Kreyling v. O'Reilly

• Decision Date: 23 December 1902
• Citation: 97 Mo. App. 384,71 S.W. 372
• Court: Missouri Court of Appeals
• Parties: KREYLING et al. v. O'REILLY et al.<SMALL><SUP>*</SUP></SMALL>

71 S.W. 372

97 Mo. App. 384.

KREYLING et al. v. O'REILLY et al.^*

Court of Appeals at St. Louis, Missouri.

December 23, 1902.

MORTGAGES — FORECLOSURE — LIMITATIONS — CONSTITUTIONALITY OF STATUTE — OBLIGATION OF CONTRACTS — RETROSPECTIVE LAWS — COURT OF APPEALS — JURISDICTION.

1. Rev. St. 1899, § 4276, provides that no suit to foreclose any mortgage or deed of trust executed hereafter to secure any obligation shall be had after such obligation has been barred by limitations. Section 4277 declares that no such suit shall be had "to foreclose any such mortgage or deed of trust heretofore executed to secure any such obligation after the expiration of two years after the passage of this act." Held to apply as well to suits to enforce a mortgage against the surplus resulting from a sale under a prior mortgage as to those which proceed against the land itself.

2. Rev. St. 1899, § 4298, provides that "the provisions of this chapter [on "Limitation of Actions"] shall not apply to any action commenced, nor any cases where the right of action or entry shall have accrued, before the time when this chapter takes effect, but the same shall remain subject to the laws then in force," and was enacted many years before section 4277 was passed. Held that, if section 4277 is repugnant to section 4298, it must nevertheless govern, being the more recent law.

3. Rev. St. 1899, § 4277, is not unconstitutional, as impairing the obligation of contracts.

4. Rev. St. 1899, § 4277, does not violate Const. art. 2, § 15, prohibiting the enactment of laws retrospective in their operation.

5. To oust the jurisdiction of the court of appeals on the ground that a constitutional question is involved, the question must be raised in the trial court, and the benefit of some constitutional provision must be denied to the party claiming it.

Appeal from St. Louis circuit court; H. D. Wood, Judge.

Action by Augusta Kreyling and others, as widow and heirs of the grantor in a deed of trust, against M. B. O'Reilly, trustee, to recover the surplus resulting from a sale under the deed. Defendant filed a bill of interpleader, setting up that Benjamin Horton and others also claimed the fund, etc., whereon he was discharged, and plaintiffs and Horton and others were ordered to interplead. Judgment in favor of Horton and others, and plaintiffs appeal. Reversed.

Cannon & Farish, for appellants. James E. Withrow, for respondents.

GOODE, J.

On July 13, 1876, David Kreyling and Augusta Kreyling, his wife, executed a deed of trust to M. B. O'Reilly, trustee, to secure a note therein described. Under the power of sale contained in that deed, O'Reilly, the trustee, sold the property on October 18, 1901. After paying the indebtedness secured by the instrument, and expenses of the sale, a surplus of $1,026.55 remained in his hands. This surplus is claimed by the plaintiffs as the widow and heirs of Kreyling, and is also claimed by the defendants Benjamin and William Horton as the beneficiaries of a junior deed of trust executed by said Kreyling and wife on April 23, 1877. After the sale, Augusta Kreyling and her children instituted suit against O'Reilly for said surplus; and, as the present defendants were asserting their claim thereto, O'Reilly appeared and filed a bill of interpleader, in which he stated he did not know, and could not determine without hazard to himself, to whom the surplus belonged, and set out facts respecting the foundation of the two hostile claims. Thereupon he was discharged, and the plaintiffs and defendants ordered to interplead, which they did; their pleadings showing that their claims are based on the facts above stated.

Against the claim of the defendants Horton, the plaintiffs pleaded several statutes of limitation; the presumption that the debt secured by the Horton deed of trust was paid, more than 20 years having elapsed before they sought to collect it; that defendants' deed of trust shows on its face that it was never acknowledged by Augusta Kreyling in the manner required by the law as it existed when said deed was executed; and that hence her right to the surplus proceeds is superior to defendants' lien. The note given by Kreyling to the Hortons, and secured by their deed of trust, was undoubtedly long since barred by the statutes of limitations. None of the defenses succeeded, but the court below gave judgment in favor of the respondents for the money which the interpleader had paid into court.

We think the defendants' case was barred by the special limitation statutes, first enacted in 1891, in regard to the enforcement of mortgages and deeds of trust after the obligations they were given to secure are barred by the statute of limitations. Those two statutes are as follows: "No suit, action or proceeding under power of sale to foreclose any mortgage or deed of trust executed hereafter to secure any obligation to pay money or property shall be had or maintained after such obligation has been barred by the statutes of limitations of this state." "Nor shall any such suit be had or maintained to foreclose any such mortgage or deed of trust heretofore executed to secure any such obligation after the expiration of two years after the passage of this act." Rev. St. 1899, §§ 4276, 4277. The first of the above sections has no application to the present case, because the defendants' deed of trust was executed prior to its enactment, and by its terms it only affects securities subsequently executed. It is quoted because it throws light on the next section, which we think controls the decision of this case. To avoid the bar of the second section, defendants' counsel contends that this suit is not one to foreclose a mortgage or deed of trust, as contemplated therein, and hence is not within the intention of the law. Strict foreclosure suits, wherein the mortgagor was given a fixed time in which to discharge his debt, on pain of losing his equity of redemption, are obsolete in this state; suits for the sale of mortgaged property under judicial decree, and the application of its proceeds to the discharge of the debt secured, having taken their place. We are of the opinion that this action is one of the latter kind, and within the spirit of said section, if not within its letter.

The defendants, as beneficiaries of the second deed of trust, acquired the right of Kreyling, the grantor, to the surplus proceeds arising from the sale of the land under the first deed of trust, and are entitled to enforce the lien of their security against the said surplus as far as, but no further than, they would be entitled to enforce it against the land itself. In fact, the surplus money realized by the sale of land under a mortgage or deed of trust is treated as realty, and not as personalty, in respect to the rules of law governing its disposition. It remains real estate in the hands of the mortgagee or trustee, to be disposed of according to the law of real property. Moses v. Murgatroyd, 1 Johns. Ch. 119, 7 Am. Dec. 478; Fagan v. Association, 55 Minn. 437, 57 N. W. 142; Dunning v. Bank, 61 N. Y. 497, 19 Am. Rep. 293; Beard v. Smith, 71 Ala. 568; Trust Co. v. Earle, 110 U. S. 718, 4 Sup. Ct. 226, 28 L. Ed. 301. Where a person dies seised of real estate incumbered by a mortgage, as Kreyling did, and the mortgage is thereafter foreclosed, the surplus is regarded as realty, and goes to the heirs of the decedent, instead of to his personal representatives. Wiltsie, Mortg. Forec. § 704; Kinner v. Walsh, 44 Mo. 69, and other cases cited supra. If there had been no sale under the first mortgage, it is plain an action could not have been maintained to foreclose the Horton mortgage, because such an action would have been within the very terms of the limitation created by section 4277. It would be a narrow and inconsistent construction of the law to hold that, while...