Jackson v. Cunningham

Hall, J. No question arising out of the first claim made by plaintiff that he had paid the note in suit before defendant took possession of the mortgaged property is made here. It is clear that if such payment was made, even after forfeiture, it would have revested the legal title to the property in the mortgageor, without a re-delivery or re-sale, and without a cancellation of the mortgage. Jones on Chat. Mort., sects. 632 and 633, and cases cited. The questions presented grow out of the action of the court with reference to the second claim made by plaintiff. Those questions must be decided in the light of the following rules of law concerning the respective rights of [362] mortgageor and mortgagee in respect of mortgaged chattels. In this state, upon a breach of the condition of a chattel mortgage, the mortgagee has the absolute title to the property, subject to the right of the mortgageor to redeem in equity. The mortgagee, upon such breach , becomes entitled to the possession of the property and may maintain replevin for it, against the mortgageor himself. The right of the mortgageor to redeem is an equitable right, not a legal right, and can be enforced only in equity. While a mortgageor may, by payment of the mortgage debt, be revested with the legal title to the property, this is so on the ground that, by accepting such payment, the mortgagee waives such forfeiture. For the same reason payment of the debt after forfeiture and possession taken by the mortgagee has the same effect. But after forfeiture and possession taken by the mortgagee a tender of the debt does not revest the title in the mortgageor. “Nothing short of acceptance of the tender will have that effect and extinguish the legal title of the mortgagee in the property mortgaged.” Jones on Chat. Mort., sec. 632. The legal title remains in the mortgagee notwithstanding the tender. The tender will not enable the mortgageor to maintain replevin for the property. Jones on Chat. Mart., sec. 634. The mortgageor, where the mortgagee stands on the forfeiture and refuses to accept payment of the debt, can only enforce his right to redeem by a bill in equity for that purpose. He cannot enforce such right in any proceeding in a court of Ifiw. He may tender the mortgage debt in any manner he may choose, by giving the mortgagee credit on an account held by him against the latter, whether in suit or not, if he sees fit to do so, and if the mortgagee accepts the tender thus made the forfeiture is thereby waived and the mortgageor becomes revested with the legal title to the property; but the mortgagee cannot be forced to accept the tender in any court of law in any proceeding; that can be done, as just said, only by a bill in equity. A mortgageor cannot, by a tender in a suit of replevin for the prop [363] erty after forfeiture and possession by mortgagee, force the latter to accept payment of the debt; in other words, the mortgageor cannot redeem in a suit of that kind; neither can the mortgageor force the mortgagee to receive payment of the debt by credit or otherwise in any suit at law, and then maintain replevin for the property. What the mortgageor cannot do in one suit at law he cannot accomplish in two such suits. To hold otherwise would be to encourage circuity of action, in favor of which surely there cannot be invoked the principle, “ that current accounts and mutual demands, of a like nature, as far as they go, should compensate and extinguish each other, and that the balance only constitutes a real debt between the parties.” That principle can have no application to a case where a mortgagee, after forfeiture, has taken possession of mortgaged chattels, because, in such ease, the mortgagee has thereby acquired rights which the mortgageor can discharge by only one proceeding. The mortgageor in that proceeding only has the right to pay the mortgage debt against the will of the mortgagee ; and the mortgagee can be prevented only by a court of equity from subjecting the property to the payment of the debt. The mortgageor by giving the credit, to which reference has been made, in his account filed as a setoff in the suit brought against him by the mortgagee, simply njade a tender to the amount of the credit. Had the mortgagee accepted the tender thus made, after judgment in that suit, the credit would have been a payment of the mortgage debt in full, or pro tanto, according as the, credit was equal to or less than the mortgage debt at the time of the credit, and would have had the full force and effect of such a payment. The credit would have been a payment after judgment because of the acceptance of it by the mortgagee, not because it was tendered by the mortgageor and was allowed by the court. But if, as all the evidence showed, the mortgagee disclaimed and refused the credit, then the allowance of it by the court, at the instance and request of the mort [364] gageor, <was without authority, beyond the power and jurisdiction of the court, and of no force and effect as against the mortgagee. The credit in such case was allowed at the instance of the mortgageor and at his risk, and if he has suffered from it he alone is to blame. If the mortgagee had not made disclaimer of the credit, and the court had allowed it without objection from the mortgagee, we think that the acceptance of the credit by him should have been presumed from such course on his part. On account of the views expressed by us and the uncontroverted fact of the mortgagee’s disclaimer of the credit referred to, we have not deemed it necessary to determine many of the questions raised in the record. The court below tried the case contrary to these views, and, therefore, the judgment is reversed and the cause remanded, to be proceeded with in accordance therewith. All concur.