance. To sustain this last proposition it is not necessary to trace, any of the elements of a trust in the relation of mortgagor and mortgagee. A mortgage of land is a legal lien, and the effect of such lieu upon a purchaser with notice is a legal doctrine. There was no necessity for resorting to the peculiar ideas of equity, in order to solve the questions then before the Court.

Doubt has been thrown on the correctness of the reasoning in Thayer vs. Cramer, so far as the idea of a trust is involved. Such a doubt was expressed by Judge O’Neall in Thayer vs. Davidson (Bail. Eq., 412). But the legal doctrine advanced by Thayer vs. Cramer stands supported by numerous cases, and is as well supported as the concurring opinion of able Judges and an unbroken line of judicial determination can support it.

The decree regards the authority of Wright vs. Eaves as prejudicially affected by its relation to Thayer vs. Cramer, and the eases following that, and considers that it must stand or fall with them. We find it much more difficult than this would imply, to get rid of the deliberate judgment of the Court of highest authority. To show that the reasoning on which a judgment has been placed is defective, is not always enough to unsettle the authority of such judgment. The question in such case is whether there is any valid reasoning to support it. But it is going much too far to say that because an early case advanced an untenable reason for its judgment, that a subsequent judgment, following the authority of the former, without giving express sanction to the defective reasoning, must be regarded as resting upon such error.

Drayton vs. Marshall (Rice Eq., 373,) is not at variance with the foregoing. That case holds, that when there is an actual denial of the right of the mortgagee, manifested by acts of opposition to such right, commensurate with the period prescribed by the statute of limitations, there is an adverse possession, in the legal sense, such as to bar the mortgagee’s right. That case is distinguishable from the present, as here it is sought to make out the adverse possession from the naked fact of the possession of the land, while in that case there was a real and active controversy between the parties, based on an actual conflict of claims, and maintained by acts on the part of the purchaser characterizing his possession as irreconcilable with the mortgagee’s claim of right.

The Act of 1791, (5 Stat., 170,) has no bearing on the present question. The practical effect of that Act was to leave in the mortgagor in possession, an estate determinable on the contingency of his relinquishing possession. On the happening of such contingency the statute estate was gone, and the parties stood on their rights as existing previous to the statute.—Williams vs. Beard, 1 S. C., 309.

The fact that the mortgagor retained possession of part of the mortgaged premises is unimportant. So much of the mortgaged premises, the possession of which was transferred by the mortgagor to a stranger to the mortgagee, passed from under the operation of the statute. We are not called upon at the present time to determine whether the alienation by the mortgagor of part of the mortgaged premises takes the whole mortgaged land out of the operation of the statute.

In all these cases where the rights of a purchaser, in possession, were considered, the question was, necessarily, outside of the statute, for the fact of possession being in a purchaser evidenced its being out of tbe mortgagor.—Stoney vs. Shultz, 1 Hill Ch., 465; Smith vs. Osborne, 1 Ib., 340.

That portion of tbe decree that orders that the mortgaged premises be sold in the inverse order of the sales made by the mortgagor is not subject to objection. The mortgagor secures the application of the entire proceeds of the mortgaged land, or so much as may be necessary, for the payment of the mortgage debt, while the order of sale satisfies the equities as among the purchasers.

The decree, so far as it adjudges that the claim of the mortgagee to a sale of the mortgaged premises is barred by the possession of the defendants of the land mortgaged, must be set aside, and the complainant is entitled to the usual decree for the sale of the mortgaged premises.

The causes will be remanded to the Circuit Court for a decree of foreclosure in conformity with the foregoing determinations.

Moses, C. J., and Wright, A. J., concurred.