McNair v. O'Fallon

• Decision Date: 31 July 1843
• Citation: 8 Mo. 188
• Parties: MCNAIR ET AL. v. O'FALLON ET AL.
• Court: Missouri Supreme Court

8 Mo. 188

MCNAIR ET AL.

v.O'FALLON ET AL.

Supreme Court of Missouri.

July Term, 1843.

APPEAL FROM THE ST. LOUIS COURT OF COMMON PLEAS.

LAWLESS and NABB, for Appellants. 1. An equity of redemption, on the 6th October, 1824, was the only interest to which McNair and wife were entitled, and which, at that time, could not be the subject of levy and of sale, on a fi. fa. at law. 2. If an equity of redemption at that time was saleable on fi. fa. at law, it could not legally apply to this case; because the fi. fa. was on a judgment at law, obtained on the mortgaged debt. 3. If saleable on fi. fa., John Mullanphy, mortgagee, could not become a purchaser at the sale. 4. The conduct of Mullanphy, at the sale, was oppressive and fraudulent, and thereby, by denying a competition of bidders, and otherwise, depreciated the value of McNair's interest and property.

I. An equity of redemption was the only interest to which McNair and wife were entitled on the 6th October, 1824, which interest neither then was, nor could be, sold, under the statutory provisions of Missouri nor at common law, or fi. fa., or general judgment. 1st. As to the interest of McNair and wife, on 6th October, 1824. Vide record, the several mortgages at pages 46, 51, 76; viae return of sheriff, p. 70; vide p. 76, as to the judgment; vide return of sheriff on judgment, 5500, p. 77-78; vide p. 79, as to the proceedings at law. 2nd. At common law, an equity of redemption not saleable. Vide 1 Pow. 258, note R.; 1 Mad. Ch. 522; 4 Kent, 160; 1 Pick. 399. 3 rd. An equity of redemption is an estate derived from every contract of mortgage, and possesses the inseparable incident of foreclosure, which must be had through a judicial decree. Vide 4 Kent, 135; 1 Pow. 116; 2 Johns. Ch. R. 100. 4th. And before foreclosure, no act of mortgage can affect, in any way, the right of redemption in mortgage. Vide Wilson v. Twup, 7 Johns. Ch. R. 37-8; 9 Cowen, 358, 360-1, 371, 389-90-91. 5th. An equity of redemption, being a mere creature of equity, is an estate and interest sui generis, and can only be construed, understood and enforced by a power residing in a court exercising chancery power. Vide Fonb. 227; 4 Kent, 163; 1 Mad. Ch. 451: 3 Bin. 8. 6 th. An equity of redemption being thus a creature of equity, partakes of, and is, in fact, a trust estate; if not express, certainly a constructive trust, which could only be sold under statutory provisions, where the common law is recognized. In England, a trust estate not saleable before 29 Charles II.; 8 East, 482; 24 Law Lib. 298; 1 Vesey, case of Lysler v. Dolland; 1 Pow. on Mort. p. 255, note K.

If trust estate be not saleable at common law, and in England, only by statute of 29 Charles II., an equity of redemption being, as aforesaid, a peculiar trust estate, was not embraced in the provisions of 29 Charles II., because the words, “lands, tenements, and hereditaments,” &c., did not contemplate “an equity of redemption,” for the words “equitable interest” were not embraced; showing by the absence of the word “equity,” nothing can be inferred in a statutory provision. 8 Peters, 691; Saunders, H. and T., p. 191; also, note X, for the words, 2 statute of Charles II.; 1 Powell, 257, note; 1 Vesey, 431; 7 Pick., 51: 13 Peters, 294; 5 Har. and Johns. 315.

An equity of redemption could not have been contemplated by the Legislature of the Territorial government. Geyer's Dig., title Judicial Proceeding, § 63, 66; ibid., p. 307, title Mortgages, being an express provision for the sale of mortgaged estates. This statute must be strictly pursued by the party, mortgagee, and while there existed no chancery power, a common law court was entered to be the forum for the remedy, which cannot change or affect the principle in equity, to wit: that “once a mortgage, always a mortgage;” and being such, there arises an incident of foreclosure, which must be disposed of before the right of mortgagor can be released or annihilated, either by special contract or judicial sentence; consequently, the power was given to the common law courts through which to obtain relief, clearly showing, that though a remedy is in a court of common law, yet it may become the vehicle of effecting it. 1 Dallas, 211; Lausett's Eq. 41, 44; 13 Peters' R. 294; 13 Johns. R. 551, 102; 11 Mass. 165; 9 Cowen, 182.

It is admitted by the court below, that this was an Anglo-American mortgage. If so, the interest is purely equitable, and is contra-distinguished from legal interest; and being so, could not be affected by affording a remedy in a court of common law. This view arises from several acts of Congress, relating to judiciary powers in territory of Louisiana, and then the territory of Missouri. 2 Story, p. 938, § 13, p. 975, § 1, ch. 99; 3 Story, 1255, passed 4th June, 1812; ibid., 160-3, passed 29th April, 1816. Also, in Geyer's Digest, several titles of Mortgage, and other titles showing a distinction between law and equity; also, the introduction of equity of power in 1811, p. 124, title Common Law. Thus, the whole system of legislation in Congress and the Territory shows, from the commencement to act of 1839, that there is a negation to sale of equitable right. See, also, the reasoning of the court by Lord Ellenborough, in Scott v. Scholey, 8 East, which shows the injustice of other doctrines: also, note K. in Powell, 255.

It was objected in argument below, that no other creditor than mortgagee could enforce payment of his debts. To the fallacy of such reasoning, I refer the court to 1 Geyer's Dig., title Mortgage; 1 Pow. note B, 261; 13 Law Lib. 108. As to the policy of protecting the rights of mortgagors or mortgagees, vide Sugd., p. 128; 1 Johns. Ch. R. 30. Compare the statutes with the provisions of equity Charles II., Saund. H. and T., note X; Geyer's Dig., title Jud. Pr., §§ 63, 66, and decisions in other States whose statutes contain like provisions; vide Hardin's R. 19; 1 Saxton, 304.

If an equity of redemption be real estate, a judgment would be a lien on it, and an innocent purchaser might be affected. 1 Johns. C. R. 55; Hart v. Reeves, 5 Hayw. 58 (which I cannot find but by reference). If an equity of redemption be saleable, it must be levied on as such. Con. Dig., 105, 518; 1 Pow. note, p. 255; 7 Pick. 51; 4 Pick. 160; 8 East, Scott v. Scholey. If saleable at law, an equity of redemption could not be sold on a judgment on mortgage-debt. Perry v. Barker, 8 Vesey, 527; 10 Johns. 482; 1 Pick. 352-3, &c., Atkins v. Sawyer; 4 Pick. 133-4, &c., Crane v. Marship; 4 Pick. 253, Curling v. Hardin; Schottenkerk v. Whale, 3 H. R. 279.

As to the election of mortgagee to sue on bond, he thereby waives his right against the mortgaged property. 3 Johns. Ch. R. 330, Dunkley v. Van Buren. The mortgagee cannot become the purchaser on debt mortgaged, at judgment at law, at his own sale. If so, the mortgagee may still redeem. 4 Hen. and Munf. 101, Dabney v. Green; Tea v. Annan, 2 Johns. C. R. 127; 1 Pick. 354; Pow. 1001. The mortgagee is regarded quasi trustee, at least, to mortgagor, after forfeiture. 1 Mad. Ch. 512; 1 Pow. 330, and part of note M to p. 330; 1 Peters' S. C. R. 441, Conrad v. Atlantic Co.; 1 Mo. R. 240, case of Carr and Holbrook; 2 Merivalle, 259, 260; 13 Johns. R. 555-558; Cowen, 378

As to the hostile attitude mortgagee holds to mortgagor, that does not evade the principle, any other than that of Creditor v. Debtor; but as every creditor on simple contract has his remedy, which is as necessary to be pursued, as the creditor or specialty must pursue the action prescribed to him.

It is contended, that if Mullanphy purchased any interest, it was the equity of redemption of McNair, and not Mrs. McNair's whole equity of redemption arising on her contract as well as that of Alex. McNair; and it is not for the defendants to deny the ability of Mrs. McNair to make contract, or bond and mortgage, in both of which she joined. If mortgagee could evade the remedy pointed out by the statute, it would nullify the act of 1807, and the mortgagee then become his own purchaser; and the consequences of oppression would be apparent 2 Johns. C. R. 30.

If the doctrine of merger be brought in, in aid of the bill of the mortgagee, on the hypothesis that he could purchase, the courts of equity apply it according to the intention of the mortgagee, purchaser, to be determined by his own acts. In this case we refer to the petition of foreclosure of mortgage, of 17th April, 1821, to show his admission of existence of mortgage, and thereby the equity of redemption in Mr. and Mrs. McNair. Vide 10 Johns. 482; in case of James v. Morer, 4 Wend. 24-26.

Fraud may be inferred from fiduciary relations, or the relation of mortgagor and mortgagee, when mortgagee departs from the prescribed boundaries given him by statute to recover his debt. 2 Sch. and Lefroy, 673; 1 Story Eq. Com. p. 198, §§ 188, 190; 18 Vesey, 483; 2 Story, 200, 266; 2 Johns. C. R. 30; 5 Gill and Johns. 75; Pow. 124, note 2. From fact of interference at sale, Sugd. 127. As to inadequacy of price, 14 Vesey, 240. Evidence of Dent, Evans, and all the circumstances.

SPALDING, for Appellees. The appellees make the following points:

I. Equity of redemption passed by sheriff's sale, on the judgment on the bond. Gever's Dig., 266-7, § 63, 64, 66; Edwards' Com., 855, § 3; acts of Assembly of 1821-2, p. 93, § 61, as to liens of judgments on real estate. See 3 Mo. R. 492, and 4 Mo. R. 319, 380, that mortgage in Missouri is not the same thing as in England. 3 Martin's R. (old series) 574; 4 ibid. 397; 5 ibid. 634, to show that, under Spanish laws, which formerly were the law here, an equity of redemption could be sold on execution; and the last case was a judgment in favor of the mortgagee, on the mortgage debt, and under those laws there was no distinction of estates into equitable and legal. The custom was to sell equity of redemption here always. The words, “lands and tenements,” &c., were used to comprehend all interest in lands. See...