Bancroft v. Ashhurst

The opinion of the court was delivered by Thompson, J.. — This is an application for an injunction, to restrain the trustees in a deed of trust, in the nature of a mortgage, from selling the mortgaged premises, under a power con518 tamed in the instrument. My brethren sat with me as adsessors, at Nisi Prius, on the argument of this motion, and were unanimously of opinion, that it was not a case for injunction, on any of the grounds taken by the plaintiff, and that a sale by the trustees, would pass a good title to the purchaser. In New Hampshire, the doubts of the validity of such a power, rest upon the construction of a statute of that State. Bell v. Twilight, 22 New Hampshire Rep. In New York these powers are received universally, not only as valid, but the usual remedy for enforcing payment of the mortgage-money, and the right of redemption, in favor of subsequent lien creditors, is founded on the provisions of the New York statute, and would not exist without it. In the same State, the notice of sale is prescribed by statute, and must be followed. Wilson v. Troup, 7 Johns. Ch. 25; 4 Kent’s Com. 147; In Virginia, some doubts have been entertained respecting the validity of these powers, when given to the creditor himself. Chowning v. Cox, 1 Rand. 306; Taylor v. Chowning, 3 Leigh, 654. But they are fully recognized, even in that State, where, as in the case before us, they are given to disinterested trustees. 1 Rand. 311. In England, the power to sell, inserted in a mortgage, seemed unknown to Lord Eldon. Roberts v. Boyer, 4 Kent, 146, note c. (1825); but the case of Croft v. Powell, Comyns, Rep. 603, (1738,) shows that suck powers existed in that country before the time of Lord Eldon. The case last mentioned, instead of being an authority against their existence, is an authority the other way, for the only grounds, on which the alleged execution of the power was defeated, was, that it had not been executed at all, the mortgagee having sold Ms mortgage expressly, subject to the right of redemption. And it was on the authority of this case, that Mr. Sudgen expressed the doubt about the power to sell, clear of the equity of redemption. Powell on Mort. 14. At page 155, he qualifiedly concedes the point. Writers of authority, and numerous judicial decisions in that country, fully recognize the validity of these powers; they are powers coupled with an interest, and, therefore, irrevocable, and a title under such a power is considered as taking effect, as if the power, and the instrument executing it, had been incorporated in one instrument, and as if the purchaser was in by the first grantor, and not by the grantee or donee of the power. Marlborough v. Godolphin, 2 Ves. 79; Hearti v. Greenbank, 1 Id. 306; Clay v. Sharp, Appendix to Sudg. on Vend. 16; Carden v. Morgan, (1800,) 344; Cook v. Duckenfield and others, 2 Atk. 565, 568; Bx parte Caswell, 1 Id. 560; Haul v. Carter, 2 Id. 356; Southery v. Stonehouse, 2 Ves. 612; Thomas’ Coke, 591, 2, note b.; Coote on Mortgages, 130, note and cases there cited; 2 Cruise’s Digest, 104, [519] 105; Williamson on Real Property, 355; Story, Eq. § 1027; 4 Kent, Com. 146. Judge Story informs us, “ that the inconveniences arising from the practice of foreclosure in England are so great, that it has become a common practice to insert in mortgages, a power of sale upon default of payment.” Sec. 1027. Ch. Kent speaks of the vexatious delay which accrues upon foreclosure, and states that it “ arisen, not only from the difficulty of making all proper persons parties, but chiefly from the power which Chancery assumes, to enlarge the time for redemption on a bill of foreclosure.” He adds, “ that these powers are found in England to be so convenient, that they are gaining groiind very fast upon the mode of foreclosure in Chancery. 4 Kent, Com. 146. The case of Wortner v. Wright, 2 Sim. 534, is an evidence of the progress of this practice. In that case the mortgagee had lost his mortgage, and was, therefore, compelled to file a bill of foreclosure, instead of selling under the power in the mortgage, and the court decreed that he should pay the subsequent incumbrancers their costs, out of the proceeds of the sale, although not sufficient to pay the debt and interest on the first mortgage. This order could only be justified, on the principle that the loss of the mortgage was his own misfortune, and he had put the subsequent incumbrancers to costs, which would not have been necessary had he acted under the power.. Lord Tenterden, C. J., tells us, that it had been established ever since the time of Lord Coke, that when a power is executed, the person taking under it, takes under him who created the power, and not under him who executes it, and on that principle it was held, that judgments against the person, who held an estate with power to sell, were defeated by the execution of the power. Doe v. Jones, 10 Barn. & Cress. 459; Naustall v. Nappes, 3 Simons, 286; Skeeles v. Shearly, 8 Id. 153. As the title takes effect by virtue of the original deed, it follows, that a purchaser is not affected by the liens or interests derived from the mortgagees, subsequent to the creation of the power, unless protected by statute. Dolittle v. Lewis, 7 Johns. Ch. 48. Such a sale upon principle, when not controlled by statute, extinguishes all liens and interests, derived by the mortgagor subsequent to the creation of the power. Eaton v. Whiting, 3 Pick. 492; Kingsly v. Arnes, 2 Met. 30; Sutton v. Orange, 6 Id. 484; Jackson v. Duroy, 10 Johns. 185; Carson v. Blakely, 6 Missouri Rep. 273; Dunlap’s Estate v. Wyncoop, 13 Johns. Ch. 144; Wilson v. Troup, 7 Id. 25; affirmed in Court of Errors, Cowen, 195. It is a mistake to suppose that mere powers, are unknown in Pennsylvania. The case of Bell v. Fisher, decided in 1791, 1 Yeates, 581, note, shows that they were known and recognized by the courts of this State seventy years ago, and there is [520] now scarcely a railroad mortgage in the State, that does not contain such a power. It is a maxim of the law, that the contract of the parties governs and gives the law, “ Oonventio vincit et dat legem.” The parties have made their own contract in this case. It is much more beneficial to them, if the rule be fairly construed, than a resort to the tedious and expensive process of law. They have, by their contract, given their trustees full power to elect the remedy deemed most beneficial to the bondholders, and the trustees have made their election. There is no pretence of unfairness or want of notice. If it brings more than sufficient to pay the first mortgage, they cannot defeat it or impair its contract obligation, any more than the mortgagor himself could. The stream cannot rise higher than its source. The mortgage expressly stipulates that the conveyance by the trustees, under the power to sell, shall vest in the purchaser a “full and absolute title in fee simple, freed and discharged from all trusts whatever,” without any obligation on the purchaser to become responsible for the application of the purchase money, or for the propriety or expediency of exercising the power to sell;” the conveyances are made conclusive on these points. We have seen that a power coupled with an interest is irrevocable. Here is an estate granted to disinterested trustees, in trust to sell, which is clearly quite as irrevocable as an ordinary power coupled with an interest. To permit the mortgagor to prevent the exercise of this power, by subsequent grants, or to allow his creditors to defeat by subsequent judgments, would be, in substance, a reservation of the power, and would render the security worthless, so far as its value depended on the power. On the whole, I see nothing in the case to justify any doubts in regard to the title which the purchaser will take under the power to sell. There is no ground consequently for interfering with the contract of the parties. Nor is it our business or duty to take action in regard to the advertisement. That will be a question properly determinable in the accounts of the trustees, when, if too much has been paid for it, it may be corrected. But I cannot refrain from suggesting that the trust fund would not be likely to be answerable for the expense of a greater number of insertions than are provided for by the terms of the mortgage. There can be no necessity for it of which I can conceive. It can hardly be supposed that a mistake could occur in publishing the advertisement at least twice out of six times in a week. The motion for a special injuction refused.