McNees v. Swaney

Wagner, Judge, delivered the opinion of the court. The real question underlying this case- is whether, after the sale of the mortgaged, premises,, the mortgagor, who .is the plaintiff ..here, still retained the right of redemption. The principle is,.I think, well established that when a power, of sale is contained in a mortgage, and a sale made by virtue of such power, and the mortgagee becomes the .purchaser, the,equity of, redemption still subsists and attaches to.the property in. favor of lh.e mortgagor. And if at, such sale the mortgagee .acquires the title through the agency of a third person, the .title, will not be-in anywise altered, and the rights .of the mortgagor will remain the same. It is not disputed that parties have the right to agree upon the terms of a power of sale of mortgaged- premises, and where the sale takes place upon such terms as the. parties were competent to agree upon, and is faithfully and fairly executed, courts will not interfere. (Dobson v. Racey, 4 Seld. 216; Elliott v. Wood, 45 [391] N. Y. 71.) But there is . less .danger of oppression and abuse of the creditor in agreeing upon the conditions of the security and the power of sale-at the-, time of giving the mortgage, when the mortgagor is free to. act as his interest’and judgment prompt, than after ,the relation of mortgagee and mortgagor has been created,, and the debt has become due, as the latter is then in a greater,or.less'degree in the power and at the-mercy of the creditor. An examination of all the facts in this case makes it perfectly clear to my mind that the sale= of the mortgaged premises was not intended to .and did not destroy the'equity of redemption in the .mortgagor. • The country was in an unsettled condition, both of the parties were apprehensive that they would have to leave Kansas City, and- in fact they did leave in a short time thereafter; and- they labored under the impression -that by selling the property and. having the title vested' in'the mortgagee, "the matter would be-more secure. This was-the view entertained by them,-which resulted in-the-arrangement under which the property was.sold. McNees, the mortgagor, was unable at that time to pay the debt, and there were no sales of property, and Swaney wanted to be- secure. It was .then agreed that Swaney, the mortgagee under the- power, should sell the premises, that they should be. bid in by Hayden at the amount of ...the principal debt and interest, and that Hayden should immediately convey the same to Swaney; and that McNees should have one year within which 'tQ . pay .off the debt, and again obtain -title to the property. A fur-, .ther part of the agreement was that McNees was to remain in,. ; possession, pay the -taxes and have the use of the property,;; I have said that one year was the time limited in which. M-cNceSsWaS to have the privilege of paying the debt and regaining, the-title, though upon this point there is a conflict in the tes timo ny Swaney asserting that the .limitation prescribed was one year, aftd;.McNees -saying.-that-.the understanding-was that he was to have a reasonable time. The purchase by Hayden at the mortgagee*?- sale was,, in effect,- a .purchase by. Swaney himself. McNees. continued, in possession by his. tenant until, in his absence, Swaney. induced, the-tenant to attorn to him, and. thereafter exercised¡ ownership over, the property, and -finally claimed that it was. absolutely his,. [392] About this. transaction there were none of the characteristics of a conditional sale. Swaney did not stand in the attitude of a person holding the absolute title, agreeing to convey upon certain conditions, but he possessed the naked legal title, while the equity was in McNees. As Swaney, the mortgagee, purchased at his own sale, the law gave McNees the equity o£ redemption, and the agreement between the parties did not in any way impair or vary their respective rights. Now, conceding that the understanding was that McNees was to redeem within one year from the date of the sale, will his neglect to do so cause a forfeiture of his rights? Upon the testimony disclosed here, I think not. Where a party claiming an interest in land lies by for a great number of years, and sees it enhanced in value and improved by the labor and expenditure of others, the courts will not listen favorably to his demands. But it is always proper to consider the situation of the parties and all the surrounding circumstances. Shortly after the sale was made, McNees and-Swaney both left Kansas City on account of the war then raging. It is obvious that neither party had an idea at that time that anything could be done with the property. Swaney advised McNees not to try to sell the property to pay the debt, as he could not get anything like its value, and at the same time made assurances that the land was his, and that all he wanted was his money. But before the expiration of the year Swaney deeded this land, together with others, to one Collins, of Indiana; he .alleges, however, that the deed was not placed on record till after .the year had expired. This deed he says was voluntary, and made “ to protect the property from the United States army.” .When the title was vested in Collins, McNees could not proceed, and Swaney in a short time left his home and stayed in the . territories until 1865. After his return home Collins conveyed the property back to him, and at the first term of court thereafter this suit was brought. Under all these circumstances there was no such want óf diligence as would work a forfeiture of McNees’ rights on account •of lapse of time. We do not .think it was competent to bar the equity tt£ .redemption by the restriction of one year, and the evi [393] deuce leaves it doubtful whether any such restriction was ever contemplated or agreed upon by the parties. The relation pi mortgagor and mortgagee existed at the time of the sale and the execution of the deed, and the transaction must be viewed with distrust and scrutinized with rigor before it can be allowed that the equity of redemption was extinguished and converted into an absolute title. In such cases the leaning of the courts is always in favor of holding that the mortgage continues. That McNees did not apprehend that he was in any danger of losing his property, and that he was lulled into security by the representations of Swaney, I think is abundantly shown by the testimony. Upon the whole case as made by the bill of exceptions, we áre still at liberty to hold the equity of redemption as continuing, and to decide that the sale and conveyance did not vest the absolute title in the mortgagee. The judgment must therefore be reversed and the cause remanded, with directions to the court below to enter up a decree in conformity with the stated account agreed upon by the parties. The other judges concur.