Steele ex rel. Milroy v. Farber

37 Mo. 71

• Court: Supreme Court of Missouri
• Decided: October 15, 1865
• Status: Published

Opinion

Holmes, Judge,

delivered the opinion of the court.

After some hesitation as to whether this instrument (which is very inartificially drawn) be properly a mortgage, a deed of trust, or a partial assignment for the benefit of creditors, we have come to the conclusion that it must be considered as a mortgage containing a power to sell, and creating a trust in the proceeds of the sale. It conveys the property, consisting of real and personal estate, to the sixteen persons named as grantees and parties of the second part, and it is conditioned for the payment of certain debts owed by the grantor to some of these parties, and for indemnity against liabilities severally incurred by others of them on account of the grantor, and the persons so named as grantees are the same persons who are thus severally secured. It gives to John M. Milroy, one of their number, a power to sell the property conveyed in case of default made in such payment or indemnification. The whole title or estate is not vested-in him, but only a joint interest as tenant in common or part owner with the rest; but a power may be a mere naked collateral power, not annexed to any estate, or a power coupled with an interest and estate ; and it may be given to any one of the parties having an interest or estate in the property, or even to a stranger who takes no title or estate in the property conveyed. (6 Crui. Dig., tit. Power, A. 1; Hard. 415; 4 Crui. Dig., Greenl. 138-7*; 4 Kent Com., 316-22*; 1 Sug. Vend. 522* n. 1, 523* n. 2; Carson v. Blakey, 6 Mo. 273.) In either case, the execution of the power by a sale and conveyance of the property to the purchaser devests the legal title or fee out of the persons to whom it has passed, and vests it in the purchaser under the power; and the person who is entrusted with the execution of such a power becomes a trustee of the proceeds of the sale for application and distribution in accordance with the trusts of the instrument, express or implied, subject to the jurisdiction and control of a court of equity in the matter of trusts. (Braman v. Stiles, 2 Pick. 460; Dabney v. Manning, 3 Ohio, 321; Peter v. Beverly, 10 Pet. 532; Eaton v. Whiting, 3 Pick. 484; Kinsley v. Ames, 2 Metc. 29; 1 Crui. Dig’., tit. XV., ch. 1, § 44, n. 1, & ch. 6, § 1, n. 1, by Greenl.; 2 Sto. Eq. Jur., § 1031, 1196-7.)

This mortgage does not in any express words give to John M. Milroy any right to take possession of the property conveyed upon default made, nor does it declare in terms what he shall do with the proceeds of the sale when received ; but it may be gathered and implied from the character and tenor of the whole instrument, that he was to take possession for the purpose of a sale, deliver the property sold to the purchasers and receive the purchase money, and that, when received, it is to be applied to the payment of the debts and liabilities thereon secured to be paid, or indemnified, to the persons named as mortgagees and creditors. All this would seem to be necessarily implied in the grant of a power to sell and convey the property for the purposes of the deed, and a trust arises by operation of la,w in respect of the proceeds, either for the use of the grantor, or for the use and benefit of the persons named as beneficiaries, such intention being sufficiently expressed and declared in the instrument. We think this mortgage to be sufficiently clear and definite as to the object and purpose of the conveyance, and as to the beneficiarles, and as to the appropriation to be made of the funds to enable a court of equity to enforce an execution of the power and a performance of the trust.

John M. Milroy, having thus a right to take possession of the property, when default was made, for the purpose of selling it, in pursuance of the power given for the benefit of the mortgagees when the whole property was turned over to him by the mortgagor for that purpose, acquired a lawful possession of the property on behalf of himself and the other mortgagees. The proof is clear that the whole property, real and personal, was delivered up to him by the mortgagor on the 20th day of June, 1863, to be advertised and sold under the mortgage. The property was advertised for sale, but the mortgagor was suffered to remain in his occupancy of the premises by the consent of Milroy, and, as he himself says, at the mercy of his creditors and the purchasers. At this time the wheat in question was a growing crop on the farm, as yet unsevered. It was harvested under the direction of Milroy, stacked on the farm, and left in the immediate charge of the mortgagor; but this did not make the stacks of wheat subject to a levy and sale under an execution in favor of a creditor of the mortgagor. The bare possession of a chattel by the mortgagor with the consent or permission of the mortgagee, and determinable at his will, does not make it subject to such levy. (King v. Bailey, 8 Mo. 332.) The growing crops passed to the mortgagees by virtue of the mortgage of the land on which they were growing. A growing crop is an interest in land; it is a part of the freehold, and it passes by a deed conveying the land without more. (McIlvaine v. Harris, 20 Mo. 458; Pratte v. Coffman, 27 Mo. 424; 1 Crui. Dig., Greenl. 59, s. n. 1.) The doctrine of emblements, or of contracts for the sale of growing crops, as such, before severance, has no application in this case ; the matter is governed here by the contract of the parties as expressed in the conveyance. The mortgagees, or rather the trustee of the power on their behalf, had a right to enter and take possession of the farm and of whatever belonged to it as a part of the realty; and so of the growing crops, conveyed for the security of the debts and liabilities. When the crops are harvested by the mortgagee in possession, they are to be applied to the payment of debts secured, and they go thus to the benefit of the mortgagor. (Doe v. Giles, 5 Bingh. 427; Creins v. Pendleton, 1 Leigh, 297; Pested v. Colvin, 3 J. R. 216; Wilkins v. Vashbinden, 7 Watts, 378; Evans v. Meinken, 8 Gill & J. 39; Walton v. Withington, 9 Mo. 549.) Even where an execution is levied on a growing crop as a part of the realty subject to execution, in which case a sale gives the purchaser a right to enter and harvest the crop as against the judgment debtor, a prior mortgage of the land takes precedence of the execution and carries both land and crop. (Shepherd v. Philbrick, 2 Den. 174.) When the mortgagee takes possession and cuts the growing crops, thus converting them into personalty, he takes them as profits of the estate to be accounted for to the mortgagor in settlement of the debt and interest; but when the mortgagor remains in possession, and harvests the crops, he takes them for his own use and benefit as consumable profits of the farm, absolutely as his own. (Toby v. Reed, 9 Conn. 216; 2 Sto. Eq. .§ 1917.)

There can be no doubt that this crop of wheat passed to the mortgagees with the land by virtue of the conveyance, without reference to the clause concerning the future “ products” of the farm, when a virtual entry was made, and possession taken of the premises, by or on behalf of the mortgagees. It is equally clear that Milroy had the right and power to enter and take possession of the property on behalf of himself and the others as mortgagees. And when the growing crop was harvested by him and thus became converted into personal estate, he had the same right to the possession and the same title as before; and it matters not, as against these defendants, or the execution creditor, whether the whole title was vested in him, or'a joint interest as tenant in common or part owner with the other mortgagees, or a mere special property and right of possession. Ho had such an interest, title, and right of possession, as was sufficient to enable him to claim and hold the property against the mortgagor, and the execution creditor, for all the purposes of this case. It was clearly not the property of the mortgagor ; nor was it subject to levy and sale as such under an execution against him. This being so, it becomes immaterial and altogether unnecessary to consider whether or not the clause, “and also the products of my farm'until my debts to the aforesaid persons are satisfied,” would be effectual either in law or equity to convey “ products” which were not in existence as such at the date of the mortgage, or products which had been severed and converted into personalty by the mortgagor while ho remained in possession of the premises.

The first instruction given for the plaintiffs, taken by itself, would be open to serious objection ; but, when considered in reference to the evidence before the jury, it may be sustained as substantially correct. It omitted to include among the facts supposed in it. the very important circumstances, that the mortgagee had entered and taken possession of the premises while the crop was yet standing on the land, and that it was harvested under his direction and for himself; but these facts were proved, and there was no evidence whatever that the mortgagor had harvested the crop for himself while he remained in possession as mortgagor. So far as this instruction predicated a right to recover solely upon the clause relating to “products of the farm,” whether “ harvested by himself or the relators,” we think it was superfluous, if not also erroneous; but it was followed by other instructions for the plaintiffs which laid down the law correctly in the case made, and we do not think the error of sufficient importance to call for a reversal of the judgment on that ground alone.

For similar reasons the second, third and fourth instructions, which were refused for the defendants, on the same subject, may be considered as rightly enough refused. There was no sufficient basis in the .evidence for such instructions, and they were wholly immaterial to the issue on the case made.

It is contended on behalf of the defendants that the mortgage deed was void on its face, for the reason that it made a reservation to the use of the grantor himself, and covered up the property beyond the reach of creditors for his own use and benefit. This objection is founded upon a clause in the deed which reads thus : “ and whereas I am equally bound with” (four of the mortgagees named) “to the following persons,” named as holders of notes for specified amounts. It is by no means clear in what manner the grantor and these four grantees were bound or liable on these notes; but it would seem to be a fair construction, that it means to say they were bound as co-sureties, or at least as endorsers. The four persons named as mortgagees are indemnified against liability on his account on these notes, that is all. There can be no pretence that the holders of these notes are secured as beneficiaries in the deed. It is not stated who were the makers of the notes, but the next clause goes on to speak “ also ” of his “ individual debts ”; from which it may be inferred that he was not the maker of these notes. The language imports a joint liability as co-sureties. In such case, either of them might be compelled to pay the whole, and there would then be a right to a contribution from the others. As an indemnification for such liability the mortgage would be valid. If the other persons became liable to him for a contribution, that indebtedness would be subject to garnishment at the suit of his creditors unaffected by the mortgage; and as to any liability on his part to them, it is not apparent how any question of fraud can arise on the face of the instrument, or otherwise than as a matter of fact aliunde upon evidence tending to show that the property conveyed was largely more than enough to secure the whole indebtedness provided for in the mortgage, or fraud in fact in the making of the deed; and this would be a matter of fact for a jury. We do not see that there is any fraud in law, in this respect, appearing on the face of the instrument.

It is further objected that John M. Milroy alone can maintain a suit 'on this bond. The petition alleges that he claimed the property before'the sheriff for himself and the other mortgagees. The answer denies this. The return of the sheriff is, that John M. Milroy claimed the property, in writing, as his own. The claim itself does not appear in the record, nor is there any evidence on this point. The statute concerning executions (R. C. 1855, p. 743) provides that when any person shall in writing, verified by affidavit, claim the property levied on, a jury may be summoned to try the right of property (sec. 26), but, notwithstanding the verdict may be for the claimant, the officer must proceed to sell if the plaintiff will tender him a bond of indemnity (sec. 30). The claimant may sue on the bond in the name of the sheriff to his own use (sec. 31), and the execution of the bond is a bar to his right of action against the officer (sec. 32). Those who do not make such claim in writing under the act are not barred of their actions against the sheriff. (Bradley v. Holliday, 28 Mo. 150.) The bond is conditioned, not only to pay a,nd satisfy any person “ claiming title to such property” —that is, any person who makes claim in writing, under the act, for all damages which he may sustain in consequence of the seizure and sale — but also, and chiefly, to indemnify the officer against all damages which he may sustain in consequence of the seizure and sale of the property. No person is bound to appear and claim the property in writing before the sheriff; nor is any one who does not so. claim, barred of his action against the officer. The bond is no protection to the officer against persons who make no claim; it protects him only against the claimant for whose benefit as well as his own the bond is given. The act evidently contemplated that the officer may be sued in trespass by other persons than the claimant in writing; and the bond when given by the plaintiff, upon any claim, is therefore to be conditioned to indemnify him against all damages which he may sustain by reason of such suits. In such case, lie will sue in his own name and to his own use ; and the person who has made claim in writing, under the act, may maintain an action on the bond in the name of the officer to his own use (sec. 31) ; but persons who have never made claim in writing in this manner, being left to their actions against the officer, have no right to sue upon the bond at all. It is not given for their benefit. If it were expressed in terms which would give it force’ for their benefit as a common law bond, independent of the statute, it is very possible they might sue upon it. (Watson v. Frank, 21 Mo. 108.) The bond being given to the sheriff in his name only, it is only by force of the statute that an actual claimant can sue upon it in his name. It follows that this suit should have been brought to the use of John M. Milroy alone. He, only, made claim in writing before the sheriff; and, as we have seen, he had such a right and title to the property as would have enabled him to maintain an action against the sheriff if a bond had not been given, and now enables him to sue upon the bond in the name of the officer to his own use. He recovers the property, or the value of it money, not in his individual right only, but in his character of trustee of the power to sell under the mortgage, and the trust fund in his hands must be appropriated and applied as the mortgage directs, under the control of a court of equity, in which the other mortgagees may find an ample remedy in case their rights should not be inspected.

There could be no such thing as a separate action for each one of those mortgagees against the sheriff in respect of his particular interest in the property, nor can they be treated altogether as one claimant, acting in the name of John M. Milroy. It does not appear that the claim was made in that manner. Milroy had taken possession of the property under his power for the purpose of a sale and an execution of the trust. He alone could properly make the claim before the sheriff, and he only is entitled to sue upon this bond.

The sixth instruction asked by defendants was correct in so far as it told the jury that the verdict should be for the defendants as to all the plaintiffs but John M. Milroy, but it was erroneous in declaring that Milroy could.recover only for his individual share.

The seventh instruction for defendants was correct enough in itself, and might have been given if the state of the evidence had been such as to make it relevant or important. As it was, there was no substantial error in refusing it.

The eighth instruction asked by defendants was rightly refused. (Ashby v. Winston et als., 34 Mo. 311.)

This matter of the parties plaintiff appears to be purely a technical difficulty. We do not see that it is in any way important to the rights of the defendants here, or that it would make any difference with their defence, if a new trial were granted. And this court having power by the statute to reverse or affirm on the whole record, and to give such judgment here as shall be agreeable to law (R. C. 1855, p. 1301, § 35), we think justice would best be accomplished by affirming the judgment as to Robert Steele to the use of John M. Milroy, and reversing and dismissing the case as to the other plaintiffs, who are no proper parties to this action. Judgment will be entered accordingly.

Judge Wagner concurs; Judge Lovelace absent.