Thornton v. Irwin

• Citation: 43 Mo. 153
• Parties: CHARLES A. THORNTON, Defendant in Error, v. JOSEPH C. IRWIN et al., Plaintiffs in Error.
• Decision Date: 31 January 1869
• Court: United States State Supreme Court of Missouri

43 Mo. 153

CHARLES A. THORNTON, Defendant in Error,

v.JOSEPH C. IRWIN et al., Plaintiffs in Error.

Supreme Court of Missouri.

January Term, 1869.

Error to Sixth District Court.

Douglass & Gage, for plaintiffs in error.

I. Plaintiff should not have been allowed to redeem the property conveyed under the first mortgage under this bill, however much he might be entitled to redeem under a suit properly brought for that purpose. The bill really contains two distinct counts and independent equity suits having no legal connection with each other, viz: First, the bill to rescind the sale and deeds under the first mortgage, on the ground that the debt secured thereby was paid and the mortgage satisfied. Second, the bill to redeem the second mortgage, which bill admits an existing debt unpaid. The plaintiff offers to pay that debt, and asks for redemption.

The two charges are directly inconsistent with each other. The charge that the mortgage was paid and satisfied on the 7th of January necessarily leads to the conclusion that after that payment the mortgage was dead. Irwin, and the other mortgagees named, upon the payment of the debt ceased to be mortgagees; had no further powers, duties, or rights over the property under the mortgage; held no longer a fiduciary capacity under it. The one charge directly denies the fiduciary capacity; the other no less directly asserts it. The denial in one charge and the assertion of it in the other are equally the very gist and substance of the respective charges. If, therefore, the two charges were made in form and substance in the same petition, the trial could only proceed upon one charge, and the other would be disregarded. The rule of pleading established by our courts is, that whenever, in a petition or answer, inconsistent grounds of action or defense are set up, the party will be confined in his case to the main or leading charge; and whatever is antagonistic to, inconsistent with, or outside of that charge, is to be regarded and treated as surplusage. Much less do our courts permit a party, either at law or in equity, to come into court and try his case upon one cause of action and recover upon another, and have a different remedy from the one asked or to which he would be entitled were the petition confessed. (Robinson v. Rice, 20 Mo. 230; Pensenneau v. Pensenneau, 22 Mo. 27; Harris v. Hann. & St. Jo. R.R., 37 Mo. 307; Coble v. McDaniel, 33 Mo. 263; Sto. Eq. Pl. 42; Cooper's Eq. Pl. 13, 14; 1 Daniels' Ch. Pr. and Pl. 385; Mitford's Ch. Pl. 38; Rochester v. Anderson, Littel's Sel. Cas. 147; Boone v. Chiles, 10 Pet. 211; Singleton v. Scott, 11 Iowa, 589; English v. Foxull, 2 Pet. 612; Hobson v. McArthur, 16 Pet. 195; Colton v. Ross, 2 Paige, 396.)

II. The order of release of January 7, 1861, signed by Ranson and Hedges, is not a legal satisfaction of the mortgage; neither a release nor a conveyance; is not acknowledged or recorded, and has no legal force or effect. Even if it were in form a perfect and full release, it would be a fraud upon Irwin; and the sale by the mortgagees could not be prevented or avoided by such fraudulent act of the parties. (Grove v. Robards et al., 36 Mo. 523; Ewing v. Shafton, 34 Mo. 518; 2 Sto. Eq. § 977.)

III. The evidence regarding the taking of the second mortgage preponderates strongly in favor of the finding of the court that it was done without Irwin's knowledge or consent and never was assented to by him. This court will not disturb that finding.

IV. Notwithstanding the bill does not charge as a ground of relief the purchase by Irwin of the mortgaged property through Hale, yet without any ground for such action the court found that Irwin was the purchaser of the property through Hale, and upon that ground set aside the sale and decreed redemption in favor of the plaintiff. This finding was not warranted by the evidence. In such cases the evidence must be clear, certain, and conclusive as to facts, and precise and certain as to terms and conditions. (Miller et ux v. Stokeley et al., 5 Ohio St. 194.) There is no certain evidence, no clear, conclusive act or word of evidence, except the statement of Irwin himself; and that statement is that he agreed to guarantee Hale against any loss he might incur by bidding, in case the property should be struck off to him. That agreement was not such as would avoid the mortgage sale. (Ives v. Ashley et al., 97 Mass. 198.)

V. The bill of January 7 was a renewal of that of September 5, and the security of the mortgage of August 30 attached to it and continued in force in favor of defendant Irwin through all the renewals of the debt. (Chouteau et al. v. Thompson et al., 3 Ohio St. 424; Patterson v. Johnson, 7 Ohio, 225; Brinkerhoff v. Lansing, 4 Johns. Ch. 65.)

VI. The court erred in setting aside the sale on account of Irwin's indirect purchase through Hale under the agreement as found by the court. No actual fraud was found, nor any evidence on which fraud could be found, against Irwin. Neither fraudulent intent nor unfair practice was shown or found against him. There was no finding of gross inadequacy.

It is admitted that a sale under such circumstances would be liable to be set aside under the doctrine of Fox v. Mackreth, 2 Browne's Ch. 400; but we submit that as that doctrine, when applied to modern cases, has no foundation in justice or reason, so it is now shaken as authority. (Richards et al. v. Holmes et al., 18 Howard, 143; Ives v. Ashley et al., 97 Mass. 198.) These cases utterly disregard the peculiar doctrine of Fox v. Mackreth, and apply fairly and fully the true test of actual fraud and actual injury. In the case in 18 Howard, the trustee employs his own agent for the sale to bid for the property and buy it. Nothing is better established than that a trustee cannot do that as agent for a stranger which his capacity of trustee forbids him to do himself. (Irwin's Trusts and Trustees, 395.) The court can with as little effect examine how far the trustee has made an undue use of information acquired by him in the course of his duty in the one case as in the other.

The principle against which we here contend was first applied to cases like this only upon authority; never upon considerations of justice or equity. The effect of the application of this rule in cases of this nature is to inflict a penalty upon the mortgagee of the severest kind by reducing his security far below that of a common mortgage, and to give the mortgagor the undue advantage of a privilege of redeeming the mortgage or not, at his option, within a reasonable time, which has been held to be in some cases fifty years, and generally for the period of the statute of limitations. (McNair v. Biddle, 8 Mo. 257; Cooley v. Rankin, 11 Mo. 642; Richards v. Holmes, 18 How. 143; Howard v. Davis, 6 Texas, 174; Erskine v. LeBaun, 3 Texas, 406.

VII. The doctrine of Fox v. Mackreth is not applicable to purchases of mortgages. (Bergen et al. v. Bennett, 1 Caines' Cas. in Error.)

VIII. Upon the whole case, as made by the pleadings, evidence, and finding, there is no equity in favor of plaintiff, and the bill should be dismissed.

W. B. Napton, for defendant in error.

I. The decree of the court is justified by two hypotheses, both of which are found by the court as true in fact, and either of which is sufficient to sustain it.

1. A mortgagee with a power of sale contained in the same deed, or in a separate one, is to that extent a trustee, and cannot buy at his own sale, so as to extinguish the equity of redemption. (2 Sugd. on Vend., bottom p. 887-890; 1 Hill. Mort. 118-128, ch. 7, and 128-149; 1 Wh. & T. Lead. Cas. Eq. 208-214; 19 Verm. 9; Mapps v. Sharp, 32 Ill. 13; Dobson v. Racy, 3 Sandf. N. Y. 61; Benham v. Rose, 2 Cal. 387; Ramsey v. Merian, 6 Minn. 168; Baldwin v. Allison, 4 Minn. 25; 2 Tucker's Com. p. 447, ch. 21, and p. 459; 1 Sto. Eq. § 321; 2 Sto. Eq. § 1027; Jackson v. Walsh, 14 Johns. 415.)^a1

In some of the States--as New York and Minnesota--this subject is regulated by statute, and the mortgagee is allowed to buy under certain restrictions imposed by the statute, such as notice to the mortgagor, printed advertisements in some newspaper, sales by the sheriff or some officer selected by law. These are called statutory foreclosures, and have the same effect as regular foreclosures in court. (See Baldwin v. Allison, 4 Minn. 25; Allen v. Chalfield, 8 Minn. 435.)

The statute law in this State merely recognizes the validity of such mortgages, which at an early day had been questioned (Carson v. Blakey, 6 Mo. 273), but subsequently fully sanctioned by the court (Destrehan v. Scudder, 11 Mo. 484); and in 1855 the legislature put the question at rest by a clause in the Revised Code of that year. But although mortgagees may unquestionably buy at sales under judicial foreclosures, and also directly by negotiation with the mortgagor, under certain restrictions (McNair v. Biddle, 8 Mo. 257), yet no case allows a mortgagee to become a buyer where he assumes to sell under a trust or power contained in the deed; for the plain reason, applicable to all such trusts or agencies, that one man cannot perform conflicting duties and interests--it being the duty of the seller to get the highest price, and the interest of the buyer to get the property at the lowest.

A purchase by the mortgagee through the interposition of a third person, or, as the law phrase is, per interpositam personam, not only fails to make the matter better, but is considered by courts of equity as an unequivocal mark of fraud, and is therefore denominated fraud per se. (2 Tuck. Com. 447.)

2. Another ground on which the decree may be sustained is the fact found by the court, and indeed concerning which there can be no question, that the two mortgagees, Ranson and Hedges, acknowledged satisfaction of the mortgage, and filed their written acknowledgment with the clerk or recorder for record. Although this was done, as the court found, without the assent of the third mortgagee, Irwin,...