Jordan v. Sayre

29 Fla. 100

• Court: Supreme Court of Florida
• Decided: January 15, 1892
• Status: Published

Opinion

Mabby, J.:

The former proceedings on the part of Sayre to foreclose the mortgage executed by Warrock and wife to Benedict, and assigned to Sayre, were futile, and the sale thereunder did not pass any title to him. Jordan vs. Sayre, 24 Fla., 1; 3 South. Rep., 329.

Sayre first executed and delivered to Manuel C. Jordan, appellant, a warranty deed for the west fifty feet of the east eighty feet of lot six (6), in square seventy-one (71), according to Hart’s map, in the city of Jacksonville, Duval county, Florida, being the lot described in the Warrock mortgage, and then executed and delivered to Minnie I-Ialle, one of the appellees, a warranty deed to the remaining thirty feet of said eighty feet lot. At the time of the conveyance to Jordan the situation of Sayre with respect to the entire eighty feet lot was that of mortgagee by virtue of the assignment from Benedict. After the execution of the deed to Mrs. Halle, Jordan obtained a conveyance from Myers, who had purchased from Warrock, for the entire eighty feet lot, and thereby became the holder of the legal title, at the same time being in possession of a prior warranty deed from Sayre, the mortgagee, for the west fifty feet of said lot. Under this condition of affairs, Sayre and the Halles, husband and wife, file a bill to foreclose the Warrock mortgage for the use of Mrs. Halle, to whom Sayre had executed a warranty deed, on the east thirty feet of said lot, and asking that the sum of twelve hundred dollars, the purchase money paid by Jordan for the other portion, be credited on the mortgage debt. It is alleged in the bill that the only interest Sayre had in the said thirty feet of said lot at the time he executed the deed to Mrs. Halle, was the mortgage lien, and complainants insist that the deed from Sayre to Mrs. Halle was, and must be deemed and decreed to be an assignment to her of said note and mortgage and the lien thereof on said thirty feet, after deducting the amount paid by Jordan to Sayre.

The consideration of two questions will be sufficient to determine the matters now before us. The first one is, what is the effect of the deeds executed by Sayre to Jordan and Mrs. Halle, under the circumstances presented here, on the present foreclosure proceedings; and, second, what efficiency must be given to the alleged tax title acquired by Jordan ?

When the case was here before on appeal (Jordan vs. Sayre, supra), it was said: “It is true that an assignment simply of the mortgage, or of the mortgagee’s interest in the land, without the debt, is held to be a nullity. In the case at bar, however, we have before us as complainants, both the assignor and the assignee, and upon the record, the assignment of both the balance of the debt and the lien as to the east thirty feet is admitted; and the terms of the deed as set forth in the bill are sufficient to carry the mortgage interest as to the land involved in this suit, and should be held to do so.” Counsel for appellant contend that this decision was made on a demurrer to the bill, but as it is averred in the answer that as matter of fact Sayre did not sell or convey to Mrs. Halle by his deed to her, said note and mortgage, and that he did not intend by said deed to convey, and Mrs. Halle did not intend to purchase or receive, said note and. mortgage, and that said conveyance was not in fact, and cannot and should not be deemed as an assignment to her of said note and mortgage, an issue is presented which must be determined in favor of appellant, on a failure of proof to sustain the ¿negations of the bill. It appears that counsel for complainants in the court below set the cause down for hearing before the expiration of the time fixed for taking testimony, on bill, answer, exhibits, the record of the former proceedings of Sayre against Warrock and wife, and the deed from Sayre to Mrs. Halle, and both parties went to hearing on this submission. Looking to the entire record, including the answer of appellant, is any valid objection to the foreclosure proceedings shown? Complainant, Sayre, executed to Mrs. Halle a warranty deed to the land which he did not own, though he may have mistakenly supposed he did, but on which rested the lien of the mortgage which had been assigned to him, together with the mortgage debt. Sayre unites with Mrs. Halle in a bill to foreclose said mortgage for her benefit, on the part of the lot which she had attempted to buy from him, and for which she held his warranty deed. They allege that the only interest Sayre had in the lot at the time of Ips said conveyance was the mortgage lien, and that the deed to Mrs. Halle was and must be so decreed an assignment of said mortgage debt, except $1,200, paid by appellant to Sayre. Appellant says in opposition to their right to maintain the suit, that they did not intend the deed to Mrs. Halle to be a conveyance of the mortgage debt. Does this, in the face of what is admitted in the record, constitute any defense? With us the mortgagee, either before or after default, has no title by virtue of his mortgage to the mortgaged real estate. His interest is simply a lien for the security of the debt mentioned in the mortgage, and he can acquire the title, as against the mortgagor or his grantee, only by out-bidding every other person at the foreclosure sale. At the time of the execution of the deed to Jordan by Sayre, he had no title to convey, and his interest in the land was a lien of a mortgage to secure the payment of a note which he held against Warrock. And the same is true of Sayre’s situation in reference to the east thirty feet of the lot, and the attempted sale to Mrs. Halle, unless his previous deed to appellant produced' a different result. It is furthermore true under the existing conditions with us in respect to the rights of mortgagor and mortgagee, that a conveyance by the latter of the mortgaged property before foreclosure, or an attempted foreclosure, unless such conveyance contain a gr<*at of the mortgage debt, or Unless its terms are sufficient to carry this interest, and it was intended by the parties to have this effect, will be inoperative for this purpose. The mere conveyance by .the mortgagee of the mortgaged premises alone will not per se operate as an asssgnment of the debt secured by the mortgage. Hill vs. Edwards, 11 Minn., 22; Everest vs. Ferris, 16 Minn., 26; Purdy vs. Huntington, 42 N. Y., 334; Smith v. Smith, 15 N. H., 55. On the other hand, it has been held by many cases, and seems to be sustained by the decided weight of authority, that where a void sale lias been, made of the entire mortgaged premises under proceedings to foreclose a mortgage, a third party purchasing at said sale succeeds to the title and rights of the mortgagee in said property, and may enforce them as the mortgagee could have done, had no sale taken place. And it appears that where the mortgagee becomes the purchaser of the entire mortgaged premises at a void foreclosure sale and then sells and attempts to convey such premises, his deed operates as an assignment of the mortgage debt, as well as the mortgage securing the same to the grantee in the deed. Johnson vs. Sandhoff, 30 Minn., 197; Cooke vs. Cooper, 18 Oregon, 142 ; Stark vs. Brown, 12 Wis., 572; Brobst vs. Brock, 10 Wallace, 519; Hoffman vs. Harrington, 33 Mich., 392; Jackson vs. Bowen, 7 Cowen, 13; Robinson vs. Ryan, 25 N. Y., 320; Winslow vs. Clark, 47 N. Y., 261. This doctrine seems to rest upon certain equitable considerations between the mortgagee and the purchaser. In Stark vs. Brown, supra, in speaking of the right of the mortgagee to assign his debt, it is said: “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 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; * * * 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.” In Frische vs. Kramer’s Lessee, 16 Ohio, 125, it was held that the purchaser at judicial sale of the mortgaged premises becomes invested with the interest of the-mortgagee in the land, and so far as the land is concerned, is subrogated to all the rights of the mortgagee. In Smith v. Hitchcock, 130 Mass., 570, it was decided that the conveyance by the mortgagee of a part of the-mortgaged premises operated as an equitable assignment of the mortgage to secure the purchaser in the amount he had paid for the land. In one of the opinions delivered in Wilson vs. Troup, 2 Cowen, 195, it-was said, in reference to the effect of a conveyance of a part of the mortgaged premises by the mortgagee, “it produces a suspension of the exercise of the power1 as to the part conveyed in hostility to the right of the grantee; that is, the grantor shall not defeat his own grant. But the operation of a suspension of the power,- whether it applies to the whole or a portion of the estate, is merely to1 postpone the vesting of the estate, or interest created by, or acquired under the power in possession. It does not suspend or affect the right to execute the power and perfect the title to the estate.” In this case the mortgagee had conveyed by warranty deeds parts of the mortgaged premises to persons who had not acquired the equity of redemption in the parts so purchased, and it was decided that the mortgagee could sell the entire estate, but should he acquire title to the portions which he had conveyed, it would enure to the benefit of such purchasers.

It wás clearly the duty of Sayre, under the covenants in his deed to Mrs. Halle, to perfect the title to the part of the lot -which she had purchased, and it was legitimate for him, conceding that he had an interest in the mortgage debt, with her co-operation, to foreclose and buy in the legal title with that debt if he could. His warranties in the deed would estop him of course from ¡asserting any interest in tlie land in hostility to her, .and should he acquire the legal title, it would at once pass to her. According to the authorities above cited, Mrs. Halle would, in equity, be entitled to be subrogated, to the extent at least of the lot described in her deed and the amount paid for the same, to the rights of Sayre in the debt, and mortgage securing the same on said lot. Her rights under her warranty deed, accruing by operation of law, would be the same, to the extent of her purchase, as her grantor had, and it is ■clear that all he had was a right to foreclose his mortgage on said lot. To this extent it is clear Mrs. Halle would have an equitable right to have the mortgage foreclosed for her benefit. It would manifestly be no defense to a bill filed by Sayre and herself to foreclose the mortgage on the lot, to allege that the deed from the former to-the latter was not intended by them to ■operate as an assignment of the mortgage debt, when in equity, as we have seen, she becomes subrogated to the mortgage security to the extent of her purchase. She might not necessarily, by operation of law under her purchase, acquire the entire interest in the mortgage debt, as it may be large enough to protect her rights in the lot and leave a balance over. Her right, however, to be substituted, to the extent of her purchase, to the mortgage security does not depend upon a conrractural assignment of the mortgage debt, but it comes about by operation of law-. The answer of appellant in so far as the allegations in reference to the assignment of the mortgage debt extend, shows no defense against the right to foreclose the mortgage. If we were to concede that the parties did not, as a matter bf fact, intend the deed to Mrs. Halle to operate as-an assignment of the mortgage debt, it does not deprive the transaction of its legal effect in equity of subrogating her to the rights of the mortgage security to the extent of her purchase. She can only avail herself of her rights in this respect by a foreclosure, and as equity gives her this remedy, she is in the-proper forum. Nor does Sayre in any way obstruct her in this remedy. He joins in the suit and asks that the court decree a foreclosure in her favor, and that his conveyance to her be decreed as an assignment of' the balance of the mortgage debt. Within the authority of Wilson v. Troup, supra, Sayre, who is before the court as complainant, can maintain the foreclosure suit. There is no objection to him as being an improper party here. Mrs. Halle is the only person, so far as this record shows, who has any right to object to the foreclosure of the mortgage on the part of the lot involved in this suit. Though she may not have acquired a.ny legal title to the part of ti. • lot by her deed from Sayre, yet, as between them, she has acquired rights which he is bound to respect, and interests which it is his duty to protect. They are both before the court as complainants, asking that the mortgage be foreclosed for the benefit of Mrs. Halle, and under the terms of Sayre’s deed to her, to the extent of the property therein attempted to be conveyed at least, they maintain an equitable status in the court to foreclose the mortgage.

Much of the discussion of the counsel for appellant is based on the theory that appellant by his deed from Sayre acquired a large part, if not all, of the mortgage debt from the latter. It will be remembered that appellant first purchased from Sayre fifty feet of the lot described in the mortgage. There is here no invasion of this fifty feet. Appellant’s warranty deed will protect this part against unfriendly action on the part of Sayre, or any one claiming subseqently under him. If it appeared that the title in the portion ot Lne lot described in the deed from Sayre to appellant was outstanding, and it was necessary for his protection that the mortgage security should be foreclosed on this portion of the lot also, he would have a right, upon proper allegations, to a decree to this effect. His rights, however, would attach to the mortgage security only to the extent of his purchase. His subrogation, under such circumstances, would spring from, and be measured by, the warranty deed to him from Sayre. It would arise from the fact that Sayre, the holder of a mortgage lien on the lot, had sold it to him for twelve hundred dollars in cash, and the latter, in' equity, would be entitled, under the circumstances, to have the mortgage security enforced on the land to secure him in his purchase. But no such case is presented for appellant. He has already acquired, by conveyance from Myers, who purchased from War-rock, the original mortgagor, the legal title to the portion of the lot described In the deed from Sayre.

As to the thirty feet now sought, to be subjected to the lien of the mortgage, appellant occupies the position of mortgagor, having derived title from him, with knowledge of the mortgage.

It is not claimed in the answer that Sayre intended to, or did in fact by his deed to' appellant, assign any portion of the mortgage debt. It is true the answer says that if the deed to Mrs. Halle, proprio vigore, assigned to her the debt and mortgage, then the former deed to appellant must likewise be deemed to have transferred to him said debt and mortgage, or, as it is argued, the major part of it. But we do not hold that the deed to Mrs. Halle operates, proprio vigore, to assign the debt and mortgage to her. We hold that the purchase by Mrs. Halle from Sayre operates as a subrogation to his rights in the mortgage security to the extent of protecting her in the portion of the lot described in her deed. This protection can only be had, as shown here, by a foreclosure of the mortgage. It nowhere appears that it is necessary for the protection of appellant in his purchase from '.Sayre that any portion of the mortgage debt be decreed to exist for his benefit; on the contrary, it appears that no part of the mortgage security is necessary to secure him in the fifty feet described in his deed from Sayre, and as it is not shown that appellant has any interest in the debt and mortgage, it becomes unnecessary for us to devote any discussion to the case as presenting this aspect. While the warranty -deed from Sayre to appellant protects him in the portion described therein, it does not affect the residue of the debt, nor the lien of the mortgage as to the remainder of the land. As to this, he is in the place of the mortgagor, and the abortive foreclosure proceedings are no bar to another action'to enforce the lien of •the mortgage. Aside from the tax title, the other allegations in the answer call for no discussion. The hearing was had upon the record of the proceedings in the foreclosure suit, and what is alleged in the answer in reference thereto constitutes no defense.

It is contended in the second place that after appellant obtained his deed from Sayre he discovered that the entire lot had been sold to the State of Florida, for the non-payment of taxes assessed thereon for the year 1878, and that he had obtained from the State a tax deed, which is paramount to the mortgage. A «certified copy of the tax deed is attached to the answer as a part thereof, and is executed by the clerk of the circuit court of Duval county, on the 19th day of August, 1884. It is contended by appellees that appellant could not, by reason of his relation to the property and tlie parties here, acquire a tax title as; against their interest, and that the acquisition of the* same amounted to a redemption of the property from said tax sale. Appellant’s deed from Myers bears-date the 16th day of August, 1884, and the tax deed is dated August 19th, 1884. By the purchase from, Myers,, appellant became invested with the title of the* mortgagor. In Jones on Mortgages, sec. 680, it is laid down as a rule that “a mortgagor cannot, by acquiring a tax title upon the land, defeat the lien of the mortgagee. It is his duty to pay the taxes, and he-is not allowed to acquire a title through his own default. The same obligation rests upon one who has purchased the land of the mortgagor. * * * The-mortgagor, or any holder of the equity standing.in his-place as a purchaser, or a second mortgagee, cannot set up such title against the prior mortgagee.” Burroughs, in his work on taxation, sec. 123, p. 353, announces the same view. If a person is in possession, of land claiming the same as his own, it is his duty to* pay the taxes, and under such circumstances he cannot acquire an outstanding title by neglecting to pay the-taxes, and allowing the land to be sold for the same- and purchasing the same. Some decisions go to the extent of holding that if he be a trespasser in possession claiming the land he cannot neglect to pay taxes and then acquire a title by purchasing the same-at tax sale. Douglass v. Dangerfield, 10 Ohio, 152; Bassett vs. Welch, 22 Wis., 175; Barrett vs. Amerein, 36 Cal., 322. In Spratt vs. Price, 18 Fla., 289, it is said that the terms, duty and obligation to pay taxes, are used, first in reference to the government imposing the tax, and second, in reference to the relation existing between individuals. The legislature-fixes the duty to the State, and the relation, legal or-equitable, between individuals gives rise to the obligation between parties. Here it was held that a mortgagee not in possession could acquire a valid tax title at a second sale, based upon an assessment against the mortgagor in possession, as against a stranger who* had purchased at a former tax sale. The question, here presented involves the right of a purchaser from a mortgagor to acquire a tax deed as against a mortgagee or his assignee. In Avery vs. Judd, 21 Wis. 262, it was decided that one in possession of mortgaged land under a deed from the mortgagor, subject to the mortgage, cannot take as against the mortgagee-a tax title for taxes which the mortgagor or those-holding under him were bound to pay. In this case-the mortgage was executed and recorded in 1853,, and. through mesne conveyance from the mortgagor, Judd' came to the owner of the equity of redemption in 1859. The mortgaged premises were sold to the county at tax sale in 1858, for the taxes of 1857, and a tax deed was issued to Judd in 1862, as assignee of the tax sale certificate. When Judd purchased the mortgage premises through ' mesne conveyances from the* mortgagor in 1859, they had been previously sold to the county for the taxes of 1857. In speaking of the* relation of the parties in this case, Dixon, C. J., said: “It is a relation of trust, arising from the nature of the contract as a security, and the situation of the parties with respect to the property upon which the security is given. The mortgagor, and those in possession under him subject to the payment of the mortgage, hold the estate clothed with a fiduciary duty. The estate, to the extent of his interest, belongs to the mortgagee; and the mortgagor and his grantees are entrusted with the care of it; and being so intrusted, they are bound in equity and conscience to do no act and to suffer none to be done, which shall destroy the mortgagee’s title, or impair his security. * * * Judd, as the holder of the estate by conveyance from the mortgagor subject to the mortgage, was precluded from acquiring title by tax deed as against the mortgagee. He stood in the place of the mortgagor, whose duty it was to have paid the taxes. This was the duty of the mortgagor in possession, not only by virtue of that relation, but more particularly because of the covenant which he had made to pay all taxes. The same duty devolved upon Judd upon conveyance of the premises to him subject to the payment of the mortgage.” This view finds supjjort in the following authorities: Lacey vs. Davis, 4 Mich., 140; Middletown Savings Bank vs. Bacharach, 46 Conn., 513; Stears vs. Hollenbeck, 38 Iowa, 550; Cooley on Taxation, 500; 1 Blackwell on Tax Titles, sec. 591; Black on Tax Titles, sec. 138.

The tax title set up as a defense here covers the entire lot, and, as appears from the record, at the time Jordan obtained it he owned, freed by his warranty deed from the mortgage lien, the west fifty feet of the lot. The tax title is an entirety and covers property then owned by appellant, as well as that part now involved. In 1 Blackwell on Tax Titles, sec. 592, it is said that one who owns any portion of the equity of redemption from a mortgage cannot buy a tax deed that will be valid against the mortgagee. In Middle-town Savings Bank vs. Bacharach, supra, it is declared that any party who sustains such a relation to the property that he has a right to redeem, and, if redeeming, may be required to refund to the mortgagee the taxes paid by him, cannot be a purchaser of the property if sold for taxes.” Furthermore the copy of the tax deed attached to the answer shows that the lot was sold in 1879 for the non-payment of taxes levied and assessed thereon for the year 1878, and that the assessment -was to L. AY arrock. The deeds exhibited as parts of the answer show that Warrock had previously sold the property, and that A. Joseph Myers was at the time of the assessment the owner of the property. On the record here there is apparently an erroneous and void assessment.

Upon a consideration of the entire record, our judgment is, that the decree of the chancellor should be affirmed, and it is so ordered.

Raney, C. J.:

It is fully adjudicated by the authorities cited in the main, opinion that where the owner of the mortgage interest purchases at a foreclosure sale under a decree in which he is complainant, but to which the •owner of the legal title of the land is not a party, and obtains a deed, purporting to convey the land to him, and afterwards to execute a deed, with covenants of warranty, conveying’ the land to another, this deed •operates as an assignment of the mortgage claim to the last supposed purchaser; and authorities cited even show that he is a necessary party to a bill brought by the owner of the legal title to redeem the mortgage. Where, as here, the assignment of the mortgage interest.- — the debt and the lien on the land — is asserted on the record by both the grantor and the grantee, and the terms of the deed are sufficient to carry such interest, the mere holder of the legal title cannot, -in my judgment, question the mere intent to assign the mortgage interest. Upon these pleadings Jordan is, as to the thirty feet in question, no more than a mere holder ■of the legal title. The intent to assign is a matter of immateriality to Jordan, in so far as he is shown to be •concerned, in the face of the deed and the admission referred to. Had Sayre continued to hold the mortgage, he could have foreclosed it as to the thirty feet, even as against Jordan, under the circumstances of this •case, excluding the assignment to Mrs. Halle. Jordan shows no interest which is in any wise affected by the transfer, nor any fact altering the law of the case (Wilson. vs. Fridenburg, 21 Fla., 386) as settled by the de•cisión made when it was here before. (Jordan vs. Sayre, 24 Fla., 1.) This decision, adjudged that upon the case as then made, the deed operated as an assignment to Mrs. Halle of the mortgage interest remaining in Sayre. The only parties who, upon the face of'this record, can ever claim any interest in the remainder of the mortgage interest sought to be foreclosed are before the court, and they, as against Jordan, are forever ■concluded by the decree from asserting that the transfer has not been made. Jordan not only does not show any interest of his which can suffer from the assignment, but he does not pretend that there is any one before the court who has any interest in the controversy-

There is no controversy in the record between Sayre and Mrs. Halle as to the extent to which the mortgage claim held by Mrs. Halle, at the time the deed was executed, was assigned to her; nor as shown by the main opinion, is there any such controversy properly made between Jordan and complainants. Upon this question, and as to what right Sayre might have to enforce of himself the mortgage for the benefit of Mrs. Halle, and as to the exact principle upon which the deed can be said always to operate in cases of this kind, I express no opinion.

While I concur fully in the conclusion that the decree appealed from should be affirmed, and am of the opinion that the real effect of the deed, under the circumsances of its execution, and of the case as it is-made by the pleadings, was to assign the mortgage interest to Mrs. Halle, and that, as is indicated by the-main opinion, there is nothing in the answer, outside the effect of the tax deed, to merit any attention but the question of intent, I do not think that Jordan can, under the case made by the pleadings, question this intent; and this view is, in my judgment, the one properly controlling the decision of the issue thus attempted to be raised by the answer.