Carson v. Cochran

• Decision Date: 23 December 1892
• Citation: 52 Minn. 67,53 N.W. 1130
• Parties: CARSON v COCHRAN ET AL., (TWO CASES.)
• Court: Minnesota Supreme Court

52 Minn. 67

53 N.W. 1130

CARSONvCOCHRAN ET AL., (TWO CASES.)

Supreme Court of Minnesota.

Dec. 23, 1892.

(Syllabus by the Court.)

1. In an action to foreclose a mortgage, the mortgagor, and those claiming under him, cannot set up as a defense that he had no title to the mortgaged premises.

2. Held that, if a certain instrument did not create a valid trust, it is valid as a power in trust.

3. If a party voluntarily, and without mistake of fact, pays as interest a greater rate than is legally enforceable, (but not usurious,) the appropriation thus made by the parties will not be disturbed, but will stand as any other voluntary payment; and when it is paid on a debt secured by mortgage, subsequent purchasers of the mortgaged premises, unless they show some special equity peculiar to themselves, have no greater rights in that respect than the mortgagor.

4. A partial payment which prevents the statute of limitations against the debt from running will also prevent the statute from running against the remedy on the mortgage security; and a purchaser from the mortgagor, with actual or constructive notice of the mortgage, will be bound by any previous acknowledgment of the debt by his grantor.

Appeal from district court, Fillmore county; FARMER, Judge.

Action by Matilda G. Carson against Thomas Cochran, Jr., and others, trustees, and the Chicago, Milwaukee & St. Paul Railway Company, to foreclose a mortgage. From a judgment for plaintiff, defendants appeal. Affirmed.

The mortgage was executed by virtue of a declaration of trust, which instrument is referred to in the opinion as “Exhibit A.” In this instrument, executed by them, C. W. Thompson, F. W. Lane, and H. C. Kingsley declared that certain specified real property, including that covered by plaintiff's mortgage, had been conveyed to them, by one Wykoff, as joint tenants; that they had taken the title to the property in their individual names, for convenience, and held the same in trust for the holders of certain certificates of stock to be issued to the persons contributing to a fund used in the purchase of the property, inter alia, to sell and convert the property, to improve the same with the surplus funds contributed, to convey and mortgage the property upon such terms as to the trustees might seem proper, and to turn over all profits to such stockholders. Provision was made for the substitution of trustees. Subsequently to the execution of this instrument, the trustees named executed and delivered to plaintiff the mortgage now sought to be foreclosed. Thereafter the trustees conveyed portions of the property subject to the mortgage. These grantees, or their assigns, were joined as defendants herein. The opinion states the facts. Prior to the commencement of this action, the trust vested in defendants Cochran and O. G. Walls. Upon the trial before the court, without a jury, judgment was ordered for plaintiff, substantially as prayed. Defendants separately appeal from all or a portion of the judgment.

H. R. Wells and B. A. Man, for appellants.

Lloyd W. Bowers, for respondent.

MITCHELL, J.

This was an action to foreclose a mortgage on real estate. The only questions raised by the appeal are whether the conclusions of law were justified by the findings of fact.

1. The first and second assignments of error go to the point that a certain trust (Exhibit A of the complaint) attempted to be created by Thompson, Kingsley, and Lane, and under which they assumed to execute the mortgage in question, is void. To this there are at least three complete answers: First. The only interest which the defendants claim in the property is under this very trust, either as trustees or as the grantees of the trustees; and the ground of their attack on the mortgage is not that it is, in and of itself, invalid, but that the mortgagors had no title or interest in the land to convey. The position of the defendants is suicidal; for, if they are right in their contention, they themselves have no interest either in the property or in the result of this action. The mortgagor, and those claiming under him, are estopped to thus deny his title. The decree of foreclosure binds his interest, whatever it may be, and nothing more, and to such a decree the mortgage is entitled. Second. If Exhibit A is not valid either as a trust or a power in trust, then Thompson, Kingsley, and Lane remained the absolute owners of the land, under the conveyance from Wykoff, and as such, of course, had power to execute the mortgage. The finding is that the allegationof the complaint that, “at the time of the execution of said instrument, [Exhibit A,] they owned all the lands therein described,” is true. The conveyance to them from Wykoff was in fee simple, and it nowhere appears that he conveyed the lands for the purposes of any such trust, or that the declaration of trust was in pursuance of, or any part of, an agreement between him and them. The mere fact that the instruments are of the same date does not, of itself, establish any such connection between the two. This declaration of trust may have been the voluntary act of Thompson, Kingsley, and Lane, alone, or the result of some arrangement between them and the proposed beneficiaries of the trust. The recital in the instrument (to which Wykoff was not a party) that the title had been placed in their names to enable them “to carry out with greater facility the object aforesaid, [the improvement and development of the land as a townsite,] but in trust for the parties contributing the funds aforesaid,” is entirely consistent with such a hypothesis. Third. But, in any view of the case, Exhibit A, if not valid as a trust, under Gen. St. 1878, c. 43, § 11, is at least valid, under section 14 of the same chapter, as a power in trust to convey or mortgage the lands. Section 2, c. 44, of the statutes defines a power as “an authority to do some act in relation to lands, or the creation of estates therein or of charges thereon, which the owner granting or reserving such...