Averett v. Ward, 45 N.C. 192, 1 Busb. Eq. 192 (1853)

June 1853 · Supreme Court of North Carolina

45 N.C. 192, 1 Busb. Eq. 192

JOHN A. AVERETT, ADMR. &c. OF ISAAC LIPSEY, DEC’D., against GEO. J. WARD, AND THE HEIRS AT LAW OF ISAAC LIPSEY, DEC’D.

The personal representative of a deceased mortgagor is not a necessary parly to á bill filed for a foreclosure of a mortgage of land.

Where a bill by its prayer submits to a sale of the land mortgaged, a sale is usually ordered, as most convenient for both parties.

(The case of Ingram v. Smith, 6 Ire. Eq. 97, cited and approved.)

The bill in this cause was filed at Fall Term, 1844, of the Court of Equity for Onslow county. It alleged that, one Richard Ward, in the year 1823, had made a mortgage of certain parcels of land, describing them, lying in Qrislow county, to the plaintiff’s intestate, for the purpose of securing to the said intestate a debt evidenced by a bond of the same date, payable twenty years thereafter; that the mortgagor remained in possession until his death, and then devised the land to the defendant George J. Ward, who is still in possession. It then charges that the debt is still due, and prays for an account, and a decree for payment, of what shall be found due by a short day, or in default thereof, that the land be sold, and that the heirs of the plaintiff’s intestate &c. be decreed to make title &c.

The answer of George J. Ward admits “ that the bond and mortgage mentioned in complainant’s bill bear the signature of his father, the late Richard Ward, but this defendant has been informed, and believes, that the said signatures were obtained by fraud and imposition practiced upon the said Richard Ward while in a state of intoxication,” &c.

No other- allegations are material to the understanding of the opinion of this Court. , _

At Spring Term, 1853, the cause was set for hearing on the bill, answer and proofs, and transmitted to the Supreme Court.

J. H. Bryan, for the plaintiff.

J. W. Bryan, for the defendant, Ward, argued :—

1. The bill is filed against the devisee of the mortgagor, praying a sale alone of the mortgaged premises for the satisfaction of the debt, without making the personal representative of the mortgagor a party. The mortgagee before foreclosure has merely a chattel interest in the mortgaged estate, and if so, a sale without foreclosure can only pass a chattel. Messereau v. Runyan, 11 Johns. ‘Rep. 538. Douglas Rep. 610. A sale operates as a foreclosure and bar of the equity of redemption, only in case where it is made under a power in the mortgage. Wilson v. Troup, 2 Cow. 195. Doolittle v. Lewis, 7 Johns. Ch. Rep. 50. There is no decree of foreclosure in such case, for it is a power coupled with an interest, and in some of the States of the Union, such sales are regulated- by law. Berger v. Bennett, 1 Can. Ca. E. 1. The sale of this chattel interest cannot effect the equity of redemption, for if the mortgagor takes the land, the mortgagee takes the money ; the one is a full equivalent for the other. Co. Lit. 332. 2 Atk. 103. And it would seem to follow,-that if the order for sale is deemed a foreclosure, it is a satisfaction of the mortgage debt.

2. There is necessarily a substantial difference between a bill to foreclose, and one praying specially only a- sale of the mortgaged premises. The one is a proceeding in rem, involving a difference in the calculation of interest, Harris Vn. Harris, 2 Atk. 722 ; tynd the other, regarding the mortgage a mere incident to the bond, as a personal security lor the debt, Jackson v. Curtis, 19 Johns. Rep. 325, necessarily involves an account of the personal estate of the deceased mortgagor. For, in the class of debts by specialty, are also debts by mortgage, where there is a bond or covenant for the payment of money. If there be neither the one nor the other, still the mortgage debt is payable out of the personal assets, since every loan creates, a debt from the borrower, whether there be a bond or covenant for payment or not. Gallon v. Hancock, 2 Atk. 435. Howell v. Price, 1 .P. Wins. 291. The personal estate is to be first applied to the payment of debts, with which the real estate is charged by mortgage ; for the mortgage is understood to be merely a collateral security for the personal obligation. Co. Lit. 208, b. in notes. 4 Kent. Com. 416. And although the debt of the creditor is of a nature to bind both the real and personal estate, having adopted one remedy, he is under a legal control to pursue that remedy, whatever may be the legal effect and result of the sale. The mortgagee, by praying a sale, seeks his money and not the land by foreclosure. It would seem to be a mere conversion of the realty into personalty; and in such cases, the personal representative is to pay, if there are assets, though the 'heir or devisee is to have the benefit. To a bill which prays a sale instead of a foreclosure, the personal as well as the real representative of the mortgagor, must be a party ; for it is requisite to show that the personal estate has been applied, before the Court will decree the real estate to be sold. Daniel v. Slcipworth, 2 Bro. Ch. C. 155. Fell v. Brown, lb. 276. Christopher v. Spark, 2 Jac. & Walk. 229. Hunter v. Shaffer, Dudley’s Rep. 227.

And the greater necessity exists for this in North Carolina. For under the Act prescribing the mode of subjecting the lands of deceased debtors for the payment of their debts, (Rev. Stat. ch. 63,) the land would be undoubtedly legal assets ; for that Act makes all devises void against creditors, as the 1st sec. of the Stat. 3 & 4 W. & M. ch. 14, had in England done. Dunn v. Keeling, 2 Dev. 283. Henderson v. Burton, 3 Ire. Eq. 259. And this necessity has since been greatly increased by the Act of 1846-7, ch. 1, making^eal estate assets, whereby the heir and devisee are discharged from all liability on account of the bonds and obligations of the ancestor, and the same is cast upon the personal representative, who is made responsible for both estates. Ired. on Ex’rs., 582.

3. This is not a case for a sale according the English authorities., As a general rule, the Court will not decree a compulsory sale. The mortgagee may have a foreclosure, but he cannot have a sale without the consent of the mortgagor, except in the following instances : 1st, where the estate is deficient to pay the incum-brances; 2nd, where the mortgage is of a dry ¿reversion ; 3d, where the mortgagor dies, and the"reversion descends on an infant ; 4th, where the mortgage is of an advowsan ; 5th, where the mortgagor becomes bankrupt, and the mortgagee may pray a sale, under Lord Rosslyn’s general order, and 6th, where the mortgage is of an estate in Ireland. 3 Powell on Mortgages 1016.

Nash, 'C. J.

The bill is filed by a mortgagee to foreclose an equity of redemption, or for the sale of the premises. The statements of the bill and those of the answer show a clear original right to the relief sought. The answer, however, insists upon the length of time which elapsed since the execution of the mortgage deed, and also upon the alleged drunkenness of the mortgagor at the time of the execution of the mortgage deed. If this latter defence had been so 'stated in the answer as to amount to a defence, it. is entirely unsupported by any proof. As to the first, it cannot avail the defendant. The bond given to secure the money mentioned in the mortgage did not fall due until 1843, and the bill was filed in 1846.

The principal defence relied on however, is the alleged want of parties. It is insisted that the personal representative of Richard Ward ought to be a party. The answer is, there is no relief prayed against the personal estate. The prayer is for a'foreclosure in the ordinary way, but the plaintiff submits to a sale of the land itself, if the Court thinks proper so to decree. In a case of mortgage, in discharging the debt, the most convenient course for both parties is primarily to have the land itself sold, giving to the debtor any surplus that may remain ; and this rule is acted upon in this State. Ingram v. 6 Ire. Eq. 97. - And in most of the States of the Union, where the aid of a Court of Equity is asked, and even in England where the rule docs not exist, there are some cases in which its propriety is recognized ; as where the mortgage is of land, and which by the local law is subject to sale. Story’s Eq. s. 1025, 1026. Cook on Mortgages, 521. In this State, the personal representative of the mortgagor may be made a party, but is not a necessary one. Worthington. v. Lee, 2 Bland 684. The land mortgaged is primarily liable to pay the mortgaged debt, and the personal property of the deceased is liable to the heir in exoneration of it. Adams 585. There must be a decree for the sale of the land in question, and the case is referred to the Master to ascertain what is due in principal and interest upon the bond of the 25th of August, 1823.

Per Curiam. Decree accordingly.