Eaton v. Whiting

20 Mass. 484

Opinion

Parker C. J.

delivered the opinion of the Court. The opinion expressed in the case of Blanchard v. Colburn & ux. 16 Mass. R. 345, that the interest of a mortgagee, in real estate mortgaged to him for security of a debt, or the performance of a condition, is not liable to be levied upon for the debts of the mortgagee, and so of course not liable to attachment on mesne process, we see no cause to change. It is in fact but a chose in action, at least until entry to foreclose, and although the legal effect of the mortgage is to give an immediate right of entry or action to the mortgagee, yet the estate does not become bis, in fact, until he does some act to di-vest the mortgager, who, to all intents and purposes, remains the owner of the land until the mortgagee chooses to assert his right under the deed. It is, as before said, in the nature of a pledge, and a pawn or pledge cannot be seized in execution for the debt of the pledgee. The mortgager may be compelled to pay over the debt to the creditor of the mortgagee on the trustee process, with the same exceptions as are provided for other cases, and payment under such process will discharge the mortgage pro tanto; so that the creditor of the mortgagee is not without remedy, as has been suggested. The law in New York and Connecticut is the same as with us. In the courts of both those States it has been decided, that a mortgagee before entry has • not such an interest in the land as can be sold, levied upon, or attached. See Jackson v Willard, 4 Johns. R. 41; Runyan v. Mersereau, 11 Johns. R. 534; Johnson v. Hart, 3 Johns. Cas. 329; also Huntington v. Smith, 4 Connect. R. 237, in which Hosmer C. J. states at large the reasons, similar to those given in Blanchard v. Colburn & x. by this Court. Before the case of Blanchard v. Colburn & ux. the same principle had been decided in the case of Portland Bank v. Hall, 13 Mass. R. 207. So that we are warranted in considering it as settled law, that the interest of a mortgagee before entry is not attachable ; and we might add with Hosmer C. J. in the case cited from Connect. Rep., that we doubt whether it is attachable before foreclosure, for until then all the inconveniences suggested as the ground of decision would occur ¹

The plaintiff in this case, then, in order to sustain his suit, must show that the property attached as the defendant’s is something more than a mortgage interest, for as he is not an inhabitant of this commonwealth, and was not within its jurisdiction when the writ issued, he can be held to answer only by the attachment of real or personal estate belonging to him liable to be attached or seized on execution.

The property returned as attached consists of two parcels of real estate, formerly belonging to John Peck, who, by deed of indenture, on the 2d of February, 1810, conveyed one of the pieces to Ruggles Whiling the defendant; and by a like deed of indenture, made on the 31st of March, 1810, conveyed the other piece to the same Ruggles .Whiting. On the 8th of March, 1810, Whiting, by deed, assigned and conveyed all his right and interest in the deed and land first mentioned to Ebenezer Francis. This deed of Whiting to Francis was acknowledged by Whiting on the 15th of the same March, but has never been recorded. The other tract described in the deed of indenture first mentioned, has not been conveyed by Whiting. So that whatever estate passed to Whiting by the indentures, may be supposed, for the sake of the question, to have remained his, as regards his creditors, to the time of the supposed service of the plaintiff’s writ opon him. What estate, then, passed by these two deeds to Whiting ? If any estate in possession, so that in point of law it can be called his real property, then of course it is liable to attachment, whether it be a fee simple, freehold, or an estate for years ; for by our law all such estates may be seized on execution, and therefore may be attached: On the other hand, if by these deeds only a mortgage for security of debt was created, then, for the reasons before given, it is not liable to execution or attachment.

Both deeds contain a recital setting forth that Peck the grantor was indebted to Whiting, and both contain a provision, that if the sums admitted to be due shall be paid within specified times, the deeds shall be void. Thus far we have even the common characteristics of a deed of mortgage expressly made as collateral security for a debt. At the same time with the deeds promissory notes were given by Peck to Whiting, which were also to become void on payment of the sums intended to be secured. The deeds are also in trust, but as Whiting the creditor is the trustee, and as the payment of his debts was the first object of the trust, the nature of the conveyance is not altered thereby. But it is further provided, in the first deed, that after fifteen months from the date, and in the second, after thirteen, if the' money due shall not be paid, Whiting may sell and convey the lands described, at public auction, and from the proceeds pay himself the amount due and expenses, and the balance over to Peck. Now it is contended by the plaintiff, that this power to sell so alters the character of the conveyance, as to deprive it of the qualities of a mortgage, or else superadds qualities which enlarge the estate in Whiting, so as to render it subject to his debts by attachment and levy. We have not seen any authorities which will justify us in adopting this opinion ; on the contrary, all the authorities cited have a tendency to show, if they do not distinctly decide, that where the transaction between the parties to the conveyance is in truth and in fact a security for debt or loan, it shall have all the attributes of a mortgage, notwithstanding there may be an unlimited power to sell. Conveyances of the kind are invariably thus treated in chancery, and even when the parties have attempted in that form of convey anee to deprive it of the character of a mortgage, still if it appear to have been a security for debt, the Court will let the debtor in to redeem. So if there be a limited period within which the mortgager shall redeem, as during his life, his heirs shall nevertheless be allowed to redeem. Howard v. Harris, 1 Vern. 192. And if there be an agreement to make the conveyance absolute upon payment by the mortgagee of a further sum, if the money lent be not paid at the day appointed, yet the mortgager may redeem in spite of this agreement. For where the real transaction is security for a loan, the law deems all restrictions upon the right to redeem, unconscionable advantages taken by the creditor of the necessities of the debtor. Manlove v. Ball, 2 Vern. 84; Co. Lit. 203, Butler’s note 96.¹ An instrument of conveyance, therefore, which appears on the face of it, or by contemporaneous in struments, to be intended as security for the payment of a debt or the performance of other conditions, does not lose this character while the estate remains in the hands of the grantee, although he may have power to convey the estate free from such incumbrance. A power to sell executed to one who relies upon such power, and expects and intends to purchase an absolute estate, will without doubt pass an unconditional estate to the purchaser, though this form of conveyance is rare in this country. But while the power remains unexecuted, the relation of mortgager and mortgagee subsists, if that was the relation created by the instrument separate from the power ; but even under such a power, it has been held in England, that if the purchaser knows the original nature of the transaction, and appears not to have purchased wholly without reference to the conditional character of the title, be will be compelled in equity to surrender it, on receiving the money he has advanced. See Croft v. Powel, 2 Com. Rep. 607.

We do not find any thing in the authorities cited by the plaintiff’s counsel that contradicts the principle, which seems well founded in equity, that a power in the mortgagee to sell, unexecuted, leaves the estate as it would be if no such power existed. The right of redemption, which is the true indicium of a mortgage, remains in the mortgager and his representatives, until it shall be foreclosed by entry or judgment, with possession as prescribed by law, or until, availing himself of his power, the mortgagee shall have made a conveyance pursuant to it, to some one who shall intend to purchase an irredeemable estate.

Verdict set aside.

Footnotes

1

See 1 Powell on Mortg. (Rand’s ed.) 255, n. (1).

1

See 1 Powell on Mortg. (Rand’s ed.) 187 a, note.