Dem on demise of Davis v. Evans, 27 N.C. 525, 5 Ired. 525 (1845)

June 1845 · Supreme Court of North Carolina

27 N.C. 525, 5 Ired. 525

DEM ON DEMISE OF WILLIAM DAVIS vs. ASA EVANS.

A delay of a mortgagee to enforce the payment of Ms debt is not fraudulent so as to make his mortgage void, but the creditor may have his remedy Equity, or promptly at law by a sale of the equity of redemption.

Whatever relation to the time of the sale a conveyance from the Sheriff may have for some purposes-, it cannot be used to'prove title, in an action bróught after the deed was made:

A purchaser at a Sheriffs sale of an equity of redemption, may recover in-an-action of ejectment against the mortgagor who was in possession.

The mortgagee, who is subsequently permitted to come in and defend the action can make no defence, which the original defendant could not Make; and is, therefore; like him, estopped from denying the’ plaintiff s right to recover.

The act of ISIS, (Rev.- Stat. ch. 45, sec. 5,) makes the equity of redemption,, when sold under execution, a legal interest, to the extent, at least, of enforcing it by a recovery from the mortgagor himself.

The act of 1S12', (Rev. St. ch. 45, sec. 5,) includes, not only express mortgages, but also those that were intended to be securities in the nature'of mortgages, and so held to be by construction- of a Court of Equity.

The cases of Gorham v. Brefour, 2 Dev. 174, Balsour v. Davis, 4 Dev. & Bat.. 300, Thompson v. Bodges, 3 Murph. 546, Duncan v. Dsmcan, 3 Ired. 317, and Thorpe v. Ricks, 1 D'eV. & Bat. 613, cited and'approved.

Appeal from the Superior Court of Law of Cumberland1 County at the Spring Term 1845,- his Honor Judge Pearson presiding.

Ejectment for 1100 acres of land in Robeson,-commenced the 15th September 1836 against John Campbell, then the tenant in possession. The demise is laid the 1st March 1836. — ■ Campbell appeared, entered into the common rule, and pleaded, not guilty. In March 1838 his daughter Mary Ann Campbell (who has since married Evans) procured herself to bo made defendant instead of John Campbell.

On the trial the plaintiff showed,- as his title, a judgment obtained by one Johnson and one Davis in September 1833 against John Campbell for $780 26, and a fieri facias thereon, and a sale of the premises to the lessor of the plaintiff by the Sheriff in January 1834, and a return on the execution of* sale of the legal and equitable interest of John Campbell in the land. The plaintiff then showed two Sheriffs deeds to the jegsor Qf tjje plaíotifi: The one, dated May 26th 1834, which recites that under the execution the Sheriff seized and took into liis hands “a certain tract of land, that is to say, the equitable interest of the said John Campbell in the same” &c., and then conveys the land in dispute : The other, dated March 26th ■ 1837, is in all respects like the former, except that it does not refer to any equitable interest of Campbell in the premises, but purports merely to be a conveyance of the legal estate.

The counsel for the defendent then stated the defence to be, ' that, before the judgment was rendered, under which the lessor of the plaintiff purchased, the premises had been bona fide sold under another judgment and fieri facias and purchased by and conveyed to the State Bank of North Carolina, who held the same, subject to an agreement for the redemption of the premises by the said John Campbell upon the payment of the sum of $144' and interest thereon, and certain costs; and that, underpaid agreement, the said Campbell was permitted by the Bank to remain in possession; and that he had no other interest in the premises; and that a part of the said sum of $144, namely, the sum of $88, remained due to the Bank at the time of the sale to the lessor of the plaintiff, and still remained due and owing from the said John Campbell to the Bank or its assignees. The counsel for the plaintiff insisted, that he had shewn conclusively a title against John Campbell, and that it was not competent for him or the present de-fendent-to deny it; and therefore he objected to any evidence in support of the. defence, as stated. But the court overruled the objection and allowed the defendant to go into the evidence.

Upon the evidence the case was thus, in 1821 the State Bank got a judgment against John Campbell, and the premises were sold upon an execution thereon and purchased by the Bank and a Sheriff’s deed executed. The Bank and Campbell then agreed, that Campbell might redeem by paying the debt and costs,- and that in the mean time he might retain the possession and use of the land. Campbell sold several parcels of the land between 1821, and 1833 and the Bank conveyed to the purchasers. In 1833 the debt had been reduced by Campbell to $88 — which was stated on the books of the bank to be “ secured by mortgage of landand at that time one Tuton, at the request of Campbell, his wife, and his said daughter, paid that sum to the Bank, upon an agreement that, when it should be repaid, the premises should be conveyed to the daughter, as they stated that Johnson &■ Davis had their judgment against John Campbell, and therefore it would not do to have the conveyance made to him, John Campbell, as the land would be sold immediately for his debt. At that time Mary Ann Campbell was about sixteen years of age, lived with her father and had no property at all. In 1836 Mary Ann Campbell repaid to Tuton his debt and interest, and in 1837 a deed was made to her in fee. John Campbell continued to live on the premises and his daughter with him, until her marriage in 1841, when the father left the possession to her and her husband.

The presiding Judge thereupon instructed the jury, that there was nothing to be left to them, but that the questions in the case were all matters of law, which it was his duty to decide ; and that, although it was a general rule, that a debtor, whose land has been sold, cannot in an action of ejectment by the purchaser, dispute his title or show the title to be in a third person, yet in this case the debtor, John Campbell, had but an equitable right of redemption, which might lawfully be sold; and which was purchased by the lessor of the plaintiff; but that would not enable the plaintiff to maintain this action, which must be founded on a legal and not an equitable title. And his Honor proceeded to state to the jury, in an argument of considerable length, his reasons for thus laying down the law to them, and allowing the defendant to shew, that John Campbell had not the legal titleAt the time of the purchase by the lessor of the plaintiff; which reasons it is not material to state in order to a proper understanding of the points decided.

In submission to the opinion of the Court, the plaintiff suf-~f"el'ed a nonsuit, and appealed to the Supreme Court.

Strange, with whom was Henry, for the plaintiff.

We contend that all the points have been already decided by this Court in this same case. Davis v. Campbell, 1 Ire. Rep. 482.

1. We say that the plaintiff was .entitled to recover upon the mere production of his judgment, execution, sale and Sheriff’s deed, as against, Campbell Den on dem of Hodges v. Thompson, .3 Murph. 546, Hatton v. Dew, lb. 260, Smith v. Kelly., lb. 507, Duncan v. Duncan, 3 Ire. 317.

2. It is insisted, that the same rule applies to a subsidiary defendant, that he can shew nothing which the party in aid of whom he .comes in co.uld not do. Balfour et al v. Davis et al, 4 Dev. & Bat. 300, Gorham v. Brenon, 2 Dev. 174.— The Judge therefore erred in allowing .evidence of the transaction relative to the mortgage.

3. But haying allowed it., he .erred in holding that the plaintiff could not recover, because the title of Campbell was a mere equitable -title., and of course Davis purchased nothing which would avail him in Equity. This is an exception to the general rule, that a party cannot recover in Ejectment on an .equitable title. The act .of Assembly authorizing the sale of such interest under an execution at law converts them pro hoc vice into legal estates. As soon as .the law interferes with such estates so far as to give execution against them., it must also furnish the remedy to make the .execution available. It is not to be expected that we should find any direct English authority upon this question, for equities of redemption there are not extendible, and no real estate can be sold by fi. fa., .but trust estates are extendible; but in executing an extent the purchaser is put into the actual possession, and the plaintiff does not loose the fruits of execution, because the defendant has a more equitable estate. Vid. Com. Dig. Title. Execution, ch. 14, and it would seem, that when an act gives the writ of fi. fa., where in relation to other real estate the purchaser gets the fruits of the purchase by ejectment, that as against the defendant in execution, and those coming instead" of or in aid of him, it must necessarily have his ejectment though the estate be merely equitable. No direct authority have we been able to find among our own decisions, upon this question, but it seems to us several of them necessarily in their conclusions must have taken this proposition for granted. In Campe v. Cox, 2 Dev. 502, and 1 Dev. & Bat. 52, it does not seem to have occurred to the Court to get rid of the difficult questions involved in that case by considering the parties just in the hands of the Court of Equity as they were before, and that no new relation was created by the purchase at execution sale. In Hamson v. Battle, 1 Dev. Eq. 541,2,3, the Court speaks of the creditors remedy at law, though it admits it may not be as effectual as in Equity, and goes on to say, that as to the trusts upon the personal property, there is no remedy but in this Court, &c. In Thorpe v. Ricks, 1 Dev. &> Bat. Eq. 613, the Court admits the right of the purchaser at execution sale to redeem j but of what avail would his redemption be, if in the mean time the debtor is to remain in the quiet occupancy of the land, reaping its profits, while he is pursuing his decree for foreclosure, unable to bring his action of ejectment until he had paid the money to tire mortgager, and obtained the legal title ; and in the case of Thorpe v, Ricks, it appears the creditor had already obtained possession of the lot, and so far as his action was concerned required no remedy, but only needed the assistance of the Court of Equity, to extinguish the title of the mortgagee. In Hall v. Harriss, 3 Ire. Eq. 289, Harriss had purchased the equitable interest of Morgan, and the matter is distinctly brought before the Court that an action of ejectment had been brought, not against the debtor in execution but against this alienee, and it was not thought of by the counsel or by the Court to make that an objection to the plaintiff ’s recovery at law. A Court of Equity protecting its own jurisdiction should refuse to dissolve the injunction. But we have, from other sources, express authority upon this question. Stephens N. P. 1288, and especially, note B., which states that except as against the mortgagee and those claiming under him, the mortgagor is considered the real owner, and may maintain ejectment, and the defendant can not set up the mortgage as an outstanding title; and cites Collins v. Torry, 7 John. Rep. 278, Wellingham v. Gale, 7 Mass. Rep. 138, Porter v. Millett, 9 Mass. 101, Hitchcock v. Harrington, 6 John. 290, Sedgewiclc v. Hollenback, 7 John. 376, Jackson v. Pratt, 10 John. 381, Jackson v. Bronson, 19 John. 325.. To the same purport is 4 Kent’s Com. 185 & 148, also the case of Jackson v. Davis, 18 John. Rep. 7. In Perkins Edition of Brown's C. C., Yol. 3, p. 478, in a note to the case of Lyster v. Dolland, it is stated, a purchaser at execution sale acquires the rights of the mortgagor, and cites Crow v. Tinsley, 6 Dana. 402, Wathington v. Lee, 2 Bland. 678, White v. Bond, 16 Mass. Rep. 400, Warren v. Childs, 11 Mass. Rep. 222, Kelly v. Brunham, 9 New. Hamp. 20, Steward v. Allen, 5 Green 103, Fitch v. Ayer, 2 Conn. 143, Coomb v. Jordan, 3 Bland 284. And further, the right of the mortgagor to redeem his estate is almost universally liable, in United States, to be taken and sold by execution creditors, and cites 1 Hilliard’s Ab. Law of Real Estates ch. 85, and cases cited, Pritchard v. Brown, 4 New Hamp. 402, Kelly v. Beus, 12 Mass. 368,390.

4. But the permission to remain in possession and sell, was a legal title and under it the mortgagor might himself have maintained ejectment. Lyster v. Goldwin, 2 Add. & Elb. 142.

5. If it should be objected that this was not such an equity of redemption as is subject to sale. Tide Thorp v. Ricks, 1 Dev. & Bat. 613, Poole v. Glover, 2 Ire. 129.

6. As to the form of the conveyances, vid. Thorpe v. Ricks, 1 Dev. & Bat. Eq. 613.

7. We are entitled to have the question left to the Jury on the presumption of the legal title having been surrendered, if not to a positive charge in our favor, from lapse of time. Stephens N. P. 1377, cites Lade v. Half on, Ball. N. 110, 3 Bun. 1416, 1 W. Black. 428, Syburn v. Slade, 5 Term. R. 682, Bennett v. Long, 9 Carr &, Payne 778, Williams v. Bennett, 4 Ire. 122, Cook v. Sottern, 2 Simon & Stuart, 154.

Badger & Warren Winslow, for the defendant.

Ruffin, C. J.

The counsel for the plaintiff moved for a great number of instructions in succession, but all presenting different views of the position, that it was fraudulent against Campbell’s creditors in the Bank and Tuton to indulge Campbell so long for the debt,- so as to keep the mortgage on foot, to the hindrance of creditors: all of which we think his Hon- or properly refused, because the bona fides of the debt to the Bank was not contested and the delay of the mortgagee to enforce payment is not fraudulent, so as to make his mortgage void, but the creditor may have his remedy in equity or promptly at law by a sale of the equity of redemption. The counsel also moved the court to instruct the jury, that if the money paid to Tuton by Mary Ann Campbell was furnished by her father, then the transaction was fraudulent and she held the legal title in trust for him and the plaintiff might recover.— But the court refused so to instruct the jury; and very properly refused, inasmuch as that transaction occurred several years after this suit was brought.

But upon the principal point in the case, that respecting the right of the defendant to shew, that John Campbell was but a mortgagor, in answer to this action, this court holds a different opinion from that of his Honor. We understand his Hon- or, as not admitting the present defendant to any defence the original defendant could not make, according to the cases of Gorham v. Brenon 2 Dev. 174, & Belfour v. Davis 4 Dev. &. Bat. 300. But he ruled, that Campbell himself might insist on that matter, and therefore the defendant might. Now, we think the point was not open to Campbell, and for that reason that the evidence was improperly received.

It is proper to make the preliminary admission, that the second Sheriff’s deed to the lessor of the plaintiff can have no operation in this action. For, although it has been held, that the‘provisions of the act of 1812, respecting the form of a "Sheriff’s deed for an equity of redemption,.are but directory, and although we have no doubt, that a Sheriff may make a second deed, if the first be not effectual to pass all he sold, this deed was not evidence in this suit, as it was made a year after the suit was brought. Whatever relation to the time of the sale a conveyance from the Sheriff may have for some purposes, it cannot be carried to the unreasonable extreme of proving the title in an action, that was brought before the deed was made.

The question, then, is, whether the purchaser at 'Sheriffs sale of an equity of redemption may not recover in an action of ejectment against the debtor himself? We think, be may. It seems to us to stand on the same reason with the other cases, in which it is held, that the debtor in execution cannot set up a want of title, legal or equitable, in himself. That has long been settled as the law, in numerous cases. Thompson v. Hodges, 3 Murp. 546, Gorham v. Brenon, 2 Dev. 174, Duncan v. Duncan, 3 Ired. 317. The grounds, on which the doctrine rests, are, that, as he has had the benefit of the sale in the payment of his debts, he ought not to say that he had nothing in the premises, and that he cannot with truth say so, as he had, at least, the possession and enjoyment of the land, and those he ought to give up ; and to recover them is the object of the ejectment. Now, it would seem that precisely the same principle'applies equally to a case, in which the debtor has, in fact, no title — nothing but the possession — and to one in which he has nothing more at law, but has also an equitable interest. Why should his real ownership of the land in equity defeat a recovery from him at law, when without such equitable ownership the recovery could not be resisted? There might be some reason in the defence, perhaps, if the debtors equitable interest was not subject to be sold under execution. But when the act of 1812 authorised the sale of an equity of redemption under a fieri facias, it added tenfold to the reason for holding, that the mortgagor and debtor should immediately surrender the possession to the purchaser, and that the Courts of law should uphold the sale, made under their process, in an action against the debtor himself. Why should the mortgagor be allowed to resist ttie recovery of the purchaser, and retain the possession ? Although, while he was a mortgagor he was not bound to pay rent or account for the profits to the mortgagee, (who is only entitled to his interest,) yet undoubtedly, as between the purchaser and the debtor in execution, the latter is bound to pay the profits to the former from the time of the sale. Then, why allow him to continue a possession, which must be wrongful, and cannot be otherwise ? If it be said, that the plaintiff cannot recover, because upon his own deed he appears to have only au equitable title, the answer is, that it is idle to make a distinction, which may be so readily rendered nugatory by the purchaser taking a deed containing no admission of the mortgage. If there really be a mortgage, nothing more in fact passes than the equity of redemption, whatever may be the form of the deed ; and, therefore, the form ought not to change the respective rights of the parties. We consider, that the act of 1812 makes the equity of redemption, when sold under execution, a legal interest, to the extent, at least, of enforcing it by the recovery of possession from the mortgagor himself.— It may be admitted, that, if the mortgagor were to assign his-equity of redemption, the assignee could not recover from the assignor in ejectment; because at law the equity of redemption is not known as an interest, which may be the subject of a conveyance, but the assignment operates only in equity.— But suppose a statute to be passed, expressly recognising that-interest as the subject of conveyance by the mortgagor, and' authorizing him to sell and convey it by deed of bargain and-sale ; could there be any doubt, that, as against him, the assign-nee would have the right, and that it would be upheld in a Court of law ? Now, that is the substance and effect of the act of 1812, in its operation upon a sale of an equity of redemption by the sheriff; and therefore we perceive no real difference between the application to this and all other cases, alike, of the rule, which concludes the debtor in execution from disputing the purchaser’s title, and his right to recover Possessi°n him. It is true, the purchaser is obliged to resort to a Court of equity to obtain redemption from the mortgagee; as, against the mortgagee, he is but the as-signee of the mortgagor. But if he be obliged also to go into equity for redress against the mortgagor and to gain the possession from him, the act of 1812, instead of facilitating the redress of the creditors of mortgagors, will embarrass them; for it were better not to allow the sale at law at all) and require the creditor to apply to equity in the first instance— But it is no concern of the mortgagor, how the purchaser and the mortgagee arrange their business. His interest has been terminated by the sale of it under execution, and he is bound in honesty to yield the possession to the purchaser. In New York it is a settled rule, that the mortgagor cannot set up the mortgage against a purchaser under execution against him; and the case of Jackson v. Davis, 18 John. 7, resembles the present exactly, as the mortgagee was there also admitted to defend the action, which was original ty brought against the mortgagor, then in possession.

We have assumed all along) that John Campbell had an equity of redemption, subject to be sold; because it was so considered in the Superior Court, and because we think that such was the truth of the case. If he had not that equity, but was a trespasser, the defence on this point fails altogether. But, as we held in Thorpe v. Ricks, 1 Dev. & Bat. Eq. 613, the act of 1812 includes not only express mortgages, but also those that were intended to be securities in the nature of mortgages, and are so held to be by construction of a Court of equity. The judgment against the plaintiff was, therefore, erroneous, and must be reversed, and a venire de novo awarded.

Per Curiam, Judgment accordingly.