Knowlton v. Walker

By the Court, DIXON, C. J. This a hill to redeem, filed under the old system, by the respondent, as the owner of the equity of redemption, against the appellant and one Bilis Baker, as original mortgagees, and Isaac E. Leake, Samuel D. Smith, Lewis Story, and John Hicks, as having or claiming some interest in the mortgaged premises under the mortgagees first named. The premises in controversy are two hundred and forty acres of land, situate in the county of Rock. So far as the written instruments are concerned, the transaction between the original parties is in all respects the same as that detailed in the case of Rogan vs. Walker, 1 Wis., 527. Those parties were Wallcer and Balter on the one side, and one Henry K. Belding on the other. The respondent, through several mesne conveyances, claims title as the owner of the equity of redemption under Belding. In addition to claiming that the written instruments themselves created the relation of mortgagor and mortgagee between Belding and the appellant and Baker, the bill likewise charges that the real transaction was a loan of money by the latter to the former, with the understanding that the money loaned was to be applied by the appellant to the purchase or entry of the lands in question, and — 271 — that the title was subsequently to be-conveyed to Belding, who was to secure the repayment to the- appellant and of double the sum loaned, at the end of four years, with interest payable annually at seven per- cent., by a mortgage upon the premises. It is alleged that through the artful and fraudulent practices of the appellant;' -this agreement was never literally carried out, but that Belding was induced to accept the conditional conveyance as aryl for an absolute deed with a mortgage back, believing that in substance it amounted to the same thing. The view we have taken of the case, however, renders a notice of this branch of it unnecessary. The conveyance and bond were, executed the 20th day of February, 1839. The money became due the 18th day of February, 1843. It appears-from the bill that but one installment of interest has been paid. Belding resided upon and had a pre-emption claim to 160 aqres of the land, and was also in possession of the other 80 acres at the time of the entry and sale, and so remained until August, 1843, when he sold out, and possession was taken by the purchaser. This possession of Belding and of those claiming under him, was continued down to about the 11th day of December, 1845, when the premises were conveyed to the respondent. The bill alleges that about that time the appellant, with force and arms, entered upon the premises and tore down and destroyed the dwelling house in which Belding and others claiming under him had theretofore resided, and that since that time the premises have remained open and unoccupied. This entry and destruction of the house is charged to have been a wanton and malicious trespass, and not an entry in pursuance of the power reserved in the conveyance to Belding. The first attempted conveyance of any part of the land by the appellant, was in 1854, when he executed and delivered a deed of 80 acres to. the defendant Leake. This bill was filed on the 31st day-of August, 1855, and in it the respondent offers to pay to the appellant or such other persons as may be entitled thereto, such sums of, money as may be justly and equitably found due upon the original agreement of the parties. The case -comes before this — 272 — court upon an appeal from an order of tbe circuit court over- . ruling tbe demurrer of tbe appellant to tbe bill. In support of tbe demurrer two objections are principally urged. One is that it is not tbe case of a bill to redeem from a mortgage after condition broken and possession taken by tbe mortgagee; that tbe original transaction did not create tbe relation of mortgagor and mortgagee; but that it is more in tbe nature of a bill to enforce tbe specific performance of an executory agreement for tbe sale of lands, and that it discloses sucb negligence and omission of duty on tbe part of tbe respondent and those under whom be claims, as disentitles him to any relief at tbe bands of a court of equity. Tbe other objection is, that tbe claim' is barred by tbe statute of limitations. Besides these there are some of minor importance, which will also be noticed. Upon the first question we have only to say, that it was fully determined by tbe learned judge who decided tbe case of Walker vs. Rogan, that tbe instruments in question did, in substance, amount to a mortgage with a right of foreclosure on tbe part of the appellant, and also of entry as mortgagee in case be found tbe premises vacant, and a right of redemption on tbe part of Belding, bis representatives and assigns. Being entirely satisfied with the principles there laid down, and tbe reasoning by which that branch of tbe case is supported, we shall enter upon no discussion of it. We are content to leave it where it is there left. It being established that Belding, and those representing his interest, had a right of redemption, we are next to inquire within what time that right must be exercised, or whether, as it is insisted by counsel for tbe appellant, it may be lost within tbe period prescribed by the statute of limitation, by mere neglect to pay tbe principal and interest, or any part of it. In support of this principle, tbe counsel, for the most part, relies upon some remarks which occur in tbe opinion in Rogan vs. Walker. It is evident from the context and tbe manner in which those remarks are made, that they are not tbe result of any mature thought or investigation of tbe subject. At page 574, the judge expressly says that be does not undertake to determine whether tbe equity of redemp — 273 — tion thus created is or is not precisely the same in kind, degree and duration as in tbe case of a purely technical mortgage. After a careful examination, we can find no authority for the distinction thus intimated. We are unable to see how it can be sustained on principle. An equity of redemption is an estate in the land itself, which may be devised, granted, and charged with the payment of other debts of the mortgagor or owner. It is a part of the law of the land, and as such it cannot, in case of a mortgage, in any way be provided by agreement, that a court of equity shall not give relief. Whenever therefore it is ascertained that a transaction is a mortgage, this equity at once arises, and courts cannot distinguish between one mortgage and another. The estate, if it be an equity of redemption, must in all cases be the same, and must be governed by the same rules which regulate other similar interests. It matters not what peculiar form the instrument evidencing the transaction may have taken, the substance of the inquiry always is, Was it a security for the loan of money or other property ? And this being answered in the affirmative, it is difficult to perceive why, in a court of equity, one borrower should stand upon a different footing from another, or why the estate of one owner of an equity of redemptionshould.be less durable and complete than that of another. The only practical difference between an equity under a pure mortgage and one under an impure one, or an instrument not technically a mortgage, is that the latter is often much more difficult to be established. But should it for that reason be less an estate ? Should the mortgagee be rewarded for an attempt to disguise the real nature of the transaction ? We think not We can discover no good reason for discriminating between the two. In the many cases to be found in the books, where deeds and other instruments absolute upon their face have been declared to be mortgages, and a right of redemption decreed, we do not remember any in which the distinction has been made. In the absence of fraud or other improper conduct on the part of the applicant, the only limit which has been prescribed to the exercise of the right to redeem is that fixed by the statutes or by courts of equity in analogy to them — 274 — In tbe case of Russell vs. Southard, 12 How. (.U S.), 139, referred to in Roga/n vs. Walker, upwards of nineteen years bad elapsed after tbe execution and delivery of tbe deed, without a payment or tender of tbe principal and interest, before tbe action was commenced; and yet tbe complainant was permitted to redeem. Mere lapse of time, short of that fixed by the statute, unaccompanied by other circumstances, seems never to have been allowed to affect tbe right itself, although as in tbe case last referred to, it often has an important influence over tbe terms and conditions upon which a -redemption will be allowed. We must therefore treat tbe appellant tbe same as any other mortgagee. He has always bad tbe same remedies at band as other mortgagees, and lite them be must abide tbe consequences of bis neglect to use them. We hardly need add that, since tbe case presents tbe question of a right to redeem, tbe authorities cited by counsel for tbe appellant as to tbe effect of laches in cases where a specific performance of executory contracts for tbe sale of lands is sought, and tbe arguments drawn therefrom, are wholly inapplicable. We are here dealing with an estate in tbe land, which is governed by fixed and definite rules, and over which, from its very nature, courts possess no dispensing power, and not with a matter which rests in our sound discretion. This brings us to tbe consideration of tbe statute of limitations, or whether it appears from the bill that it was filed at a time when the bar created by that statute had become effectual. Both counsel agree that the period prescribed is ten years, which is undoubtedly a correct interpretation of it, but there they separate. Eor the appellant it is insisted that it began to run from the time the money became due, viz., on the 18th day of February, 1843. For the respondent it is contended that it would only begin to run from the time that Walker re-entered, and took and continued in actual possession of the premises, and that inasmuch as the bill shows that he has not so repossessed himself, it has not yet commenced running. There is no doubt in our minds that in such case the statutory period dates only from the — 275 — time tbe mortgagee takes actual, open and notorious possession of tbe premises. This is too well settled to admit of discussion. If after be bas done so, the mortgagor permits him thus to continue in possession for the period prescribed, without proceeding to redeem, or requiring an account of tbe rents, issues and profits, tbe bar is complete, but not till then. In this case therefore it is unnecessary to determine, whether tbe entry and destruction of tbe dwelling-house by tbe appellant in 1845, as set forth in tbe bill, is or is not to be considered as a re-entry and repossession of tbe premises under tbe deed; for conceding that it is, still tbe bill was filed within ten years after that date. A question is made as to tbe manner in which tbe conveyance from tbe appellant to Belding was recorded. Tbe bill alleges that it was recorded as a deed in a book of deeds in tbe office of tbe register of Bock county. It is insisted for tbe appellant, and several cases are cited to show, that bn instrument executed and recorded as a deed, but intended as a mortgage, is not constructive notice to any person, and that subsequent purchasers and alienees without actual notice, will be protected notwithstanding such recording. This may be true, but tbe doctrine cannot be applied to this case, or if it could, it would only bo to the detriment of tbe appellant himself. He is tbe mortgagee, and if bis interest can only be preserved by having tbe instrument showing him to be such, recorded as a mortgage in tbe office of tbe proper register, then it would follow that Belding, or those claiming under him, could sell tbe premises in such a way that tbe purchaser would bold them clear of bis lien. This, however, cannot be so, for tbe reason that tbe very instrument on record which would show tbe purchaser that Beld-ing, or those bolding under him, bad title, would likewise show tbe nature of that title, and that tbe appellant, |.is grantor, reserved an interest in tbe premises equivalent to that of a mortgagee. But a better answer to this position,' perhaps, is that as to Belding and bis assigns, tbe conveyance' from tbe appellant was a deed. It was them proper title, and to make it effectual for tbe purpose of protecting their rights, it must be recorded as a deed.. If in so doing it — 276 — should operate iucideutally to tbe injury of tbe appellant, it would certainly not be tbeir fault so far as tbe recording is concerned, and they clearly should not be the losers by it. instrument evidencing his mortgage interest, is in the form he chose to adopt, and if on account of its form there should be a failure to comply with the registry laws, and consequent loss, it would be upon him, and not upon them, that it ought to fall. Another question is also made upon the allegation of usury contained in the bill. It avers that the original agreement was usurious and void, and the respondent prays tobe relieved from it according to the usual course of equity in such cases. This, it is said, cannot be done; that the respondent cannot seek relief upon a contract, and at the same time claim it to be void for usury. Without deciding whether the respondent can take advantage of the usury, if there was any — a question more proper to be determined hereafter than at this time — we may say that such a claim, however unfounded in law, does not render a bill demurra-ble. If it be otherwise good, and shows a valid claim for relief, it will not be vitiated because the complainant has asked for more than he is entitled to receive. But admitting that the respondent may take advantage of the usury, Ms el aim that the contract is void for that reason, does not preclude him from asserting that it is a mortgage, and demanding judgment that he be allowed to redeem. It would be strange indeed if the assertion that a mortgage was void for usury should be held to cut off the mortgagor’s equity of redemption, in case it should be decided that it was not. The order of the circuit court is affirmed, with costs.