Craig v. Meriwether

McCueloch, J., (after stating the facts.) Many questions are ably argued by counsel as to the validity of the tender said to have been made to the Meriwethers to redeem from the foreclosure sale, the right of the mortgagors to assign their statutory right or privilege of redemption after sale, whether it is merely a personal privilege and not assignable, and whether or not the mortgagors were bound by the clause in the mortgage waiving their statutory right of redemption after sale; but the conclusion which we have reached renders it unnecessary for us to discuss these questions. The case is disposed of on other grounds. The statute governing the foreclosure of mortgages declares that “at all sales of personal and real property under mortgages and deeds of trust in this State, such property shall not sell for less than two-thirds of the appraised value thereof. Provided, if the property shall not sell at first offéring for two-thirds of the amount of the appraisement, then, * * * in case of real property, another offering may be made in twelve months thereafter, at which offering the sale shall be to the highest bidder without reference to the appraisement.” Kirby’s Digest, § 5416. The statute also prescribes that “when such sales are to be made, the mortgagee, trustee or other person authorized to make the same shall, before the day fixed therefor, apply to some justice of the peace in the county in which the property is held or situated for the appointment of appraisers.” Kirby’s Digest, § 5417- These provisions of the statute were not complied' with. No attempt was made to comply with them. It has been said by this court that “the right to foreclose a mortgage at private sale is derived from the power conferred by the mortgage, and, independently of it, does not exist. The instrument creating such a power determines its extent, as well as the manner and conditions of the exercise; and those relying upon such a sale must show that it was made in obedience to this power.” Stallings v. Thomas, 55 Ark. 326. To this statement of the law may be added that when foreclosure sales of land under mortgages pursuant to power therein conferred are regulated by statute, a sale not in conformity with the statute is invalid, and will not cut off the equity of redemption. Kerr’s Supp. to Wiltsie on Mort. For. p. 1181; Pierce v. Grimley, 77 Mich. 273. In Ellenbogen v. Griffey, 55 Ark. 268, and in Kelley v. Graham, 70 Ark. 490, this court held that a failure to comply with this statute with reference to foreclosure sales of land under mortgages rendered the sale void. In those cases the mortgagors were seeking to avoid the sale. The statute imposes conditions upon the exercise of the power of sale contained in a mortgage of deed of trust, viz., that the property shall first be appraised, and that at the sale it shall bring two-thirds of the appraised values. It impliedly commands the mortgagee or trustee not to proceed with the sale until these conditions are performed, and no valid sale can be made until they are performed. The statute regulating probate sales of land contains substantially the same provisions, and this court has held that the omission to comply with the statute can not be taken advantage of after confirmation b}’the court — that the confirmation cures all such defects, (Bell v. Green, 38 Ark. 78) ; but that rule can not be applied to violations of the statute regulating proceedings in pais for foreclosure of mortgages. As we have already said, that statute must be- complied with; else the sale is invalid. It is urged by counsel for appellants that the provisions of the statute are solely for the benefit of the mortgagors, that they may waive compliance with its provisions, and that the mortgagors in this instance, by offering to redeem from the sale, did waive the omission and ratify the sale. Counsel cite Dailey v. Abbott, 40 Ark. 276, as sustaining their contention. That case does not, however, decide any such thing. It involved an effort on the part of the mortgagor to redeem from a sale under mortgage by paying the amount of the debt secured and to charge the purchaser with rents and waste. The complaint alleged that the sale was made without appraisement, but the question of the validity of the sale was not important, inasmuch as the purchase price exceeded the amount of the debt secured. The controversy arose solely over the amount of rtents and profits and damages for waste. We express no opinion on the question whether or not the mortgagor can in any manner before the sale waive the provisions of the statute and authorize a sale to the highest bidder without appraisement. That is not the case before us, and we need not decide it. What we have to consider is whether or not an unaccepted offer of a mortgagor to redeem from a sale which is invalid by reason of failure to comply with the statutory provision concerning appraisement ratifies and validates the sale and prevents the mortgagee from taking steps to procure a sale at which a valid title may be obtained. We hold that a sale under the power in the mortgage without complying with the statute is invalid, that no title can be vested thereunder, and that the mortgagee, when the defect in the sale is discovered, can have another sale made, either under the power or by suit in equity. As the sale in violation of this statute did not vest the title in the purchaser, the offer to redeem gave no vitality to the sale. The title either did or did not pass by the sale. If it did not pass by the sale, certainly the offer to redeem, which was an attempt to defeat, not to confirm, the title of the purchaser, did not validate the sale. An unaccepted offer to redeem from the invalid sale did not change 'the rights of the parties in any respect, and left the mortgagors free to take advantage of the invalidity of the sale. And, until there had been a valid exercise of the power of sale, the power was not exhausted and could be exercised. But it is said that, even if this be true as to Law and Bunn, appellees are, by their conduct in procuring a defective sale and purchasing the property thereat, estopped as against Craig and Norman to assert the invalidity of the sale and to seek another foreclosure. Craig and Norman stand in no better attitude in the controversy than Law and Bunn. The mortgage executed by Law and Bunn and the deed made by Chapman to appellees were both on record, and Craig and Norman had actual as well as constructive knowledge of them. They were therefore chargeable with full notice of all the rights of the mortgagees, and purchased only such interest and rights as Law and Bunn had. They can claim no greater rights than Law and Bunn had. Nor were appellees estopped, on account of having instituted a suit at law against Law and Bunn, to seek a foreclosure in equity. That was not assuming an inconsistent position. They had the right to sue at law on the notes, without waiving their mortgage lien. Whitmore v. Tatum, 54 Ark. 457; Rice v. Wilburn, 31 Ark. 108. It is only where one of two or more inconsistent remedies are pursued that' the election to pursue the one is an abandonment of the other. It is true that Chapman and the person whom lie requested to bid the land for appellees “were agents of appellees, and knew that there had been no appraisement; hnd appellees were charged with constructive knowledge of information concerning the subject-matter which came to these agents while in the performance of their respective duties. But the agency of these parties came to an end with the sale and execution of the deed. They had nothing to do with the bringing of the action, and appellees were not, by reason of constructive knowledge of material facts received through these agents, bound by any election made in actual ignorance of those facts. The binding force of an election can not be predicated upon mere imputed knowledge, for the doctrine is based entirely upon the idea of a conscious exercise of choice between two remedies which are inconsistent with each other. Besides, when appellees instituted the suit at law, they did so in ignorance of a material fact concerning the matter, viz.: that there had been no appraisement of the land. They were not bound by any election made in ignorance of material facts. White v. Beal & Fletcher Gro. Co., 65 Ark. 278; Dudley E. Jones Co. v. Daniel, 67 Ark. 206. Lord Chelmsford, speaking for the House of Lords in Spread v. Morgan, 11 H. L. Cas. 588, said: “In order that a person who is put to his election should be concluded by it, two things are necessary: First, a full knowledge of the nature of the inconsistent rights, and of the necessity of electing between them. Second, an intention to elect, manifested either expressly or by acts which imply choice and acquiescence.” We think there is nothing in the opinion in Baker v. Brown Shoe Co., 78 Ark. 501 (relied on by counsel), which bears out the contention that an election of remedies can be based on imputed knowledge of material facts. We are of the opinion that the decree of the chancellor is correct, and the same is affirmed.