Weathersbee v. Goodwin

Walker, J. The action was brought for the recovery of land- The plaintiffs claimed title under Isaac Spicer, by a deed from his widow and heirs at law, dated 15 December, 1890, and mesne conveyances to them, he having died after the year 1815. Defendants claimed from Isaac Spicer under a mortgage made by him to John 0. Millis 15 February, 1875, and duly probated and registered 4 April, 1881, and mesne conveyances to them. There was evidence that John 0. Millis took possession of the premises after default in payment of the debt, and he and those claiming under him remained in possession for some years; and also evidence that defendants entered into possession under the deed from the widow and heirs, and held the possession for several years. We deem it unnecessary to recite the evidence in the view we take of the ease. It is familiar learning that, at least, after default of the mortgagor in paying the debt secured by the mortgage, the mortgagee is entitled to the possession and is accountable to the mortgagor for rents and profits; and, nothing else appearing, the mortgagee, or his assignee, who has the same right, is entitled to recover upon the mere strength of the legal title so held by him. Wittkowski v. Watkins, 84 N. C., 457. The doctrine is thus stated in 27 Cyc., 1234: “By the strict doctrine of the common law, a mortgagee is entitled to the immediate possession of the mortgaged premises, in the character of the legal owner, and therefore, unless his right in this respect is waived or controlled by stipulation in the mortgage, he may, even before breach of condition, maintain ejectment and oust the mortgagor. But according to the modem equitable doctrine, which regards the mortgage as nothing more than a lien or security, the mortgagor is entitled to remain in the possession and enjoyment of the estate at least until breach of condition, even without the clause now commonly inserted in mortgages securing this right to him.” We have adopted the common-law rule, that a mortgage carries the legal title to the mortgagee, which he holds in trust for the security of his debt. A mortgage of land is not a mere pledge or chattel security. It was said in Williams v. Teachey, 85 N. C., 404: “In many of the States the strict legal relations of the parties resulting from the making of a mortgage have been changed, Tor the most part by statute,’ remarks a recent author, To that a mortgage is regarded as a mere pledge, and the rights and remedies under it are wholly equitable, so that a second system has grown out of the first.’ 1 J ones Mortg., sec. 17. It is held that the mortgage, though conveying land, passes but a chattel interest incidental to and partaking of the nature of the debt -intended to be protected, and hence upon the death of the mortgagee it may be assigned by his personal representative. Ib., 796. Such is not the law in this State, and the distinction is maintained between the legal estate in the — 236 — mortgagee and tbe equitable estate in tbe mortgagor, created by tbe execution of tbe mortgage deed, while tbe latter is subject to dower and to sale under execution,” citing Hemphill v. Ross, 66 N. C., 477; Ellis v. Hussey, ib., 501; Isler v. Koonce, 81 N. C., 378. See, also, Dameron v. Eskridge, 104 N. C., at p. 625. As tbe mortgagee of land bas tbe legal title, be is entitled to tbe possession. Parker v. Banks, 79 N. C., 480. It follows that, in this, case, tbe defendants were entitled to recover, unless tbe plaintiffs could sbow that in some way tbey bad acquired tbe title and right to tbe possession. Tbe burden of establishing their right to a recovery was upon them, as plaintiffs, at tbe outset, and when tbe facts as to tbe conveyances appeared, or were admitted, as here, it of course remained with them. Tbey contend that tbey have acquired tbe title as against tbe mortgagee and bis assignees, tbe defendants, by the' lapse of time, but if that can be set up in this action (it not being an action to redeem), under Revisal, sec. 390, subsecs. 3 and 4, it does not appear whether or not tbe debt was paid, or if paid, at what time; and besides, the mortgagee or bis assigns were in possession. But tbey further contend that about 1890 tbey acquired at least color of title-by tbe deed from tbe widow to her assignor, James Cowan, and from him by mesne conveyances executed in 1893 and 1894 to herself. She testified that her former husband, James Cowan, and herself were in possession of tbe property, tbe lot being 200 feet wide, from 1891 until she sold a part of it to Mr. B. R. King, 132% feet of tbe lot at tbe corner, and she then kept tbe remainder, or 67% feet at tbe western end herself, and continued in possession of it, except that C. E. Goodwin, in 1894, entered upon it, as she was told, and built a bouse or bouses there. That she was absent from Wilmington, where tbe lot is situated, for two or three years about tbe time that Goodwin built tbe bouse upon it, and upon her return she discovered that Goodwin bad built bouses there and rented them, and afterwards in 1907 and 1908 she commenced this suit. Tbe court charged that if tbe plaintiff bad continued in adverse possession-of tbe land for seven years from tbe date of tbe deed, which she claimed to be color of title, she would be entitled to recover, and tbey would answer in her favor, that she is tbe owner of tbe land described in tbe complaint and entitled to the possession thereof, it being admitted that tbe title to tbe land is out of tbe State. This instruction was in plaintiff’s favor, and all, and perhaps more, than she bad any right to expect from tbe court, and tbe jury found against her. Tbe assignments of error cannot be sustained. — 237 — First assignment: The testimony of Lucy Faires, which was excluded, was not material in the view we take of the case; and if it was, it could not have changed the result. Second assignment: We have not regarded the alleged possession of J. 0. Millis, the mortgagee, as material, but have considered him as holding the legal title in trust for the plaintiffs, who are the assignees-of the equity of redemption (Dickerson v. Simmons, 141 N. C., 325),. and the trust as still open. But notwithstanding this contention, which we have favored, the mortgagee had the legal title, though in trust, and' was entitled to the possession, and was constructively in possession, if' there was no actual possession by any one (Cahoon v. Simmons, 29 N. C., 189; Drake v. Howell, 133 N. C., 163, 165, 166), and the legal title and constructive possession is sufficient for a recovery in ejectment against one who enters not having a better title. We will presently refer more-fully to this principle as applied to the trust relation of mortgagee and mortgagor. Third assignment: As we have already said, the mortgagee has been regarded as holding in trust for the mortgagor, but that does not alter his right to the possession of the land, as against the mortgagor, unless the latter has, by some special circumstance, shown his superior right to the same, which has not been done here. Fourth assignment: This was a correct instruction, for, as we have intimated, it only states that, nothing else appearing, plaintiffs hold the equity of redemption by conveyance from the mortgagor and mesne conveyances to her, and defendants hold the legal title of the mortgage by deed from him and mesne conveyances to them, the latter have the better title and right to the possession, unless the plaintiffs have in some way shown a better title, which she has not done. The jury have even -decided that she had no sufficient adverse possession, if any at all; and we are of the opinion that, upon her own showing, she did not have such adverse possession for the length of time required to ripen, her title,, even if she had color of tille. The fifth, sixth, seventh, eighth, and ninth assignments of error are fully covered by what we have already said. The jury have found correctly, as we are of the opinion that plaintiff’s possession was not adverse under Parker v. Banks, supra; and if not adverse, whát the judge said about the necessity of defendants having adverse possession to-restore the title to themselves was immaterial as they had not lost the title by any adverse possession, and, therefore, they need not acquire what they had not lost. The plaintiffs being assignees of the mortgagor, their possession could not be considered as adverse to the defendants, who were assignees of the mortgagee. Plaintiffs have, in this case, claimed that the possession of the mortgagee, or his assignees, could not — 238 — be adverse to her as they beld in trust for her, and formerly for ber assignors. And tbe converse, therefore, is equally true, tbat tbe mortgagor in possession bolds under tbe mortgagee and not against bim, unless some break in tbe trust relation, as, for instance, a hostile possession or repudiation of tbe trust is previously shown. Mere possession is not sufficient for this purpose. Tbe Court said in Parker v. Banks, 79 N. C., at p. 483: “Tbe mortgagor in possession sold and conveyed to bis tenant, also in possession, tbe mortgage having been duly registered prior to tbe sale by tbe mortgagor. It is insisted tbat tbe purcbaser having continued in possession for seven years after bis purchase before tbe beginning of this action is protected by tbe statute of limitations against this action by tbe assignee of tbe mortgagee. It is well settled tbat tbe mortgagor is tbe tenant of tbe mortgagee, and therefore tbat bis possession is not hostile or adverse to tbe mortgagee; nor can tbe mortgagor make any lease or contract respecting tbe mortgaged ¡premises effectual to bind tbe mortgagee or prejudicial to bis title; neither can tbe assignee of tbe mortgagor bold possession adverse to tbe mortgagee unless tbe assignee has taken a conveyance without notice. But where a bona fide purcbaser from tbe mortgagor entered without notice of tbe mortgage (which was not registered till after tbe commencement of tbe ejectment suit), and be and those claiming under bim bad been in tbe continual possession of tbe premises claiming under color of title for more than tbe time limited by statute, it was beld in this State sufficient to bar tbe mortgagee or any claiming under bim. Baker v. Evans, 4 N. C., 417. And such is tbe general doctrine. Perkins v. Pitts, 11 Mass., 125; Newman v. Chapman, 2 Band. (Va.), 93; Angel on Limitations, 554; Wellborn v. Finley, 52 N. C., 228. Apply these principles to our case: It was virtually decided in Flemming v. Burgin, 37 N. C., 584, tbat a registered mortgage is notice to a subsequent purcbaser from tbe mortgagor. This decision has been approved and affirmed in Leggett v. Bullock, 44 N. C., 283, and in McLennan v. McLeod, 70 N. C., 364, and such being tbe obvious policy and purpose of our registration laws, as well as tbe convenience and good sense of tbe thing, it may now be considered as settled in this State, tbat tbe purcbaser from tbe mortgagor, or tbe mortgagee, after a mortgage duly registered, is a purcbaser with notice. Adams Eq., 152; 2 Kent, 172. The intestate of. the defendant, then, purchased with notice of tbe mortgage and took only such title as the mortgagor bad, and subject to all tbe stipulations contained in tbe mortgage deed. He simply took, tbe place of tbe mortgagor, and as tbe mortgagor cannot claim adversely to tbe mortgagee, neither can bis assignee with notice. The right of tbe purcbaser can in no case go beyond bis own title, and whatever appears in tbe registered mortgage is as much — 239 — an integral part of bis title as if it bad been inserted in bis deed from tbe mortgagor. Sucb notice therefore is of 'the-most conclusive nature and is unsusceptible of being rebutted or explained away. 2 White & Tudor Eq. Cases, 21 LeNeve &’LeNeve, and notes.” So far, Justice Bynum has shown what the relation of mortgagor and mortgagee is, and how it is affected by either of them having possession of the land. He then practically applies the principle in these words: “The defendant acquired by the purchase only that which the mortgagor could rightfully convey, to wit, the equity of redemption in the land; and nothing short of the payment and discharge of the mortgage debt will change his relations with the mortgagee. Adams Eq., 110. • It follows that the deed from Pool to Banks, 'a purchaser with notice, conveyed the equity of redemption only, and that such title is not that color-able title, a possession under which for seven years will bar the mortgagee’s right of action. The only limitation upon the mortgagee’s right of action in this case is contained in C. C. P., see. 31 (3), which prescribes that where the mortgagor has been in possession, the action for foreclosure or sale shall be brought by the mortgagee within ten years after forfeiture of the mortgage, or after the power of sale became absolute, or within ten years after the last payment on the debt. Such time has not elapsed in this case. • “Take another view of this action: Even assuming that Pool’s deed to Banks was a colorable title, it has been long settled that the possession under it, to bar an action under the statute, must be an adverse possession. The constructive possession was in the mortgagee, and that continued until an adverse possession commenced, and that adverse possession must have continued seven years before the right of possession of the first grantee could be lost. Slade v. Smith, 2 N. C., 248. But the law never presumes a wrong; hence he who alleges an adverse possession against the better title must show it as well as allege it.” It would seem that this statement of the law answers conclusively the plaintiffs’ objections. The charge of the judge, instead of being adverse to the plaintiff, went to the extreme verge of the law, if not beyond, in their favor, and they have no ground of complaint. This is not an action to redeem from the mortgagee, but a straight action of ejectment, with no equitable element pleaded. The statute of limitations is not, therefore, really involved (Cone v. Hyatt, 132 N. C., 810) ; and if it were, there has been no evidence to show that it applies beneficially to the plaintiffs. There is no proof here of actual payment of the indebtedness secured by the mortgage, and the fact is, so far as appears, that the trust relation is still open, and, therefore, Parker v. Banks, supra, applies. — 240 — The case has been tried on its merits, witb proper instructions to the-jury, so far as tbe plaintiffs are concerned, and their exceptions therefore were not well taken, and must be overruled. No error.