Am. Mortgage Co. v. White

• Decision Date: 26 March 1930
• Docket Number: No. 3351.,3351.
• Citation: 34 N.M. 602,287 P. 702
• Parties: AMERICAN MORTGAGE CO.v.WHITE et al.
• Court: New Mexico Supreme Court

34 N.M. 602

287 P. 702

AMERICAN MORTGAGE CO.

v.WHITE et al.

No. 3351.

Supreme Court of New Mexico.

March 26, 1930.

Syllabus by the Court.

The owner and holder of a state grazing lease may assign his interest therein absolutely or as collateral security.

Syllabus by the Court.

The interest of a lessee in a state grazing lease is personal property, as distinguished from real estate.

Syllabus by the Court.

An assignment of a state grazing lease as collateral security is not in violation of the provision of the Enabling Act prohibiting the mortgage or incumbrance of state lands granted therein.

Syllabus by the Court.

A creditor of a lessee of state lands demanding the transfer to him of the rights of such lessee in default of payment of rentals must show that lessee's default has become fixed in the manner provided by chapter 8, Laws 1921 (section 132-121, 1929 Comp.)

Syllabus by the Court.

With regard to the respective rights of the parties to a mortgage, the general property in the thing mortgaged remains in the mortgagor, and only a special property vests in the mortgagee.

Syllabus by the Court.

The mortgagee is not entitled upon the mortgagor's default to take the property as his own in satisfaction of the debt. A provision in the contract by which the absolute property in the thing mortgaged is to vest in the mortgagee, upon default of the mortgagor, is void.

Appeal from District Court, Chaves County; Brice, Judge.

Contest by American Mortgage Company against grazing lease issued to Oscar White, as assignee of J. C. Ballard. From a judgment on appeal to the district court in favor of contestant, the lessee appeals.

Reversed and remanded, with directions.

A creditor of a lessee of state lands demanding the transfer to him of the rights of such lessee in default of payment of rentals must show that lessee's default has become fixed in the manner provided by chapter 8, Laws 1921, section 132-121, 1929 Comp.

S. G. Bratton, of Albuquerque, J. C. Gilbert and O. O. Askren, both of Roswell, and C. J. Roberts, of Santa Fé, for appellant.

Hurd & Crile, of Roswell, and Carl H. Gilbert, of Santa Fé, for appellee.

BICKLEY, C. J.

J. C. Ballard was the owner and holder of a grazing lease on state lands designated as lease No. 15,342.

He assigned this lease conditionally, and as collateral security to the El Paso Cattle Loan Company, to secure his indebtedness to said company. The appellee has succeeded to the rights of said El Paso Cattle Loan Company.

The assignment purports to transfer to the assignee “all of the assignor's right, title and interest” in said lease, conditioned that, if Ballard paid his debt when due, the instrument should be null and void.

The assignment was consented to and approved in writing by the land commissioner.

Afterwards, J. C. Ballard assigned all of his “right, title, interest and claim” in said lease to appellant, Oscar White. The commissioner of public lands on October 1, 1926, pursuant to application made by White therefor, issued to said White lease No. G-237.

After application was made by Oscar White for the lease, and after approval of such application, but before it was issued to him, appellee appeared at the land office and presented an application for a renewal of the lease No. 15,342 to commence on the 1st day of October, 1926, upon the expiration of said lease No. 15,342. This application was made under a claim of a preference right to renewal in the applicant, by virtue of the provisions of the collateral security contract, and also as a creditor of J. C. Ballard, independently thereof.

The commissioner refused to recognize that the applicant, American Mortgage Company, had any rights which would defeat the application of Oscar White, also claiming a preference right, and refused to accept and permit to be filed the application of appellee for renewal of the Ballard lease.

A contest was thereafter instituted in the land office by appellee, against the lease issued to Oscar White.

The contest was decided in the land office in favor of appellee. On appeal to the district court, a like decision was rendered in favor of appellee.

The judgment of the district court was that the commissioner of public lands should forthwith cancel the Oscar White lease and issue to the appellee a lease to the lands in question.

Appellant quotes section 5196, as amended by section 3 of chapter 73, Laws 1915, as follows: “With the consent of the Commissioner any lessee may assign all his right, title and interest in his lease, or relinquish the same to the State, whereupon his lease shall be cancelled. Any assignment or relinquishment without the written consent of the Commissioner shall be null and void.”

[1] He argues that as this section does not specifically authorize conditional assignments, or assignments for collateral security, no power exists in the land commissioner to consent to or approve assignments of such character.

In State ex rel. Otto v. Field, 31 N. M. 120, 241 P. 1027, we decided that the jurisdiction of the commissioner over the public lands extended to all cases, except as otherwise specifically provided by law. Except as otherwise specifically limited by law, the power of the commissioner is very broad, and he is a sort of business manager of the lands under his control. That the approval of the commissioner of an assignment for collateral security of a lease on state lands is not contrary to public policy is indicated by chapter 8, Laws 1921, which amended section 5198 of the 1915 Code, and which provides that, in default of payment of rental notes, any creditor of the lessee may pay same, and have the rights of such lessee transferred to him.

We do not believe that the Legislature made this provision for the purpose of aiding the creditors of lessees of state lands. The purpose, doubtless, was to keep the leases operative as long as possible, so that revenue therefrom might be uninterrupted. If the legislative policy was to encourage creditors to keep the lease alive by taking it over, under such circumstances, the same result would be accomplished by permitting the pledgee of the lease or his successor to become, under proper proceedings, the owner thereof.

In the absence of statutory or contractual restrictions to the contrary, a lessee for years, may, without the lessor's consent or an express provision in the lease, either assign, sublet, or mortgage or otherwise incumber the term granted by the lease. But he cannot, of course, incumber the reversion by his contracts. 35 C. J., Landlord and Tenant, § 54. Such a transaction as between landlord and tenant being not unusual, we are of opinion that the commissioner has the power to consent thereto. This point is ruled against appellant.

Appellant challenges the transaction further upon the ground that it is contrary to the following provision of section 10 of the Enabling Act: “No mortgage or other incumbrance of the said lands, or any thereof, shall be valid in favor of any person or for any purpose or under any circumstances whatsoever.”

The transaction in the case at bar did not attempt to incumber the reversion.

The state's interest in the land is not by the acts of the parties, mortgaged or incumbered.

[2] Terms for years, of grazing lands, as in the case at bar, are chattels real, falling within the classification of personal property and governed by the rules applicable to other kinds of personal property. 35 C. J., Landlord and Tenant, § 47.

“The interest of a tenant in a term for years is deemed at common law personal property as distinguished from real estate, however long its duration in years.” 16 R. C. L., Landlord and Tenant, § 3.

“Except so far as they have been modified by statute, a leasehold interest, though a chattel real, is personal estate and subject to the rules governing that species of property.” Thompson on Real Property, § 958.

Our attention has not been called to any statute modifying the common-law rules in this regard.

[3] We are therefore convinced that the transaction in the case at bar is not in violation of the provision of the Enabling Act heretofore quoted.

It follows also that, even assuming that the leasehold was the community property of Ballard and his wife, the assignment executed by Ballard alone does not run counter to the provisions of section 68-403, 1929 Comp., as follows:

“The husband and wife must join in all deeds and mortgages affecting real estate * * * any transfer or conveyance attempted to be made of the real property of the community by either husband or wife alone shall be void and of no effect.”

“An assignment of a term for years is governed generally by the rules applicable to the sale of personal property.” 16 R. C. L., Landlord and Tenant, § 325.

[4] Appellee contends, under the provisions of section 132-121, 1929 Comp. (L. 1921, c. 8, § 1, amending Code 1915 § 5198), and the facts in the case, it was entitled to have transferred to it the rights of Ballard in the lease. The statute is as follows: “The violation of any of the terms, covenants or conditions of any lease or instrument in writing executed by the commissioner covering state lands, or the nonpayment by any lessee of such lands of rental notes, except when lien therefor is enforced as hereinbefore provided in this chapter, shall, at the option of the commissioner work a forfeiture of any such lease or instrument in writing after thirty days' notice to the lessee by registered mail, addressed to his last known post office address of record in the state land office, and to the other makers, if any, upon such rental notes; Provided, if within said thirty days the lessee shall fail to comply with demand made in any such notice, after the expiration of said period of time the other makers upon any such rental note may pay same and have the rights of any such lessee transferred to them. In default of payment of any such note or notes as aforesaid, any creditor of the lessee...