Pitts v. American Freehold Land Mortgage Co.

123 Ala. 469

Opinion

TYSON, J.

The appeal in this cause is prosecuted by the complainants who are minors from a decree sustaining a demurrer to their bill of complaint. The facts alleged upon which they predicate their right to the relief sought by the bill may be briefly stated as follows: The father and mother, of the complainants executed a mortgage to the respondent Mortgage Company in the year 1886 upon six hundred and eighty acres of land belonging to the father. About one year after the execution of this mortgage, the father of complainants executed to his wife, their mother, a warranty deed for valuable consideration, to two hundred acres of the land conveyed by their mortgage to respondent. There was a default in the payment of the debt secured by the mortgage, and in 1892, after the death of the complainants’ mother, the mortgage was foreclosed under the power contained in it and the respondent Mortgage Company became the purchaser of the entire tract without authority to do so under the terms of the mortgage, and went into the possession of the lands.

The relief sought by the bill upon these facts, is to set aside the foreclosure sale of the lands as a whole, including the two hundred acres conveyed to complainants’ mother, and also to redeem them and to hold the Mortgage Company liable as mortgagee in possession for the rents collected by it upon the entire six hundred and eighty acres to he applied upon the mortgage debt; and “so redeeming to have said mortgage assigned and enforced, for their protection and benefit, upon the four hundred and eighty acres by a sale thereof, under a decree of this court, to the exoneration of their 'said two hundred acres.”

There were many grounds of demurrer assigned to the bill; and those sustained by the chancellor practically go to the rights of the complainants to have the sale set aside as to the whole tract and their right to redeem the four hundred and eighty acres. Some of the grounds of the demurrer assigned recognize the right of the complainants to redeem the two hundred acres -which were conveyed by the deed to their mother. Independent of the recognition by the Mortgage Company of this right in the complainants, it would seem there is no question of their having it.- — 2 Jones on Mortgages (5th ed.), § 1055, et seq.; Howser v. Cruikshank, 122 Ala. 256, and authorities therein cited.

It is contended by complainants, however, that in order to secure to themselves the benefit of the equity of redemption they will be required to pay the entire mortgage debt to.the Mortgage Company; that there can be no apportionment of it so as to relieve the two hundred acres in which they still have an equity of redemption from the lien of the mortgage bv paying their aliquot part. As to the correctness of this contention we express no opinion as it is not necessary to a decision of the question here involved. The authorities on this subject are not altogether uniform (2 Jones on Mortgages (5th ed.), § 1074, and note on page 34) ; and the question has never been decided in this State that we are aware of. The cases insisted- upon as supporting appellants’ contention rest upon a different principle.

The complainants confessedly having the right to redeem the tAvo hundred acres, is it true that the sale and purchase by.the Mortgage Company of the four hundred and eighty acres more than five years before the filing of the bill, and Avhich has ripened into an indefeasible title as against the mortgagor, may'be avoided by them? Unless this question can be ansAvered affirmatively, the decree .of the chancellor must be affirmed. The complainants derived their equity of redemption to the tAvo hundred acres by inheritance from their mother, being her only heirs at law. They never OAvned any property interest in the four hundred and eighty acres. The equity of redemption as to this portion of the tract conveyed by the mortgage, after the death of the Avife, re-, sided exclusively in their father, Avho is still living and one of the respondents to their bill. Unlike in this respect to the case where there was a voidable foreclosure and the heirs at law of the mortgagor after his death disaffirmed the sale. In the latter case, the equity of redemption in all the realty conveyed by the mortgage descended to. his heirs at laAV. Mr. Jones says: “To entitle one to redeem he must have an interest in the.land derived through the mortgagor, so that in effect his interest constitutes a part of the mortgagor’s equity of redemption.” — 2 Jones on Mortgages, § 1055 a. And the mortgagee in possession under a voidable foreclosure sale after the mortgagor’s death is regarded- as holding under the mortgage in privity of title with his heirs at law.—Lovelace v. Hutchinson, 106 Ala. 417; Am. F. L. M. Co. v. Sewell, 92 Ala. 163. No contract in the present case can be said in any sense to exist between the complainants and the Mortgage Company. And their right to redeem the two hundred acres rests solely and exclusively upon their inheritance of the equity of redemption from their mother who acquired this property interest in-it. As to the four hundred and eighty acres she had no such right as descended to her heirs at law.

- It is contended, however, that this right to aVoid the sale as to the four hundred and eighty acres grows out of their eqfiity to have this portion of the tract first sold for the payment of the mortgage debt to tbe exoneration of tlieir. two hundred acres. The equity of exoneration invoked by them says Mr. Pomeroy, “is one of purely equitable origin and is not an absolute rule of lane; and if the peculiar equitable reasons on which it rests are wanting, it ceases to operate.” One of the cases in which lie says the doctrine is applicable is where the grantee of the mortgagor acquires a title by warranty deed to a portion of the tract previously mortgaged. — 3 Pomeroy Eq. Jur., 1225; Howser v. Cruikshank, supra. It is obvious that the doctrine has its foundation'in the intention of the parties to the warranty deed. The grantee takes the parcel conveyed by the deed free from the mortgage lien and the grantor assumes the whole burden of the incumbrance as a charge upon his own parcel. The mortgagee is not a party to this contract, and it can in nowise concern him. His lien upon the entire tract, is not impaired by it and indeed could not be. The entire tract remains as a security to his debt, and as against him, before foreclosure or before-a release by him of any portion of the mortgaged premises in case of several 'sub-purchases from the mortgagor, the grantee in the first deed has only the right to have him after notice to foreclose or release so as not to disturb the equities subsisting among the various owners or not to destroy their right of precedent in the order of liability, or not to defeat their rights of ratable contribution or of complete and partial exoneration. Mr. Pomeroy says further: “No such obligation, however, rests upon the mortgagee, nor is he prevented from dealing with the mortgaged premises in any manner cpnsistent with his general rights as a mortgagee, unless he has received notice of the conveyances to the subsequent owners whose interest could be affected by his dealings. ' Since his- mortgage is a prior lien and creates an incumbrance alike upon all parts of the land subject to it, no subsequent change in the ownership of the mortgaged premises, 'of which he is ignorant, can in any degree control or limit his original rights and power conferred by the security. It is settled, therefore, that notice must be given to the mortgagee of any subsequent conveyance of a parcel of the mortgaged premises, so as to prevent him from affecting tlie equities of the grantee therein by- his dealing with other portions of the same premises. It is also settled in this connection, that a record of the subsequent conveyance is not a constructive notice to the prior mortgagee, so as to prevent him from dealing in any manner with the mortgaged premises.”- — 3 Pomeroy Eq. Jur., § 1226; 2 Jones on Mortgages, § 1624; Hosmer v. Campbell, 98 Ill. 572; Cheesebrough v. Millard, 1 Johns. Ch. 409.

The bill of complainants contained no allegations of actual notice.to the mortgagee before the foreclosure by it of the mortgage of their title to the equity of redemp-; fcion of any portion of the tract conveyed by the mortgage. The only allegation in this respect was, that the' deed to their mother was duly recorded in the county in which such conveyances are required to be recorded. This was insufficient under the authorities above cited for the obvious reason that registration of -conveyances is for the protection of creditors and purchasers against dormant conveyances and loans of which the creditor or purchaser had no notice. The Mortgage Company was not required to search the records for the purpose of ascertaining the status of the title of the equity of redemption after the execution of the mortgage to it. — 2 Jones on Mortgages, § 1624; Matteson v. Thomas, 41 Ill. 110. Neither can it be charged with any such duty towards complainants because they were infants.

We entertain no doubt -that a bona fide purchaser for value without notice of an unrecorded conveyance held by an -infant would be protected. And the infant whose duty, it was to have his conveyance recorded cannot invoke, to the injury of such bona fide- purchaser, his infancy on failure to perform any act required of him by law as an excuse and thereby-secure a benefit to himself. As said by Lord Coke, “And so it is of an infant: his laches, for not performing of a condition annexed to a state [an estate], either made to his ancestor or to himself, shall bar him of the right to the land forever.”

Tyler in his work on Infancy says: “An infant cannot avail himself of his infancy to excuse the non-assertion of his rights under an executory agreement made with his ancestor, when the immediate performance of his part of the contract is essential to the interest of the other contracting party.” — Tyler on Infancy & Coverture, 161.

Actual notice of the complainants7'equity at the time of the foreclosure, as we have seen, was the essence of their right to control in any degree or limit the exercise by the Mortgage Company of the power conferred by the mortgage. — 2 Jones on Mortgages, § 1624; Matteson v. Thomas, supra; Lausman v. Drahos, 8 Neb. 457; Hoy v. Bramhall, 19 N. J. Eq. 563. Without this notice, the complainants had no such right, and as to its acquisition they are bound upon the plainest principles of equity by the same rules’ of law that govern adults. If the right never had any existence, then, of course it cannot be enforced. If they had ever had the right, no laches would be imputed to them so as.to deprive them of its enforcement during their minority. It is of no consequence whether the failure to acquire the right grew out of their want of capacity to give the required notice. The courts cannot create it for them, but can only enforce the remedies provided by law for its protection and preservation. And the fact that the Mortgage Company exercised the power of sale in its mortgage in such manner as that the mortgagor might have, within a reasonable time, disaffirmed cannot affect the principle under consideration. It violated no rule of law or public policy and the sale and purchase were not void, but only voidable at the instance of the mortgagor alone. As to all the world ex: cept him, it was valid as to the four hundred and eighty acres, and the Mortgage Company acquired an indefeasible title. He elected to affirm, and by his election removed the only impediment in the way of this indefeasible title becoming absolutely unassailable.

The decree of the chancery court is affirmed.