Agnew v. Renwick

4 S.E. 223, 27 S.C. 562, 1887 S.C. LEXIS 157

• Court: Supreme Court of South Carolina
• Decided: December 12, 1887
• Status: Published

Opinion

The opinion of the court was delivered by

Me. Justice McIver.

In April, 1857, Daniel R. Sartor and Samuel T. Agnew bought from one Rice Dulin a plantation, containing 1271 acres of land and forty-eight slaves, together with sundry other articles of personal property, for the sum of sixty-four thousand dollars. No part of the purchase money was paid in cash, but the same was secured by the bond and mortgage of the said Sartor and Agnew, which mortgage covered the said land and slaves so purchased, as well as eighty-two other slaves, belonging to the mortgagors. On May 6, 1857, this mortgage was assigned by Dulin to the Bank of the State of South Carolina. Sartor and Agnew after carrying on the plantation for about two years, on December 6, 1858, entered into an agreement in writing, to the effect following: that their partnership in planting should be dissolved ; that the entire partnership property should be sold on December 27, 1858, on a credit of one, two, and three years, the purchase money to be secured by bond with two good sureties, to be “approved by the Bank of the State, and a mortgage of the property if required,” and that the securities taken at such sale should be transferred “to the said bank in release of our liability for the purchase money of said property.”

In pursuance of this agreement the property was advertised for sale by Sartor & Agnew, with a slight variation as to the terms, whereby all sums under fifty dollars were to be paid in cash before the delivery of the property, the advertisement containing a statement that “Col. S. Fair [who was the attorney representing the bank] will receive all bonds or payment for the purchases of the property as our agent.” The property was accordingly offered for sale at the time designated, when the land and a considerable amount of the personal property was bid off by Sartor at the sum of about $35,000. Col. Fair attended the sale, the mortgagors, Sartor & Agnew, being also present, and all the proceeds of the sale were delivered to Col. Fair as attorney for the bank. Sartor failing to comply with his bid, the same was transferred to John P. Kinard and James A. Renwick, but the time when such transfer was actually made does not appear. It does appear, however, that an endorsement, bearing date December 27, 1858, was made upon the list of the property bid off by Sartor, of which the following is a copy:

“South Carolina, Newberry District. Know all men by these presents that I, Simeon Fair, as agent and attorney in fact for the president and directors of the Bank of the State of South Cai’olina, in consideration of the sum of thirty-five thousand five hundred and seventy-four dollars and twelve cents, secured to be paid by three several promissory notes, payable to Thomas R. Waring, cashier, or hearer, dated December 27, 1858, with interest payable, do hereby release and relinquish unto John P. Kinard and James A. Renwick, their heirs and assigns, all the lien of a mortgage held by the president and directors of the Bank of the State on a certain tract of land, containing 1271 acres described in said mortgage* given by D. R. Sartor and Samuel T. Agnew to Rice Dulin, and by him assigned to the said bank, dated April 12, 1857, and also release the following slaves contained in said mortgage to wit: [naming them] twenty-two in all, from all lien of said mortgage.” This endorsement was originally signed “S. Fair, attorney for bank, per J. Elvin Knotts,” but was afterwards, by writing, dated February 17, 1860, confirmed by Col. Fair. The notes referred to in this endorsement, as set out in the “Case,” are signed by John P. Kinard and James A. Renwick, as principal, and by two other persons as sureties, and bear date December 27, 1858.

. It also appears that D. R. Sartor, by deed bearing date April 6, 1859, conveyed to Kinard & Renwick all his interest in the tract of land, containing 1,271 acres, and that the assignees of Agnew, who had, on March 9,1859, made an assignment for the benefit of his creditors, by their deed, bearing date the day of April, 1859, after reciting the making of the assignment, the fact of the sale on December 27, 1858, at which Sartor had bid off the land and failed to comply, and his consent that Kinard & Renwick should take the same at his bid, together with the fact that Sartor had by his deed above mentioned conveyed his interest to Kinard & Renwick,' proceed to convey the interest of Agnew to said Kinard & Renwick. It also appears that, by an agreement under seal, purporting to have been executed on April 5, 1859, between Sartor of the first part, and Kinard & Renwick of the second part, Sartor agreed to “sell and convey to them, by good and perfect titles, all the property, both real and personal, which he, the said D. R. Sartor, bid off at the sale of Agnew & Sartor, and at the price there given,” and the said Kinard & Renwick. agreed to take the same, and “to apply the purchase money of the said property to the mortgage debt due the Bank of the State by the said Agnew & Sartor, according to the terms of the sale of the said Agnew & Sartor.” It further appears that the Bank of the State had received 'from Sartor three notes, amounting to twelve thousand dollars, as collateral security for the bond of Sartor & Agnew given to Rice Dulin, and by him assigned to the bank. It further appears that at the time of the sale, made on December 27, 1858, there were judgments to a large amount then’ remaining due and unsatisfied which had been recovered against S. T. Agnew individually, and as a member of a firm known as S. T. Agnew & Co., subsequently to the execution of the mortgage held by the bank.

S. T. Agnew having died on September 21, 1873, this proceeding was instituted by the demandant as his widow on April 13, 1883, in the Probate Court, whereby she claimed that her dower in the one undivided half of the 1,271 acres of land, now in the possession of the defendants claiming under the said Kinard & Renwick, should be admeasured to her. This claim was resisted substantially upon two grounds. 1st. Because the land was held by Sartor & Agnew as partners, and the partnership debts being unpaid, no right of dower attaches until the same are paid, and then only in Agnew’s share of any surplus that may remain after the payment of the debts. 2d. Because the mortgage given to secure the purchase money of the land being unpaid, no right of dower can attach.

The judge of probate overruled both of these defences and rendered a decree that the demandant was entitled to dower out of one-half of the land. From this decree defendants appealed to the Circuit Court, and the Circuit Judge, sustaining the judge of probate on the first ground, overruled him on the second, rendering judgment that the cause be remanded to the Probate Court to be there dismissed with costs. From this judgment demand-ant appeals upon the several grounds set out in the record, which raise the general question whether the mortgage and the transactions connected therewith are sufficient to defeat the claim of dower.

There can be no doubt that a widow is entitled to dower in 'lands mortgaged to secure the payment of the purchase money at the same time the mortgagor acquires title, but such right is subordinate to the lien of the mortgage. As against all persons other than the mortgagee, or one claiming through the mortgagee, her right to dower cannot be disputed by reason of such mortgage. Stoppelbein v. Shulte, 1 Hill, 200; Klinck v. Keckley, 2 Hill Ch., 250; Wilson v. McConnell, 9 Rich. Eq., 512. So that the practical inquiry in this ease is whether the defendants can avail themselves of the mortgage given by Sartor & Agnew to Dulin, and by him transferred to the Bank of the State as a bar to demandant’s claim of dower. This depends upon two inquiries, first, whether the mortgage was ever transferred to Kinard & Renwick, and was held by them as an open subsisting lien upon the land; or, second, whether they can be regarded as purchasers under the mortgage.

The first inquiry involves the construction and effect of the endorsement, a copy of which is hereinbefore set out, which was placed upon the sale bill of the articles bid off by Sartor at the sale on December 27,1858, which bid was afterwards transferred to Kinard & Renwick. This paper certainly is not, in form, an assignment of the mortgage, or any part thereof. There is not a word in it which indicates any intention to transfer the mortgage. Its language imports nothing more than a surrender of the lien of the mortgage to those who had become, or were about to become, purchasers of the mortgaged property from the mortgagors, so that they might take the property free from the lien of the mortgage. It must be remembered that the mortgage covered a very large amount of property — eighty-two slaves— besides that originally purchased from Dulin by Sartor & Agnew, and that the whole amount of property included in the mortgage was probably considerably more than double the value of the property which Kinard k Renwick proposed to purchase from Sartor & Agnew, and that the amount of the mortgage debt was more than double the amount of the purchase of Kinard & Renwick.

It is inconceivable thatHhe bank, holding a mortgage on such a large amount of property to secure the payment of a bond for sixty-four thousand dollars, upon which the interest had been running for nearly two years, would have been willing to transfer such mortgage in consideration of the three notes of Kinard & Renwick for only $35,574.12, especially when the bank, in addition to the security afforded by the mortgage held as collaterals the notes of Sartor and others, of the face value of twelve thousand dollars. But it is very easy to understand why the bank should have done just exactly what the language of the paper imports— release the lien of its mortgage — not upon all the property included in the mortgage, but only on the property purchased by Kinard k Renwick, in order to secure a partial payment upon its large debt. The language of the paper in question, as well as all the circumstances, show clearly that the intention was to do what is very often done in such cases, viz., that the mortgagor' having found a purchaser for a portion of the mortgaged property, the mortgagee agrees to release the lien of the mortgage upon the property so sold by the mortgagor, upon the condition that the proceeds of such sale should be applied to the mortgage debt. How such an arrangement can be regarded as an assignment or transfer of the mortgage, it is very difficult, if not impossible, to understand.

But even assuming that the paper in question could be regarded as an assignment or transfer of the mortgage, or at least the lien thereof, so far as it affected the property bought by Kinard & Renwick, how does that affect the question of the demandant’s right to dower ? There is some controversy as to whether the several papers introduced in evidence were really executed on the dates which they bear. The endorsement on the bill of sale containing the list of the property bid off by Sartor, which is claimed to operate as an assignment of the mortgage to Kinard & Renwick, as well as the notes given by them to the bank bear date December 27, 1858 — the day of the sale — while the agreement for the transfer of this property by Sartor to Kinard & Renwick bears date April 5, 1859, and the deed for the interest of Sartor in the land to Kinard & Renwick is dated April 6, 1859, and the deed from the assignees of Agnew to Kinard & Renwick for his interest in the land bears date the day of April, 1859.

Governed by these dates, it would seem then that Kinard & Renwick took from the bank a release of the lien of the mortgage, or, under the assumption upon which we are now considering the case, took the assignment of the mortgage and executed their notes to the bank before they had purchased the property from Sartor, or, so far as appears in the “Case,” before Sartor’s bid had been transferred to them. This seems to be hardly probable, especially when taken in connection with the testimony of Kinard, that “Agnew had made an assignment of all his property before we bought the property,” which assignment bears date March 9, 1859; and the more reasonable conclusion would seem to be, from these and other circumstances which it is needless to mention, that the endorsement and the notes of Kinard & Renwick were not really executed on the day on which they are dated, but after the purchase made by Kinard & Renwick from Sartor, and dated back to the day of sale in order that they might bear interest from that date, or for some other reason then deemed sufficient.

But waiving this and assuming that the Circuit Judge was right in considering the several papers as having been actually executed on the dates which they bear, what was then the real nature and legal effect of these transactions? Under this view, taking it in the light most favorable to the defendants, the transaction amounted simply to this — that Kinard and Renwick took an assignment of a portion of the mortgage, giving their notes to the bank for the amount specified, and afterwards purchased from the mortgagors the property covered by so much of the mortgage as had been transferred to them, and instead of paying the purchase money of such property to the mortgagors, assumed the payment of so much of the original mortgage debt as such purchase money amounted to, by giving their notes for the same to the bank. Reduced to its simplest form, the transaction amounted to a purchase by the mortgagee from the mortgagor of the mortgaged premises, not under proceedings for foreclosure, but at private sale. Now, under the admitted general rule, the legal effect of such a transaction is to extinguish the mortgage, and the only exception to this rule, recognized in this State, is that established by the case of Agnew v. Railroad Company, 24 S. C., 18, and this court has said in Bleckeley v. Branyan (26 S. C., 424): “We cannot venture to go further in relieving a mortgagee who purchases the mortgaged property than was indicated in the case of Agnew v. Railroad Company, supra.”

So that the inquiry is narrowed down to the inquiry, whether the case now under consideration can be brought within the exception recognized in Agnew’s case. In that case, when the mortgagee purchased the mortgaged property from the mortgagor there was an express covenant inserted in the deed that the mortgage should “remain open to protect against claim of dower, liens, and encumbrances.” This was clearly the extent of the exception to the well settled general rule recognized in that case, as is shown by the subsequent case of Bleckeley v. Branyan. Where parties have taken the precaution to protect themselves against the operation of the general rule, by an express covenant to that effect, they then bring themselves under the exception recognized in Agnew’s case, beyond which this court has said it will not venture to go; but where no such precaution has been taken, then the case must fall under the operation of the general rule. As was said in Navassa Guano Company v. Richardson (26 S. C., 401), in speaking of Agnew’s case: “In that case there was an express agreement inserted in the deed that the mortgage should remain open for the protection of the defendant against intervening encumbrances, and this might be regarded as evidence that the payment of the mortgage debt was not absolute, but conditional; that if the mortgage was preserved, then the conveyance was accepted in satisfaction of the mortgage debt, but if the lien was not preserved, then the conveyance should not operate as satisfaction.”

Now, in the case under consideration it is quite certain that there was no express agreement or covenant that the mortgage should remain open as a protection against intervening encumbrances, and hence the case cannot be brought under the exception recognized in Agnew’s case. Indeed, it would be very difficult, if not absolutely impossible, to find any evidence whatever, either written or otherwise, tending to show that the parties had any intention to keep the mortgage open as a protection against dower or any other encumbrance. ■ The only possible ground for such an inference would be the fact that, as it has turned out, it would have been to the interest of the mortgagees that such an agreement should have been made, but, as was held in Bleckeley v. Branyan, supra, that would not be sufficient; for, as there said, if so, it would be impossible to conceive of a case where such an inference could not be drawn, and thus the well settled general rule would become absolutely useless whenever it became necessary to apply it. From this it follows that the defence set up to the claim of dower based upon the mortgage, cannot in any view of the case be sustained, and that the Circuit Judge was in error in ruling otherwise.

There is also another ground upon which such defence should be -defeated. While a widow can only claim dower out of land mortgaged to secure the payment of the purchase money contemporaneously with the acquisition of title by her husband, subject to the payment of the mortgage debt, or, as some of the cases express it, her claim is subordinate to the lien of the mortgage, yet when the mortgage debt is paid or otherwise extinguished, the lien of the mortgage is gone, and there is then nothing in the way of the claim of dower — nothing to which it is subordinate. Indeed, it is well settled -in this State that where a husband dies seized of land covered by a mortgage upon which his wife has renounced her dower, or which being given to secure the payment of the purchase money of the land is superior to the claim of dowei', the widow has an equity to require the executor or administrator to apply the personal assets, even though to the prejudice of simple contract creditors, in payment of the mortgage debt, so as to let in the widow’s claim of dower. See Wilson v. McConnell, 9 Rich. Eq., 500, and Henagan v. Harllee, 10 Ibid., 285.

Now, in this case the bond which the mortgage was given to secure was dated April 18, 1857, and it is said was payable in one and two years. So that assuming that the last instalment fell due in 1859, it must be presumed paid by lapse of time, more than twenty years having elapsed several years before these proceedings were commenced, there being no evidence of any intervening acknowledgment or promise by the mortgagors— nothing to rebut the presumption of payment. If, then, the bond must be regarded as paid, the lien of the mortgage vras likewise extinguished, and therefore when these proceedings were commenced, the mortgage, no matter in whose hands it may have been, afforded no bar to the claim of dower. The position taken by the Circuit Judge and relied upon by the respondents here, that this presumption cannot arise when the object of acquiring the mortgage was to protect against intervening encumbrances, is not tenable, because, as has been shown above, such was not the fact. But even if it was, it is not easy to perceive why this should prevent the presumption from arising. If the union of the character of payor and payee in the same person does not work payment by operation of law, and if payment cannot be presumed after any length of time, then it would follow that the mortgage debt could never be regarded as paid — a conclusion which would not be readily accepted.

The only remaining inquiry is, whether Kinard and Renwick can be regarded as purchasers under or through the mortgage. It is quite certain that the mortgage does not invest the mortgagees with power to sell, and it is equally certain that the sale did not even purport to have been made under any such assumed or supposed power. Nor is it pretended that the sale was made under any proceeding to foreclose the mortgage. On the contrary, the sale was made by the mortgagors of their own motion, so far as appears, for the purpose of closing the partnership between Sartor and Agnew, under an agreement between them, to which the mortgagees were not parties, that the proceeds of the sale should be applied to the mortgage debt. There is no evidence that the bank, then holding the mortgage, had anything to do with making the sale. On the contrary, Sartor in his testimony says the sale was agreed to ‘‘by Agnew and myself, no one else being instrumental in effecting it.” The agreement for the sale and the advertisement of its terms were signed by Sartor and Agnew alone, and no one else appeared to have anything to do with it.

The provision in the agreement that the proceeds of the sale should be turned over to the bank, was quite natural under the circumstances. Both Sartor and Agnew were bound for the payment of the debt, and therefore it was very proper that the proceeds of the sale should be so applied, to say nothing of the fact that, without some such arrangement, the property, covered as it was by the mortgage, would not have been likely to bring much. But what is absolutely conclusive is the fact that so experienced a lawyer as Col. Fair was known to be should have taken the trouble to prepare and execute a release of the lien of the mortgage on the property bid off by Sartor at the sale; for if the property was considered as sold under the mortgage, that of itself would have operated as a discharge of the lien of the mortgage, and the release executed by Col. Fair would have been wholly unnecessary. It is clear, therefore, that the sale was not made ■under the mortgage, and the title of the purchasers was not derived through that instrument. They took their title directly from the mortgagors, and to protect themselves against the lien of the mortgage, obtained a release of such lien from the mortgagees.

The judgment of this court is, that the judgment of the Circuit Court be reversed, and that the case be remanded to that court for the purpose of carrying out the conclusion herein reached.

Mr. Chief Justice Simpson and Mr. Justice McIver concurred in the result.

A petition was filed by defendants praying the court to grant them a rehearing of the case. Upon this petition the following order was endorsed January 19, 1888 :

Per Curiam.

We have carefully considered this petition, and finding that no material fact or principle of law has been overlooked in the decision heretofore rendered, there is no ground for a rehearing. It is therefore ordered, that the petition be dismissed.