Moore v. Lackey

Simrall, C. J., delivered the opinion of the court. The question between the parties, affecting their substantial rights, is, whether Cocke, in his deed of conveyance to Moore, reserved an express lien on the property, as security for the notes for the purchase-money. , Cocke transferred the notes to Taylor, who assigned them to the appellant, Mrs. Rebecca J. Moore. While the vendor’s equity does not pass to the assignee of the debt for the purchase-money, it is well settled that, if the vendor retains the legal title until payment is made, or if he creates an express lien in his deed to secure the purchase-money, an assignment of the notes carries with it the security, to the same extent as it existed for the benefit of the vendor. If Cocke created an express lien, Mrs. Moore, assignee of the notes, would be the beneficiary of it. There has been a manifest disposition in the courts to give a more liberal scope to the contracts of parties, intended to create securities for the fulfilment of their obligations. An agreement to make a mortgage on land to secure a debt, has in equity been construed to be a lien on the property, though the mort [91] gage was never executed. Literally, it was but the personal engagement of the party. A security may be created on property, which is short of a grant, which does not convey, or profess to convey, the title, such as expressions in a conveyance that the vendor will look to the land as security for the money. No formula of words is necessary to create that right. Whatever words distinctly convey the idea that the vendor retains or reserves a lien on the land creates an express security. Such language does not create a technical mortgage, nor does it prevent the legal title from fully vesting in the purchaser; but this security follows the land, and, being expressed in the deed, is notice, by reason of the registration, to creditors and purchasers. “ There is, generally, no difficulty in establishing a lien in equity, not only on real estate but on personal property,” “ wherever that is a matter of agreement, at least against the party himself, and third persons, who are volunteers, or have notice.” 2 Story Eq. Jur. § 1231. And courts of equity will regard the substance, and not the mere form, of agreements and other instruments, and will give the precise effect the parties intended, in furtherance of that agreement. 1 Story Eq. Jur. § 791; Perkins v. Gilson, 51 Miss. 699, 704, 705. The stipulation in the deed is, in effect, that if Moore shall fail to pay the notes at maturity, the sheriff of Munroe County, then in office, may sell the property, on notice, for cash, and convey to the purchaser, and pay the proceeds to Cocke, or the assignee or holder of any of the notes. The argument for the appellees is, that this attempted security is neither a mortgage nor a deed of trust; that there is inseparably connected with both these instruments a transfer of the title to the mortgagee or trustee, the trusts or the conditions being appendages of the title. But, though not an ordinary, technical mortgage or deed of trust, it does not necessarily follow that it may not operate as security for the debt. There are various sorts of securities, which, because they cannot be classified as mortgages or deeds of trust, are denominated “imperfect” or “ equitable ” mortgages. Of these is the implied equity of the vendor, — “the vendor’s lien; ” the express reservation of a lien in the deed; [92] and the retention of the legal title, where the vendor has given a bond, or obligation to convey on payment of the money. In the first two instances, the legal title completely passes to the grantee. The implied, or the express lien, are, in the estimation of a court of equity, where alone they would be recognized, impressed on the land, and follow it to the successive assignees who have notice; and though not of the dignity of title, legal or equitable, yet they are of virtue and value, as securities for the money, of equal strength and efficiency as a regular mortgage. Dealing with them in this light, a court of equity treats them as paramount to the legal title, and as efficient to transfer the property to a purchaser under its decree. Where the lien is expressly reserved, it is a matter of bargain and contract; it runs with the land, and operates as an incumbrance upon it, not only for the vendor, but for his assignee of the purchase-money. A court of equity, which looks through the form to the substance, does not exact any peculiar formula to create a security on lands. If the vendee accepts a deed, with the stipulation that the “ land shall be bound for the notes,” or “ be a security for them,” or any other words expressing the intention that the land is pledged as security, they would be quite as effectual as the usual form, “ reserving a lien, as security for the notes.” The infirmity in the argument is the assumption that a security cannot be created, except in certain modes. In the several instances just mentioned, the purchaser takes the legal title, or the equitable title, incumbered for the protection of the vendor. He buys the property with that charge upon it by the very instrument that assures the title. Cocke’s deed confers a power on the sheriff, in a certain event, to sell the property and pay the notes. The title is not vested in him by the instrument, but in Moore; but at the same instant, and by the same assurance, that Moore takes the title, there is conferred on the sheriff a power over it. The question whether it shall be exerted or not depends on subsequent events and conditions. This power, as distinguished from an interest or title, is imparted to make the land, by a sale, [93] produce the money. The purchaser accepted the title, with this condition annexed to it. The fundamental idea is, that the land is pledged for the money. The vendee accepted the title with that incumbrance, in the form, perhaps, of a condition subsequent. Moore agreed that, if the purchase-money was not paid, then the contingency had arisen, when the power might be exerted. There is nothing immoral or illegal in such a contract. The end sought was laudable; and we are well satisfied that a security was thereby created, which ought to be enforced, at the suit of a holder of the notes. It appears from the allegations of the bill, that, in a suit in the bankrupt court, to which Lackey, the appellee, was not a party, all the lands embraced in the deed from Cocke to Moore were sold. Lackey had purchased from Moore fifty-five acres, a small fraction of them. Lackey had notice of the stipulation we have been considering, in the deed to his vendor, and he acquired title, subject to the incumbrance. The decree in the bankrupt court could not affect his title, because, not being a party, he was not concluded by it. But the bill is not as full and certain, in disclosing these proceedings in the bankrupt court, as is desirable. It is conceded by the counsel for the appellant that the demurrer was well taken, on the grounds which were attempted to be cured by the amendments to the bill, which were offered after the demurrer was overruled. The Chancellor declined to permit the amendments, being of opinion that there were no merits in the bill on the main question. We think the amendments ought to have been allowed. We reverse so much of the decree as dismissed the bill, and remand the case, with permission to amend. Each party to pay his costs in this court. Decree accordingly.