Carroll v. Ballance

Breese, J. The questions presented by this record are, can a mortgagee, the mortgage debt being payable by installments for which separate notes are given, recover the mortgaged premises in ejectment against the mortgagor, or those claiming under him, when one or more notes are due and unpaid, and without notice to quit to the party in possession, before action brought ? In England, and in many of the American States, it is understood that the ordinary mortgage deed conveys the fee in the land to the mortgagee, and under it, he may oust the mortgagor immediately on the execution and delivery of the mortgage, without waiting for the period fixed for thé performance of the condition. Coote on Mortgages, 339; Blaney v. Bearce, 2 Greenl. R. 132; Brown v. Cramer, 1 N. H. 169; Hobart v. Sanborn, 13 ib. 226; Northampton Paper Mills v. Ames, 8 Met. 1. And this right is fully recognized by courts of equity, although liable to be defeated, at any moment, in those courts, by the payment of the debt. It has been held, that this right cannot be restrained by a parol agreement that the mortgagor shall be allowed to remain in possession until forfeiture, for the reason, that such an agreement is inconsistent both with the terms of the deed, and the provision of the statute of frauds. Colman v. Packard, 16 Mass. 39. So strict are the principles which obtain in such cases, and constantly applied in some States, that it is held that the rights of the mortgagee to the possession, cannot be defeated by the tender, or even by the payment of the debt, after the time fixed for its payment; for, by the old and rigid rule of covenants, the condition not having been performed at the day, the right of the mortgagor was gone at law, and the only redress for him was in equity. By the common law, as enforced in the English courts, on the execution of the mortgage, the mortgagor becomes the equitable owner, the mortgagee the legal owner of the land, and they so remain respectively, until the land is redeemed or the equity foreclosed. As a consequence of this results the doctrine that the mortgagee may maintain ejectment against the mortgagor before condition broken, and turn him out of possession. To avoid this, most English mortgages contain a clause, that until default made, the mortgagor, his heirs, etc., may hold and enjoy the land, and receive the profits, without interruption by the mortgagee or his heirs. The interest of the mortgagee is regarded there, and in many of the States, as an estate, and may be conveyed by him to third persons by any of the usual modes of conveyance. Being a mortgagee in fee, it must follow that he has the legal title to the estate, and consequently the same right to transfer it by deed, that he has to convey by deed the legal title of any other real estate, subject only to the right' of redemption existing in the mortgagor. Givan v. Doe ex dem. Tout, 7 Blackford, 210. In other States, holding the mortgagor to be the owner of the land, not only as against third persons, but as against the mortgagee, it is decided, that a conveyance by the mortgagee, intended to pass the interest of the mortgagee as an estate, and not as a security merely for a debt due, would be wholly inoperative. Wilson v. Thorp, 2 Cowen, 145; Jackson ex dem. Titus et al. v. Myers, 11 Wendell, 533. In Jackson ex dem. Curtis v. Bronson, 19 Johnson, 325, which was an ejectment by the mortgagor against the assignee of the mortgagee, the court held, that the mortgagee had a mere chattel interest, and the mortgagor must be considered the proprietor of the freehold. The mortgage is deemed a mere incident to the bond, or as security for the debt; and the assignment of the interest of the mortgagee in the land is a nullity. In Runyon v. Mersereau, 11 ib. 534, it was held that the mortgagor, or a purchaser of the equity of redemption, may maintain trespass against the mortgagee, or against a person cutting wood under his license off the mortgaged premises. The freehold is in the mortgagor, and in an action of trespass by a mortgagor against a mortgagee, if the defendant pleads liberum tenemenlum, the plaintiff may reply that the freehold is in himself. In Gardner v. Hart, 3 Denio, 232, the court said, a mortgage creates a specific lien on the land mortgaged, the same as a judgment duly docketed creates a general lien on the land of the judgment debtor. But the mortgagee, as such, has no title to the land mortgaged; he has neither jus in re nor ad rent., but a mere security for his debt, the title to the land, notwithstanding the mortgage, remaining in the mortgagor. This court has held, in accordance with the rulings of the English courts of common law jurisdiction, that as an incident to this ownership in the mortgagee, he can enter before condition broken or bring ejectment. He is considered the owner of the fee, having the jus in re as well as ad rem., and being so, is entitled to all the rights and remedies which the law gives to such an owner. Delahay v. Clement, 3 Scam. 202; Vansant v. Allmon, 23 Ill. 33. There seems, to one member of this .court at least, great propriety in a distinction which might be made, though the books do not recognize it, between a mortgage executed for money loaned, or for the performance of some other obligation, where the consideration passes from a stranger to the owner of the land mortgaged, and a mortgage executed to secure the payment of the purchase money of the land itself, which are quite as common in the transactions of the day as those given on the actual loan of money. In the first class of cases, a mortgage may properly be regarded as an incident, or security merely for the repayment of the money actually loaned, the lender never having had an interest in the land mortgaged as security. A mortgage of the other description, given to secure the payment of the purchase money of the land itself, ought to be regarded as something more than a mere security for money loaned, no money being in fact loaned. The vendor of land, by his deed, clothes his grantee with power to enter and take possession of the land—to grant it away to strangers—to deprive the vendor of all use of it. The mortgage is executed to secure the vendor in the purchase money, on the promise of which, at a certain day, he surrenders the possession to the mortgagor. Now, different considerations operate upon the parties in these cases. In the first, the mortgagee only stipulates for a prompt return of his money—his only consideration is, that the security shall be ample, and it is, in practical life, rarely if ever understood by the parties to such a mortgage, to pass the title in fee of the land to the mortgagee, so as to vest in him the power to enter on condition broken, or bring ejectment and turn the mortgagor out of possession. The debt may be very trifling in comparison to the value of the land mortgaged, and so long as its ultimate payment is fully secured, such mortgagee should be content with the usual remedies allowed him by the law—to proceed by scire facias under the statute, or by bill in equity for a strict foreclosure, or for a foreclosure and sale, or by suit on the note, and thus receive the full benefit of what the parties intended should be security. In justice and equity his principal right is to his money only. In the other class of cases, and they are perhaps the most numerous in this State, something more than mere security must be in contemplation of both parties. The title to the fee ought not to be held as having passed absolutely out of the vendor. It is in him when he sells, and should be considered as passing out of him, only by the payment of the purchase money. There would seem to be great propriety in conceding to such a mortgagee all the rights the true owner of the fee can exercise—the right of entry, or the action of ejectment on condition broken, and not before. It is his estate, the title to which he has never in fact parted with, except upon a condition which has not been performed. It is then but sheer justice that the possession should be restored to him. But the law makes no distinction, and we can make none. The next question is, the mortgagor being in possession, is he entitled to notice to quit before suit brought? This depends on the relation subsisting between the mortgagee and mortgagor, and this has never yet been specially defined or authoritatively determined. The appellant’s counsel contends that he is a tenant from year to year. We think no court has gone so far as to say that. The relation is admitted to be sui generis and altogether anomalous. What the true relation is, has been much discussed. He has been called tenant at will, quasi tenant at will, tenant at sufferance, agent, receiver, yet wanting in some of the essentials of each. He has never been considered a tenant from year to year, except as it may be so inferred from the cases cited from New York, Jackson v. Loughhead, 2 Johns. 75, especially, which is the leading case. Judge Livingston, who delivered the opinion in that case, said, that it was not deemed necessary to ascertain what relation the mortgagor held to the mortgagee, whether as tenant at sufferance or at will, or from year to year. That as a rule of practice, the court would require in such cases, a notice of six months; and that decision has been followed since. Bennet v. Lampson, 17 ib. 300. The doctrine in England is, as we find it declared by Lord Mansfield, in the case of Keech, Lessee of Warne, v. Hall, Douglass, 21, that when the mortgagor is left in possession, the true inference to be drawn is, an agreement that he shall possess the premises at will in the strictest sense, and therefore no notice is ever given him to quit, and he is not even entitled to reap the crop as other tenants at will are, because all is liable to the debt; on payment of which the mortgagee’s title ceases. ‘' And in Thunder on the demise of Weaver v. Belcher, 3 East, 221 [449], Lord Ellenborough held that a mortgagor wasno more than a tenant at sufferance, not entitled to notice to quit. In most of the American courts this doctrine is recognized. Brown v. Cram, 1 N. H. 169; Newell v. Davis, 3 Mass. 162; Colman v. Packard, 16 ib. 39; Reed v. Davis, 4 Pick. 216; Blaney v. Bearce, 2 Greenleaf R. 132; Welch v. Adams, 1 Metcalf, 494; Shute v. Greaves, 7 Blackford, 1; Lyman v. Mower, 6 Vermont, 345. One good criterion of the nature of a mortgagor’s interest is found in the case of Keech v. Hall, and recognized in the case of Jones v. Thomas, 8 Blackford, 428, and that is, that the mortgagor cannot take the emblements, even when expelled, without warning by the mortgagee, as a tenant at will could. This being so, he cannot be regarded as a tenant at will, and the decisions which put his possession on that footing cannot be correct, for although the mortgagor holds the premises by the sufferance of the mortgagee, yet he does not hold of him, and as the peculiar relation of tenure is not created, the mortgagor cannot properly be described as a tenant at will. Mayo v. Fletcher, 14 Pickering, 530. The point has never come directly before this court for a decision. We are inclined to the opinion that there is really no tenancy of any kind created by the mortgage. The mortgagee may consider the mortgagor as his tenant for some purposes, or a trespasser, or person holding without right. It is an inference from the facts and circumstances. He is not such a tenant as to be entitled to a notice to quit. The only case decided by this court bearing on this point, is the case of Prentice v. Wilson, 14 Ill. 91. It is there held as a general principle, where a party acquires the possession of land under an executory contract to purchase, the vendor cannot maintain ejectment against him, until he has demanded possession or given him notice to quit, but if he repudiates the contract under which he obtained the possession, or fails to comply with its terms, the seller is at liberty to treat the contract as rescinded, and regain the possession by an action of ejectment, a demand of possession or notice to quit being, in such case, unnecessary. As to the other points made by the appellant, that he was in possession under a lease theretofore executed by the appellee, it appeared in evidence that the premises were, many years previous to the suit, leased by the appellee to one Cole, who assigned to Thompson, and he to one Gregg, and he to Kellogg, who afterwards purchased the fee and executed the mortgage. The lease then being owned by Kellogg, merged in the deed of the fee to him, and no person thereafter, could claim under that lease,—it was extinct. As to the fourth point, that the appellee had violated his contract and broken his .covenants, this is attempted to be made out, by showing that portions of the land conveyed to Kellogg, and included in the same mortgage, were recovered by other adverse parties in ejectment in the U. S. Circuit Court. This recovery did not affect the land sued for, it was neither part or parcel of it, and has not any connection with these premises for which this suit was brought, nor does it appear from the evidence that there was any complaint made on that account, when Webb, as agent of appellee, demanded payment of the notes. The statute to which appellant refers under the first point he makes, that a mortgage cannot be foreclosed until the last installment is due, means only, that the mortgagee cannot resort to the proceeding by scire facias, until the last installment is due. It does not debar him from resorting to other remedies. He may proceed personally against the debtor, on the note, and-subject his general property to the judgment; or he may bring ejectment on condition broken, or make peaceable entry, or file a bill in chancery for a strict foreclosure, for a foreclosure and sale, or if he prefers it, sue out a scire facias. The remedies are various and concurrent or successive, as may be deemed proper. We think it is settled that a mortgagee, may maintain ejectment, on condition broken, without notice to quit, and that the condition is broken when one or more installments are due and unpaid; because, the condition being an entirety, it is indivisible, and a failure to pay any part of the debt is a breach of the condition. On the other point made by appellant, the presumption must obtain, inasmuch as the deed and mortgage bear one and the same date, that they are but one transaction. The judgment must be affirmed. Judgment affirmed.