Atwater v. Manchester Savings Bank

• Decision Date: 13 February 1891
• Citation: 48 N.W. 187,45 Minn. 341
• Parties: John B. Atwater and another v. Manchester Savings Bank and others. Sampson A. Reed v. Same
• Court: Minnesota Supreme Court

48 N.W. 187

45 Minn. 341

John B. Atwater and another v. Manchester Savings Bank and others.

Sampson A. Reed v. Same

Supreme Court of Minnesota

February 13, 1891

These were two actions brought in the district court for Hennepin county, -- the former by attaching and the latter by judgment creditors of Maria B. Nell, -- the relief sought in each action being a decree that on the payment into court by plaintiff of the money theretofore tendered to the sheriff for redemption of certain lands sold under fore-closure of a mortgage made by Nell, a proper certificate of redemption should be issued, and, in default of such certificate, that the decree stand in place thereof. The actions were tried by Hooker, J., who ordered judgment for plaintiff in each case. The defendants in each case appeal from an order refusing a new trial.

Orders affirmed.

Hawley & Hall and Ueland, Shores & Holt, for appellants.

A. B Jackson, for respondents in first case.

James W. Lawrence, for respondent in second case.

OPINION

Mitchell, J.

In each of these cases the question involved is the right of the plaintiffs to redeem from a mortgage sale; and as both grow out of the same general state of facts, and are more or less connected with and dependent upon each other, they can be better considered together. So far as material to explain the legal questions involved, the facts are these: A Mrs. Nell who owned a 40-acre tract of land, but the title of which was then in litigation, (Nell v. Dayton, 43 Minn. 242, 45 N.W. 229,) in March, 1886, executed two mortgages, -- one on the west half and the other on the east half of the tract. Default having been made in the conditions of these mortgages, they were both foreclosed, and the premises sold on December 14, 1888. The time for redemption would of course expire December 14, 1889. On August 1, 1889 Mrs. Nell executed to Seagrave Smith the trust-deed, Exhibit A, upon the entire tract. On December 12, 1889, Atwater & Hill commenced an action against Mrs. Nell to recover a debt which they alleged she owed them for services as attorneys and on the same day caused an attachment to be issued in the action, and levied on the whole tract. On December 14, 1889, Mrs. Nell confessed judgment in favor of plaintiff Reed for a debt due him for services performed and money expended for her as attorney. This judgment was docketed on the same day. On December 14, 1889, Atwater & Hill and Reed each filed notices of intention to redeem from both foreclosure sales, -- Atwater & Hill under their attachment lien, and Reed under his judgment lien. Smith had never done anything with the land under the trust-deed, Exhibit A, nor did either he or Mrs. Nell make any redemption. Within five days after the expiration of one year from the date of the sales, and on December 19th, Atwater & Hill did everything necessary to effect a redemption of the west half of the tract, but made no attempt to redeem the east half. Within five days thereafter, and on December 21st, Reed did everything necessary to effect a redemption of the east half. But in both cases the sheriff who made the sales, and the defendant bank, which held the certificates of sale, refused to accept the money or to execute certificates of redemption. Hence these suits to compel them to do so.

1. The first question that arises is whether, after the execution to Smith of Exhibit A, Mrs. Nell had remaining any interest or estate in the land upon which plaintiffs' attachment and judgment were liens; for if not, then plaintiffs were not "creditors having a lien," and had no right to redeem. Counsel have discussed at great length the questions whether Exhibit A was a trust or merely a power in trust, and, if the former, whether it was valid under the statute of uses and trusts. Under the view we have taken of the case, it becomes unnecessary to consider these questions. We shall assume that the instrument is all that defendants claim it to be, viz., a valid trust, -- a conveyance of the land to Smith in trust to pay certain charges upon it and to pay certain specified debts of the grantor. Defendants' contention is that, as thus construed, it vested in Smith the whole estate in the land, so that no title or interest remained in Mrs. Nell to which a lien could attach. That she had a residuary interest in the land cannot be questioned. The deed itself expressly provides that, "if there be more than sufficient to pay all of said claims in the manner as aforesaid, then the said trustee shall grant, convey, and set over to said Nell, her heirs," etc., "all of the rest and remainder of said property." This is nothing more than the law would imply, for such a residuary interest necessarily arises in every case where property is assigned in trust to pay debts or to satisfy other specified objects. Had Mrs. Nell herself paid all the charges and debts specified in the deed of trust, the entire beneficial interest in the land would have been in her. Or if the trustee had accomplished all the purposes of the trust by executing mortgages, the land subject to the mortgages would have been hers. So if he had accomplished these purposes by selling only a part of the land, the residue would have been hers. In speaking of the similar residuary interest of a bankrupt in real estate assigned to an assignee in bankruptcy, this court said that it may be classified under our statute (Gen. St. 1878, c. 45, §§ 12, 33) as a reversion, subject to be defeated by a sale by the assignee; that after the purposes of the trust are accomplished the residuum of the property would revert by operation of law without any reconveyance. King v. Remington, 36 Minn. 15, 32, (29 N.W. 352.) If this be so, then Mrs. Nell's interest in the land was subject to the lien of an attachment or judgment, and to sale on execution, for, of course, a reversion in land is a legal estate.

But if her interest was merely an equitable one, the same result would follow. At common law the rule undoubtedly was that a mere equitable estate in land could not be sold on execution for the familiar reason that courts of law did not recognize equitable estates, and could not deal with them. But a judgment creditor was not in such cases without remedy. He could file his bill in a court of chancery, which always held that, for its purposes, these equitable interests were just as much bound by the judgment as legal estates, and could be subjected to its satisfaction by equitable process; and in adjusting the conflicting rights of creditors it always followed, by analogy, the rules of the common law. It is true that the courts of chancery held that the lien or right to obtain satisfaction out of the specific property sought to be subjected to sale for that purpose dated from the filing of the bill. But this was also in strict analogy with the law, for at common law the judgment was not a lien on real property, but it was the judgment creditor who first extended the land by elegit, or whose execution was first begun to be executed, who was entitled to priority; and a bill in equity to reach the property for the satisfaction of a judgment was considered as being in the nature of an equitable execution. But when the law was changed so as to make judgments liens from the date of their docketing there can be no reason why a court of equity, still following the analogy of the law, should not and would not hold that equitable interests in land were subject to the liens of judgments in the order of their priority in date. See Hale v. Horne, 62 Va. 112, 21 Gratt. 112. The modern tendency of both courts and legislatures is, as far as possible, to do away with the distinction between legal and equitable estates. The old rule that a judgment lien did not attach to a mere equity has been abolished in England, and in the great majority of the states of the American Union, by statutes expressly declaring that a judgment shall be a lien on all the interests of the judgment debtor in real estate, whether legal or equitable. In Pennsylvania the same result is reached without the aid of a statute, upon the ground that, as they have no courts of chancery from which the creditor might have relief, therefore, from necessity, they must establish the principle that both judgments and executions have an immediate operation on equitable estates. Auwerter v. Mathiot, 9 Serge. & Rawle 397, 402. In this state there is no express statute declaring that a judgment shall be a lien on an equitable estate; but when we consider that the common-law rule on the subject was purely technical, and arose out of the supposed inability of courts of law to deal with equitable estates, and that in this state all distinction between courts of law and courts of equity has been done away with, and that the same court now administers both legal and equitable remedies in the same action, it must be evident that all reasons for the old rule have ceased to exist. And there is nothing in our statutes indicating any intention to retain any distinction in this respect between legal and equitable estates. Gen. St. 1878, c. 66, § 277, provides that "the judgment, from the time of docketing the same, becomes a lien on all the real property of the debtor;" and section 300 of the same chapter provides that "all property, real, personal, or mixed, * * * may be levied upon and sold on execution." This language is certainly broad enough to include both legal and equitable interests in real property; and, in view of all the circumstances, we do not think it is going too far to hold, as we do, that it was so intended, and that now any interest or estate, either legal or equitable, (at least if a vested one,) of the debtor, is subject to the lien of an attachment or judgment, and to sale on execution. The...