Union Guardian Trust Co. v. Building Securities Corp.

I agree with Mr. Justice BUSHNELL.

In Wurzer v. Geraldine, 268 Mich. 286, it is said:

"Mortgage foreclosure proceedings are special and statutory and not an exercise of inherent equity powers of the court."

This statement is too broad. Though in Kollen v. Sooy,172 Mich. 214, it is said:

"The jurisdiction of equity in foreclosure proceedings is purely statutory."

In Union Trust Co. v. Detroit Trust Co., 243 Mich. 451, it is said:

"In this State, the jurisdiction of equity in proceedings for the foreclosure of mortgages is governed by statute."

And in Janower v. F. M. Sibley Lumber Co., 245 Mich. 571, it is said:

"This court has held that foreclosure of mortgage is not a matter of general equitable cognizance, but a statutory proceeding."

Wurzer v. Geraldine, supra, was based upon the earlier opinions of this court above quoted.

On the other hand, —

"Courts of equity have inherent original jurisdiction of the subject of mortgages both for the foreclosure and redemption of them." 3 Jones on Mortgages (8th Ed.), § 1840.

"Courts of equity have an inherent original jurisdiction of actions to foreclose a mortgage, and authority to render such judgment or decree as substantial justice between the parties may require." 1 Wiltsie on Mortgage Foreclosure (4th Ed.), § 35.

"Unless prohibited by statute, a court of equity always has jurisdiction of a bill for the foreclosure of a mortgage." 42 C. J. p. 19.

The subject of mortgages and mortgage foreclosure is extensively treated in 3 Pomeroy's Equity Jurisprudence (3d Ed.), §§ 1179-1228.

The earliest case involving the exercise of equitable jurisdiction over a mortgage of real estate dates from the 13th century where the land was pledged for the payment of a certain sum on a date fixed and the creditor fraudulently contrived to procure the imprisonment of the debtor to prevent his redeeming the property pledged, and a bill in equity was filed to obtain relief from the resultant forfeiture and to redeem the land. Case No. 141, Select Cases in Chancery, 10 Selden Society Publications, p. 137.

The early development of real estate mortgages is mentioned in 1 Reeves' History of English Law (Finlason's Ed.), p. 213; 2 Pollock Maitland's History of English Law, p. 118; Crabb's English Law, p. 372, and is quite fully discussed in "The Gage of Land in Mediæval England," 3 Select Essays in Anglo-American Legal History, pp. 646-672.

The change from the ancient conception of a real estate mortgage and its effect to a more modern one is quite fully discussed in Dougherty v. Randall, 3 Mich. 581. In Batty v.Snook, 5 Mich. 231, it is said:

"What we now call a mortgage was at common law a conditional conveyance of the land, by which the title of the vendee was to terminate or become absolute on the performance or nonperformance of the condition of the grant by the vendor at the day. When such conveyance was made to secure a debt, or for the performance of some other act by the vendor, equity took cognizance of the transaction, and declared the conveyance a security merely for the payment of the debt, or doing of the act, and on the performance thereof by the vendor, after the day had elapsed, and the estate had become absolute, would decree a reconveyance of the premises. To allow the equity of redemption to be cut off by a forfeiture of it in a separate contract, would be a revival of the common-law doctrine, using for that purpose two instruments, instead of one, to effect the object."

The basis of the jurisdiction of equity over mortgages was the fundamental maxim that equity looks at the intent, rather than the form, and the resulting general principle that equity could and should relieve against legal penalties and forfeitures, when the person in whose behalf they were enforced could be fairly and sufficiently compensated by an award of money. 3 Pomeroy's Equity Jurisprudence (3d Ed.), § 1180.

"It is believed that the first encroachments by the courts of chancery were in the reign of Queen Elizabeth; but their powers were not fully exercised until the time of James I. Great confusion resulted from these concurrent jurisdictions for a number of years, but the justness and equity of the decrees of the chancellors gradually came to be recognized by the courts of common law and were acquiesced in by them. The rule came to be fixed and settled as part of the law of the kingdom, that 'once a mortgage, always a mortgage,' and that no mortgage could be enforced without a decree of the chancellors." Wiltsie on Mortgage Foreclosure (4th Ed.), § 23.

"The law of mortgages and of equitable foreclosures is, indeed, as has been remarked by Chancellor Kent, 'one of the most splendid instances in the history of our jurisprudence of the triumph of equitable principles over technical rules, and the homage which those principles have received by their adoption in the courts of law.' " 1 Wiltsie on Mortgage Foreclosure (4th Ed.), § 34, citing 4 Kent Commentaries 158.

"The powers and jurisdiction of the circuit courts and circuit judges in chancery, in and for their respective counties, shall be co-extensive with the powers and jurisdiction of the courts and judges in chancery in England as existing on March first, eighteen hundred forty-seven, with the exceptions, additions and limitations created and imposed by the Constitution and laws of this State." 3 Comp. Laws 1929, § 13944.

"No action of ejectment shall hereafter be maintained by a mortgagee, or his assigns or representatives, for the recovery of the mortgaged premises, until the title thereto shall have become absolute upon a foreclosure of the mortgage." 3 Comp. Laws 1929, § 14956.

When a bill is filed to procure the foreclosure or satisfaction of a mortgage, "the court, instead of proceeding to a sequestration, may decree a sale of the mortgaged premises, or of such part thereof as may be necessary to discharge the mortgage, and the costs of suit, as in other cases." 3 Comp. Laws 1929, § 14347.

The subject of equitable foreclosure of mortgages is treated in 3 Comp. Laws 1929, §§ 14364-14380 as amended, inclusive.

The statutes do provide for many things, — that all bills for the foreclosure or satisfaction of mortgages shall be filed in the circuit court in chancery of the county where the mortgaged premises, or any part thereof, are situated. 3 Comp. Laws 1929, § 14364.

While in England, it is a general principle that a court of equity operates primarily in personam and not in rem, it may provide for the foreclosure of mortgages out of the realm of England. An English court of equity entertained jurisdiction to foreclose a mortgage in the Island of Sark, Toller v. Carteret, 2 Vern. 494 (33 Eng. Repr. 916); for the foreclosure of a mortgage on land in the West Indies, Paget v. Ede, L. R. 18 Eq. 118, 43 L. J. Ch. 571, 30 L. T. 228; in the Isle of Man,Athol v. Derby, 1 Cas. in Ch. 220 (22 Eng. Rep. 771); and for the enforcement of mortgages on land in Scotland, Re Courtney,Ex parte Pollard, Mont. Ch. (Bankr.) 239; and a clog on title which has been removed as to property in South Africa, BritishSouth Africa Co. v. DeBeers Consolidated Mines, Ltd. (1910), 1 Ch. 354, 79 L. J. Ch. 345, 102 L. T. 95, 26 T. L. R. 285. 13 Halsbury's Laws of England, p. 65.

The statute in this State provides, too, for a decree for deficiency. 3 Comp. Laws 1929, § 14366 as amended by Act No. 229, Pub. Acts 1933. And it has been held the statutory proceeding to collect a deficiency on foreclosure is a new and supplementary proceeding and not a mere continuation of the foreclosure. Johnson v. Shepard, 35 Mich. 115; Crawford v. Edwards, 33 Mich. 354; Miller v. Thompson, 34 Mich. 10;Taylor v. Whitmore, 35 Mich. 97; Higman v.Stewart, 38 Mich. 513; Winans v. Wilkie, 41 Mich. 264; Booth v.Connecticut Mutual Life Ins. Co., 43 Mich. 299; Gage v.Jenkinson, 58 Mich. 169; Shelden v. Estate of Warner, 59 Mich. 444; Winsor v. Ludington, 77 Mich. 215;Corning v. Burton, 102 Mich. 86; Union Trust Co. v. DetroitMotor Co., 117 Mich. 631.

"The practice * * * of allowing a personal decree against even the mortgagor himself comes from no original equitable jurisdiction, but springs from quite recent statutory authority." Gage v. Jenkinson, supra.

"The power to make a personal decree against the makers of a mortgage upon real estate, or against others interested in its payment, upon a foreclosure in chancery, comes entirely from the statute. Winsor v. Ludington, supra.

The whole doctrine of rendering personal decrees in equitable proceedings for foreclosure is in this State statutory. And under the law of this State, after a bill in equity is filed to foreclose a mortgage, no proceedings whatever shall be had at law for the recovery of the debt secured by the mortgage, or any part thereof, unless authorized by the court in which the suit in chancery is pending. 3 Comp. Laws 1929, § 14367. Specific provisions are made for the foreclosure of real estate mortgages upon default in the payment of instalments due thereon. 3 Comp. Laws 1929, §§ 14375-14378. And in the particulars covered by statute, the statute governs.

The cases above first discussed ought not to be construed to militate against the established rule that courts of equity have original jurisdiction of the subject of foreclosure of real estate mortgages. In so far as Wurzer v. Geraldine, supra; Kollen v. Sooy, supra; UnionTrust Co. v. Detroit Trust Co., supra; and Janower v. SibleyLumber Co., supra, militate against the views expressed herein, they should be overruled.