Barker v. Bell

R. W. WALKER, J. In the absence of actual notice,. an unrecorded mortgage is void, as against a purchaser at a sale under- execution against the mortgagor. — Code, §§ 1287-8.-. The bill of. exceptions purports to-set out all the evidence ; but it fails to show'either the registration of • the mortgage, or actual notice to the defendant of. its exis- ■ tence. As the plaintiff was not entitled to recover, unless the mortgage was duly recorded, or the defendant had notice of its existence, the court erred in charging the juryv, that, if they believed the evidence, they must find for the plaintiff. [2.] It is highly probable, however, that proof of notice was made, and that this part of ¡the evidence has been inadvertently left out of-the bill of exceptions. We shall, therefore, consider the question which would be presented. by a record which showed, in addition to the facts now before us, either the due registration of the mortgage, or actual notice of its existence to the defendant at the time of his purchase. In that case, the question would be, whether a sale of the mortgaged property under execution at law, for a part of the mortgage debt, by the direction, or with the knowledge and consent of the mortgagee, and his subsequent reception of the proceeds of the sale from the sheriff, discharge the lien of the mortgage, or estop the mortgagee, or a subsequent purchaser at the mortgage sale with notice of the facts, from recovering the land in an action at law. [358] In Jackson, ex dem. Ireland v. Hall, (10 Johns. 481,) it' was held, that where a creditor, secured, by mortgage,, brings his action for the debt so secured., recoyers judgment, and issues execution, which is levied, by his direction, on the mortgaged premises ; and the same are sold, under such execution, to a purchaser haying, notice of the mortgage, — the lattér acquires nothing but the equity of redemption, and, the mortgagee may recover the possession by action at law. In this State, after a careful consideration of the question, it.has been held, that the mortgagor’s equity of redemption cannot be sold, under execution-.at law, for the whole or a part of the mortgage debt ; and. the effect of the .decision is,,'that a sale of the property, under such execution, passes nothing to the purchaser. Powell v. Williams, 14 Ala. 476. See, also, Goring v. Shreve, 7 Dana, 65 ; Surgest v. Thomas, ib. 221; Bronston v. Robinson, 4 B. Monroe, 142 ; Camp v. Coxe, 1 Dev. & Batt. L. 52 ; Atkins v. Sawyer, 1 Pick. 351. After the law-day of .the mortgage, the legal estate -is. absolutely vested in tbe mortgageethe mortgagor has nothing left but an equity of redemption. — Paulling v. Barron, 32 Ala. 11. As this equity, of redemption is the only interest which the mortgagor has in the property, this is all that can be sold. under execution against him ; and oyen this interest cannot.be sold, it the execution is for the debt secured by the mortgage. It follows,, .therefore, that a sale of the,, mortgaged property, under .execution for the mortgage..debt, is.wholly ineffectual, as-a conveyance of title to the purchaser, unless there has been a surrender by tbe mortgagee of the legal title, with which-(after the law-day) he is clothed by the mortgage. It is only by virtue of such surrender that tbe mortgagor can have a title subject to levy and sale under such an .execution. Without such surrender, tbe legal title is in the mortgagee, and only an equity of redemption in the mortgagor; and as the mortgagor cannot be stripped of his right to redeem by such a sale, nothing passes to the purchaser. Unless it can be shown, therefore, in the present case, [359] that the mortgagee has done something which amounts to a surrender of his legal title to the mortgagor, the latter had no interest which could be reached by this execution. Such a surrender is sought to be implied from the fact, that Mayes,-the administrator, was present-at the execution sale, made no objection thereto, and subsequently received, in part payment of a judgment, for .a part - of the mortgage debt, a portion of the money paid by the defendant. -It -may be true that, when the mortgagee either- directs a sale of the mortgaged property under execution, for the whole or any part of the mortgage debt, or knowingly sanctions such sale, and-receives the proceeds, he would be thereby precluded, in a court of equity, from afterwards setting up the, mortgage title against the purchaser. — See Waller v. Tate, 4 B. Monroe, 531. But it is settled in this State, beyond the reach of controversy, (whatever .may be,the-rule elsewhere,) that a parol estoppel cannot operate a transfer of the legal title to land. — McPherson v. Walters, 16 Ala. 714 ; Smith v. Munday, 18 Ala. 182; Walker v. Murphy, 34 Ala. 591. The largest effect that could possibly be given to the acts and declarations of the administrator in tbis case, would be to hold, that they amounted to a statement by him that the title - oí the mortgagee was extinguished. Even if we go a step further, and concede that the defendant bought the land-in reliance upon-this statement, these facts combined would not, in- a.court of law, preclude the mortgagee, or a purchaser. at the mortgage sale, from a recovery in ejectment against the defendant. Authorities supra; also, Swink v. Soars, 1 Hill, 17 ; Delaplaine v. Hitchcock, 6 Hill, 17. Where the mortgage is of real estate, nothing less than a payment, or something equivalent to a payment of the mortgage debt, a release in writing of the mortgage, - or a re-conveyance in terms, can operate, in a court of law, a divestiture of the legal title oí the mortgagee. — See Haddock v. Bulfinch, 31 Maine, 246 ; Crosby v. Chase, 5 Shepl. 369 ; Hoyt v. Swift, 13 Verm. 129. It has even been questioned, whether payment of the debt, after the law-day [360] of the mortgage, without an actual re-Gonveyance, restores the fee to the mortgagor,., or will enable bim to recover in ejectment against the mortgagee. — See 4 Kent, 193-4, and notes ; Collins v. Robinson, 33 Ala. 94 ; Doton v. Russell, 17 Conn. 146. In this-ease, there has been neither payment of the debt,- release in writing of- the mortgage, nor actual re-conveyance of,the fee and the mortgage title must, in a,court of law,-stand unimpaired.. The rule declared in ,Wallis v. Long, (16 Ala. 738,) and Acker v. Bender, (33 Ala. 230,) that the title which-is conveyed to the mortgagee may be released at law by a subsequent verbal contract,, providing- for the discharge of the mortgage,, but-leaving the debt it-: was given to secure unaffected, must-be limited, .as it was in thoáe cases applied, to mortgages of personal property.. If the subsequent verbal contract was for the release of the mortgage debt; the case might be different.. The debt, even when- secured' by a mortgage on,real estate,- may be- released' by subsequent verbal contract-; - and the release of the debt has the same effect as its payment. — See 1 Cowen, 122 Armitage v. Wickliffe, 12 B. Monroe, 488, 497. There are, it- is true, .decisions to the effect, that* the lien-of a mortgage is discharged, by a-sale under a judgment for the whole or a part of the debt secured by the mortgage.. Pierce v. Potter, 7 Watts, 477 ; Berger v. Heister, 6 Whart. 210 ; Bank v. Chester, 11 Penn. St. R. 282; Clarke v. Stanley, 10 Barr, 472 ; Ridgway v. Longmaker, 18 Penn. St. R. 215 ; Freeby v. Tupper, 15 Ohio, 467 ; Lessee of Fosdick v. Risk, ib. 84. But these decisions are made to rest upon-, reasons which cannot operate with us, because they assume the existence of certain rules of law, which have been deniedplaco in our jurisprudence. In Pennsylvania,,..it seems to be the rule, that the mortgaged lands may .be sold, under execution at law for the mortgage debt; ■ and that, in such case, the sale works-the same effect as though' the proceeding were under the-mortgage itself. The mortgagee has the option to proceed, either by scire facias omthe mortgage, or by action of debt. [361] on the bond ; and when judgment is obtained in either proceeding, be may sell the mortgaged land. “The writs, itis true, bear different names ; but there is no more virtue in a sheriff’s sale on a levari facias, than: in a sheriff’s sale on a venditioni exponas. The one, as well as the other, sells the estate ; and when the estate is sold" for the mortgage debt, or any part, the whole estate, legal and equitable, is sold, unincumbered, to the purchaser, whatever the name of the writ under which the sheriff acts.’’ — Clarke v. Stanley, 10 Barr. 474, 476, 478-82 ; Bank v. Chester, 11 Penn. St. R. 287-8. The very reverse of this is the rule in this State ; for the result of the decision in Powell v. Williams, (14 Ala. 476,) is, that the mortgaged lands cannot be sold under execution at law for the mortgage debt, and that such sale passes-nothing to the purchaser. In Ohio, the decisions referred to are placed, partly, on the ground that; by the statute law- of that State, lands, cannot be sold without appraisal, and for no less sum than two-thirds the appraised value ;-and partly, also, on the ground, that a mortgagee, who causes the mortgaged premises to be sold as the property of the mortgagor, is thereby estopped from setting up his title against the purchaser. It must, be remembered, that our doctrine in reference to the application of estoppels en pais-to the title to land, does not' prevail in. either Ohio or Pennsylvania. On the contrary, the rule in both of those States is, that the holder of the legal title to land may, ,by acts en pais, be estopped, even in a court of law, from.;.-asserting his title. Hamilton v. Hamilton, 4 Barr, 193 ; Bigelow v. Barr, 4 Ohio, 358 ; Buckingham v. Smith, 10 Ohio, 298. It is obvious, therefore, that the cases to which we have referred, as in conflict with the view we have taken of this question, proceed on grounds which our previous decisions have rendered inapplicable here. Judgment reversed, and cause remanded.