Longwith v. Butler

• Decision Date: 31 December 1845
• Citation: 3 Gilman 32,1845 WL 3999,8 Ill. 32
• Parties: THOMAS LONGWITH et al.v.THOMAS T. BUTLER.
• Court: Illinois Supreme Court

3 Gilman 32

8 Ill. 32

1845 WL 3999 (Ill.)

THOMAS LONGWITH et al.

v.THOMAS T. BUTLER.

Supreme Court of Illinois.

December Term, 1845.

BILL IN CHANCERY for relief, etc., in the Scott circuit court, filed by the defendant in error against the plaintiffs in error. The cause was heard before the Hon. SAMUEL D. LOCKWOOD, at the October term 1845, when a decree was entered in favor of the complainant below.

The allegations of the bill and the answers, the depositions of the witnesses, and the decree are substantially set forth in the opinion of the court.

The cause was submitted in this court upon the written arguments of counsel.

J. J. HARDIN and D. A. SMITH, for the plaintiffs in error.

M. MCCONNELL, for the defendant in error.

The opinion of the court was delivered by KOERNER, J.

Butler, complainant below, filed a bill in chancery in the Scott circuit court against the appellants, setting forth in substance, that on the 24th day of September, 1841, the said Butler and wife executed a mortgage to Gilham, M'Dow, Hitt and Cline, four of the defendants, on certain tracts of land, to secure the said mortgagees in their liability as his securities, for the payment of a certain sum of money, a part of which was owing to one Morgan, and another to the Bank of Illinois. The mortgage contained a clause, that in case of Butler's failure to pay the said sums of money when due, the said mortgagees might sell from time to time, and on certain terms, so much of the real estate morgaged, as should be necessary to raise the amount due upon said claims against Butler, at public auction, and might execute deeds of conveyance, with covenants of warranty to purchasers, and that said mortgagees might proceed by such sale or sales to reimburse themselves for all losses sustained by them, by the non-performance of the condition of the mortgage mentioned. The bill further avers that Butler made default in paying said debts, and that said mortgagees, being called on for payment, immediately sought to raise the money by sale, and did on the 26th day of November, 1842, without an application to a court, and in violation of law, actually sell said land. That about this time, Butler's indebtedness to Morgan amounted to $865.00, and his indebtedness to the Bank of Illinois nominally to $1,784.00, though owing to the depreciation of the paper of said bank, it might have been discharged with about $600.00 in good money; that in selling said land, they did also fail to pursue the power granted to them, and grossly departed therefrom; that at the said sale, Thomas Longwith, one of defendants, purchased a large tract of the lands mortgaged, for $1,515.00; a part of which, however, he bought for the benefit of the defendants, William Sharoon and John Morrison, according to a secret understanding with said last named defendants. That the mortgagees immediately executed an absolute deed to said Longwith, and put him in possession, and that Longwith executed deeds to Sharoon and Morrison for their respective shares of the purchase, and put them in possession. That one Martin Funk, another of the defendants, at the said sale, bought another tract of said mortgaged land, and obtained a deed and possession from the mortgagees; that M'Dow, one of the mortgagees, became the purchaser of two other tracts of land, and that all these tracts of land were sold greatly below their value, and for an inadequate price. The bill charges that the mortgagees and the purchasers had conspired to sacrifice said land by various fraudulent devices, as well in the manner of the sale, as by preventing fair competition, and states the facts in detail, supporting this allegation. Many other facts and transactions are set out on the bill, which it is unnecessary to state here, as they, under the view which the court has taken of the case, can have no bearing upon its decision.

The bill waives the oaths of all the defendants, except as to Martin Funk, and prays to set aside all these sales as utterly void, and that an account be taken of the rents and profits. Complainant alleges that he does not know how much these mortgagees have actually paid for him, or in fact, that they have paid any thing, as they have not surrendered to him the evidences of his indebtedness, and he offers to pay the full amount of money actually paid by them, and legal interest, whenever that amount is fairly ascertained by the taking of an account, and also asks for general relief.

The answer of the defendants, while it admits the indebtedness of complainant, the execution of the mortgage for the purposes mentioned in the bill, their sale of said lands without application to a court of chancery, the making of deeds to purchasers, denies that they sold without authority of law, or that they departed from the terms of sale, as provided for in the mortgage, in the slightest degree. It denies that they acted unfairly and fraudulently in the premises in any manner whatever. They insist in their answer, that Illinois bank paper was not so much depreciated as complainant alleges, and render an account of payments made by them, and for expenses, etc., by which they make it appear that the proceeds of said sale were no more than sufficient to reimburse them, and, in fact, left complainant in their debt to a small amount. The purchasers all insist that they are bona fide purchasers, and as such ask the protection of the court in the premises. To this answer there was a replication, and numerous depositions were taken by the complainant.

At the October term 1845, the court rendered a decree which, by agreement of parties, is to be considered made pro forma, setting aside and annulling all the said sales, and directing the purchaser to deliver possession of all said lands to complainant within forty days after service of copy of the decree; that the master in chancery take an account of the rents and profits of said lands, and also of permanent improvements made thereon by the purchasers, (except as to the lands sold to Robert McDow,) from the day of their taking possession until surrendered. Also, that the said master take an account of what is due on said mortgage, and of what mortgagees have paid for said complainant, and in what funds, and their value.

By agreement of parties, appearing on the record, this decree is considered final in the court below as to the rights of the parties under said sale, and so far final in all other respects as to enable the parties to take an appeal; and it is also agreed that this court shall render such decree in this case, if the court shall be of opinion that said decree is in any way defective, as the circuit court ought to have rendered.

The defendants assign for error that said decree is erroneous in every particular, and that the bill ought to have been dismissed for want of proof.

The first question presented by the record, as to the mortgagee's right to sell under a power of sale, without the aid of a court of chancery, is one of considerable importance, and about which much diversity of opinion prevails amongst the profession in our state. For this reason, it becomes necessary to examine it with care, and to give it due deliberation. At common law, a mortgage vested the legal estate in the mortgagee, liable to be defeated upon performance of the condition. After default, the legal estate became absolute. There is no question that, by the consent of both the mortgagor and mortgagee, the harshness of this rule might be mitigated. The parties were at liberty to prevent the absolute foreclosure, by stipulating that the mortgagee, after default, might sell, so as to evolve the real value of the land and have the debt satisfied, and no more. Such a power was a common law power, an appointment, and considering the legal estate all the time in the mortgagee, it may be called a power appendant or annexed to the estate. 2 Cowen, 236. It seems clear, then, that the power in question would have been a valid one at common law.

Equity has, however, obtained jurisdiction over the subject of mortgages, and has, in a spirit of humanity and justice, essentially modified the common law principles, and, as some eminent writers have said, has achieved a noble triumph over technical rules. 4 Kent, 158; 2 Story, sec. 1014. It will be conceded by all, who have any knowledge of the Roman law, that the equitable doctrines now universally prevailing in regard to mortgages, have been derived from that source. The civil law, in this as in many other instances, has been the great armory from which the courts of equity in England have supplied themselves with the most efficient weapons to ward off the severities of the stern and unrelenting common law.

Should we, therefore, be able to ascertain what the rights of the mortgagee were, as is established by the civil law, we will not find it difficult to satisfy ourselves what they were under the rules of equity as laid down by the English courts.

Default of payment at the stipulated time worked no forfeiture of the mortgage or pledge by the civil law; but the creditor obtained a right to reimburse himself by sale, and ordinarily he might sell without any judicial sanction, after giving proper notice to the debtor of his intention, whether the authority to sell were expressly given to him or not. 2. Story's Eq., sec. 1009, and the numerous authorities there cited. In fact, courts were generally applied to in such cases only where the sale of the mortgaged estate or personal property could not be effected, for the purpose of obtaining a decretal order to vest the property absolutely in the mortgagee. 2 Story's Eq., sec. 1024. That an authority to sell after default gave to the mortgagee complete power to sell, is a principle of the civil law which has never been disputed, and there is no reason to believe that the English courts of equity should have refused to adopt it, while they received the whole equitable doctrine on...