Stark v. Brown , 12 Wis. 572 ( 1860 )

By the Court,

PAINE, J.

This was an action of ejectment. It was conceded that the title was originally in Pliny Drake, who died in April, 1838. The plaintiffs claim, one as one of his heirs, and both under the other heirs. The defendant claims under a foreclosure proceeding upon a mortgage executed by Pliny Drake, which was instituted after his death, and to which his administrator alone was made a party.

The defendant claims, first, that this proceeding was effectual to transfer the entire title to the purchaser at the foreclosure sale, divested of all right of the heirs; and secondly, if not, that it was at least effectual to transfer the interest represented by the mortgage, and that the subsequent deeds, through which he claims, must be held to operate as an assignment of that mortgage interest, so that he stands in the position of a mortgagee in possession after Condition broken, and cannot be ousted by ejectment. If either of these propositions can be sustained, it is conceded that the plaintiffs’ action must fail.

We agree with the plaintiffs, and, as it seems, with the court below, that the first is incorrect. The rights of the heirs — they not being made parties to the suit — could not be divested by the foreclosure proceeding. The argument of the defendant that it should have that effect, is founded upon what he claims to be an entire change in the policy of the law, from that which existed in England, under which the rule that heirs were necessary parties to a foreclosure was established. That change is in mating the land subject to the debts of the deceased, through a sale by his administrator, and in giving him, as our law now does, and as he claims it then did, the possession of the real estate during the administration. But we cannot concede to these changes, the effect contended for. Nor do we think, as argued by counsel, that these statutes make the interest of the heirs in the real estate, prior to an order for its distribution, precisely the same as their interest in the personal estate, leaving the administrator to represent both for all purposes. It is well known that the legal title to the personalty is vested in the administrator. But it could hardly be claimed that these statutes vest in him the legal title to the real estate. That must still be held to descend to the heirs, and vest in them on the death of the ancestor, subject to be divested by a sale for the payment of debts. They, therefore, have an immediate interest in the premises, which cannot be divested by a foreclosure to which they are not parties.

Counsel relied upon the case of Grignoris Lessee vs. Astor, 2 How., 319, as establishing the proposition that “in a proceeding to sell the real estate of an indebted intestate, there are no adversary parties, the proceeding is in rem, and the administrator represents the land,” &c. It is true that the court in that case asserted that doctrine, and held that the provision in the statute requiring notice to -be given to the parties interested, before the court should pass upon the application, did not affect its jurisdiction. Whether that is the law or not in this state with respect to sales by administrators, we shall not now attempt to decide. It is certainly not in conformity with a long list of adjudications that might be cited, among which are the following: Bloom vs. Burdick, 1 Hill, 130; Sherry vs. Denn, 8 Blackf., 542; Givan vs. McCarroll, 1 S. & M., 351; Lessees of Adams vs. Jeffries, 12 Ohio, 253; Messenger vs. Kintner, 4 Bin., 97; Schneider vs. McFarland, 2 Coms., 459; Bank vs. Johnson et al., 7 S. & M., 449.

But we do not feel called upon to discuss the of that decision, for the reason that it must be held to relate . „ only to a proceeding by an administrator, under the statute, to sell the real estate for the payment of debts. Whemthe court said that the administrator represented the land, they meant in that proceeding. And it would be entirely unwarrantable to say that they intended to assert that he represented it for all purposes, so that a foreclosure suit to which he alone was a party would divest the rights of the heirs. There is a great difference between the two cases. In the one, the statute expressly authorizes and requires him to proceed for the purpose of making a sale. The design is to pay the debts of the estate, which is one of his most important duties. In the other case, it is conceded that there is no statute expressly requiring or authorizing him to be made a party to a foreclosure, and his character as a representative of the land for that purpose is sought to be derived entirely from the rights which the law gives him as to the possession, and as to obtaining a license to sell on a certain contingency. Even if the case in 2 Howard should be held to establish the doctrine that, on a direct statutory proceeding by him to effect a sale for the payment of debts, he is to be considered as the representative of the land for all the parties interested, so that the judgment would not be void, though such other parties had no notice, we do not by any means think it can have that effect with respect to foreclosure suits, or any other by which the title to property is sought to be affected.

But we think the defendant’s second position is well taken. And that is, that although the foreclosure sale had no effect to divest the interests of the heirs, the purchaser must be held to have acquired the mortgage interest. The counsel for the appellants have attacked the correctness of this doctrine. But it has already been passed upon by this court in a manner with which we are entirely satisfied. The case of Watson vs. Spence, 20 Wend., 260, sustains the view of the plaintiffs. That of Frische vs. Kramer's Lessee, 16 Ohio, 125, sustains the opposite view. And in Ely vs. Tallman, 6 Wis., 258, this court distinctly repudiates the doctrine of the former case, and approves that of the latter. TLe plaintiffs . contend that this case is distinguishable from Ely vs. Tail-man, by the fact that there some of the parties in interest were served with process, and made parties to the suit. But that was not so in Frische vs. Kramer's Lessee. The mortgagor was a party there, it is true, but he was made so after he had sold the property; and he had no more interest in it than had the administrator in this case, and possibly not as much. But we do not think the decision should turn upon the point whether somebody actually interested is made a party. ,On the contrary, the conclusion would seem to rest rather upon certain equitable considerations between the mortgagee and the purchaser. The former had full power at any time to assign all his interest to the latter. If he sees fit to invoke the agency of the law, not only to accomplish that assignment, but to divest all adverse rights and transfer them also to the purchaser, if by any reason he fails to accomplish the latter object, should that also defeat the former? It seems to us not. Even though technically a correct argument can be made against the validity of the judgment as such, it still seems to us that the proceeding ought to be allowed to operate as a mode by which the mortgagee voluntarily transferred his interest, at least, to the purchaser. ■ "Where the mortgagee has assented to the sale in that manner, and taken the purchaser’s money, this conclusion would seem to rest safely on the doctrine of equitable estoppel, whatever irregularities there might be in point of form. But here the property was bid in by one of the administrators of the assignee of the mortgage, who was one of the complainants in the suit. As such he would undoubtedly be held a trustee for the benefit of those interested in the estate, in a controversy between him and them. But there is no such controversy here, and we do not see that this fact has any material bearing upon the question.

It was subsequently discovered that the equitable title to the mortgage was in the brother of the assignee, and he, ratifying the foreclosure sale, commenced an equitable suit against the purchaser and all the other parties interested, to obtain a transfer of the interest acquired at that sale, to himself. Suet a transfer was adjudged, and deeds executed accordingly, and through them the title comes in a chain, to the defendant. It is now urged by the plaintiffs that, even conceding that the foreclosure sale operated as an assignment' of the mortgage interest, still these deeds cannot beheld to have operated in the same way. This conclusion is derived from the fact that the mortgage is a mere incident of the debt, and that a deed of the land neither purports to, nor does assign the debt, and therefore the mortgage interest in the land cannot be held to pass. There are some cases apparently sustaining this position, as Jackson vs. Bronson, 19 John., 325. It is a very short case, and the circumstances are not fully stated. The court said: “ The assignment of the interest of the mortgagee in the land, without an assignment of the debt, is considered in law as a nullity.” But the court do not discuss the question whether, under any circumstances, such an assignment could be held to transfer the debt, and thus become operative as an assignment of the entire mortgage interest. The same question is discussed in Wilson vs. Troup, 2 Cow., 195. The mortgagee had there sold parts of the mortgaged premises by warranty deed, and the question was, whether he afterwards had the right to foreclose. Several opinions were delivered. Wood-WORTH, justice, uses general language in terms applicable to a case where the mortgagee had conveyed the whole land, and holds that such a conveyance would not operate as an assignment of the mortgage. SutherlAND, J., on the other hand, makes the case turn on the point that he had only sold a part of the property, and Savage, C. J., concurs upon the same ground.

Other cases cited by the plaintiffs hold that a mere deed of the land by the mortgagee does not operate as an assignment of the mortgage and debt, yet clearly imply that, under certain equitable circumstances, it might have that effect. Such is the case of Bell vs. Morse, 6 N. H., 205, where the court say that they “have no doubt that, under certain circumstances, a conveyance of the land by the mortgagee will pass the debt secured by the mortgage.” And they further imply that it would be sufficient if it appeared that the mortgagee, at tbe time, bad a right to transfer the debt. The same idea is suggested in subsequent cases in that state, though not decided. " Ellison vs. Daniels, 11 N. H., 283. In Weeks vs. Eaton, 15 N. H., 145, while holding that the facts of that case brought it within the rule as previously decided, the court intimate that if the amount of the claim had been liquidated, it “ might have been assigned by a deed of the land, with warranty.” And again in Furbush vs. Goodwin, 5 Post., 450, it is said that “ the doctrine of the cases is, that a mere quit-claim deed, purporting to be a conveyance of the land mortgaged, will not pass the debt,” &c., implying still that a warranty deed might, under certain circumstances, have that effect.

On the other hand, in the case of Hunt vs. Hunt, 14 Pick., 374, there is a well reasoned opinion, deciding that a quitclaim deed by the mortgagee, of his interest in the land, would operate as an assignment of all his rights as a mortgagee. And the same doctrine is held in Carll vs. Butman, 7 Greenl., 102, and in Crooker vs. Jewell, 31 Maine, 306. It is suggested by counsel in their brief, that “ these cases depend upon the principle of equity that upholds the security in such case for the protection of the releasee against the intervening title of the first grantee.” This suggestion is doubtless based upon the facts in Hunt vs. Hunt, where the assignee of the mortgage was the second purchaser also of the equity of redemption. The court kept the mortgage interest alive after its assignment to him, so as to protect him against the prior conveyance of the equity of redemption. But the question whether that interest should be kept separate for his benefit, after he obtained it, is entirely distinct from the one whether he had obtained it. The equitable principle alluded to relates entirely to the former question, and has no bearing upon the latter. On the contrary, the conclusion upon that seems to rest upon another equitable principle, which is, to give some effect to the intention of parties in their deeds, if, consistently with the rules of law, they can have any effect.

In addition to these cases, we may say that the ease of Frische vs. Kramer's lessee seems necessarily to show that a deed, of tbe land in sucb a case should operate as an assignment of tbe mortgage interest. That case gave sucb an effect to a deed on a foreclosure sale, though it no more purported to assign tbe debt or tbe mortgage than did tbe subsequent deeds in this case from tbe purchasers at tbe foreclosure sale. We have followed that case upon that point, and I am unable to see why tbe same reasoning should not bold good with respect to a deed directly from tbe mortgagee. If by procuring tbe officers of tbe law to make a deed, in a case where no jurisdiction was obtained over adverse parties, tbe mortgagee is held to have assigned tbe mortgage, by tbe same reasoning tbe purchaser, supposing himself to have acquired tbe entire title, should be held to have assigned it by a deed purporting to have conveyed tbe land. See Warder vs. Tainter, 4 Watts, 270. We think,- therefore, that tbe court below was right in bolding that tbe defendant bad acquired tbe mortgage interest, and stood in tbe position of a mortgagee in possession after condition broken, not to be ousted by ejectment.

It is urged that tbe note should be accounted for or produced. But no exception seems to have been taken on that point at tbe trial, other than in connection with tbe admissibility of tbe deeds. Tbe court was not asked to submit any question as to its payment to tbe jury. And there was no evidence tending to .show payment, and we think no presumption of it arises from lapse of time, under tbe circumstances of this case, where all the parties have evidently acted on the supposition that the note was merged in tbe decree.

We think, upon tbe whole, there was no error, and tbe judgment must be affirmed, with costs.