First Nat. Bank of Butte v. Bell Silver & Copper Min. Co.

• Decision Date: 15 September 1888
• Citation: 8 Mont. 32
• Court: Montana Supreme Court
• Parties: FIRST NAT. BANK OF BUTTE et al. v. BELL SILVER & COPPER MIN. CO. et al.

8 Mont. 32

FIRST NAT. BANK OF BUTTE et al.

v.BELL SILVER & COPPER MIN. CO. et al.

Supreme Court of the Territory of Montana.

September 15, 1888.

Appeal from district court, Silver Bow county.

Thomas L. Napton and Sanders, Cullen & Sanders, for appellants.

Knowles & Forbis and W. W. Dixon, for respondents.

MCCONNELL, C. J.

This was an action of ejectment brought by the plaintiffs against the defendants for the recovery of two mining claims, described in the complaint. There was judgment for the plaintiffs, and an appeal taken from said judgment to this court. The pleadings make a case of ordinary ajectment. There is not special defense set up in the answer of the defendants. The case was tried by the court without a jury upon certain agreed facts, which have been transferred to the transcript, in the nature of a special verdict. The substance of them is that on the 25th day of April, 1882, the defendant the Bell Silver & Copper Mining Company was the owner of, and then was, and ever since has been, in the possession of, all the premises described in the complaint, the other defendants being at the time of the commencement of this action at work on said premises under a contract with said company. The defendants are entitled to a judgment in their favor unless the following facts entitle the plaintiffs to recover, to-wit: On the 25th day of April, 1882, the defendant company executed the delivered to the said grantees therein named an instrument in writing, which was duly recorded, in substance as follows, to-wit: “This indenture, made this 25th day of April, by and between the Bell Silver & Copper Mining Company, a corporation duly organized under and in accordance with the laws of the territory of Montana, party of the first of the first part, and Samuel Wells and Theodore H. Tynadale, both of Boston, Mass., mortgagees and trustees, parties of the second part: Witnesseth, that whereas, said party of the first part is authorized by the laws aforesaid, by its articles of incorporation, and by a vote of its trustees, to execute trust mortgages of all its property, real, personal, and mixed, to secure the payment of bounds issued by it; and whereas, the said party of the first part is about to issue 60 bonds, for the sum of one thousand dollars each, to secure a loan of sixty thousand dollars to be made to it,-now, therefore, said party of the first part, in order to secure the payment of said bonds thus to be issued, and interest thereon, and in consideration of the sum of one dollar to it in hand paid by the said party of the second part, at the ensealing and delivery of these presents, the receipt whereof is hereby acknowledged, has granted, bargained, and sold, transferred and conveyed, and by these presents does grant, bargain, sell, transfer, and convey, to the said Samuel Wells and Theodore H. Tyndale, as trustees, and unto the survivor of them, and to their successors in the trust, and assigns, the following described property, (then follows a description of the property as set out in the complaint,) together with all the buildings, privileges, franchises, and appurtenances to the same belonging. *** But this clause shall not be so construed as to prevent the said company from selling old materials in the ordinary course of the business, to be replaced by new, nor to prevent said company from mining, reducing, and selling ore from said mine, in the ordinary course of business, meaning and intending hereby to mortgage all the property of said company, real, personal and mixed, of whatever name or nature, owned by the said party of the first part; *** but upon the following express trustees; that is to say, incase the said Bell Silver & Copper Mining Company shall fail to pay the principal, or any part thereof, which may fall due on said bonds, secured and intended to be secured thereby, at any time and place when and where the same may become due and payable according to the tenor and effect thereof, and for thirty days thereafter, then, in that case, upon the written request of the holders of one-fourth part of said bonds, and which may be at the time outstanding and unpaid, it shall be the duty of said parties of the second part, their successors or assigns, to enter upon the take possession of all and singular the premises, etc.; or the said parties of the second part, their successors in said trust and assigns, at their discretion, may, and upon the written request of the holders of one-fourth of said bonds then unpaid shall, cause the said premises and property to be sold at public auction in Butte City, Mont., or in the city of Boston, Mass., as the parties of the second part, their successors and assigns, may deem best, first giving 30 days' notice of the time and place and terms of such sale, by publishing the same once a week for three weeks successively in one of the principal newspapers, for the time being, in Boston, Mass., and Butte City, Mont., and upon such sale to execute to the purchaser or purchasers thereof good and sufficient deed or deeds of conveyance in fee-simple for the same, which shall be a bar against the said Bell Silver & Copper Mining Company, party of the first part, it successors and assigns, and all persons claiming under it or them, of all right, interest, or claim in and to the said premises and property, and all parts thereof. And it is expressly agreed that the parties of the second part, their successors and assigns, or any persons in their behalf, may purchase at any sale made as aforesaid, or at any sale made by order of court, under the laws of Montana, and that no other purchaser shall be answerable for the application of the purchase money; and the said trustees shall, after deducting from the proceeds of any such sale the costs and expenses thereof, and of managing the said property, and enough to indemnify and save themselves harmless from and against all liability arising from this trust, and their own compensation, apply so much of the proceeds of the said premises and property as may be necessary to the payment of the principal and interest of the said bonds unpaid, whether matured or not, and restore the residue, if any, to the party of the first part; it being expressly understood and agreed that in no case shall any claim or advantage be taken of any valuation, appraisement, redemption, or extension laws by the said party of the first part, its successors or assigns, nor any injunction or stay of proceedings, or any process be obtained or applied for by it or them to prevent such entry or sale and conveyance as aforesaid.” Then follows a number of agreements, which it is unnecessary for us to notice, and hence we do not incumber this opinion with a copy of them. It is further agreed that thereafter, on the 24th day of June, 1885, one Harriet M. Pitman, being then the owner of 35 of the bonds mentioned in the mortgage, which had been due more than 30 days, wrote said Wells and Tyndale a letter, directing them, in their discretion, to proceed and sell said premises upon the terms described in the aforesaid instrument, and, further, that thereafter, on the 14th day of July, 1885, said bonds, all being past due and unpaid, the said Samuel Wells and Theodore H. Tyndale prepared and published a notice of sale, the substance of which as to time we will give in another portion of this opinion; that said notice was published in the Boston Traveller, and in the Butte Miner; that said papers were newspapers of general circulation in the cities and vicinities, respectively, where they were published; that, in pursuance of said notice, on September 2, 1885, said Samuel Wells and Theodore H. Tyndale offered for sale to the highest bidder the property described in said notice, by virtue of their alleged authority in said instrument of date April 25, 1882, when the same was struck off to the holders of the bonds in said mortgage mentioned, for the sum of $45,000, they then and there being the highest and best bidders. And thereafter, on the 12th day of October, 1885, the said Samuel Wells and Theodore H. Tyndale made and delivered to the plaintiffs, the purchasers at said sale, a deed of the premises described in the complaint. This deed is the foundation of the action of ejectment brought by the plaintiffs against the defendants for the recovery of said premises. The defendants insist that it is void, and conveyed no title to the plaintiffs, for the reasons that (1) the notice of sale was not in conformity with the requirements of the contract; (2) the description of the property sold was insufficient in law; (3) the power or authority under which the mortgagees and trustees, Wells and Tyndale, executed the deed was void, under section 371, p. 161, Comp. St. Mont.

We shall notice these objections in the reverse order of their statement above, for the reason that the last objection is the main one relied upon for a reversal of this case, and involves a question, not only of interest to the parties litigant in this case, but to the business public generally of this territory. Said section 371 is as follows, to-wit: “A mortgage of real property shall not be deemed a conveyance, whatever its terms, so as to enable the owner of the mortgage to recover possession of the real property without foreclosure and sale.” It is contended that the effect of this statute is to so completely modify the common law on the subject of mortgages of real property that the mortgagor cannot convey the title to the mortgagee, or to third parties as trustees, so as to enable them, under the power thus given by the mortgagor, to sell the real property so conveyed, and cut off his equity of redemption, and that therefore all the power and authority which the aforesaid instrument purports to confer upon Wells and Tyndale, as mortgagees and trustees, to sell the said premises, and make the deed aforesaid to the purchaser, is void, and hence the deed itself is a nullity, and...