Schleef v. Purdy

• Decision Date: 10 April 1923
• Citation: 107 Or. 71,214 P. 137
• Parties: SCHLEEF v. PURDY ET AL.
• Court: Oregon Supreme Court

214 P. 137

107 Or. 71

SCHLEEF v. PURDY ET AL.

Supreme Court of Oregon

April 10, 1923

Department 1.

Appeal from Circuit Court, Marion County; Geo. G. Bingham, Judge.

Suit by Katherine Schleef against Will E. Purdy and another. Decree for complainant, and defendants appeal. Affirmed.

P. J Kuntz, of Salem (Walter C. Winslow and P.J. Kuntz, both of Salem, on the brief), for respondent.

RAND J.

This suit was brought in Marion county to obtain the cancellation of a mortgage of real property situated in Douglas county. The circuit court entered a decree canceling the mortgage and from this decree the defendants have appealed.

Their first contention is that the court had no jurisdiction of the subject-matter of the suit, for the reason that the suit was not brought in the county where the mortgaged land lies. Under section 396, Or. L., suits in equity "(1) for the partition of real property; (2) for the foreclosure of a lien or mortgage upon real property; (3) for the determination of an adverse claim, estate, or interest in real property, or the specific performance of an agreement in relation thereto"--shall be commenced and tried in the county where the land or some part thereof is situated. "In all other cases, the suit shall be commenced and tried in the county in which the defendants, or either of them, reside, or may be found at the commencement of the suit."

If a suit for the cancellation of a mortgage of real property is a local one, then this suit should have been commenced and tried in Douglas county, where the mortgaged land is situated; while, if it is a transitory suit, then it was not only proper, but necessary, for the suit to be commenced and tried in Marion county, because at the time of the commencement of the suit the defendant Purdy and the officers of the defendant corporation all resided and were found in Marion county. Under the provisions of the statute referred to the suit is transitory, and not local, unless the cancellation of this mortgage will operate or result in the determination of some adverse claim, estate, or interest of the holder of the mortgage in or to the mortgaged property, as none of the other provisions requiring the suit to be commenced and tried in the county where the land or some part thereof lies can have any application to the equitable relief of cancellation of a mortgage. Whether, by the cancellation of this mortgage the decree determined or resulted in the determination of any adverse claim, estate, or interest the holders of the mortgage had in the lands mortgaged depends upon the character and extent of the rights and interests that the holder of a mortgage in this state has in the mortgaged premises; and unless the rights and interests of the holder of a mortgage upon real property are tantamount to an "adverse claim," "estate," or "interest" in the mortgaged lands, within the meaning of those words as used in the statute, a suit for the cancellation of a mortgage is transitory, and not local.

At common law, a mortgage was "an estate created by a conveyance, absolute in its form, but intended to secure the performance of some act, such as the payment of money and the like, by the grantor or some other person, and to become void if the act is performed agreeably to the terms prescribed at the time of making such conveyance," and was "therefore an estate defeasible by the performance of a condition subsequent." Washburn on Real Property (5th Ed.) c. 16, § 1. In the same section the author says:

"As ordinarily understood, a lien upon land does not imply an estate in it, but a mere right to have it, in some form, applied towards satisfying a claim upon it. The peculiarity of mortgages is that, while in some states they combine the character of lien and estate, in others they form a lien only upon the land."

In this state a mortgage upon real property does not combine the character of a lien and an estate in the lands mortgaged, but it creates nothing more than a lien or an incumbrance on the land as security for the payment of a debt or the fulfillment of some other obligation. In the case of Anderson v. Baxter, 4 Or. 105, this court said:

"Formerly a mortgage of real property was regarded as a conveyance of the legal title, subject, of course, to be defeated by the performance of a condition; and this doctrine still prevails to some extent. Courts of equity, however, have always regarded a mortgage as a mere security for a debt, and the foreclosure thereof as a proceeding to satisfy the debt secured thereby, and courts of law as well as courts of equity in many of the states have taken the same view; that is, that a mortgage was a mere lien or pledge, and that the general title to the mortgaged property was in the mortgagor. In the language of one of the authorities, 'the mortgagee has neither a jus in re, nor ad rem, but a specific lien, similar in character to a general lien created by a judgment upon the land of the judgment debtor.' 3 Denio, 232. However this may be as a matter of strict law, I am satisfied that a suit to foreclose a mortgage is not for the determination of any right or claim to or interest in real property, but a proceeding to have the mortgaged property adjudged to be sold to satisfy the debt secured thereby; at least, this is in accordance with the express provisions of our statute. Civ. Code, § 410. In such a suit the title to the mortgaged premises is in nowise drawn in question. The adjudication is merely as to the fact of the execution of the mortgage, the amount due thereon, and the sale of the property to satisfy the debt secured. It is the mere collection of a debt charged upon specific property by resorting to the property as a means of satisfying it. If it were a suit to divest a party of title, or to establish some right regarding the title to real property, it would stand upon a different footing; but the mortgage being in equity only a chose in action, a suit to foreclose it is more analogous to an action upon a sealed instrument, and should be governed by the same rule of limitation."

Said Mr. Justice Lord in Sellwood v. Gray, 11 Or. 534, 537, 5 P. 196, 197:

"In this state, a mortgage does not operate, as at common law, to vest in the mortgagee an estate upon condition, the breach of which works a forfeiture of the estate, and renders it absolute. It is, in fact, what the parties intended, and as equity treated it, a mere security for the repayment of the debt or obligation, and serves simply to create a lien or incumbrance upon the property. The title, both before and after condition broken, remains in the mortgagor until foreclosure and judicial sale. The mortgage works no change of ownership in the property. It is still the property of the mortgagor, in law and in equity; is liable for his debts; may be sold under execution, conveyed or devised; is subject to dower, or may be again mortgaged, as any other estate in land. Nor do any of the qualities or incidents of an estate in land attach in the mortgagee; he has but a lien upon the land as a security for repayment, and which cannot operate to affect the possession of the mortgagor without his consent, or to transfer his estate in the land, except after default, and by force of a judicial sale under a decree of foreclosure. But before such proceedings are had, payment of the debt by the mortgagor will extinguish the lien and free the estate from the mortgage."

Said this court again in Marx v. La Rocque, 27 Or. 45, 47, 39 P. 401, 402:

"It [the mortgage] vests no title or right to the possession in the grantee, but simply creates a lien or incumbrance on the land. * * * Whatever may be the form of the instrument, if it was executed as security for a debt, it will be treated merely as a mortgage, and the title and right to possession will remain in the mortgagor until foreclosure and sale. [ Citing authorities.] From this it necessarily follows that plaintiffs have no legal estate in or right to the possession of the land sought to be partitioned and cannot maintain a suit for that purpose."

The doctrine announced in these cases has been followed by this court in the following cases: Renshaw v. Taylor, 7 Or. 315, 320; Thompson v. Marshall, 21 Or. 171, 176, 27 P. 957; Adair v. Adair, 22 Or. 115, 131, 29 P. 193; Trust Co. v. Loewenberg, 38 Or. 159, 169, 62 P. 647; Dekum v. Multnomah County, 38 Or. 253, 256, 63 P. 496; Kaston v. Storey, 47 Or. 150, 152, 80 P. 217, 114 Am. St. Rep. 912; Noble v. Watkins, 48 Or. 518, 520, 87 P. 771; Kaiser v. Idleman, 57 Or. 224, 233, 108 P. 193, 28 L. R. A. (N. S.) 169.

Under these decisions a mortgage of real property in this state does not convey the title nor does it create an interest or an estate in the mortgaged property. It merely creates a lien or an incumbrance against the property as security for the payment of a debt or the fulfillment of an obligation, and becomes void on payment of the debt or the fulfillment of the obligation. Equity regards the debt as the principal thing, and the land as a mere incident to it. The interest created by the mortgage in the mortgaged premises is of a personal nature, like that which the mortgagee has in the debt itself, and whatever the mortgage does with the land is auxiliary to enforcing payment of the debt. 2 Washburn on Real Property (5th Ed.) § 511.

Until foreclosure and sale the mortgage is a mere chose in action secured by a lien upon the land, which gives to the mortgagor no title or estate whatever to the mortgaged premises. The mortgagor has no interest in the mortgaged premises which he can sell or which can be sold separately from the debt itself, and the transfer of the mortgage, without a transfer of the debt intended to be secured thereby, is a mere nullity. Trimm v....