Fisk v. Stewart

Cornell, J. This action was decided in the court below, upon the point that the plaintiffs’ right of action had become barred by the statute; and if the point is well taken, it disposes of the case. Without considering and definitely determining the nature of the transaction between the parties, as disclosed by the findings, but viewing it in the light presented, by plaintiffs as the one most favorable for them, as a loan of money made by defendant upon the premises in controversy, the legal title to which was vested in him, at the time, for the purpose of securing the repayment of the loan, the right of action belonging to plaintiffs, if any, is one of redemption. Whether this right is barred by the statute of limitations depends upon the question when the loan became due and payable, and defendant’s right of foreclosure consequently accrued, and whether the statutory period of ten years, limited for the exercise of that right, has since elapsed;' for, as a general rule, the right of foreclosure and the correlative right of redemption are mutual and reciprocal, and when one is barred so that it cannot be enforced, the other is also gone, unless some special facts and circumstances exist, taking the case out of the operation of the general rule, of which there can be no pretence in this case. Holton v. Meighen, 15 Minn. 69 , King v. Meighen, 20 Minn. 264; Parsons v. Noggle, 23 Minn. 328. But for the stipulations contained in the written lease from defendant to Murray, and its subsequent renewals from time to time with the concurrence of plaintiffs, it is not pretended that any specific time was fixed when the alleged loan was to be repaid; and if such was the fact, of course there was noth [373] ing to prevent Stewart from treating the debt as due and payable immediately, and commencing at once his action for a foreclosure. It is contended, however, that this right to «demand immediate payment was postponed by the giving of said lease, and the stipulation therein contained, in these words: “And it is hereby further understood and agreed by and between said parties that said party of the second part, '{the lessee therein named,) complying with all his covenants aforesaid, shall, at any time during his said term, have the privilege to purchase from the party of the first part (the said defendant, therein named as lessor,) all the estate, right, title and interest of the party of the first part in said premises hereby leased, by paying up to the said party of the first part the full amount of rent for the term aforesaid, amounting to the sum of $250, and also the further sum of $1,200 cash, as purchase-money therefor in hand paid at the time of said purchase. ” The argument of plaintiffs is that this lease, as made and executed, was one of the devices which were resorted to, at the time the loan was made, by Stewart, .to cover up and conceal the real nature of the transaction; that the stipulations therein, which in terms provided for the payment of rent at stated times, and which gave to the lessee the privilege, during the term, of purchasing the property upon paying the rent - and the sum named as purchase-money — which was the same in amount as the loan — were in fact (and so intended) but stipulations to secure the payment of interest, and also the redemption of the property by a reconveyance of the title upon repayment of the loan. Thus considered, it is plain that the stipulation — which, in its terms, gave the privilege of purchasing the premises during the term, upon complying with the conditions named in the lease — operated to extend the time-for the payment-of the sum loaned for that period; and it is equally obvious that such extension terminated upon the expiration of -the term. The lease was for the term of one year from January 1,1862, and contained covenants obligating the lessee to pay the spec [374] ifiod instalments of rent as they should become due, and also a stipulation giving to the lessor the right of re-entry, upon a failure of the lessee to keep and observe any of the covenants or conditions of the lease on his part. According to the findings, this lease was renewed from year to year, with modifications as to the amount of rent to be paid, until the spring of 1865, when, the lessee being then in default in respect to the payment of the rent for the preceding year, the defendant, at his request, agreed orally with him to extend the agreement for that year, upon the condition that the yearly rent of $150, agreed upon for that year, with all arrearages, was paid on or before September 1, 1865. As no part of the rent, or of said sum of $1,200, was paid or tendered on or before that day, the defendant, on the 19th of the month, put an end to the tenancy under the lease, by the service of a written notice to that effect, coupled with a demand for the possession of the premises. The legal effect of this was to extinguish the privilege which the lessee, as the representative of the plaintiffs, enjoyed, under the lease, of purchasing the premises at any time during the term; and, as a consequence, the defendant’s right to demand immediate repayment of his loan, and to foreclose upon his security, thereupon at once accrued. As ten years have since elapsed before the commencement of this action, it is evident that the defendant’s right to maintain an action to recover the amount of his loan, or to foreclose upon his security, has become barred by the statute, and with it the right of plaintiffs to redeem is also gone, unless something has occurred in the meantime to suspend the running of time under the statute. It is contended by plaintiffs, however, that the sums which defendant got from sales and rents, after he obtained possession of the property in February, 1869, operated as payments upon the alleged mortgage, as of the dates when received, and had the like effect in keeping it and the equity of redemption thereunder alive, as against the statute of limitations. This position necessarily rests upon the assumption [375] that the possession which he then acquired and afterwards held was that of an acknowledged mortgagee, who is equitably liable to account for the rents and profits of the mortgaged estate. Unless that was the character in which he .held, his possession was no recognition of any subsisting mortgage, or mortgage indebtedness; and, without some such recognition, it is certain he could not have intended any application thereon of the proceeds of the rents and sales, and, hence, no presumption arises from any payment voluntarily made and applied, to affect the alleged cause of action of the •plaintiffs. If his possession was not, in fact, according to the mortgage, but upon an adverse claim of absolute title and ownership in himself, and in open denial of any rights under the mortgage, it is obvious that the subsistence of the mortgage must be first established before any question can arise as to the liability of the mortgagee to account for rents and profits, or as to the application of any sums from that source, by operation of law or otherwise; and this fact cannot be shown if the time for bringing and maintaining an action upon his alleged equity of redemption has already expired. According to the findings of fact herein, ever since the time when plaintiffs’ right of redemption first accrued, and for more than ten years prior to the commencement of this action, the defendant, with full knowledge-on the part of plaintiffs and their representative, Murray, has openly and continuously disclaimed and denied the existence of any mortgage relations between him and them, and all rights growing out of the same. In terminating the tenancy under the lease to Murray, he demanded possession in his right, as absolute owner of the real property. Iff that capacity he thereafter instituted legal proceedings to dispossess Murray,- and to recover the possession, and, after a somewhat protracted litiga, tion, in which the same claim here made by the plaintiffs, in respect to the nature of the transaction between the parties, was interposed as a defence, he finally succeeded in establishing his right of recovery, and at once went into possession [376] under his asserted right of absolute ownership, and has ever' since so held the same, making sales from time to time of portions of the property, and appropriating the proceeds derived therefrom, and from the rents, as his own, and not otherwise. From these facts it is evident that the character of the defendant’s possession was not that of a mortgagee holding under his mortgage, and asserting rights under it; and the principles applicable to such a case, in respect to rents and proceeds realized out of the mortgaged estate during such occupancy, have no relevancy here. - His possession was hostile and adverse, both iti its inception and continuance. It wholly ignored and repudiated the existence of any mortgage, and all rights in the plaintiffs as mortgagors. All acts done by him during his possession were also of a like hostile and adverse character. Conceding, therefore, the original transaction between the parties to have been in the nature of a loan and mortgage, the instant defendant took this hostile attitude toward it by the setting up of a claim of absolute title to the property in himself, as he did on the 19th day of September, 1865, and that fact became known to plaintiffs, that moment, the mortgage debt being then due, time began to run against their right or equity of redemption, and they were put upon diligence to pay up the loan and enforce their right, before the period limited for its prosecution should intervene to prevent it. No subsequent act of defendant, done in the way of asserting rights under such adverse claim, not in recognition of any subsisting mortgage or rights thereunder, but in repudiation thereof, could have any effect to keep alive the equity of redemption, and stop the running of time against it. Morgan v. Morgan, 10 Ga. 297; Kane v. Bloodgood, 7 John. Ch. 90, 123. This, according to the findings, was clearly the character of all acts done by the defendant, after he got possession of the premises-, in the way of making sales, collecting rents, and appropriating the proceeds. The decision of the court below is affirmed.