Traer v. Fowler

• Decision Date: 21 March 1906
• Docket Number: 2,288.
• Citation: 144 F. 810
• Parties: TRAER v. FOWLER.
• Court: U.S. Court of Appeals — Eighth Circuit

144 F. 810

TRAER v. FOWLER.

No. 2,288.

United States Court of Appeals, Eighth Circuit.

March 21, 1906

(Syllabus by the Court.)

Rules of property established by the construction by the highest judicial tribunal of a state of its Constitution or statutes prevail in the federal courts where no question of right under the Constitution and laws of the nation, and no question of general or commercial law is involved.

During the period of redemption from foreclosure and execution sales of real estate in Illinois the mortgagor or judgment debtor is entitled to the possession and rents and profits of the property. The purchaser has a lien for the amount of his bid and interest during this period. If no redemption is made the title he acquires at the expiration of the period of redemption relates back to the beginning of his lien to cut off intervening incumbrances, but it does not divest the mortgagor or judgment debtor of, or vest in the purchaser the right to the possession or to the rents and profits during the period of redemption.

A judgment creditor who redeems from a foreclosure or execution sale under the statutes of Illinois buys the lien of the purchaser and secures no more or less rights than the purchaser would have acquired if no redemption had been made.

Coal lying under land in its natural deposit is real estate and foreclosure and execution sales thereof are subject to redemption.

The coal and other materials derived from the ordinary and reasonable operation of open coal mines, iron mines, lead mines, gravel banks, clay pits, stone quarries, slate quarries, salt works, oil wells, and other property of this character which diminishes in quantity and value by use constitute the rents and profits thereof, and not the body of the property, and belong to the owners of the former and not the owners of the latter.

A judgment creditor who redeems from a foreclosure sale of mortgaged coal in an opened mine under the statutes of Illinois is not entitled to recover damages from a receiver in the foreclosure suit for his extraction of coal from the mine by ordinary and reasonable mining operations during the period of redemption.

General expressions in the opinions of courts are not authoritative beyond the questions which they were considering the deciding when they used them.

William McNett (Walter McNett, on the brief), for plaintiff in error.

Nathaniel T. Guernsey, for defendant in error.

Before SANBORN, HOOK, and ADAMS, Circuit Judges.

SANBORN Circuit Judge.

The statutes of Illinois provide that the mortgagor may redeem from a foreclosure sale of his real estate at any time within 12 months after the date of the sale, and that if he fails to do so any of his judgment creditors may make a redemption within three months after the expiration of the 12 months by paying the amount bid at the sale and interest. If no redemption is made, the deed to the purchaser issues after the expiration of the period of redemption. 2 Starr & C.Ann.St.Ill. 1896, c. 77, Secs. 18, 20, 21.

The assignor of the plaintiff, a judgment creditor of the mortgagor, redeemed from the foreclosure sale of mortgaged coal underlying 80 acres of land in the state of Illinois and afterwards conveyed to the plaintiff both the coal under the land and its claim for damages for the removal and conversion of coal mined during the period of redemption. The foreclosure sale was made on November 25, 1899, and the redemption on February 25, 1901. In the foreclosure suit the defendant had been appointed a receiver of the mortgaged property, and during the period of redemption he operated the mine in which the mortgaged coal was situated without the authority or consent of the mortgagor. No shaft had been sunk or mine opened from the surface of the land under which the coal lay, but it was accessible through the mine of an adjoining owner, and the mortgagor had caused the coal to be mined through this adjacent property before any receiver was appointed. The receiver extracted the mortgaged coal in the same way. Between December 9, 1899, and June 6, 1901, the defendant, as receiver in the foreclosure suit, mined and converted to his own use, without the authority or consent of the mortgagor, 50,000 tons of coal, and thereby diminished the coal in the mine by that amount. There was no statement in the petition of the amount of coal, if any, which was mined subsequent to the redemption, and for that reason no cause of action was stated, unless the plaintiff was entitled to recover for coal extracted during the redemption period. The court below sustained a demurrer to a petition of the plaintiff for damages which disclosed the foregoing facts, and this ruling is challenged as error.

Is a judgment creditor who redeems from a foreclosure sale of mortgaged coal in an open mine under the statutes of Illinois entitled to the coal extracted therefrom in the ordinary and reasonable working of the mine during the period of redemption? This question must be answered by the decisions of the Supreme Court of Illinois, for the rules of property established by the construction by the highest judicial tribunal of a state of its Constitution or statutes prevail in the federal courts where no question of right under the Constitution and laws of the nation and no question of general or commercial law is involved. Detroit v. Osborne, 135 U.S. 492, 10 Sup.Ct. 1012, 34 L.Ed. 260; Percy v. Cockrill, 4 C.C.A. 73, 82, 53 F. 872, 877; Madden v. Lancaster Co., 12 C.C.A. 566, 570, 65 F. 188, 192; Union Pac. R. Co. v. Reed, 25 C.C.A. 389, 394, 80 F. 234, 239.

In Stephens v. Illinois Mutual Fire Ins. Co., 43 Ill. 327, 331, the question was whether the title of the mortgagor was divested before the expiration of the period of redemption by the foreclosure sale so that his grantee could not recover of the insurance company the value of improvements upon the mortgaged property which were insured for his benefit, as owner before the foreclosure sale, and which were destroyed by fire during the period of redemption. The court decided that he held the title to the property during the period of redemption and that he could recover. It said:

'In this state, the purchaser under a sheriff's sale, upon judgment and execution, or at a master's sale, on foreclosure of a mortgage, acquires by his purchase no new title to the premises until the period of redemption has passed and he is entitled to a deed. His deed will relate back, it is true, to the beginning of his lien, in order to cut off intervening incumbrances, but it will not carry back the absolute divestiture of title, as is evident from the fact, that neither judgment debtor nor mortgagor can be called to account for rents and profits. His title becomes absolute only when his right to a deed accrues. If it is a sale under a decree of foreclosure, the mortgagor still has the estate of a mortgagor, with this qualification, that the amount and time of redemption have become absolutely fixed by the decree and sale, and his estate will be absolutely divested if he fails to redeem within the allotted time.'

In Rockwell v. Servant, 63 Ill. 424, 427, the issue was whether the time limited by the statute for the commencement of an action of ejectment commenced to run in favor of one Seymour, the purchaser at the foreclosure sale, and against the heirs of the mortgagor, at the date of the sale or at the time of the expiration of the period of redemption, and the Supreme Court of Illinois said:

'The heirs in possession were not liable for use and occupation, or to account for rents and profits, until Seymour was entitled to his deed. And had the latter been and remained in possession after the rendition of the judgment, he would have been bound to account for rents and profits until the time for redemption had expired, precisely as though he had been in possession as mortgagee, and there had been no judgment rendered.'

And that court held that the time limited did not commence to run until the period of redemption expired.

In Locey Coal Mines v. Chicago, W. & V. Coal Co., 131 Ill 9, 18, 21, 22 N.E. 503, 8 L.R.A. 598, a sale in one parcel under a decree upon a creditors' bill had been made, without the right of redemption, of 280.31 acres of mining lands, of the coal under 211.71 acres of other land and of the personal property used in operating the mines. The court decided that 'the right which the defendant had acquired prior to the filing of the bill to the coal under the 211.71 acres is an interest in land and is in its nature real property'; that this interest in coal and the other real estate involved in the suit should be sold separate from the personal property and subject to the debtor's statutory right of redemption. The main issue in this case was whether or not the defendant was entitled to this right of redemption. Before the decree was rendered a receiver had been appointed who was operating the mines. In the opinion the court states that it was suggested in argument that there ought to be no right of redemption because neither the receiver, the defendant, nor the purchaser could be permitted to operate the mines during the period of redemption and they would consequently become seriously injured unless the water was kept out of them and fresh air was supplied to them at an expense of $400 per month. The court then proceeds in this way: 'This expense should not be borne by the receiver, as he can no longer work the mines, since his doing so would simply be a subtraction or taking away of a portion of the property sold. The defendant, being insolvent and presumably unable in any event to redeem, would have no inducement to incur such expense, since for the same reason above stated, it could not be permitted to...