DeSaussure v. Bollmann

The opinion of the'Court was delivered by Moses, C. J. It is not to be doubted that a mortgage of real estate executed for the security of the purchase money creates a lien against which no subsequent encumbrance affecting the mortgage could prevail. While it has been held in this State that the equity of redemption is such an estate in the mortgagor as may be subject to sale under a judgment against him, thereby vesting it in the purchaser, still the mortgage will take priority over judgments against the mortgagor, both antecedent and subsequent, and will be first entitled to satisfaction out of the sale of the property which it covers. Judgment creditors, as well as junior mortgagees of the same premises, even where the title vests in the mortgagee, and is not retained in the mortgagor, as under an Act of 1791, have an interest in the equity of redemption, which is necessarily affected by a sale under foreclosure. Proceeding on the principle of “ doing complete justice,” which always governs a Court of equity, it has been held, both in England and New York, that “ to a bill for foreclosure and sale of mort-gaged premises all encumbrancers or persons having an interest existing at the commencement of the suit, subsequent as well as prior in date to the plaintiff’s mortgage, must be made parties, otherwise they will not be bound by the decree.” — Haines vs. Beach, 3 John. Ch., 459. Chancellor Kent, with the learning for which he was so distinguished, and the research with which he examined all questions presented for his decision, has there so fully reviewed the authorities, and set forth the reason and policy which confirm his conclusion, that the attempt to add anything to his convincing argument would be vain and superfluous. Conforming to the general rule, this Court said in Manufacturing Company vs. Price, (4 S. C., 338,) that “ one who holds by title derived from the mortgagor subsequent to the mortgage is not concluded by a decree of foreclosure to which he was not a party.” [340] It does not, however, follow in the case before us that, although the plaintiff in the judgment against Laborde was not made a party to the foreclosure by Poincignon, the assignee of the mortgage, the omission works such a defect in the title as will discharge the purchaser, Bollmann, from the specific performance of his contract. All that the vendor is required to tender is a good and marketable title; it is not enough for the defendant to show that the title may be possibly defeated.— Thomson vs. Dulles, 5 Rich. Eq., 370; Lawrence vs. Lucas, 6 Rich. Eq., 217. The purchase by Poincignon under his bill for foreclosure vested in him the equity of redemption reserved to the mortgagor and thus conferred upon him the absolute estate in the lands. The proceeds of the sale fell short of the amount due on the mortgage. The judgment against the mortgagor was obtained in 1860, and nearly fifteen years had elapsed before the sale to Bollmann, and no step in all that intervening time has been taken by Wilbur, the judgment creditor, for the sale of the equity of redemption remaining in Laborde. Neither to this moment has he intervened by any process to subject, if he could, the proceeds of the sale to the payment of his debt. But suppose he were now to take proceeding under his judgment for the sale of the equity of redemption, — what right would a purchaser at such a sale acquire? By a Court of competent jurisdiction the mortgage has been foreclosed, and whatever interest Laborde had in the land has been conveyed to Poincignon on his purchase. In a contest of claim between him and such a purchaser, it must be decided in favor of the one who holds through the higher lien, and Poincignon’s title is derived from a sale under a mortgage given to secure the purchase money of the land, the subject of dispute, and would necessarily prevail. Mr. Story, in Section 742 of his work on Equity Jurisprudence, says: “The exercise of this whole branch of equity jurisprudence respecting the rescission and specific performance of contracts is not a matter of right in either party, but it is a matter of discretion in the Court, — not indeed of an arbitrary or capricious discretion, dependent upon the mere pleasure of the Judge, but of that sound and reasonable discretion which governs itself, as far as it may be, by general rules and principles, but, at the same time, which withholds or grants relief, according to the circumstances of each particular case, where these rules and principles will not furnish exact measure of justice between the parties.” Applying the recognized [341] principles which govern the Court in the administration of this branch of its jurisdiction, we do not see in the objection urged by liie first ground of appeal anything which would warrant its interposition against the relief sought by the complaint. Not so, however, with the other question raised by the motion. Whatever right devolved on Clarence E. Trouche by the devise to him of a life estate in the property was assigned, released and conveyed by him for the benefit of his children, all minors, to Follín, in trust for their use. The language of the deed, after referring to the words of the will, embraces “all his right, title, interest, life estate, claim and demand whatsoever of, in, to and out of all and singular the devise and bequest hereinbefore recited, and the lot of land therein mentioned and the investments thereby provided.” It was not possible for him to have employed a more comprehensive expression to denote his intention of transferring, for the benefit of his children, all the interest which he took under the will. The right reserved to him by the will to demand of the executors a sale or exchange of the property, that the proceeds of the sale may be reinvested, and such reinvested, acquired or exchanged property held for his benefit, depended upon his retention of the premises devised. The title was in him for life. He had the right to alienate his interest by gift or sale. Suppose for a money consideration he had bargained and conveyed the premises to a third person,— could he, in that event, have exercised his power under the will to demand and require a sale or exchange of them by the executors? By this decree he had transferred all his interest, and the purpose contemplated by the testator in making a sale or exchange at his request would therefore fail, for the effect intended could not be accomplished. Follin, the trustee under Trouche’s deed, had no authority to sell and convey; his eestuis que trust were all infants, and could not be divested of their interest by a sale or 'exchange unless by the authority of a competent Court. His uniting with the executors in the deed to Bollman was a breach of the trust confided to him by the deed of Trouche. The defect thus appearing in the title precludes respondents from the right of compelling specific performance of the contract referred to in the complaint. Looking to the whole case, we do not think, in a matter resting on the sound and reasonable discretion of the Court, regulated, however, by general principles, that this is a case where costs should [342] follow the decree. The executors were acting iu good faith, but misled as to the effect of the trust deed which Tronche executed. The judgment of the Court below is reversed and the complaint dismissed, each party paying his own costs. Wright, A. J., concurred.