Wilkinson v. Federal Land Bank of New Orleans

• Decision Date: 08 January 1934
• Docket Number: 30559
• Citation: 168 Miss. 645,150 So. 218
• Court: Mississippi Supreme Court
• Parties: WILKINSON et al. v. FEDERAL LAND BANK OF NEW ORLEANS

150 So. 218

168 Miss. 645

WILKINSON et al. v. FEDERAL LAND BANK OF NEW ORLEANS

No. 30559

Supreme Court of Mississippi

January 8, 1934

(Division B.)

1 MORTGAGES.

Statute requiring advertisement of foreclosure sale to name mortgagor whose property is advertised is in derogation of common law and must be strictly pursued (Code 1930, section 2167).

2 MORTGAGES.

Advertisement of foreclosure sale, which failed to name mortgagor in possession who was the last vendee through original mortgagor, rendered sale void, notwithstanding advertisement named original mortgagor (Code 1930, section 2167).

ON SUGGESTION of ERROR.

(Divsion B. Jan. 8, 1934.)

[151 So. 761. No. 30559.]

Division B

October 16, 1933

Suggestion Of Error Overruled January 8, 1934.

APPEAL from chancery court of Chickasaw county, HON. JAS. A. FINLEY Chancellor.

Bill by the Federal Land Bank of New Orleans against Walter A. Wilkinson and others. From the judgment, named defendant and another appeal. Judgment reversed, and bill dismissed.

On suggestion of error.

Suggestion of error overruled, and cause remanded in accordance with opinion.

For original opinion, see 150 So. 218.

Reversed, and bill dismissed. Suggestion of error overruled and cause remanded.

Thos. H. Haman, of Houston, for appellant, W. A. Wilkinson.

On the acceptance of J. L. Ward as a member of the Houston Farm Loan Association, coincident with the transfer of stock in the association from Wilkinson, the original borrower, to Ward, on the assumption of the obligation by Ward, Wilkinson was released by operation of the Federal law from any liability on account of the loan.

Act of Congress of July 17, 1916, chap. 245, secs. 7, 8, 9, 11, 12, 14; Title 12, secs. 270, 733, 741, 761, 771, 772 and 791, U.S.C. A.

There was no agreement by appellant when he sold to Ward and was let out of the association to remain liable, as agreed when Ward sold to Peden. There was no reservation by the association or appellee when appellant was let out and Ward accepted in his place, as to any liability against Wilkinson. The acceptance of Peden in place of Ward was on a different agreement.

Federal law covers agreements entered into under this act.

Scott v. Federal Land Bank of Louisville, 175 N.E. 16.

The release of the principal debtor as such, even though he stipulates that he will remain liable secondarily, releases the surety of such principal debtor, if done without the consent of the surety. Anything done by the assured which would operate to change the obligation of the surety without the consent of the surety releases the surety. An extension of time on the debt, the addition of a surety, the release of a co-surety or of the principal, without the consent of the surety releases him, and likewise the additions of burdens to the suretyship or the lessening of the security.

Jones v. Carpenter, 106 So. 127, 90 Fla. 407; Tennessee Valley Bank v. Sewell, 107 So. 834, 214 Ala. 362; Brownson v. Hannah, 11 So. 731, 51 A. L. R. 976; Houck v. Graham, 106 Ind. 195, 55 Am. Rep. 727; Hall v. McHenry, 19 Ia. 521, 87 Am. Dec. 451; Nelson v. Brown, 62 Am. St. Rep. 755; Abell v. Coons, 68. Am. Dec. 229; Klapworth v. Dressler, 78 Am. Dec. 69; Calvo v. Davies, 29 Am. Rep. 130; George v. Andrews, 45 Am. Rep. 706; 21 R. C. L. 1062, 1063; 21 R. C. L. 1072; 27 Cyc. 1351, 1352; Interstate Land & Investment Co. v. Logan, 72 So. 36, 196 Ala. 196; Gilliam v. McLemore, 106 So. 99, 141 Miss. 253; Smith v. Childress, 119 Miss. 20, 80 So. 346.

Whether Wilkinson, who had long before sold and conveyed the property to Ward, who had sold and conveyed same to Peden, could be "the mortgagor whose property is advertised" within the meaning of the statute, is of some doubt, especially in this case where by written instrument the mortgage had accepted first Ward and later Peden as the borrower and the owner of the land and the shares of Wilkinson, the original mortgagor.

Section 2431, H, chap. 180; Section 2167, Code 1930.

The statute does not merely require that the name of the mortgagor be disclosed, but the name of the mortgagor whose property is being advertised, i. e., the mortgagor owning the property.

This court has held that the requirements of this statute are strictly construed against the mortgagee, and that strict compliance with the statute is necessary for a valid sale and the passing of title thereby.

The statute is mandatory and invalidates a sale not complying with the provisions of the statute.

Fauntleroy v. Mardis, 123 Miss. 353, 85 So. 96; Moris v. Lindsey, 124 Miss. 742, 87 So. 12; Lake v. Castleman, 116 Miss. 175, 76 So. 877; Wilczinski v. Watson, 110 Miss. 86, 69 So. 1009.

The Federal statute of July 17, 1916, and March 4, 1923, section 921 of Title 12 U.S.C. A. requires that if there shall be default under the terms of any indorsed first mortgage held by a Federal Land Bank, the National Farm Loan Association through which said mortgage was received by said Federal Land Bank, shall be notified of said default, providing that said association may then be required to make good the default. There is no proof that such notice was given to the Houston National Farm Loan Association through which the mortgage was received.

Federal Act, secs. 720 and 761, U.S.C. A.

J. H. Ford, of Houston, for appellant, J. L. Ward.

The powers granted under the Federal Farm Loan Act will not be extended by the courts beyond the provisions of the act itself.

Wheeler v. Greene, 280 U.S. 49, 52, 74 L.Ed. 160.

When the Federal Land Bank permits the purchaser from the original borrower or his vendee to assume the mortgage and the stock interests of such borrower, it necessarily releases the original borrower or his vendee so permitted to sell said land, from all liability for such loan.

12 U.S.C. A., sec. 781, par. 2, sec. 791, par. 3.

Herbert M. Fant, of New Orleans, Louisiana, for appellee.

As between the grantor of mortgaged premises and a grantee who assumes the mortgage, personal liability for the mortgage debt is transferred from the former to the latter. But this is not so as to the mortgagee; the assumption of the mortgage does not deprive him of any rights or remedies he possessed against the mortgagor, or relieve the latter from liability from the debt secured, unless the mortgagee has expressly agreed to release him, and to accept the purchaser as his debtor in place of the mortgagor.

27 Cyc. 1352; Campbell v. Clay, 36 P. 909.

Appellee's acceptance of Ward's assumption did not, in the absence of an express agreement, release Wilkinson and if ultimately Wilkinson should pay the indebtedness, he will be entitled to reimbursement from Paden.

Stallings v. Lane, 88 N.C. 214; Scanland v. Settle, 19 Tenn. 169 (Meigs) ; Green v. Warrington (S. C.), 1 Desous 430; Merriman v. Parkey, 191. S.W. 327, 136 Tenn. 645; Pruden v. Williams, 26 N.J.Eq. 210.

T. H. Hedgepeth, Herbert M. Fant, both of New Orleans, Louisiana, and T. M. Thomas, of Tupelo, for appellee.

It is admitted that the published notice of sale did set forth the name of the mortgagor who executed the trust deed. The question at issue, therefore, is whether or not, under the law as applied to the facts of this case, that was sufficient and valid notice. The appellee maintains that it was a legally sufficient notice under which a valid sale could be made, and was in fact consummated by the appellee acting through its substituted trustee.

Section 2167, Mississippi. Code of 1930.

It will be noted that the act does not state in words that the notice of sale must set forth the name of the owner of the equity of redemption at the time of the foreclosure sale or of any subsequent assumer of the indebtedness, whether such name shall happen to be within or without the actual knowledge of the trustee or of the beneficiary.

Appellee wishes also to suggest to the court that as a practical matter it does not believe that much actual good would result to subsequent owners of the equity of redemption in mortgaged property about to be foreclosed by requiring that their names should appear in the notice of sale.

The appellee now asks the court to give the construction of the statute now contended for by it, regardless of the court's own personal feeling in the matter, because of such long continued interpretation of the statute by many thousands of persons along lines as now contended for by the appellee, and thus to prevent incalculable harm to millions of dollars in property values.

Wade v. Woodward et al., 145 So. 737.

The delay and expense incident to a foreclosure and sale in equity have brought power of sale mortgages and trust deeds into general favor both in England and America.

3 Jones on Mortgages (8 Ed.), sec. 2285, chap. 40; First Nat. Bank v. Bell S. & C. Min. Co., 8 Mont. 32, 35, 19 P. 403, affirmed 156 U.S. 470, 49 L.Ed. 497; Fleming v. Barden, 127 N.C. 214, 37 S.E. 219, 53 L. R. A. 316; Shew v. Call, 119 N.C. 450, 27 S.E. 33, 56 Am. St. 678; Kornegay v. Spicer, 76 N.C. 95; Eubanks v. Becton, 158 N.C. 230, 73 S.E. 1009.

The notice of sale need not name the owners of the equity of redemption, or the subsequent mortgagees, or others who have acquired an interest in the estate from the mortgagor since the mortgagee's title accrued.

3 Jones on Mortgages (8 Ed.), sec. 2384; Silva v. Turner, 166 Mass. 407, 44 N.E. 532; Learned v. Foster, 117 Mass. 365; Dyer v. Shurtleff, 112 Mass. 165, 17 Am. Rep. 77; Roche v. Farnsworth, 106 Mass. 509; Cogan v. McNamara, 16, R. I. 554, 18 A. 157; Hoffman v. Anthony, 6 R. I. 282, 75 Am. Dec. 701; Alexander v. Chipstead, 152 Ga. 851, 111 S.E. 552.

It will be noted that Massachusetts cases are almost entirely relied upon to support the textual statements, and the textual...