Tracy v. Wheeler

• Decision Date: 25 April 1906
• Citation: 15 N.D. 248,107 N.W. 68
• Parties: TRACY et al. v. WHEELER et al.
• Court: North Dakota Supreme Court

15 N.D. 248

107 N.W. 68

TRACY et al.

v.WHEELER et al.

Supreme Court of North Dakota.

April 25, 1906.

Syllabus by the Court.

Applying the maxim that “he who seeks equity must do equity,” it is held that a court of equity will not cancel a real estate mortgage securing a just debt, which concededly has not been paid, at the suit of the mortgagor, or one standing in his shoes, when the only ground urged for such relief is that the statute of limitations is available as a defense against its foreclosure.

Appeal from District Court, Barnes County; S. L. Glaspell, Judge.

Action by John Tracy, administrator, and others, against Henry O. Wheeler and William A. Scott. Judgment for plaintiffs, and defendants appeal. Reversed.

Engerud, J., dissenting.J. E. Robinson, for appellants. Winterer & Winterer and Lee Combs, for respondents.

YOUNG, J.

The purpose of the plaintiff's action is to remove a cloud from plaintiff's title. The complaint alleges: “That the defendants on behalf of the estate of David A. Murray, deceased, claim a lien or incumbrance on said real estate, adverse to these plaintiffs, which said lien or incumbrance is further claimed by said defendants by virtue of a certain mortgage made, executed, and delivered by one William N. Buswell and Margaret A. Buswell, his wife, to the said David A. Murray, covering said real estate, which mortgage bears date November 10, 1882, and was recorded in Book M of Mortgages, on page 236, in the office of the register of deeds of the territory of Dakota, now state of North Dakota, on November 25, 1882, at nine o'clock a. m.” “That said mortgage does not constitute a lien * * * and is invalid,” and “constitutes a cloud upon the title of the plaintiffs”-and prays (1) “that said claim be adjudged null and void; (2) that the title be quieted in these plaintiffs; (3) for general relief.” The defendants' answer admitted that they held the mortgage set up in paragraph 6 of the complaint, but denied its invalidity. The trial court canceled the mortgage, and the case is here for trial de novo upon defendants' appeal.

There is no dispute as to the facts. The only ground urged for cancellation is that proceedings for the foreclosure of the mortgage are barred. The mortgage was given on November 10, 1882, and secures a note for $700, due November 10, 1887. On November 30, 1899, Margaret A. Buswell, the mortgagor, gave a quit claim deed to her daughter, Susie M. Young, for a nominal consideration of $25. The testimony shows that the land is worth about $2,000. All of the five witnesses for plaintiffs testified to the fact of nonpayment of the debt. Mrs. Buswell and her daughter, Susie M. Smith, one of the plaintiffs herein, testified that nothing had been paid since October 1, 1885, when an interest payment was made; and it is stipulated in the record that the debt has not been paid, and it appears that the plaintiff knew at all times that the debt was not paid. She received the quitclaim deed from her mother with that knowledge. It is clear that she is in no better position to ask relief at the hands of a court of equity than her mother, the mortgagor. For the purposes of this case we may assume, without deciding the question, that the statute of limitations is available as a defense against the enforcement of the mortgage either by action or power of sale. The majority of this court has reached the conclusion, upon a rehearing, that the plaintiff must fail. Equity and good conscience require that she should pay the debt secured by the mortgage as a condition to its cancellation. The maxim “that he who seeks equity must do equity” voices a just and universal rule in determining the equitable rights of suitors, and should always be applied in cases like this. The action, even if treated strictly as a statutory action to determine adverse claims, is equitable (6 Pomeroy's Equity Jurisprudence, § 735), and is governed by equitable principles. The plaintiffs seek equity. They must do equity. Every man should pay his just debts. It is right that he should do so. The fact that he may not be coerced to discharge them by legal means affects only the legal character of his obligation. It does not alter the primary fact that he owes an obligation which in equity and good conscience he should pay. The Supreme Court of California, in applying this principle in a similar case (Booth v. Hoskins, 75 Cal. 276, 17 Pac. 227), said: “Common honesty requires a debtor to pay his just debts if he is able to do so, and courts, when called upon, always enforce such payments if they can. The fact that a debt is barred by the statute of limitations in no way releases the debtor from his moral obligation to pay it. Moreover, one of the maxims which courts of equity should always act upon is, as suggested by the court below, that ‘he who seeks equity must do equity.”’ In accordance with this rule, it was held that, “where a mortgagor of land seeks to quiet title as against the mortgage deed, he will be required to pay the mortgage debt, regardless of whether or not the debt is barred by the statute of limitations.” Merriam v. Goodlet (Neb.) 54 N. W. 686;Loney v. Courtnay, 24 Neb. 580, 39 N. W. 616;Brewer v. Merrick, 15 Neb. 180, 18 N. W. 43;Hall v. Hooper, 47 Neb. 111, 123, 66 N. W. 33;Booth v. Hoskins, 75 Cal. 271, 17 Pac. 225;Johnston v. S. F. S. Mine, 75 Cal. 135, 16 Pac. 753, 7 Am. St. Rep. 129;De Cazara v. Orena, 80 Cal. 132, 22 Pac. 74;Brandt v. Thompson, 91 Cal. 458, 27 Pac. 763;Boyce v. Fisk, 110 Cal. 107, 116, 42 Pac. 473;N. Y. B. & L. Ass'n v. Cannon, 99 Tenn. 344, 41 S. W. 1054;Cassell v. Lowry (Ind. Sup.) 72 N. E. 640, and cases cited; Spect v. Spect, 88 Cal. 437, 26 Pac. 203, 13 L. R. A. 137, 22 Am. St. Rep. 314; Driver v. Hudspeth, 16 Ala. 348; Gage v. Riverside Trust Co. (C. C.) 86 Fed. 984. See, also, Cole v. Savage (N. Y.) Clarke Ch. 179; Grinder v. Nelson, 9 Gill (Md.) 299, 52 Dec. 694; Barke v. Earley, 72 Iowa, 278, 33 N. W. 677; 1 High on Injunction (4th Ed.) § 452; 1 Story, Equity (13th Ed.) 65, 305; 1 Beach on Equity, § 439; 2 Jones on Mortgages, § 1806.

This doctrine was applied by this court in Satterlund v. Beal, 12 N. D. 122, 95 N. W. 518. In that case the plaintiff sought to cancel a mortgage against which the statute had run. The defendant counterclaimed for its foreclosure. The plaintiff attempted to plead the statute, but his pleading was insufficient. Upon a trial de novo, the court denied the prayer for cancellation and awarded judgment of foreclosure. The doctrine that a mortgage will not be canceled merely because the statute of limitations has run against an action to enforce it, and without payment of the amount justly due thereon, is of general acceptance. Our attention has been called to but two cases wherein cancellation has been awarded without payment. In Selby v. Sanford (Kan. App.) 54 Pac. 17, a mortgage was canceled on the sole ground that the statute had run against it. The opinion makes no reference to the equitable rule which is applicable to such cases. The case rests neither upon reason or authority. In Kingman v. Sinclair, 80 Mich. 427, 45 N. W. 187, 20 Am. St. Rep. 522, a mortgage given 33 years previously by the holder of an equitable title under a state certificate, was canceled at the suit of the fee owner, who had been in possession for 24 years and had no knowledge of its existence until a very short time before he brought his suit. It was not clear that the debt had not been paid. The court held under the circumstances of that case the mortgage should be canceled without exacting payment. That case, in our opinion, does not militate against the rule laid down in the cases above cited. In this case the fact that the debt is not paid is conceded. The plaintiffs are entitled to relief only upon condition that they pay it. The judgment will be reversed, and the trial court is directed to enter an order permitting the plaintiffs to pay into court for defendant's use, within 30 days from the date of said order, the amount of the mortgage debt, and upon such payment being made to enter judgment of cancellation and in default of such payment within such period to enter judgment dismissing plaintiffs' action.

MORGAN, C. J., concurs.

ENGERUD, J. (dissenting).

I am unable to concur in the conclusions of my associates in this case. It seems to me that their reasoning is unsound, because the case is not within the reason for the rules applied. The action is one to determine adverse claims under sections 5904-5913, Rev. Codes 1899, as amended by chapter 5, p. 9, Laws 1901. This was conceded by the appellant until the first opinion was handed down in this case. The appellant then petitioned for a rehearing, claiming, among other things, that the action was not one to determine adverse claims, as it was assumed to be in the first opinion. Further consideration of the case on rehearing has served to confirm me in the conviction that the first opinion was right on this question, as well as on all the questions involved. This dissent will therefore be largely a reiteration of the propositions upon which we all then agreed.

The complaint, although otherwise in statutory form, unnecessarily disclosed that defendants claimed to have a lien on the land by virtue of the mortgage in question; but the complaint did not admit that it was then or originally a valid lien. The prayer for relief was that prescribed by the statute, to the effect that the defendants set forth their adverse claims, whatever they were, to the end that their validity be determined, and plaintiffs' title be quieted. The defendants answered, admitting that the only adverse claim they had was the mortgage referred to in the complaint, and alleged that it was a valid lien in their favor. They included a counterclaim in their answer, praying that the plaintiff's title (which it averred was based on a void tax deed) should be adjudged void, and that the defendants' mortgage be adjudged a...