Bushnell, J.
The decree of the trial court in this foreclosure of a trust mortgage permits the trustee, if it becomes the purchaser at the foreclosure sale, to bid in the mortgaged premises without paying cash or depositing mortgage bonds. The decree states:
“If said trustee, or any successor in trust, shall be the purchaser at said sale, it shall not be required to have in its possession or to present to the circuit court commissioner conducting said sale any bonds and coupons, nor shall it be required to pay any sum in cash except the costs and expenses of said sale, and the remaining purchase price may be paid by crediting the balance of such purchase price on the indebtedness herein decreed to be due in the same amounts and with the same priorities as though the balance of such purchase price had been paid in cash by a third party and such cash paid to said trustee pursuant to the provisions hereof.”
Appellants claim that the court was in error in this particular.
It is also claimed that the court erred in failing to limit the time within which the mortgaged premises may be sold. The decree states:
“It is hereby further ordered, adjudged and decreed that the defendants, or either of them, pay, or cause to be paid, to the plaintiff, or to its attorneys, on or before the 15th day of December, 1935, the sums so mentioned aforesaid and decreed to be due to the plaintiff, with interest thereon at the rate of 7 per centum per annum from the date of this decree, and the costs of the plaintiff in this suit to be taxed according to law; and that in default thereof all and singular the mortgaged premises and property mentioned in the bill of complaint in this cause and hereinafter described be sold at public auction by or under the direction of a circuit court commissioner
of this county, at any time after the 15th day of December, 1935.”
The contractual rights and liabilities of the parties cannot be implied; they must be found in the trust indenture. See 3 Comp. Laws 1929, §§ 13281, 13282 and 13309.
Article 9 of the trust instrument has to do with foreclosure, sale and distribution. Section 5 thereof reads in part:
“At any such sale any bondholders or coupon holders or any committee or trustee appointed by them or a part of them, or the trustee or any successor in trust herein named may bid for and purchase said mortgaged premises or any part thereof. The purchaser at any such sale shall be entitled in making settlement or payment for the property purchased, to use and apply any bonds and any matured and unpaid coupons hereby secured, by presenting such bonds and/or coupons in order that there may be credited thereon the sum apportionable and applicable to the payment thereof, out of the net proceeds of such sale; and thereupon such purchaser shall be credited on account of such purchase price payable by him, with the sum apportionable and applicable out of such net proceeds to the payment of the bonds and coupons so presented; provided, however, that in all cases’the purchaser or purchasers shall pay in money a sufficient sum to cover the items referred to in subparagraphs (a) and (b) of . section 4 of this article. ’ ’
The last mentioned subparagraphs have to do with costs and expenses, etc.
Appellee says:
“The power of the trustee to purchase the property for the benefit of all bondholders and to make payment of its bid by'applying the amount due on the mortgage indebtedness is contained in section 5
of article 9 and in the second sentence of section 2 of article 10, when this section and this sentence are read together and construed in the light of the entire mortgage.”
In order to read the second sentence of section 2 of article 10 in its own setting, we quote all of sections 1 and 2 and a portion of section 3, italicizing the language relied upon hy the trustee:
“Liabilities, duties, powers and rights of the trustee.
‘ ‘ Section 1. The recitals contained herein and in the bonds issued hereunder shall be understood as made solely by the grantor and not as made or vouched for by the trustee. The trustee shall have no responsibility for the validity of the lien of this indenture or the execution or acknowledgment thereof, nor as to the title, value or extent of the security afforded hereby, and shall be under no obligation to see to the recording, registration, filing or refiling of this instrument, or any instrument of further assurance, or to the giving of any notice thereof, or to see that any of the property intended now or thereafter to be conveyed in trust hereunder is subjected to the lien hereof or to see to the use or application of the bonds or their proceeds.
‘£ Sec. 2. The trustee shall not be under any obligation to recognize any person, firm or corporation as the holder or owner of any of the bonds secured hereby, or to do or refrain from doing any act pursuant to the request of any person, firm or corporation, professing to be or claiming to be such holder or owner, until such supposed holder or owner shall produce the said bonds and deposit the same with the trustee in the respective cases and instances herein required and specified.
But all powers and rights of action hereunder may be exercised and enforced at all times by the trustee, at its election, without the
possession or production of any of said bonds or coupons, or proof of ownership thereof at any time tvhatsoever.
The trustee shall not he answerable for the default or misconduct of any agent or attorney employed by it in and about the execution of this trust if such agent or attorney shall have been selected with reasonable care. The trustee shall not be personally liable for any debts contracted by it nor for damages to persons or property incurred by it nor for damages to persons or property of any kind whatsoever, or for salaries or nonfulfillment of contracts during any period wherein it shall manage the trust estate or premises upon entry, but all of the same shall be a charge upon the trust estate.
‘ ‘ Sec. 3. The trustee shall not be in any way liable for the consequence of any breach of the covenants herein contained, or for any act done or anything omitted hereunder by the grantor, and in no event shall the trustee be liable to any bondholder, except for gross negligence or wilful misconduct or neglect. It shall be no part of the duty of the trustee to effect or collect insurance against fire or other damage on any portion of said premises,” etc.
It is not contended by appellee that the mortgage foreclosure statutes (3 Comp. Laws 1929, §§ 1436L-14380), as amended, contain any language authorizing the trustee to purchase the mortgaged premises at the foreclosure sale, without having in its possession or presenting “to the circuit court commissioner conducting said sale any bonds and coupons.”
Appellee suggests that the answer to the following question is decisive:
“Is the plaintiff trustee authorized by the trust deed and the bonds to bid for and purchase the mortgaged property for and on behalf of all of the bondholders, and to make payment of its bid (except for costs and expenses of sale) by applying all or any part of the mortgage debt in payment of its bid with
out having in its possession any of the bonds, and to thereby satisfy the debt evidenced by the bonds to the extent of the trustee’s bid without credit therefor being actually indorsed upon the bonds'?”
In answer thereto appellants say:
“Defendants contend that even if the trust mortgage contains the express power authorizing the plaintiff trustee to bid for and purchase the mortgaged properties without the use of bonds (which defendants do not admit), the lower court had no right or jurisdiction to enforce such power in the present equity foreclosure proceedings.
“To clarify defendants’ contentions, defendants suggest the further question:
“In this statutory foreclosure proceeding, did the lower court,have either the right, power or jurisdiction to enter the decree in this case authorizing the plaintiff trustee to bid for and purchase the mortgaged premises without cash or bonds, even though express power so to do was conferred upon the trustee in the trust mortgage ? ’ ’
None of the meticulous details of article 9, § 5 suggests that the parties presumed that the trustee, if the purchaser, would use any token of payment other than cash or bonds, etc. On the contrary, the intent of the parties is indicated by the following language of this section:
“The purchaser at any such sale shall be entitled in making settlement or payment for the property purchased, to use and apply any bonds and any matured and unpaid coupons hereby secured, by presenting 'such bonds and/or coupons in order that there may be credited thereon the sum apportionable and applicable to the payment thereof, out of the net proceeds of such sale, ’ ’ etc.
Had the parties intended that the purchase would be made “without the possession or production of
any of said bonds or coupons, or proof of ownership thereof,” the natural place to state such intention would be in article 9, § 5.
The language of section 2 of article 10, which the trustee now claims gives it power to purchase the mortgaged premises, at the foreclosure sale, merely by the execution and delivery of a receipt for the mortgage indebtedness, is italicized in our quotation of this section. It is to be noted that the statement is preceded by the word “but,” thereby connecting the thought contained therein with that which immediately precedes. This section 2 of article 10 requires all parties other than the trustee to produce and deposit their bonds before it shall be incumbent upon the trustee to do or refrain from doing any act in their behalf. However, the trustee may act under the trust deed without being required to prove its authority to act for the bondholders. The word “but,” as used in this manner, “is an appropriate term to indicate the intention of those who use it to limit or restrain the sense or effect of something which had before been said, or to indicate a proviso, condition, qualification, or exception. ” 9 C. J. p. 1106.
The word “but,” so used, is a conjunction “expressing opposition, contradiction, antithesis, exception, discrepancy, limitation, condition.” Webster’s New International Dictionary (2d Ed.).
We are mindful that the language of a mortgage is to be construed most favorably for the mortgagee
(Stuart
v.
Worden,
42 Mich. 154), but we are also mindful of the superabundance of words in trust mortgages which, in part at least, arise out of the desire of scriveners to relieve trustees from all acts excepting their own wilful defaults.
The language of this instrument is illustrative:
“The trustee shall not he liable for any error of judgment nor for any act done or step taken or omitted nor for any mistakes of fact or law, nor for anything which it may do or refrain from doing in good faith, nor generally, shall it have any accountability hereunder except for its own wilful default.”
We apprehend that neither party contemplated that the sentence which begins with the conjunction “but” would be lifted from'the context of its paragraph and read into another article which provides for the terms of purchase, and by such transfusion or grafting process, give added vigor to the carefully chosen language of section 5. Standing alone, the language of section 5 does not provide for purchase by the trustee in the manner permitted by the decree. The rules of construction of mortgages do not require adherence “to literal terms in derogation of the interior sense of the transaction. Equity regards substance rather than form, and asserts and enforces the end actually aimed at, if lawful and just.”
Stuart
v.
Worden, supra.
This appeal in equity is a trial
de novo
and in order to determine the matter, it is necessary to examine the applicable authorities and statutes, and the record. The record in the appeal before us consists only of the pleadings, orders, decree and the trust deed.
This “trust deed,” in form, is a stranger to Michigan. It was suggested on oral argument that it was in g-eneral use in Illinois and we are urged by appellee to apply the interpretation given to similar instruments as found in
Kitchen Bros. Hotel Co.
v.
Omaha Safe Deposit Co.,
126 Neb. 744 (254 N. W. 507), and
Straus
v.
Chicago Title & Trust Co.,
273 Ill. App. 63. Appellants say the case last cited is
sharply attacked in 29 Illinois Law Review for 1934-1935 at page 218, and further points out that the Nebraska court said:
“While there is a diversity of opinion, the great weight of authority undoubtedly establishes the legality of such procedure,” citing
Straus
v.
Chicago Title & Trust Co., supra.
The available authorities were considered by the appellate court of the first district of Illinois, in
Straus
v.
Chicago Title & Trust Co., supra,
in which case the trust deed provided that in case of foreclosure sale, the trustee might purchase the property “without the possession or production of any of such bonds and coupons or proof of ownership thereof.” In discussing the legal effect of its decision that court said:
“We are in accord with the reasoning of the courts in Connecticut, Pennsylvania, Kansas and Iowa rather than with the Federal court and the Supreme Court of Michigan.”
The Colorado supreme court in
Cosmopolitan Hotel, Inc.,
v.
Colorado National Bank,
96 Col. 62 (40 Pac. [2d] 245, 96 A. L. R. 1446), analyzed the foregoing authorities and pointed out that the
Kitchen Bros,
and
Straus Cases
are in conflict with
Werner, Harris & Buck
v.
Equitable Trust Co.
(C. C. A.) 35 Fed. (2d) 513, and
Detroit Trust Co.
v.
Stormfeltz-Loveley Co.,
257 Mich. 655 (88 A. L. R. 1263).
The “trust deed” in question must be interpreted by and enforced under the laws of Michigan,
Stack
v.
Detour Lumber & Cedar Co.,
151 Mich. 21, 29 (16 L. R. A. [N. S.] 616, 14 Ann. Cas. 112).
We have recognized the power of contracting parties to agree upon covenants in mortgages contrary
to traditional practice, but we have said in such instances that, while
“a
court of equity may enforce specifically such an engagement * * * yet such power should be exercised with a full recognition of the settled policy of this State, and should not be exercised except in a case where the right is clearly given by the engagement of the party.”
Michigan Trust Co.
v.
Lansing Lumber Co.,
103 Mich. 392, 402, and
Mutual Benefit Life Ins. Co.
v.
Wetsman,
277 Mich. 322, 327, 328.
The settled policy of this State is fully discussed in
Detroit Trust Co.
v.
Stormfeltz-Loveley Co., supra, cf.,
in which we passed upon some of the provisions of Act No. 111, Pub. Acts 1931; since that decision the legislature' has enacted Act No. 210, Pub. Acts 1933.
We said in
Detroit Trust Co.
v.
Stormfeltz-Loveley Co., supra:
“We are not in accord with the decision in
Nay Aug Lumber Co.
v.
Scranton Trust Co.,
240 Pa. 500 (87 Atl. 843, Ann. Cas. 1915A, 235), which fully supports plaintiff’s contentions. In
Werner, Harris & Buck
v.
Equitable Trust Co.
(C. C. A.), 35 Fed. (2d) 513, the reasoning of
Nay Aug Lumber Co.
v.
Scranton Trust Co., supra,
is held untenable. We have examined with great care
Colorado & Southern R. Co.
v.
Blair,
214 N. Y. 497 (108 N. E. 840, Ann. Cas. 1916D, 1177);
Sage
v.
Railroad Co.,
99 U. S. 334;
Gilfillan
v.
Union Canal Co.,
109 U. S. 401 (3 Sup. Ct. 304); and
Canada Southern R. Co.
v.
Gebhard,
109 U. S. 527 (3 Sup. Ct. 363), as well as other cases cited by counsel, and they are not at all controlling in the controversy at bar. The bondholders are entitled to receive what their contract provided for, and cannot be compelled to take in lieu thereof a beneficial interest in a trust uncertain as to time and outcome, and not contemplated by the indenture.”
The intent of the parties at the time the agreement was made, as gathered from the entire instrument, controls despite literal terms in derogation of the interior sense of the transaction. It is difficult to assume from the terms of the instrument before us, that at the time the contract was made, the clear intent of the parties was that the trustee would, upon foreclosure, step into the shoes of the mortgagor, and operate the mortgaged premises in the mortgagor’s stead. The decree merely substitutes the management of the trustee for that of the mortgagor, and, so far as the bondholders are concerned, it amounts to specific performance of a claimed right of possession without actual sale.
As was said in
Chicago Title & Trust Co.
v.
Robin,
361 Ill. 261, 266 (198 N. E. 4):
‘ ‘ The powers granted to a trustee in a deed of trust are not liberally construed and their exercise must be consonant with the terms of that instrument.
(Iowa Light; Heat & Power Co.
v.
First National Bank of Boston,
250 Mass. 353, 145 N. E. 433.) Those powers, furthermore, exist only in the terms creating the trust and no others. (2 Perry on Trusts and Trustees [7th Ed.], § 602g, p. 1027.) Since the contract was carefully drawn and made provision for many contingencies, it may safely be presumed that none of the parties intended that something in addition to its provisions should govern the trustee. This court does not have the power to import into a contract other or additional provisions. To do so would be making a new contract for the parties.
(Burt
v.
Garden City Sand Co.,
237 Ill. 473 [86 N.E. 1055].) We cannot construe a contract along the line of what we might believe would be a better contract for the parties to make, as equity vests no wide discretion in the chancellor such as would permit him to disturb contract rights of property.
(Merchants Loan &
Trust Co.
v.
Chicago Railways Co.
(C. C. A.), 158 Fed. 923.”
Our view, as herein set forth, compels us to hold that the sentence of section 2 of article 10, relied upon by appellee, applies only to the rights of the trustee to foreclose, to collect insurance, to complete the building’ on the default of the mortgagor, etc., and was not intended to permit the trustee to claim representation for nondepositing bondholders, and, by a purchase under such assumption, compel all bondholders to become tenants in common under the direction and guidance of the trustee for a time not limited by the instrument or to be made compulsory beneficiaries under a trust thus established.
We conclude that the power to purchase on the part of the trustee "without the possession or production of any of said bonds or coupons or proof of ownership thereof” is not given by the engagement of the parties.
There remains to be considered appellants’ claim that it was the duty of the court to fix the time of sale so as to protect the rights of all parties interested, and to make the sale most profitable to all, and that in directing a sale ‘ ‘ at any time after the 15th day of December, 1935,” the trial judge failed to perform that duty. Appellants argue that under the instant decree, the trustee is permitted to exercise "unbridled discretion” as to the time when the sale shall be held so long as it is after the date mentioned.
Section 14365, 3 Comp. Laws 1929, does not require a circuit judge to fix the time of sale, but a limitation is imposed therein that the decree shall not "order any lands to be sold within six months after the filing of the bill of foreclosure.” This question raised by appellants seems to be new as far as the decisions
of this State are concerned, except for dictum in
Redfield
v.
Reid,
148 Mich. 545. In that ease, the plaintiff held a mortgage on parcels A and B and cross-plaintiff held a junior mortgage on parcel B on which it had already obtained a decree of foreclosure. Defendants insisted for the first time on appeal that the cross-plaintiff should be “relegated to its decree of foreclosure and sale in the original case and be decreed to take steps to sell at once. ’ ’ The court pointed out that since the claim was not set up in the answer nor asserted in the court below, it could not be made in the appellate court, and said:
“If, however, the point were properly made, it could not be sustained. It is not in the power of the mortgagor to say when the mortgagee under his decree shall sell. Neither is it in the power of the courts. ’ ’
This case is included in the annotations in 103 A. L. R. 1441, where the above section is described as admittedly dictum. The annotation of the case therein reported,
Cleveland Trust Co.
v.
Capitol Theatre Co.,
117 W. Va. 1 (183 S. E. 457), indicates that although “a mortgagee has obtained a decree of sale, he may ordinarily delay indefinitely the actual execution of the decree, even though the mortgage contains no provision therefor.”
We hold that the question of when the sale is to be made under a foreclosure in equity is within the sound discretion of the trial judge.
If there were any facts bearing upon this question that the parties believed would have appealed to the sound discretion of the trial judge in fixing the time of sale, such testimony should have been brought to the court’s attention. Thus included in the record, the determination could have been reviewed. The
record is silent on this question and for decision, we have only the arguments of counsel, with nothing further upon which to base a review of the trial judge’s conclusion as expressed in the decree. We are, therefore, constrained to approve this portion of the decree.
In view of these conclusions, the remaining questions raised by the appeal are not important at this time.
The decree is vacated and the cause remanded for such further proceedings as may be necessary in order that the trial court may enter an amended decree not inconsistent with this opinion. Costs to appellants.
Fead, C. J., and North, Butxel, Sharpe, and Chandler, JJ., concurred with Bushnell, J.