Houston v. National, Mutual Building & Loan Association

• Decision Date: 31 March 1902
• Citation: 80 Miss. 31,31 So. 540
• Parties: SAMUEL M. HOUSTON v. NATIONAL, MUTUAL BUILDING & LOAN ASSOCIATION ET AL
• Court: Mississippi Supreme Court

31 So. 540

80 Miss. 31

SAMUEL M. HOUSTON v. NATIONAL, MUTUAL BUILDING & LOAN ASSOCIATION ET AL

Supreme Court of Mississippi

March 31, 1902

Appeal from chancery court, Lauderdale county; Stone Deavors Chancellor.

Suit by S. M. Houston against the National Mutual Building & Loan Association and others to redeem from a mortgage foreclosure sale. From a decree in favor of defendants, plaintiff appeals. Reversed.

On the 25th day of May, 1892, Mrs. Justa M. David executed a mortgage to the National Mutual Building & Loan Association to secure to it a debt of $1,100, money loaned to her. It was provided in the terms of the mortgage that, upon default made in the payment of the debt as provided in it, it should be lawful for the mortgagee to enter upon the premises and sell and dispose of same, and all benefit and equity of redemption of the mortgagor, her heirs and assigns, at public auction and to make and deliver to the purchaser a good and sufficient deed of conveyance, which shall forever be a perpetual bar, both in law and equity, against said parties their heirs and assigns, and against all persons claiming under them. There was default made in the payment, and the National Mutual Building & Loan Association advertised the property mortgaged for sale, and sold it July 1, 1895, at public auction; and it was bid off by one Geo. J. Peet, and a deed was made to him to the property. Peet did not pay the purchase money bid, but credited the amount of his bid on the debt owed by Mrs. David to the National Mutual Building & Loan Association, after deducting the expenses of the sale. On July 13, 1895, Peet deeded the property to the National Mutual Building & Loan Association. The building and loan association afterwards sold a portion of the property to Mrs. Katharine and W. H. De Loach, and they had paid part of the purchase money to it when this bill was filed. After this, S. M. Houston purchased from Mrs. David all the property, she making him a quitclaim deed. Houston then filed the bill in this case, setting up the foregoing facts, and asked the court to cancel the deed to Geo. J. Peet, and that the mortgage and the deed to De Loach be also canceled as clouds upon his title, and asking for an accounting, and tendered what was lawfully due the National Mutual Building &amp Loan Association. There was also alternative relief prayed, in the event that the court held that De Loach was an innocent purchaser for value without notice and that he got a good title, that defendant be required to pay complainant rents it had received, and to require De Loach to pay the balance of the purchase money to him. On final hearing, complainant was denied all relief, and his bill was dismissed. From that decree he appeals.

FROM the chancery court of Lauderdale county. HON. STONE DEAVORS, Chancellor.

Houston, appellant, was complainant, and the National Mutual Building and Loan Association and others, appellees, were defendants in the court below.

On May 25, 1892, Mrs. Justa M. David executed a mortgage to the National Mutual Building & Loan Association to secure to it a debt of $ 1,100, money loaned to her. It was provided in the terms of the mortgage that, upon default made in the payment of the debt as provided in it, it should be lawful for the mortgagee to enter upon the premises and sell and dispose of same, and all benefit and equity of redemption of the mortgagor, her heirs and assigns, at public auction, and to make and deliver to the purchaser a good and sufficient deed of conveyance, which should forever be a perpetual bar, both in law and equity, against said parties, their heirs and assigns, and against all persons claiming under them. There was default made in the payment, and the National Mutual Building & Loan Association advertised the property mortgaged for sale, and sold it July 1, 1895, at public auction; and it was bid off by one George J. Peet, and a deed to the property was made to him. Peet did not pay the purchase money bid, but credited the amount of his bid on the debt owed by Mrs. David to the National Mutual Building & Loan Association, after deducting the expenses of the sale. On July 13, 1895, Peet deeded the property to the National Mutual Building & Loan Association. The building and loan association afterward sold a portion of the property to Mrs. Katharine and W. H. De Loach, and they had paid part of the purchase money to it when this bill was filed. After this, S. M. Houston purchased from Mrs. David all the property, she making him a quitclaim deed. Houston then filed the bill in this case, setting up the foregoing facts, and asked the court to cancel the deed to Geo. J. Peet, and that the mortgage and the deed to De Loach be also canceled as clouds upon his title, and asking for an accounting, and tendered what was lawfully due the National Mutual Building & Loan Association. There was also alternative relief prayed, in the event the court held that De Loach was an innocent purchaser for value without notice, and got a good title, that defendant be required to pay complainant the rents it had received, and to require De Loach to pay the balance of the purchase money to him. On final hearing, complainant was denied all relief, and his bill dismissed. From that decree he appealed to the supreme court.

Decree reversed and remanded.

S. A. Witherspoon, for appellant.

In view of the fact that the mortgage gives the mortgagee the power to sell, but does not give him the power to buy in the property at its own sale, its action in buying in the property (through the instrumentality of another) rendered the sale voidable at the instance of the mortgagors, or their successors in title, or others interested. It has been decided in this state, in the case of Byrd v. Clarke, 52 Miss. 623, that a mortgagee with power of sale cannot buy at his own sale unless the mortgage itself confers such authority. 26 Am. & Eng. Ency. Law, 928; Wade v. Thompson, 52 Miss. 367.

It is expressly held in Roberts v. Flemming, 53 Ill. 196, that a party having a quitclaim deed from mortgagor may, under such circumstances, file a bill to redeem where the mortgagee with power of sale purchases at his own sale. By § 2433 and § 2438, code 1892, the appellant, Houston, being the vendee of the mortgagors, had a right to file this bill. Cassedy v. Jackson, 45 Miss. 397.

The record shows conclusively that Peet was simply a conduit of the title, and not a real purchaser. That being the case, his bid will be deemed in law to be the bid of the National Mutual Building & Loan Association. "Qui facit per allure facit per se." Thornton v. Irwin, 43 Mo. 154; McNees v. Swaney, 50 Mo. 388.

As bearing upon the foregoing with reference to the validity of the aforesaid foreclosure sale, see the following: Lucas v. Mortgage Co., 72 Miss. 366; Dunton v. Sharpe, 70 Miss. 850; Thornton v. Irwin, 43 Mo. 153; Hall v. Turner, 45 Ill. 493.

With reference to whether the laches of mortgagors or appellant, Houston, as charged in defendant's answer, is shown: The proof shows conclusively that Mrs. Justa E. David and her husband, W. J. David, the mortgagors, did not know until the latter part of the year 1900, or the first part of the year 1901, that the National Mutual Building & Loan Association was the real purchaser at the foreclosure sale of July 1, 1895. It also appears that the appellant, Houston, did not obtain his deed conveying mortgagors equity of redemption until three or four months before the bill was filed to redeem.

The court should have entered a decree giving appellant, Houston, possession of that portion of the lot not sold to De Loach, and as to the balance directed that De Loach should pay appellant the balance of the purchase money of his property, and that the appellee, the National Mutual Building & Loan Association, should pay appellant the amount collected by it on the thirteen notes.

A. S. Bozeman, for appellees.

This is not a sale by the mortgagee to the mortgagee. The mortgagee was the National Mutual Building & Loan Association, of New York, and the purchaser at the mortgage sale was George J. Peet.

If it be conceded that Peet bought the land at the mortgage sale for the use and benefit of the mortgagee, and intending subsequently to convey it to the mortgagee, still the sale was actually made to a third person, not the mortgagee, and it is not subject to the infirmity of a sale and conveyance by the mortgagee to itself. Technically, at least, it is a sale by the mortgagee to a third person, and I insist that under the facts in this case, in order to avoid the sale, the complainant must show some actual fraud on the part of the mortgagee, and some resulting injury to the parties in interest, and this is neither charged nor proven.

Our own court, in the case of Hyde v. Warren, 46 Miss. 13, cites with approval several cases in which it was held that the mortgagee, with power of sale in himself, might purchase at his own sale.

It is held in many of the states that the mortgagee's title as purchaser is not absolutely void, nor ipso facto voidable, but becomes voidable by the owner of the equity of redemption on proof of any unfair advantage taken by the mortgagee, and I submit that this is the reasonable rule. Howard v. Davis, 6 Tex., 174; Connolly v. Hammond, 51 Tax., 635; Marsh v. Hubbard, 50 Tex. 203; Woonsocket Sav. Inst. v. American Worsted Co., 13 R. I., 255; Robinson v. Association, 14 S. C., 148; Mills v. Williams, 16 S. C., 593; Lewis v. Duane, 69 Hun. (N. Y.), 28; Elliot v. Wood, 53 Barb. (N. Y.), 285, and 45 N.Y. 71; Moritz v. St. Paul, 54 N.W. , 370; Matthews v. Daniels, 21 S. W., 469.

I submit, in the second place, that the mortgagor, having neglected to assert her rights to avoid the sale, if she had any,...