Clarke v. Stanley

Bell, J. The facts- of the case and the principles of law by which it must be ruled, are stated with such precision in the charge of the court below, that little remains for .us, further — 478 — than to notice, with more particularity, some of the determinations upon which it rests, and to indicate the conclusion to which they irresistibly lead. It was long ago said by Lord Mansfield, in Martin v. Mowlin, 2 Burr. 978, that a mortgage, notwithstanding its form of conveyance, is, even at law, to be considered a mere charge on the land pledged; and the estate of the mortgagee, being the same thing as the money due on it, will pass as an accessory to the debt.' This doctrine has been recognised by almost innumerable cases, in our own and other courts, and is now so familiar, that it almost savours of affectation to name the authorities. The Corporation v. Wallace, 3 R. 129, may, however, be referred to as one of them peculiarly applicable to the present inquiry; for there, as here, the question was of the effect of a judicial sale upon the lien of a mortgage, and the decision was made to turn on the cautionary character of the instrument. The idea, once fully admitted, almost necessarily led to the deduction, perhaps first distinctly announced in Norris v. Willard, that a sheriff’s sale of mortgaged premises, in satisfaction of subsequent liens, unloosed the grasp of the mortgage, and transmitted the subject of it to the purchaser, clear of encumbrance. Then came the act of 1830, which worked a change of the practice in this particular. But its object was, not to interfere with the rational view of the true nature of a mortgage deed, by reinvesting it with its only common-law character of a defeasible conveyance; nor were its provisions intended, in any way, to restrict the before-known rights and remedies of a first mortgagee. Its only object was, to confer an additional security on prior mortgagees, as against subsequent encumbrancers; not to detract, in the slightest degree, from any advantage enjoyed by the eldest security, under the law as it then stood. In fact, it leaves a first mortgagee precisely as it found him, with the single exception of increased security against disturbance or annoyance from younger creditors. He is still armed with all the means of compelling satisfaction he could before exert, unrestrained by the nature of the posterior liens. His remedies, as all know, are threefold: by ejectment to recover possession of the premises — scire facias on the mortgage itself — and by action of debt on the bonds accompanying it; in which two last cases, the whole estate of the mortgagor is exposed to sale: McCall v. Lennox, 9 S. & R. 304. That a resort to the second of these remedies would discharge the lien of. a second mortgage, is conceded. The effect of the adoption of the last was first considered and stated, after the passage of the — 479 — act of 1830, in Pierce v. Potter, 7 W. 477. Mr. Justice Kennedy, who delivered the judgment, showed, with great clearness, that a sale under a venditioni exponas sur a judgment recovered on a bond accompanying the mortgage, disposed of the whole estate in the land, freed not only of the lien of the mortgage, but of all other liens created as security for debts. The decision was made to proceed on the old ground, that the execution being for the same debt secured by the mortgage, necessarily, by relation, works the same effect as though the proceeding were under the mortgage itself. “The case,” said that accurate judge, “must be regarded as standing.upon the same ground it would have done had the last-mentioned act (of 1830) never been passed; and, according to the practice, as also the judicial authorities anterior to the passage of the act, it was a settled rule that a judicial sale, either under a junior mortgage and writ of levari faeias, or a junior judgment and writ of venditioni exponas, discharged the land sold of all prior as well as subsequent liens on account of debts, whether created by mortgage, judgment, or recognisance, so that the purchaser acquired, thereby, all the estate which the defendant had in the land relieved from such encumbrances, suffered either by himself, or those under whom he claimed.” The soundness of this conclusion is fully recognised by the succeeding case of Berger v. Hiester, 6 Wh. 210, where the principle was extended to embrace a sale made under one of several bonds recited in the mortgage. That a mortgagee may sell the land, thus, on his judgment alone, cannot be disputed on any principle of legitimate interpretation, said the Chief Justice. He added: “ There may be no intermediate creditor, and where there is one, it is not his interest, nor that of the debtor, to object to the sale of the entire estate.” In Chronister v. Wise the same efficacy was accorded to the sale, as against the holders of one of the other bonds secured by the mortgage. This was but a repetition of the older decisions of Donley v. Hays, 17 S. & R. 400, and Betz v. Heebner, 1 P. R. 280, for it was not thought the act of 1830 had any effect upon the question. Finally, in The West Branch Bank v. Chester, a sale by venditioni exponas, under a judgment recovered for interest due upon certificates of loan, secured by mortgage, was held to work the same results. Among the reasons for this judgment, the Court of Common Pleas laid it down that, under the interpretation of the act of 1830, given by the Supreme Court in Pierce v. Potter and Berger v. Hiester, the law in regard to sales on judgments younger than mortgages, where both are securities for the same — 480 — debt, remained, notwithstanding the act of 1830, where Willard v. Norris had placed the rule in respect to the effect of .all judicial sales. The position was afterwards fully sustained by this court. This result is not, as has been argued, ascribable to the supposed election of the first mortgagee to use his. bonds as a means of destroying the hold of his own mortgage, irrespective of its effect on younger mortgages. As has already been intimated, it flows from the fact that the bond and mortgage are but cumulative securities for the same debt, and the use of either, as a means of collecting it from the land pledged, must unavoidably be attended by the same legal effect. The cases I have hastily reviewed, settle, so far as repeated judicial determination can settle anything, that the act of 1830 does not trammel the before existing rights of a first mortgagee. Its mission is protection, not deprivation, and its shield was made broad enough to cover the .interests of posterior mortgagees against subsequent judgments, yet leaving, as incident to the oldest debt, every established means of compelling satisfaction. This being ascertained, we shall find the question agitated in the present litigation, settled to our hand by authority that stands not within the influence of a doubt. McCall v. Lennox is directly to the point. The inquiry was, whether a purchaser of mortgaged lands, sold under a judgment recovered after the date of the mortgage, on a bond secured by it, should prevail against a lessee of the same land, mesne between the execution of the mortgage and the entry of the judgment, the avails of the sale having been applied in discharge-of the mortgage? It was insisted for the lessee, as it is here for the second mortgagee, that the intermediate estate, having sprung into existence prior to the judgment, was good against all claiming by virtue of it; that, though the mortgagee, by suing out his mortgage, might.have avoided the lease, yet, as he had his election to proceed either on the mortgage by ejectment or scire facias, or on the bond by fieri facias, the adoption of the latter course threw him on the judgment alone, to which he could not bring the aid of his mortgage; these, though not inseparable, being distinct securities, and the remedies upon them distinct: that, if a party who has distinct remedies elects one of them, he adopts it with all its legal consequences, and is considered as waiving the other, and, as a consequence of this, the judgment binding'the equity of redemption, encumbered with the leasehold, it was all that passed to the purchaser. But it was answered that a bond and mortgage represent a debt, to which all the securities are merely adjuncts, having no existence but by their — 481 — union with the subject to which they are attached: that there is an inseparable union of the bond with the mortgage, the bond, as immediately representing the debt, being the principal; the .mortgage but an incident or accessory to it, capable of effective vitality only through its connexion with the debt. “ How comes it, then,” asked Mr. Justice Duncan,- “ that a judgment for the principal, the debt; a sale for the debt, and a payment of the debt, separates them; that this does not, as a consequence, draw the land with it ? I cannot understand why, when the land is sold under process of law for the payment of the debt, the purchaser should not acquire with that the incident, as much as if he had obtained an assignment of the debt. I can understand this when it is sold on a judgment for. another debt. That is but an equity of redemption, the residue of the mortgagor’s estate in the premises. But, when it is sold for the very debt, secured by the mortgage, I cannot contemplate them as distinct substances.” Upon these grounds, the case was decided against the pretensions of the lessee. The affinity between the bond and the mortgage drew them irresistibly together, and thus squeezed out the intermediate obstacle. The same doctrine was applied in the recent case of Bury v. Sieber, 5 Barr, 431, which, in principle, is identical with the present. A statement of it will illustrate the argument: The owners of land conveyed it in fee, subject, by-a covenant in the deed, to the payment of $1,000, balance of purchase-money, for which they also took the vendee’s bond. Several years thereafter, the latter sold a portion of the land to a third person, who entered into possession, and so continued for eight years. The original owner then sued out the bond, without notice to the second vendee, and, after recovering a judgment, caused the whole tract to be sold in satisfaction of it. In a contest between the second vendee and the purchaser from the sheriff, it was decided the latter was vested with a title, by relation to the date of the first deed, and, therefore, in exclusion of the second vendee. The court said: “ We see no substantial difference between this case and McCall v. Lennox; for the lien created by the deed, and the judgment on the bond, arise out of the same transaction. They are, in contemplation of law, one instrument, form one security, and, consequently, the lien of the judgment, as is there decided, must relate to the date of the lien in the deed.” These cases are decisive of this contest, for, although the transactions out of which they grew occurred before 1830, it has been shown the act of that date worked no alteration in the relative — 482 — rights of the parties so situated. It would he strange, indeed, were it otherwise. The second mortgagee accepts his security with a full knowledge of all the remedies open to the first, and, of course, takes it cum onere. To say that, by having recourse to his bonds, the first divests the lien of his own mortgage without disturbing the hold of the second, would be to put the creditor in the power of the debtor, by a refusal of an adequate remedy until the whole sum secured by the mortgage fell due. That this would be iniquitous, is amply shown by McCall v. Lennox. But more than this, it might put the first mortgagee at the mercy of the second, who, by possessing himself of one of several bonds, might compel a sale subject to the second mortgage, in utter frustration of the first. These considerations, standing alone, might not be accepted as sufficient to show what the law is, but they certainly go far to show what the law is not. To all this weight of authority and reason, the plaintiff in error interposes a verbal objection. He says the letter of the act prohibits the destruction of the lien of a prior mortgage by sale under the authority of any writ of venditioni exponas. But to this, a satisfactory answer is given by the learned president of Common Pleas, who points to the evils that must ensue from a rigid adherence to the very words of the statute. Indeed, all the cases show that, in determining the applicability of the act, the debt to be satisfied is everything, the form of execution to be employed, nothing. As is expressly said in Berger v. Hiester, “ though such a sale is within the letter of the act, it is not within its spirit, because it is not within the mischief intended to be remedied by it.” It is, in truth, apparent that the framers of the act, when referring .to the form of the execution, thought only of sales to be effected under younger independent judgments. It is impossible to believe they could have had in contemplation a judgment to which the mortgage is itself auxiliary. The zeal with which this.cause was argued for the plaintiff in error, has induced me to add more to the charge of Mr. President Woodward than is, perhaps, necessary. But my only object was to bring distinctly to view the prior cases by which, it is conceived, the principle controverted has been, once and again, recognised and established. Judgment affirmed.