Micou v. Ashurst

55 Ala. 607

• Court: Supreme Court of Alabama
• Decided: December 15, 1876
• Status: Published

Opinion

BRICKELL, C. J. —

The original bill proceeds on the theory, that the complainant and defendant stand in the relation of mortgagor and mortgagee — that the mortgage debt, having been contracted for a loan of bonds of the Confederate States, is void, and incapable of enforcement; and that the complainant is therefore entitled to a cancellation of the evidences of the debt, and of the writings which constitute the mortgage; or, if the debt and mortgage are not void, it is averred that the debt was contracted with the understanding it should be paid in Confederate treasury-notes; and it is insisted it should now be reduced from the nominal amount, to the value of such notes at the time the debt became due and payable, in the present currency. An injunction against the prosecution of pending actions of ejectment for the recovery of the mortgaged premises is prayed. The complainant submits to abide the decree of the court in the premises, and offers to pay whatever may be decreed to be due the appellant.

It is not now insisted, nor does it appear to have been insisted before the chancellor, that the mortgage debt is void, because its consideration was a loan of Confederate States bonds; nor that the mortgage, if one exists, should for that reason be cancelled. That question is put at rest, by the decision of this court, in Whitfield v. Riddle, 52 Ala. 467. Nor is it insisted it is shown that the debt was contracted with an understanding that it should be payable in Confederate treasury-notes. On tbe contrary, the evidence establishes there was no such understanding or agreement. It would seem to follow, necessarily, that if the bill was entertained, it could be entertained only as a bill to redeem. The chancellor declined to treat it as a bill for redemption, but retained it as a bill to have certain contracts between the parties declared a mortgage; and declaring them a mortgage, he perpetually enjoined the appellant from maintaining any action for the recovery of the lands, founded on any other title than that of mortgagee.

We cannot doubt the decree of the chancellor is erroneous. If we assume that the relation of the parties is that of mortgagor and mortgagee, and that this relation is not disclosed by the writings, but is derived from parol evidence of the intention of the parties, and the purposes for which the writings were executed, we do not suppose a court of equity would entertain jurisdiction, merely to declare the true relation of the parties, and the operation and effect in equity of the contracts and agreements into which they have entered; especially after the mortgage debt has become due, and the mortgagee is entitled to foreclose, and the equity of the mortgagor is to redeem. It is said, a court of equity will not do justice by piece-meal, and that it delights to quiet litigation. Hence, it is a well-defined principle, that if the jurisdiction of a court of equity attaches for one purpose, it will settle the litigation, without remitting the parties to a court of law, though, as to some of the matters involved, the remedy at law may be clear and adequate. So, it is a maxim, that he who seeks equity, must offer to do equity, and thereby give the court jurisdiction to decree against him, and in favor of his adversary, so far as equity may require it. Therefore, a bill by a mortgagor, assailing the mortgage debt as usurious, must contain an offer to pay the principal sum and legal interest, giving the court jurisdiction to decree that to the mortgagee, or it is wanting in equity. So, if it is insisted that an absolute conveyance is really a security for a debt, and therefore a mortgage, there must be an offer to pay the debt, or the court will not interfere. If there is such offer, the court can have the amount of the ■ debt ascertained, decree that the complainant redeem on its payment, or, if he fail in its payment, that the mortgage be foreclosed. Equal justice is thereby measured out to both parties, and the litigation finally quieted. If the court assumed jurisdiction only to declare the conveyance a mortgage, one suit would be but preliminary to another, and the litigation protracted unnecessarily. If the writings disclose the true character of the transaction, there is no necessity for a decree declaring their legal effect; and tbe court should not take jurisdiction, ex» cept for redemption or foreclosure, unless cancellation is sought. If the bill will not authorize a decree of redemption, it should have been dismissed, as it shows no ground for any other relief. We cannot perceive what relief it is to the complainant, to declare that he is a mortgagor, and the defendant a mortgagee. He is liable to every remedy as a mortgagor, that could be pursued against him if he was a vendee, as the defendant insists; and he would have the same rights, if a vendee, that he would have as mortgagor. A further decree would be necessary; some relief consequent on the declaration of his relation, or he is not advanced in obtaining his rights.

But, we concur with the chancellor, the bill is not filed for redemption; nor could a decree be founded on it that the complainant be let in to redeem. The averments of the bill are adapted only to a decree for the cancellation of the mortgage, because the debt is founded on an illegal consideration. As a general rule, a bill may be framed in a double aspect, or in the alternative, when either of the aspects or alternatives entitles the complainant to the same relief. But we do not understand that, when a bill is filed for a distinct purpose, which wholly fails, whether on the facts stated, or on the proofs, that it can be converted into a bill for another purpose. Nor do we understand, that a bill may aver either one or the other of two alternatives is true, when they are repugnant to and inconsistent with each other, and if the one is true, entitling the party to relief, wholly distinct from, and repugnant to that which would be granted if the other was true. Now, if the consideration of the mortgage debt was illegal, violative of positive law, and offensive to public policy, a court of equity would not entertain a bill for redemption, nor for foreclosure. The cancellation of the mortgage, as a cloud on the title of the mortgagor, would be, perhaps, the only ground on which the court would intervene. Averring the illegality of the debt, and the consequent invalidity of the mortgage, the appellant cannot then aver that he may be mistaken in this, and affirm their validity, and claim to redeem; especially when there is no averment of ignorance of the facts, and of a necessity for a discovery. Suppose a bill of this character should be confessed by the defendant, what relief would the court grant ? which of the repugnant and inconsistent statements would be adopted? The averments of the bill not authorizing the specific relief prayed — the cancellation of the mortgage, and of the evidences of the mortgage debt, which was its primary purpose, and the special relief prayed — it should have been dismissed. Cresy v. Beavan, 13 Sim. 353; Shields v. Burrow, 17 How. 130.

We are not sure that we understand tbe decree, so far as it relates to tbe injunction of tbe actions of ejectment — ■ whether it was intended to perpetuate, or to dissolve it, or whether, limiting its operation to actions in which the appellant asserted an absolute, indefeasible estate in the lands, it was perpetuated, and dissolved as to actions in which he asserted that he was a mortgagee. If, as the chancellor supposed, the relation between the parties was that of mortgagor and mortgagee, it is clearly settled in the law of this State, that, after condition broken, the mortgagee has three remedies, either of which he may pursue; and all of which he may pursue, until his debt is satisfied. 1. He may bring an action at law to recover the debt. 2. He may bring trespass, or ejectment, to recover the possession of the mortgaged premises. 3. He may, in equity, foreclose the equity of redemption, and sell for the payment of the debt. — Duval v. McLoskey, 1 Ala. 708. These remedies he may pursue concurrently ; and unless some peculiar reason exists, a court of equity will not restrain him in the pursuit of the one or the other, or compel him to an election between them. — Kerr on Inj. 191. The appellant was pursuing but one remedy, to which he had a clear, legal right; and there is not a fact averred, or apparent from the evidence, which justified interference with him. If he proceeded at law in ejectment, it must have been on a legal title; and if, as the chancellor supposed, his title was that of a mortgagee, it was, at law, an absolute, indefeasible estate, after the expiration of the law day, and the failure of the mortgagor to perform the condition. On no other than this legal title could he maintain ejectment; and if the decree of the chancellor, limiting him to an action of ejectment on the qualified title (as the chancellor seems to have supposed it) of a mortgagee, has any operation, it is an inhibition of an action of ejectment, and an unwarranted deprivation of a legal remedy. A court of equity never interferes with the mortgagee, pursuing his legal remedies, except on terms which compel the mortgagor to do equity, and, on his offer to do equity, perform the condition which he has broken.— Gliddon v. Andrews, 14 Ala. 733; Williams v. Troy, 39 Ala. 118. This, it is evident, it was not the purpose of the appellee to do; and the injunction was the instrumentality he was employing, to delay, if not to avoid performance, and to prevent the appellant from obtaining the rights to which he is entitled in law and in equity. The injunction ought never to have been granted, and should have been unqualifiedly dissolved.

We have thus far considered the case, as if the parties stood in the relation of mortgagor and mortgagee. But that is not tbeir relation. A mortgage is defined by Chancellor Kent as “ the conveyance of an estate, by way of pledge for the security of a debt, and to become void on payment of it. The legal ownership is vested in the creditor; but, in equity, the mortgagor remains the actual owner, until he is debarred by his own default, or by judicial decree.” — 4 Kent, 151. Again, he says, “ The condition, upon which the land is conveyed, is usually inserted in the deed of conveyance ; but the defeasance may be contained in a separate instrument; and if the deed be absolute in the first instance, and the defea-sance be executed subsequently, it will relate back to the date of the principal deed, and connect itself with it, so as to render it a security in the nature of a mortgage. The essence of the defeasance is, that it defeats the principal deed, and makes it void, if the condition be performed.” — 4 Kent, 157. If the mortgagor performs the condition of the mortgage, according to its terms, whether the condition is inserted in the conveyance made by him, or is contained in a separate instrument, and therefore called a defeasance, the estate of the mortgagee is defeated, and the mortgagor is in as of his original estate. — 2 Wash. Real Prop. 152; 4 Kent, 173. The only difference between a condition and a defeasance is, that the one is inserted in the deed itself, and the other is the expression of the condition in' a separate instrument. The legal effect and operation of each is the same, when performed, discharging and disincumbering the estate of the grantor. — 2 Black. 342; Erskine v. Townsend, 2 Mass. 497; Watkins v. Gregory, 6 Blackford, 114; 2d Ward Bank v. Upmann, 2 Wis. 499. It results, therefore, that if the condition is expressed in the conveyance, it must be reserved to the grantor ; or if in a separate instrument, that it must be between grantor and grantee — they must be the parties to it, and the benefit of performance must enure to the grantor. Otherwise, it cannot have the effect and operation which is an indispensable attribute of a mortgage — defeating, rendering void, the conveyance of the mortgagor, and restoring him on performance at the time appointed to his original estate.

Now, in the case before us, if Ashurst had paid each of his notes to Micou, the estate created by Thompson would not have been defeated; it would not have ceased according to any term of its creation, nor would Thompson have been in as of his original estate. Such results were not in contemplation of the parties, and are inconsistent with their purposes. Thompson completely divested himself of all estate in the lands by the conveyance to Micou, which is absolute and indefeasible, and was so intended. The conveyance was made at tlie request of Asburst, and by him accepted as a full compliance of the duties and obligations imposed on Thompson, by the contract between them. Micou, doubtless, holds the lands in trust for Ashurst; and when Ashurst shall perform the contract on his part, he can compel the execution of the trust. But this trust bears no other resemblance to a mortgage, than that its execution, or the right to its execution, depends on the payment of money, which is usually the condition the performance of which defeats a mortgage. In no other respect do they bear a resemblance. Such contracts between the purchasers of real estate, and others having some prior estate or interest, are not of infrequent occurrence, and we are not aware they have ever been held to constitute a mortgage. The condition, which gives to a conveyance the character of a mortgage, is matter of agreement between the grantor and grantee, and is reserved for the benefit of the grantor. If there is no agreement between them, and no condition, on which the conveyance is defeasible, whatever may be the trust with which the estate of the grantee is charged in favor of others, not parties to the conveyance, it is not a mortgage. — Shaw v. Erskine, 43 Me. 371; Flagg v. Mann, 14 Pick. 467; Warren v. Lewis, 53 Me. 463; Low v. Henry, 9 Cal. 538; Fowler v. Rice, 27 Pick. 100; Stephenson v. Thompson, 13 Ill. 186. We are, therefore, of the opinion, the chancellor was in error in declaring that Ashurst was a mortgagor, and Micou a mortgagee of the lands.

The true relation of the parties is that of vendor and ven-dee, the vendor retaining title as a security for the payment of the purchase-money. The vendor is a trustee of the title, for the vendee; and the vendee, of the purchase-money, for the vendor. The law annexes many of the incidents of a mortgage to this relation. The vendee is entitled to possession, free from all liability to account for rents and profits, until the vendor ejects him. The vendor may proceed by bill in equity to enforce the lien given him by law, for the payment of the purchase-money. He may sue in ejectment for the recovery of possession of the lands, and may sue at law for the recovery of the purchase-money. These remedies he may pursue concurrently, as a mortgagee may; and a court of equity, in the absence of some evidence of fraud or oppression, or of some fact rendering it inequitable, will not restrain him from pursuing them all at the same time. Kelly v. Payne, 18 Ala. 371; Conner v. Banks, Ib. 42; Haley v. Bennett, 5 Porter, 472; Kerr on Inj. 191.

It may seem that, practically, it is of but Httles importance, whether the parties are mortgagor and mortgagee, or vendor and vendee. Yet, this would be a very narrow and superficial view of the subject. Apart from the fact that the mortgagor can maintain no action at law against the mortgagee, and can maintain no bill in equity except for redemption, the relations are wholly distinct. If the vendee makes punctual payment of the purchase-money, and the vendor refuses to convey, he may file a bill for specific performance of the contract of purchase; or, if he has a bond for conveyance of the title, he may sue at law to recover damages for its breach. Haynes v. Farley, 4 Port. 528. If a mortgage debt is founded on an illegal consideration, a court of equity will not foreclose it, and would restrain the mortgagee from proceeding in ejectment at law for recovery of possession. If a vendor was pursuing an action of ejectment at law against the ven-dee, a court of equity would not interfere to enjoin him, unless the vendee offered to perform the contract of purchase. "Without extending this opinion, we may say that, while it is certainly true that a vendor, retaining title as a security for the payment of the purchase-money, has a lien, to which a court of equity attaches many of the incidents of a mortgage, the parties are not mortgagor and mortgagee, but vendor and vendee, and the two relations cannot be confounded.

The decree of the chancellor is reversed; and this court, proceeding to render the decree he ought to have rendered, doth order, adjudge, and decree, that the injunction granted in this cause be dissolved; and it is further ordered, adjudged, and decreed, that complainant’s bill be and stand dismissed out of the Chancery Court, and that he pay the costs in this court and in the Chancery Court.