Clark v. Baker

Field, C. J. delivered the opinion of the Court—Cope, J. concurring. In August, 1853, Clark being at the time in the occupation of certain premises, situated within the city and county of San Francisco, sold and conveyed them to Baker, for the consideration of one hundred and twenty thousand dollars, and took from him a mortgage upon the property, as security for the payment of the purchase money in ten years, with monthly interest of one thousand dollars, payable each month. The conveyance and mortgage were simultaneous acts, and both purported to be of the premises in fee. With the conveyance, possession was delivered to Baker, and on the same day the mortgage was placed on record. It is admitted, that Clark did not possess at the time the true title to the premises, and it does not appear, that his conveyance contained any covenants of warranty, although it was so understood when the previous opinion of this Court was delivered. The mortgage was also without warranty. Subsequently to its execution, Baker purchased the outstanding title, and gave a mortgage upon the same to Touchard. This last mortgage Touchard foreclosed, making Baker and others, but not Clark, parties to the proceedings. At the sale under the decree, Boyreau became the purchaser, and entered into possession of the premises, and now claims to hold adversely to Clark, and not in subordination to the mortgage previously executed by Baker. Touchard, at the time he received the mortgage to himself, and Boyreau, at the time of his purchase under the decree, had actual notice of the existence of the previous mortgage. — 626 — The present suit was instituted to foreclose the mortgage to Clark for the arrears of interest, and to establish and enforce a lien upon the premises for the entire amount of the principal and interest secured. Boyreau answered, setting up, that he held the premises under the true title, acquired by purchase under the mortgage to Touchard. The other defendants, Baker and Touchard, suffered default. The Court held, that the premises were subject to the claim of the plaintiff, as against all the defendants, and decreed a sale of the premises for its satisfaction, it being admitted, that they could not be sold in parcels, without material injury to the parties. From this decree, the defendant, Boyreau, appeals. It is evident, that as Boyreau derived whatever estate he possessed from Baker, he can assert, as against the mortgage of Clark, no greater rights. The point, then, presented is this: whether Baber, upon the acquisition of the true, that is the legal, title, could impair, by its assertion, the lien of the mortgage upon the premises? Its determination must depend upon the operation given to the deed of mortgage, either by the common law, or the provisions of the 33d Section of the statute concerning conveyances of this State, upon the subsequently acquired title, or the obligations resting upon the mortgagor, from the nature of his contract with the mortgagee. In considering the operation of the instrument upon the subsequently acquired title, it is immaterial whether we regard the mortgage as a conveyance of a conditional estate, as at common law, or as creating a mere lien or incumbrance, as by the law of this State. Whatever in the instrument, treating it as a conveyance, would operate to transfer a subsequently-acquired title to the grantee, must equally operate, treating the instrument as a lien or incumbrance, to subject such acquired interest to the purposes of the original security. If, in other words, the grantor in the conveyance would be estopped from asserting against his own deed a title subsequently acquired, the mortgagor would be equally estopped from asserting such title against the force of the lien created by his mortgage. If the grantor could not deny that the title passed, the mortgagor could not, that the lien was created. By the common law, there were only two classes of convey — 627 — anees which were held to operate upon the after-acquired title— those by feoffment, by fine, or by common recovery—and this from their solemnity and publicity, and those by indenture of lease from the implied covenants arising upon such indentures. No other forms of conveyance, in the absence of covenants of warranty, had any effect in transferring the title subsequently acquired. A grant or release only operated upon the estate actually held at the time of its execution by the grantor or releasor. Thus, says Bacon: “ It is laid down as a general rule, that a man cannot grant or charge that which he hath not; and, therefore, if a man grant a rent-charge out of the manor of Dale, and in truth he hath not anything in the manor of Dale, and afterward he purchased the manor of Dale, yet he shall hold it discharged.” (4 Abridgment, 514.) “ And no right,” says Littleton, “ passeth by a release, but the right which the releasor had at the time of the release made. For if there be father and son, and the father be disseized, and the son (living his father) releaseth by his deed to the disseizor all the right which he hath, or may have, in the same tenements, without clause of warranty, etc. and after the father dieth, etc. the son may lawfully enter upon the possession of the disseizor, for that he had no right in his father’s life, but the right descended to him, after the release made, by the death of his father.” Whatever may be the grounds upon which the distinction rests between the operation of a conveyance by feoffment, fine, or common recovery, upon future-acquired estates, and that of a grant or release (and on this point see Butler’s Note 231 to Coke upon Littleton,) it is well established and recognized in England. And though in this country conveyances by feoffment, fine, or common recovery, are not in use, no greater effect is given to a grant or a conveyance by bargain and sale, or lease and release, unaccompanied with covenants of warranty, than at the common law under the Statute of Uses. They pass only the estates which are vested in interest at the time, and do not bind or transfer, by way of estoppel, future or contingent estates. Such is the doctrine of the most maturely considered cases, though we admit there are conflicting authorities on the point. Some of the earlier cases in New York would seem to hold, without reference to the existence of a warranty, that where one con — 628 — veyed land, to which he had no title, he was estopped from claiming, as against his deed, any after-acquired estate in the premises, (Johnson v. Bull, Johns. Cases, 81; Jackson v. Murray, 12 Id. 201;) but these cases, if going to that extent, were afterward overruled, and the very opposite doctrine has been repeatedly affirmed, and is now the settled law of the State. In Jackson v. M’Crackin, (14 Johns. 193,) one Boise, by his deed-poll in 1794, describing himself as a late private in the New York Regiment, granted, bargained, sold, and quitclaimed, to the lessor of the plaintiff in fee “ all that military right or parcel of land granted to him as bounty lands for bis services in the regiment aforesaid during the late war.” In 1806, the Legislature authorized the Commissioners of the Land Office to issue a patent to him, for the quantity of two hundred acres, in the tract set apart for the use of the line of the State serving in the army of the United States; and the land was accordingly patented to him. The Judge who tried the cause ruled that the deed from Boise to the lessor of the plaintiff, being prior in date to the patent, did not entitle him to recover. In refusing a motion for a new trial the Supreme Court said: “ The deed from Boise to M’Craekin is a bargain and sale, and quitclaim, and he had then no title to convey in the premises; and no title, not then in esse would pass unless there was a warranty in the deed; in which last case, it would operate as an estoppel, for avoiding circuity of action.” (See, also, Jackson v. Hubble, 1 Cow. 613; Jackson v. Bradford, 4 Wend. 622; Pelletreau v. Jackson, 11 Wend. 110; Jackson v. Waldrow, 13 Id. 178; Varick v. Edwards, 11 Paige, 290; Edwards v. Varick, 5 Denio, 665.) The same doctrine is recognized by the Supreme Court of New Hampshire, in Kimball v. Blaisdell, (5 N. H. 533;) by the Supreme Court of Massachusetts, in Somes v. Skinner, (3 Pick. 47;) and in Comstock v. Smith, (13 Id. 116;) by the Supreme Court of Connecticut, in Dart v. Dart, (7 Conn. 250;) by the Supreme Court of Ohio, in Kinsmore v. Loomis, (11 Ohio, 475,) and by the Court of Appeals, in Virginia, in Driscoll v. Buchanan’s Exrs. (3 Leigh, 365.) Authorities from other States might be cited to the same effect. These are sufficient to show the general doctrine sustained in the United States. They establish that no estate can — 629 — be passed by the ordinary terms of a deed, unaccompanied with covenants of warranty, which is not vested in interest at the time, and that estates subsequently acquired, whether by purchase or descent, are unaffected by such previous conveyance in the hands of the grantor or those claiming under him. The general doctrine thus stated is, however, subject to this qualification—that where it distinctly appears upon the face of the instrument, without the presence of the covenant of warranty, either by recital or otherwise, that the intent of the parties was to convey and receive reciprocally a certain estate—the grantor will be estopped from denying the operation of the deed according to such intent. Thus in Van Rensselaer, v. Kearney, (11 How. 322,) the Court, after reciting several authorities, said: “The principle,' dedueible from these authorities, seems to be that whatever may be the form or nature/of the conveyance used to pass real property, if the grantor sets forth on the face of the instrument, by way of recital or averment, that he is seized or possessed of a particular estate in the premises, and which estate the deed purports to convey; or, what is the same thing, if the seizin or possession of a particular estate is affirmed in the deed, either in express terms or by necessary implication, the grantor and all persons in privity with him shall be estopped from ever afterward denying that he was so seized and possessed at the time he made the conveyance. The estoppel works upon the estate, and binds an after-acquired title as between parties and privies. The reason is, that the estate thus affirmed to be in the party at the time of the conveyance must necessarily have influenced the grantee in making the purchase, and hence the grantor and those in privity with him, in good faith and fair dealing, should be forever thereafter precluded from gainsaying it.” From the authorities cited, the conclusion follows that, treating the mortgage merely as a conveyance, the subsequent title acquired by Baker did not, by the common law, inure to the benefit of Clark, the mortgagee. The words of transfer in the mortgage are only those of a common grant, or of a deed of bargain and sale, or lease and release, and are limited, as we have seen, in their effect to the estate possessed at the time; — 630 — and the instrument contains no recital or averment evidencing any intention to mortgage any greater estate. The 33d Section of the Act concerning conveyances changes the rale of the common law as to the effect of deeds under the Statute of Uses, upon subsequently-acquired interests of the grantor, and gives to them an operation equivalent to the most expressive covenant of warranty. That section reads as follows: “ If any person shall convey any real estate, by conveyance, purporting to convey the same in fee simple absolute, and shall not, at the time of such conveyance, have the legal estate in such real estate, but shall afterwards acquire the same, the legal estate subsequently acquired shall immediately pass to the grantee, and such conveyance shall be valid, as if such legal estate had been in the grantor at the time of the conveyance.” A deed with a covenant of warranty operates upon future acquired interest, not as in fact passing such interest, but by way of estoppel upon the grantor against its assertion. He is not permitted to attack a title the validity of which he has covenanted to maintain. If he could succeed in defeating the title, he would, by his success, immediately become liable to the grantee upon his covenant; and hence, to avoid circuity of action and to enforce complete justice without delay and further litigation, the doctrine of estoppel is applied. The section cited from the statute of this State goes beyond the usual covenant of warranty; it provides that the new estate “ shall immediately pass to the grantee,” and that the conveyance shall be as valid as if such estate had been in the grantor at the time of the execution. The effect, then, of its provisions upon a conveyance of premises in fee— such, for example, as that of Clark to Baker—is the same as if it were written upon its face that the grantor conveyed all the estate which he then possessed, or which he might at any time thereafter acquire. Had Clark, after his conveyance to Baker, purchased the outstanding title, it would, under the statute, immediately have inured to the benefit of his grantee. The section applies to mortgages equally as to conveyances, absolute in their form. The 36th Section of the same statute expressly provides that the term “ conveyance ” as used in the Act, shall be construed “ to embrace any instrument in writing by which any real estate or interest in real estate is created, — 631 — aliened, mortgaged, or assigned, except wills, leases for a term, not exceeding one year, executory contracts for the sale or purchase of lands, and powers of attorney.” If we substitute the terms “ mortgage ” and “to mortgage” for their corresponding words in the section, all doubt as to the application of its provisions to the case at bar will at once disappear. The section will then read as follows: “ If any person shall mortgage any real estate, by mortgage purporting to mortgage the same in fee simple absolute, and shall not at the time of such mortgage have the legal estate in such real estate, but shall afterward acquire the same, the legal estate subsequently acquired shall immediately pass to the mortgagee, and such mortgage shall be valid as if such legal estate had been in the mortgagor at the time of the mortgaged The terms “ fee simple absolute ” are used to denote an estate of inheritance conveyed or mortgaged. The word “ absolute” adds nothing to the force of the preceding terms “ fee simple ”—■ which of themselves express the highest interest one can possess in land. “Estates of inheritance,” says Blaekstone, “are divided into inheritances absolute or fee simple, and inheritances limited, one species of which we usually call fee tail. Tenant in fee simple or fee absolute, is he that hath lands to hold to him and his heirs forever, generally, absolutely, and simply, without mentioning what heirs, but referring that to his own pleasure, or to the disposition of the law.” (2 Com. 104.) No stress can be placed upon the language “ that the estate subsequently acquired shall immediately pass to the grantee,” as limiting the provisions of the section to conveyances which are absolute in form. A mortgage is in form a conveyance— and though upon the application of equitable doctrines, and upon the construction of Section 260 of the Practice Act, passed in 1851—the instrument is regarded in this State as creating a mere lien or incumbrance, it yet operates upon the estate for the purposes of the security. The statute only intends by the language in question, to provide that the subsequently-acquired estate shall be as completely covered by the instrument, whether conveyance or mortgage, as if originally possessed by the grantor or mortgagor. It follows from our construction of this section, that by virtue of its provisions, the title subsequently acquired by Baker in — 632 — ured to the benefit of his mortgagee, as much so as if that title had been originally possessed by him. Clark conveyed the premises in fee; Baker mortgaged them back in fee, and under the statute, whatever title either subsequently acquired, instantly inured to the benefit of the other. The Appellant, Boyreau, standing in Baker’s shoes, possessing only what Baker possessed after Clark’s lien was satisfied, cannot question Clark’s right to the relief he seeks, and can only claim in subordination to him. There is another consideration growing out of the nature of the contract of mortgage, which must lead practically to the same result. In the former part of this opinion we treated the mortgage as an ordinary conveyance—and held that, regarded in that light, it did not operate, by the rules of the common law, upon the subsequently-acquired title, as it did not contain a clause of warranty, or other evidence, by recital or averment, of any intention to pass a greater estate than already possessed at the time. There is, however, an obligation resting upon the mortgagor, from the nature of his contract, which does not rest upon the vendor. The mortgagor holds a very different relation to the mortgagee from that of a vendor to a vendee. By the execution of a conveyance without warranty, all relations between vendor and vendee are dissolved. They henceforth hold one another at arm’s length, as they do the rest of the world. The dealing between them is completed—nothing further remains to be done. The reverse is the case between mortgagor and mortgagee. By the execution of the mortgage, the transaction between them js only begun. Every substantial part remains to be performed. The mortgagee is to return to the mortgagor the estate, and the mortgagor is to return to the mortgagee the money and interest secured; and until this is consummated, the obligation rests upon both to do nothing which can impair the rights of the other, or embarrass their enforcement. The mortgagor cannot waste or destroy the estate, property, or thing—whatever it may be—which he pledges as security. He cannot sell it, or give it away, so as to discharge the lien, He cannot do anything which shall deprive the party, whose — 633 — money is taken, from recourse upon the property, according to the terms of the contract. He is allowed, under the law of this State, to retain the possession of the property against the form of his contract, but upon the trust necessarily implied that he will not do or permit any act to lessen the sufficiency of the original security. He will not, says Story: “Be permitted to do any acts injurious to, or diminishing, the security of the mortgagee, and if he should commit, or attempt to commit, acts of waste, he will be restrained therefrom by the process of injunction.” (2 Equity Jurisp. Sec. 1011; Brady v. Waldron et al. 2 John. Ch. 148.) On the other hand, the mortgagee can do nothing to impose burdens upon the enforcement of the equity of redemption. “ The mortgagee has not a right,” says Lord Langdale, in Sandon v. Hooper, (6 Beavan, 246,) “ to make it more expensive for the mortgagor to redeem than may be required for the purpose of keeping the property in a proper state of repair, and for protecting the title to the property.” It is difficult to state with precision the exact nature of the relation of a mortgagor in possession to the mortgagee. “He has,” says Hilliard, “ been called tenant at will, quasi tenant at will, tenant at sufferance, agent, servant, and receiver of the mortgagee; but objections have been made to each of these titles, upon the ground that in some one or more particulars the rights and duties of a mortgagor differ from those of either of the persons above named. Thus, he is said to want the chief characteristic of a tenant, which is the payment of rent; of an agent, in not being liable to account; and of a servant, inasmuch as the mortgagee has never had possession.” (1 Hill, on Mortgages, 119.) “ One is much at loss,” says Patteson, J. in Doe v. Williams, (5 Adol. & Ellis, 297,) “ as to the proper terms in which to describe the relation of mortgagor in possession, and mortgagee.” It is sufficient, in the present case, to observe that the relation is one which requires him to preserve the property for the purposes of the security for which it was originally pledged; and hence, to insure good faith and fair dealing, he is forever precluded from denying the existence of the lien which he has attempted to create, or defeating its enforcement against the property upon which it was placed. In the case at bar, the mortgage is upon the property, and not upon any particular es — 634 — tate therein, or right thereto. It is the property itself which Baker has pledged, and it is the property itself which he has promised, by his contract, to preserve for the purjioses of the security; and equity will not suffer him, in violation of good faith, by any act, to impair or destroy the security. Any claim or outstanding title he may have purchased only went to strengthen his own title to the premises, and hence, through him, to give possibly greater value to the security. It does not appear that Clark ever desired the claim or title to be bought in, and had Baker been, at the time of his purchase, ignorant of the true state of the title, and been imposed upon in the matter, he could have applied to a Court of Equity for relief, upon a surrender of possession. Not having done so, he cannot, and those claiming under him cannot, set up, to defeat the mortgage, the title thus voluntarily purchased. (See Tartar v. Hall, 3 Cal. 263; Van Waggoner v. McEwen et al. 1 Greenl. Ch. 412; 1 Powell on Mortg. 190; Holdridge v. Gillespie, 2 Johns. Ch. 30; Doe v. Vickers, 4 Adol. & Ellis, 782; Banks v. Walker, 2 Sand. Ch. 344.) Judgment affirmed.