John Hancock Mut. Life Ins. Co. v. Girard

In this case a petition for rehearing was presented and granted and the case was again argued at the November term in Lewiston, and additional briefs have been furnished. We have made a further examination of the case and have reached the conclusion that the original opinion filed herein correctly states the law governing the case.

The contention made by respondent, that this court has heretofore held that a mortgage is not void as a conveyance of real estate, under sec. 29-505,I.C.A., and War EagleConsol. Min. Co. v. Dickie, 14 Idaho 534, 94 P. 1034, Tarr v.Western Loan Sav. Co., 15 Idaho 741, 99 P. 1049, 21 L.R.A., N.S., 707, and Village of Heyburn v. Security Sav. T.Co., 55 Idaho 732, 49 P.2d 258, is not well taken and involves a misconception of the holding of those cases.

In the War Eagle case it was distinctly pointed out that the company acquired its title to the property at a time when it was fully qualified to transact business in the state, and also prior to the adoption of the act of March 10, 1903, which was the first legislative declaration that a noncomplying foreign corporation "cannot take or hold title to any realty within this state prior to making such filings," etc.

In the Tarr case the decision turned upon the principle that "those who seek equity must first do equity," rather than on the issue of the contract being either void or voidable, this court saying:

"In the first place, the appellants filed their complaint praying for a cancellation of the mortgage on the ground that it was void because of the noncompliance of the defendant corporation with the statute. That kind of action cannot be maintained by the appellants. They cannot be heard to come into a court of equity admitting the receipt of the money and the indebtedness and asking for a cancellation of the mortgage merely on account of the noncompliance by the corporation with the foreign corporation statutes of this state. Those who seek equity must first do equity."

In both the Tarr case and the Village of Heyburn case the court said: "Such contracts are not absolutely void but that the corporation making such contracts is left without a remedy." This expression contained in each of the cases clearly had reference to the corporation prosecuting an action on the contract and was not said with reference to the taking or holding of title to property. In other words, that distinction was not involved, nor does it appear to have been considered or passed upon in those cases. The part of the amendment of 1903, which was there under consideration, was that now embodied in sec. 29-504,I.C.A., and not that part now contained in sec. 29-505.

It is argued that we erred in our original opinion in holding that a mortgage is a conveyance, within the meaning of sec.54-813; and in holding that the definition of conveyance therein contained applies to sec. 29-505, with reference to foreign corporations taking title to property. It is contended that this section (54-813) only applies to the registration or recording of instruments, as the same is dealt with in chapter 8, Title 54 of the 1932 Code; and that this court so held inFargo v. Bennett, 35 Idaho 359, 206 P. 692, wherein the court, after citing cases from other states, said:

"The decision in some of the last-mentioned cases was influenced by the statutory definition of the word 'conveyance.' We have no statutory definition of 'conveyance,' that contained in C. S., sec. 5425, being limited in its application to the chapter of the statutes relating to the recording of instruments."

That observation was unnecessary and had no bearing upon, or application to, the question passed on in the case. The question here raised was not considered in that case. Further consideration of the question and examination of the history of the enactment of this statute convinces us that the court was in error in the dictum contained in the Fargo case, and that the statute does apply to the whole title of transfers,acknowledging and recording of instruments.

This statute (sec. 54-813) was adopted by the first session of the territorial legislature and approved January 16, 1864. (Sess. Laws 1863-64, p. 528.) The act containing this section was entitled, "An Act Concerning Conveyances," and contained fifty-two sections substantially covering the entire subject of transfers, acknowledgments and recording of instruments, as the same is covered by Title 54 of our 1932 Annotated Code. Sec. 35 of the original territorial act read, inter alia: "The term 'conveyance,' as used in this act, shall be construed to embrace," etc.

The session of 1874-75 re-enacted the original act "concerning conveyances" and added thereto an extra section (sec. 3 of the latter act), prescribing the method of acknowledging and proving a conveyance made by a married woman "independent of her husband." This latter act was approved January 12, 1875, and sec. 36 thereof read, inter alia, "The term 'conveyance,' as used in this act, shall be construed to embrace every instrument," etc.

The Fourteenth Territorial legislative session, convened in December, 1886, adopted what has since been known as the Revised Statutes of 1887. This compilation of the laws contained the substance of all the provisions of the act of 1864 "concerning conveyances," and embraced the same in what is designated as "Title VI, Transfers"; and this title in turn was divided into five chapters. The section defining conveyances was numbered 3002 and appeared in chapter 4 of this title, and reads, inter alia, as follows:

"The term 'conveyance' as used in this chapter, embraces every instrument in writing," etc.;

and for the first time in the history of this legislation the word "chapter" was used instead of the word "act." This change was made by the commissioners and not by the legislature.

The same statute was carried into the Revised Codes of 1909, as sec. 3161 thereof and read: "The term 'conveyance' as used in this chapter, embraces every instrument in writing," etc. The Compiled Statutes of 1919, however, changed the reference again, by embracing all the subject matter originally contained in the act of '64, entitled, "An act Concerning Conveyances," and including the substance of the whole of that act within chapter 208 of Title XLI of the new code, so that the use of the words, "in this chapter," was made to apply to the entire subject of conveyances, the same as it originally read in the act of '64. (See C. S., sec. 5425.) The section remained in this form until the adoption of the 1932 Code containing the present section 54-813. It seems clear, from the history of the section (54-813), that the legislative intent was to apply the definition of "conveyance" to the entire act and not to limit it to the recording statutes, as the compilers of the 1932 Code have apparently attempted to do.

Counsel for respondent lay stress on the fact that this court has repeatedly held that:

"A mortgage, or any contract in the nature of a mortgage, merely creates a lien, and leaves the legal title in the mortgager or grantor, which can only be passed out of him by judicial sale, in a proper action under the statute." (Brown v. Bryan,6 Idaho 1, 15, 51 P. 995; Hannah v. Vensel, 19 Idaho 796,116 P. 115; Woodmansee Estate v. Covington, 39 Idaho 749,230 P. 41; Forbush v. San Diego Fruit etc. Co., 46 Idaho 231,266 P. 659; Bergen v. Johnson, 21 Idaho 619, 123 P. 484.)

This court has uniformly held, and still holds, that a mortgage does not pass title to the mortgaged property. It must be remembered, however, that a mortgage creates a lien and incumbrance on the mortgaged property, and affords both a contractual and statutory basis on which absolute title may be acquired by the mortgagee. By the terms of this statute itself (sec. 54-813) the "title to real property" is "affected" by a mortgage. If duly recorded, it creates a lien and incumbrance on the property, so as to impair the mortgagor's title to the extent of the mortgage indebtedness. It was evidently for this purpose that the legislature, in enacting the transfer, acknowledgment and recording laws, declared that the term "conveyance" should embrace "every instrument in writing by which any estate or interest in real property is created, alienated, mortgaged or encumbered." It was likewise, evidently, the intention of the legislature, by enacting sec. 29-505 in 1903, as an amendment to the original foreign corporation statute, to cover and include every interest in real estate embraced within the meaning of the word "conveyance," as defined in sec. 54-813. Had the legislature not so intended, it might well have stopped with the use of the words, "any pretended deed" without adding the words "or conveyance."

Section 29-505 was enacted in 1903 (1903 Sess. Laws, p. 50) and reads as follows:

"Such corporation can not take or hold title to any realty within this state prior to making such filings, and any pretended deed or conveyance of real estate to such corporation prior to such filings shall be absolutely null and void."

To exempt mortgages on real property from the provisions of this act would afford ready means of circumventing the statute and accomplishing by indirection the acquisition of titles which could not be conveyed directly by original deed. It was evidently intended to prevent such means of avoiding the operation of this statute by the use of the words "or conveyance" added after the word "deed."

The conclusions stated in the original opinion will be the judgment of the court, and it is so ordered.

Morgan, C.J., and Holden, J., concur.

Givens, J., concurs in original opinion and opinion on rehearing, except that part of both holding the mortgage to be void.

Budge, J., dissents from this opinion and also from the original opinion.