Dwight v. Overton

Walker, J. At the close of the late war, Leigh Oldham executed and delivered to the plaintiffs, at the city of New York, a deed of assignment, conveying to them in trust for their own and the use of some eighteen other creditors, to whom he was indebted to the amount of about $13,000, the real estate in controversy, together with certain other lands situated within the State of Texas. The deed bears date July 10, 1865. It appears that Oldham died in the month of September, 1866, and Huffman and Terry administered on his estate. The plaintiffs claim that the legal and equitable title vested in them on the delivery of the deed to the real estate therein described, and was not subject to be defeated by the death of Oldham, under the laws of Texas regulating the settlement of estates of deceased persons. (See Robertson’s Administratrix v. Paul, 16 Texas, 472.) The prayer of the petition is in the alternative. It asks that the administrator’s sale be set aside, and that their deed of assignment be interpreted to vest the title to the real estate in them. But in the event that the court shall regard their deed of assignment as nothing more than an equitable mortgage, then that the court decree a foreclosure. The defendants excepted to the petition, and answered, setting up a sale made in pursuance of — 408 — an order of the probate court; alleging, also, that the plaintiffs’ claims were not presented to them, for allowance, within twelve months after the date of administration. They declare the estate of Oldham insolvent, and allege that the plaintiffs, regarded as mortgagees, have lost their lien. Howell, the intervenor, claims to be the owner and holder of a large claim against the estate of Oldham, which was presented within the twelve months, and asks that his claim may be preferred to that of the plaintiffs. The defendants filed exceptions to the plaintiffs’ petition, and the court sustained the exceptions. On the trial a jury was waived, and the cause submitted to the court on the law and the evidence. The judgment was for the defendants and the intervenor. Courts of equity, as well as courts of law, have apparently found more or less difficulty in giving interpretation to deeds of assignment, mortgages, and other instruments of writing intended to operate as security for the payment of money, or the performance of some act by the mortgagor. The definition of a mortgage, as given by Chancellor Kent (4 Kent’s Com., 186), is brief and comprehensive. It is said to be “the conveyance of an estate or property by way of pledge, for the security of a debt, and to become void on payment of it.” But the courts have said that any instrument of writing purporting to be a deed for real property, however absolute it may appear upon its face, if given only in security for the payment of debt, must be regarded merely as an equitable mortgage. On the other hand, the courts have said that when insolvent or other debtors convey their property to their creditors, in payment or discharge of their debts, such instruments are to be regarded as assignments, and belong to the most extensive class. (3 Sumner, C. C., 345; 10 Paige, Ch., N. Y., 445; 1 N. Y., 101; 20 Ga., 44.) — 409 — When not in conflict with bankrupt or insolvent laws, priorities and preferences in favor of particular creditors are upheld by the courts. Many authorities might be here cited, from Massachusetts, Maine, Indiana, Pennsylvania, Hew Jersey, Illinois, Georgia, Maryland, Hew Hampshire, Connecticut, Mississippi and Florida, as well as from the Supreme Court of the United States. But the controversy here arises from the character of the instrument itself. It is not objected to because of any unfairness, or want of equity, nor that it is in any way inimical to the statute of frauds. The instrument in question contains all the attributes of a good assignment. The creditors preferred, together with the several amounts due them, are all named in the recitals of the deed. The deed confers a full and absolute power on the trustees, to sell and dispose of the lands; to make deeds to purchasers; to receipt for purchase money, and apply it to the uses expressed in the deed ; to do and perform every act which Oldham himself could have done, had he never executed the deed. Mere mortgages do not contain such powers; and if this class of instruments is to be upheld by the courts at all, not only should the rules of law, but the rules of common sense, be applied to them. It certainly will not be contended that Oldham himself had retained any power of revocation; the power was coupled with the use, and was irrevocable to all intents and purposes so long as Oldham lived. Can it be, then, pretended upon any principle of common law, that the power was revoked by his death? In the case of Robertson v. Paul, the instrument was declared to be a mortgage, and it was postponed in favor of certain claims preferred by the statute, such as funeral expenses, expenses of last illness, of administration, and — 410 — the allowance to the widow and minor children. It may be that the court decided this case properly. The opinion is prepared by that eminent jurist, Judge Wheeler. He characterizes the instrument as a mere mortgage, and quotes from Story’s Equity Jurisprudence, and shows how the custom of inserting a power to sell in a mortgage sprang up in England. We must confess that the quotation from 3 Kent’s Com., 147, as found in the opinion, does appear to announce a doctrine at variance with the opinion, to-wit: “These powers fall under the class of powers appendant or annexed to the estate, and they are powers coupled with an interest, and are irrevocable; and being part of the mortgage security, they rest in any person, by assignment or otherwise, who becomes entitled to the money secured to be paid.” Mr. Justice Wheeler says: “It is clear the death of the mortgagor would not operate a revocation of the power. Whether the statute governing the settlement of the estates of decedents will cause it to have that effect, is the question to be determined.” And the learned court declare the opinion that it will. It is not necessary for the purposes of this case that we should overrule the opinion in the case of Robertson against Paul. But we here call the attention of the profession to the case, and invite consideration and argument, whenever a proper case shall come before us in which to consider the rule therein laid down. And, argumenti gracia, we will suppose that we have a statute which, upon the death of the grantor of a deed of trust, operates a revocation of the power to sell, and actually postpones the lien to other claims upon the estate. Now this lien is a matter ex contratu ; there are vested rights secured under it; a power irrevocable, coupled with an interest, has been granted. This power — 411 — is a part of the mortgage security; it vests by assignment in any person entitled to the money to be paid. Does not this statute, then, with the construction put upon it in Robertson v. Paul, divest the right secured by contract % And if so, is it not repugnant to the tenth section of the first article of the Constitution of the United States % We think the mind of the court was led to the consideration of this case in the light in which we view it, when, considering the case of Catón v. Mosely, 25 Texas, 374. But up to the present the case has not been overruled. In Catón v. Mosely, the court say: “Whether or not the principle of the decision, in the case of Robertson v. Paul, is applicable to assignments in trust for the benefit of creditors, is a question which we do not think necessary to decide in this case, although it is not supposed to present any difficulty.” This question we must decide, and we adopt the language of our predecessors, and say it is not supposed to present any difficulty. And we hold that the principle decided in that case is not applicable to assignments in trust for the benefit of creditors, and therefore does not apply to the case at bar. In Catón against Mosely, the court drew a plain distinction between assignments to trustees for the benefit of creditors, and the ordinary deed of trust in common use. They say it may be considered as well settled, that every valid assignment for the benefit of creditors must declare the uses to which the property assigned is to be applied, and must settle the rights of creditors under it, and not leave to the assignee, or reserve to the assignor himself, the right of subsequently doing so. This is sound law, and the proposition is equally incontrovertible that, when the instrument contains all these necessary attributes, it is to be regarded as a valid assignment. — 412 — This court has on different occasions acknowledged the validity of deeds of this character, drawing the distinction between assignments and mortgages. (See Baldwin v. Peet, Simms & Co., 33 Texas, 708; Vanhook v. Walton, 38 Texas, 71, 73.) In this case we think there is no difficulty, as the deed contains every attribute necessary to a valid assignment, and must be held as vesting the equitable and legal title in the plaintiffs. In this view of the case, it is perhaps wholly unnecessary for us to decide upon the second ground of defense made to the deed as a mortgage. Our opinion in the case of Crawford v. Bender, decided at the last term of the court, contains our construction of the forty-third section of the twelfth article of the present Constitution of the State; but it may not cover the precise question here presented. We need, however, only say, in order to be understood in this case, that we regard every statutory limitation as coming within the purview of that clause of the Constitution. A jury having been waived below, and the case being-now before us for final adjudication, we do order, adjudge, and decree, that the appellants do have and hold the property described in the petition, subject to the uses and trusts declared in the deed of July 10, 1865 ; that all subsequent sales or encumbrances, made by the appellees, be set aside and held for naught; and that the appellants recover their costs in this behalf expended. Reversed and rendered.