Wilson v. Bryant

• Decision Date: 17 February 1883
• Citation: 134 Mass. 291
• Parties: Charles B. Wilson v. Frederick E. C. Bryant. Same v. Same
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

134 Mass. 291

Charles B. Wilson v. Frederick E. C. Bryant. Same v. Same

Supreme Court of Massachusetts

February 17, 1883

Argued March 10, 1881; March 11, 1881

Decided November 21, 1882

Suffolk. Two appeals from decrees of the Court of Insolvency allowing claims of the plaintiff against the estate of Henry B. Williams, an insolvent debtor, of which the defendant was assignee in insolvency. The cases were submitted to the Superior Court upon the following statement of facts:

Before and on May 1, 1872, Charles B. Wilson, the plaintiff, was the owner of a parcel of land in Boston, subject to a mortgage made by him, on April 29, 1871, to Charles Amory and others trustees, to secure the payment of his note to them for $ 20,000, in three years, with interest. On May 1, 1872, Wilson, in consideration of $ 45,000, conveyed by deed of warranty to Williams one undivided half of this land "subject to a mortgage from me to said Amory and others for the sum of $ 20,000," dated April 29, 1871, "one half of which mortgage debt the said Williams assumes and promises to pay, the same forming part of the above consideration." And, on the same day, Williams, as part of the consideration, conveyed to Wilson other land valued at $ 20,000, and made to Wilson his note for $ 15,000 payable April 1, 1874, and, to secure the payment of this note. executed a mortgage back to Wilson of the premises conveyed by the latter to him, describing them as subject to a first mortgage of $ 20,000, dated April 29, 1871, to Amory and others. and with the usual covenants, except against that mortgage, and containing a power of sale.

On August 15, 1873, Williams sold and conveyed by deed of quitclaim to Samuel T. Crosby the same premises, subject to the two mortgages, but without the grantee otherwise agreeing to assume and pay them, and Williams has since acquired no new title to the premises. One half the interest on the first mortgage was paid by Williams until his conveyance to Crosby, and by Crosby, afterwards, to November 1, 1875, and no payments of interest have been made since.

On April 29, 1874, Wilson's note to Amory and others became payable, but no part of it was paid, and on May 25, 1874, they indorsed it in blank, without recourse, and delivered it to Sarah D. Wilson, his wife, who paid for it out of her separate estate, and they at the same time assigned to her the mortgage from her husband to them.

On May 24, 1877, a portion of the land, described by metes and bounds, was conveyed to one Kent, by Crosby as owner of one undivided half, by one Wallis who had acquired one undivided fourth by a conveyance from Wilson, and by Wilson as owner of the other undivided fourth; Wilson as owner of the second mortgage releasing it therefrom, and his wife as owner of the first mortgage releasing it from that incumbrance; and all of the purchase money, after payment of taxes and expenses, namely, $ 8836.54, was credited upon the first mortgage note.

On February 1, 1879, Williams filed a petition in insolvency, upon which the defendant was duly chosen assignee; and all the estate of Williams was duly assigned to him, according to the statute.

In April 1879, the plaintiff, having been duly notified, and having actual knowledge of the proceedings in insolvency, advertised for sale the undivided half mortgaged to him, according to the power of sale contained in his mortgage, and the sale, after having been once adjourned, was again adjourned until June 11, 1879, on which day the premises were bid in by James H. Young for $ 500, and Young at the same time conveyed the same to the plaintiff, who now owns the same subject to the first mortgage. No application was made to the Court of Insolvency to authorize that sale, and no notice of the sale was sent to the assignee in insolvency; but, in May 1879, he learned from a conversation with Wilson's attorney that the sale had been once adjourned and would be again adjourned to some future day. No question is made of the regularity of the sale as a sale under the power contained in the mortgage; but the assignee offers to prove, if material, that the value of the premises was at the time of the sale, and is now, more than $ 500.

On March 19, 1880, Wilson presented for proof against the estate of Williams two claims. 1st. For the amount due on the note secured by the second mortgage, less the amount obtained at the sale under the power therein contained. 2d. For half the amount remaining unpaid on the first mortgage. It was agreed, as to each claim, that, if on these facts the plaintiff had a right to prove it against the estate of Williams, and no defence was disclosed which could be set up by the assignee, judgment should be entered for a sum agreed; otherwise, for the defendant.

Upon the first claim the Superior Court gave judgment for the plaintiff, and the defendant appealed. Upon the second claim that court gave judgment for the defendant, and the plaintiff appealed.

Proof of the claim expunged, and the claim disallowed.

The cases were argued together, in March 1881, by E. W. Hutchins & J. H. Young, for Wilson, and by W. C. Loring, for the assignee; and were reargued by the same counsel, in November 1882. The following separate opinions were filed in the cases.

C. Allen, J. Devens & Holmes, JJ., absent.

OPINION

C. Allen, J.

The purchaser of an equity of redemption of land mortgaged it to his vendor to secure a part of the purchase money, and then conveyed his interest in the land to a stranger; and several years afterwards went into insolvency. The mortgagee, without any order of court, but under a power of sale contained in the mortgage, made sale of the mortgaged premises for less than the amount of the mortgage debt, and applied the proceeds in part satisfaction thereof, and offered to prove the balance against the estate of the debtor in insolvency. The question is whether he can be allowed to make such proof. The determination of this question depends on the just construction of the Gen. Sts. c. 118, §§ 25, 27. By § 25, general provision is made for the proof of all debts which are absolutely due. By § 27, an exception is made, where a creditor has a mortgage or pledge of real or personal estate of the debtor, and special provisions are made regulating the proceedings in such case. ^[*]

We have recently held, in Smith v. Warner, 133 Mass. 71, that a creditor holding a mortgage of real estate of the debtor, who made a sale of the mortgaged property with the concurrence of the assignee, but without an order of court, could not be allowed to prove the balance of his debt. In that case the creditor held two mortgages, and the equity of redemption was in the debtor at the time of his insolvency, and vested in the assignee. The question here is, whether the creditor in the present case was to be considered as having a mortgage of real estate "of the debtor." He originally received his mortgage from the debtor, but the debtor had parted with his equity of redemption five years and six months prior to the commencement of the proceedings in insolvency, and since that time had had no interest in the land.

Upon a full consideration of this question, and aided by the elaborate discussion at the bar in this and other recent cases, and after a somewhat full examination of the authorities in this State and elsewhere, a majority of the court have come to the conclusion that § 27 was not designed to prevent the proof of a claim in circumstances like the present.

In the first place, there is a difficulty in complying with the requirement for a sale of the property, under an order of the judge. The equity of redemption is held by a stranger, who is not subject to the jurisdiction of the court. The provision is that "the property" shall be sold. This can be done where the equity of redemption is owned by the assignee, as succeeding to the rights of the debtor; but it cannot be done where the equity is owned by a stranger, unless indeed the sale is limited to the interest in the property which is held by the creditor. But here, again, the practical difficulty is met, that in such case it would be necessary to make sale of the mortgage, without including the debt secured thereby. The creditor is to retain his debt, and make proof thereof, after applying the proceeds of the sale. There is a difficulty in separating the debt from the security in such a case, which apparently the statute was not intended to deal with.

In the next place, it is provided that "the creditor and assignee respectively" shall execute all deeds and papers necessary or proper for effecting the conveyance. This seems to assume that deeds and papers executed by the creditor and assignee will be sufficient to effect the conveyance. These parties are within the control of the court, and subject to its order. But, in a case like the present, their deed will not effect a conveyance of the property. It is further provided that, if the creditor does not require such sale, he may release and deliver up to the assignee the premises held as security, and be admitted as a creditor for the whole of the debt. This again contemplates that, by such release and delivery, the assignee will acquire a full title to the property; it does not contemplate that the creditor shall merely assign a mortgage, which is to be kept up as an independent security, while he himself retains and proves the debt secured thereby. Unless one of the foregoing methods is adopted, the statute provides that the creditor, if he falls within the class contemplated by the statute, shall not be allowed to prove any part of his debt. There is no provision for any valuation of his security, but the prohibition of the statute is explicit. If, therefore, the conditions of ...