Ladue v. Detroit & Milwaukee Railroad Company

• Decision Date: 08 July 1865
• Citation: 13 Mich. 380
• Court: Michigan Supreme Court
• Parties: Andrew Ladue v. The Detroit & Milwaukee Railroad Company

13 Mich. 380

Andrew Ladue v. The Detroit & Milwaukee Railroad Company

Supreme Court of Michigan

July 8, 1865

Heard May 10, 1865; May 11, 1865 [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material]

Appeal in chancery from Wayne circuit.

The facts, so far as they are necessary to an understanding of the legal questions involved in the case, will be found stated in the opinion.

Decree reversed, and the bill dismissed; and the appellants recover their costs in both courts.

G. V. N. Lothrop, for complainant:

1. Mortgages given to secure future advances and contingent liabilities, are valid.

This though often contested, seems now satisfactorily established: United States v. Hooe, 3 Cranch 73; Shirras v. Caig, 7 Cranch 34; Conard v. Atlantic Ins. Co., 1 Pet. 448; Lawrence v. Tucker, 23 How. U.S., 15; Leeds v. Cameron, 3 Sumner 492; Gardner v. Webber, 17 Pick. 414; Commercial Bank v. Cunningham, 24 Pick. 274; Holbrook v. Baker, 5 Greenl. 309; Brinkerhoff v. Marvin, 5 Johns. Ch., 327; Bank v. Finch, 3 Barb. Ch., 297; Babcock v. Bridge, 29 Barb. 427; Thomas v. Kelsey, 30 Barb. 268; Lyle v. Duncomb, 5 Birney 585; McDaniels v. Colvin, 16 Vt. 300; Seymour v. Darrow, 31 Vt. 122; Soule v. Albee, 31 Vt. 142; Lewis v. Deforest, 20 Conn. 427; Kramer v. Bank, 15 Ohio 253; Burdett v. Clay, 8 B. Mon., 287; Bell v. Fleming, 1 Beasley 13 and 490.

Some of the New York cases hold that such mortgages must, on their face, define or limit the extent of the security. And this doctrine would seem to have retained some hold even as late as Truscott v. King, 2 Seld. 157.

But it has been finally abandoned by the court of appeals: Robinson v. Williams, 22 N. Y., 386.

And this agrees with the doctrine of this court: Mich. Ins. Bank v. Brown, 11 Mich. 271.

2. Such a mortgage is good for advances made after a subsequent mortgage or sale, if made in good faith without notice: Gordon v. Graham, 2 Eq. Cas. Ab., 598; Truscott v. King, 6 Barb. 346; S. C., 2 Seld. 157; McDaniels v. Colvin, 16 Vt. 300; Nelson's Heirs v. Boyce, 7 J. J. Marsh, 401; Burdett v. Clay, 8 B. Mon., 287; Nelson v. Russell, 13 Md. 494, 535, per Whittlesey; V. C. Bank v. Finch, 3 Barb. Ch., 289; Craig v. Tappan, 2 Sandf. Ch., 78; King v. McVickar, 3 Id. 208; Frye v. Bank, 11 Ill. 381.

3. The record of a subsequent deed or mortgage is not notice to a prior purchaser or mortgagee: Stuyvesant v. Hone, 1 Sandf. Ch., 419; Stuyvesant v. Hall, 2 Barb. Ch., 151; Truscott v. King, 6 Barb. 346; Truscott v. King, 2 Seld. 166, per Edmunds J.; Taylor v. Maris' Ex'rs, 5 Rawle 51; Rowan v. Sharp's Rifle Co., 29 Conn. 325.

This seems to be held everywhere except in Ohio: Spader v. Lawler, 17 Ohio 371.

There is one case which holds that in a mortgage for future optional advances, it is not a valid security till the advance is made; that as to each advance it is to be treated as a new mortgage, having its origin at the time of each advance, so far as that advance is concerned; and that, therefore, as to such advance, it is not to be treated as made or recorded till the advance is actually made: Terhoven v. Kems, 2 Barr 96.

This case, though not referred to, seems to have been partially countenanced by Parmenties v. Gillespie, 9 Barr 86. And the judge, who delivers the opinion, in Boswell v. Goodwin, 31 Conn. 74, suggests that such a doctrine is reasonable.

In my judgment, the doctrine is not only novel but unsound. It imposes the burden of notice and vigilance on the wrong party. "To make it the duty of the first mortgages to inquire before he acts, lest he may injure some one, would reverse this rule, and make it his duty to do for the second mortgagee what the latter should do for himself:" James v. Brown, 11 Mich. 30

It disturbs the repose which the registry law intends to give the holder of a security, which the law declares valid, and of which, by the registry, he has given open and public notice to the whole world. Every subsequent purchaser knows that he must consult this registry at his peril; and such purchaser, if he would prevent further advances on the faith of such securities, is, in the plainest equity, bound to give notice of his intervening interest.

H. H. Emmons, and A. Pond, for defendants:

1. A mortgagee has no estate in the land. His entire interest is but a chose in action; and no mortgage can be created without a debt, or continued after the debt is discharged. The signing, sealing and recording of a paper in the form of a mortgage cannot create the relation of mortgagor and mortgagee until some debt exists, or liability is assumed, to give it vitality: The king v. St. Michael's, Douglass, 630; Carburn v. Inglis, 2 Jacobs & Walker, 194, note; Burnett v. Kenniston, 2 Vernon 401; Richard v. Syms, Barnardiston Ch. Rep., 90. This case is cited in Edwards v. Ins. Co., 21 Wend. 485; Martin v. Mowlin, 2 Burr. 978; Flock v. Longmate, 8 Beavan 420; The king v. The Inhabitants of Edgington, 1 East, 287; 1 Hilliard on Mortgages, 215; Jackson v. Willard et al., 4 Johns. 41; Runyan v. Merserau, 11 Johns. 534; 4 Kent 193; Lane v. Shears, 1 Wend. 433; Jackson v. Bronson, 19 John. 325; Gardner v. Heart, 3 Denio 232.

The New York cases, thus far, all arose prior to the statute, taking from the mortgagee the right of ejectment until foreclosure.

The following cases were subsequent: Edwards v. Ins. Co., 21 Wend. 467; Waring v. Smyth, 2 Barb. Ch., 119; Bryan v. Butts, 27 Barb. 504; Bank v. Tallman, 31 Barb. 201; Cortright v. Cady, 21 N. Y., 343.

It has been held in New York, that the statute taking from the mortgagee the right of ejectment until after foreclosure, only affects the remedy and did not "alter the law as to the interest vested in the parties to the mortgage," and that the mortgagee, if he once obtained possession by any lawful mode, could not be put out of possession by the mortgagor, until payment of his mortgage: 15 Wend. 248. But it is evident from the above cases that it would not now be so held. And it is settled otherwise in this state. See also, Gunn v. Scovill, 4 Day 234; Town of Barkhampsted v. Farmington, 2 Conn. 600; Fisk v. Fisk, 1 Conn. 559; Huntington v. Smith, 4 Conn. 235; Leonard v. Bosworth, 4 Conn. 421; Roath v. Smith, 5 Conn. 133; Clark v. Beach, 6 Conn. 164; Porter v. Seeley, 13 Conn. 564; Cooper v. Davis, 15 Conn. 556.

City of Norwich v. Hubbard et al., 22 Conn. 587. In this case, Church Ch. J., p. 594, says: "Although in this state we have held that, in a strictly legal sense, the mortgagee has a bare title, even after payment of the debt, if the law day had expired before payment, until a release deed is executed; yet this is rather a matter of policy, arising from our recording system than from any other view of it. In truth, the mortgagee has only a lien and cannot be considered or treated as a proprietor or owner of the mortgaged estate."

The decisions in Connecticut, then, with this explanation, go quite to the liberal limit established in this state: Bolton v. Ballard, 13 Mass. 345; Swan v. Stevens, 15 Mass. 227; Gorton v. Roxhorough, 6 Mass. 50; Blanchard v. Colburn, 16 Mass. 345.

"A mortgage in South Carolina does not convey the legal title, and the fee remains in the mortgagor even after condition broken: Thayer v. Cramer, 1 Mc.C. Ch., 395; 2 Eq. Dig., 294, § 22. And see 2 Ga. Dis., 76; Seals v. Corbine, 2 Eq. Dig., 292, § 24; and 10 Geo. 6; Reynolds v. The Justices, etc. This, we believe, is the well settled law of Georgia: Weeks v. Eaton, 15 N. H., 145; Bell v. Morse, 6 N. H., 205; Hobson v. Rolle, 20 N. H., 41; Fenbish v. Goodwin, 25 N. H., 428.

Sutherin v. Mandurn, 5 N. H., 420. The opinion in this case is among the ablest in this country at that day. It shows at length nearly all the incidents which have been decided to belong to the mortgagee's estate which attach to personalty, and which do not belong to realty. Authorities are cited under each head to verify the argument. It is said it cannot be sold on execution; that it will not pass by deed of the realty alone, or without assignment of the debt; that the wife is not dowable of estate; that it will not pass by a will of real estate; that after assignment of the debt no estate is left in the mortgagee; that it goes to the administrator and not to the heir, and is discharged by payment or tender; that the heir must redeem from it; that a settlement is gained by the mortgagor, and that his interest cannot pass by parol.

To this list we will here add, that the husband may dispose of it as among the wife's choses in action; that it passes by assignment, not sale; that mortgagor may vote when legal title is necessary for such purpose; may at common law convey a title so that his grantee may receive a release, and that the mortgagee cannot do so. It passes by a will of personalty. Its transfer is not within the recording acts in reference to real estate; and to create which does not violate the statute in relation to selling pretended titles to realty. It gives no vote when title to real estate is necessary. It passes in all cases subject to equities which real estate does not. An alien here and in England may hold it when he cannot a title to realty.

This list of incidents belonging to personality, and which do not appertain to the real estate, might be indefinitely protracted by simply pursuing the decisions. But enough appears to show that the interest of a mortgagee, his whole interest, is not in any sense real estate. It is but a chose in action, a chattel interest: Wilson v. Kimball, 27 N. H., 300; 24 N. H., 485, Whittemore v. Gibbs. The same decision was repeated in 36 N. H., 39, Blake et al. v Williams; Rickett v....