Case ID: scl_49/html/0246-01.html
Source: Caselaw Access Project
Author: {"author": "Wardlaw, A. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Patrick Laffan vs. John Kennedy and Daniel McSweeny.
    
      Mortgage — Tenant—Legal Title — “ Out of Possession.”
    A mortgagee in fee does not become vested with the legal title merely because the mortgaged premises are temporarily occupied by a tenant of the mortgagor under a lease made after the mortgage was executed. The mortgagor is not “ out of possession ” by reason of such occupancy, within the meaning of the Act of 1791.
    BEFORE MOSES, J„ AT CHARLESTON, JANUARY TERM, 1868.
    The facts of tbe case are stated in tbe opinion delivered in tbe Court of Appeals.
    Tbe report of bis Honor, the presiding judge, is as follows:
    “ Tbe point came up by demurrer to the plea of plaintiff in replevin, to tbe avowry and cognizance of defendants, and makes the question, whether the possession of tbe tenant of a mortgagor is bis possession ? If it is, he, the plaintiff, standing in that relation, cannot protect himself by the defence on which he relies.
    “The Act of 1791, (5 Stat., 159,) changed the principle which obtained at common law, as to the relation between mortgagor and mortgagee. It held the mortgagor even after the condition broken as owner of the land, and denies to the mortgagee the right to maintain any posses-sory action for the estate mortgaged. Its provisions, however, were not to apply when the mortgagor was out of possession. The plaintiff’ insists that the Act sustains bis plea, on the ground, that after the breach, the mortgagor is not in possession through his tenant.
    
      “If any support is to be found in the English cases referred to in the argument, (and I am not impressed with their relevancy,) it must be remembered, that in England the legal title is in the mortgagee, and if he can claim the rent from the tenant, it is by reason of that title. There the mortgagor stands quodam modo, as the tenant at will of the mortgagee, who may treat the lessee as a mortgagor. In this State the relation is entirely changed by the Act, unless the mortgagor is out of possession.
    “Lañan entered as the tenant of McSweeny, the mortgagor ; he gained the possession by his permission, and if he can, he claims as the tenant of the mortgagee. The possession is changed without the consent of the former, who would thereby be placed in a position he did not originally agree to occupy.
    “If Lañan can be regarded as holding for the mortgagee, what becomes of bis right which McSweeny had against him as landlord? He entered under him, and before he can in any way dispute his title, he must place him in the position he occupied when he became his tenant, by first surrendering the possession. The title of the lessee,.is that of the landlord; he recognized it at his entry — is protected under it — maintains his possession through it, and can assert it in his defence. When he entered, he never claimed a right to hold in opposition to his landlord. His disclaimer by denying that he holds under the power through which he entered, is an attack on his own title. Every principle of justice and equity, precludes him from asserting any title independent of that under Avhich he held at the moment of his taking possession. He is certainly in no better situation than if during bis term he had acquired title in himself. In that event, be could not rely on it, for retention of possession, but would be bound to surrender and enforce his claim by action.
    
      “His act disputes tbe right of bis landlord, while he, the tenant, remains in possession, and he is not permitted to controvert the title under which he entered.
    
      “Durand vs. Isaacs, McO. 4, 54, held that the Act of 1791 did not apply where the mortgagor was out of possession. There he had sold and conveyed, and his grantee had been in quiet possession from the date of the deed. The possession of the grantee was for himself, not as tenant or subsidiary to any right, for he held the legal title. Here Laffan, while in possession as tenant in effect, disputes his landlord’s title as just said, and he cannot be allowed to controvert it, for he entered under it.
    “ The authorities on this point are so clear, that it is only necessary to refer to some of them.
    
      “ Anderson vs. Darby, 1 N. & McO. 870; Syn vs. Sanders, 4 Strob. 196; Trustees of Wadsworthville Academy vs. Weeks, 4 Rich. 51; Millhouse vs. Patrick, 6 Rich. 215, and the whole doctrine may be found at length in Willison vs. Watkins, Car. Law J. 121.
    “ The plea asserts that Laffan, during the lease, attorned to McKeegan, the mortgagee. This assumes that to the moment of doing so, his possession was that of his landlord, and he asks that by committing a breach of his contract, he shall be permitted to change the conditions under which he entered, to the prejudice of such landlord, and alter the possession by violation of his own agreement. If Laffan did not connive with McKeegan, in the attempt to hold under him to the injury of McSweeny, how could it be claimed that the possession was actually so changed, that he was out of it, while the party that entered, to hold for him, was actually in ?
    “ Until changed in some different mode from that thus attempted, the possession of the tenant must be regarded as that of the landlord.
    “It is not so certain that in England, where the relation of tbe mortgagor and mortgagee is so different from that which prevails in this State, the plea of the plaintiff presented in the case made could avail, for in Evans vs. Elliott et al. 9 A. & E. 342, 36 E. C. L. E. 159, it was held that where a mortgagor in possession makes a lease, after the mortgage, reserving rent, the mortgagee after breach, cannot by merely giving notice to the lessee of the mortgagor, of the arrears due and requiring the rent to be paid to him, make the lessee his tenant, or entitle him to distrain for rent, subsequently accruing, under the terms of the lease. There seems to be no difference between that case and this, to say nothing of the Act of 1791, which on the execution of the mortgage still continues the title in the mortgagee.
    “ I sustained the demurrer.”
    The plaintiff appealed and now moved this Court to reverse the decision of his Honor, the Circuit Judge^ on the grounds:
    1st. Because his Honor erred in deciding that the plea in bar was bad as infringing the rule that a tenant cannot dispute his landlord’s title.
    Authorities: Hwpcrofi vs. Keys, 9 Bing. 613, (23 E. C. L. 399;) Doe dem, Higginbotham vs. Barton, 11 A. & E. 307, (39 E. C. L. 97;) Alchome vs. Gome, 2 Bing. 54, (9 E. C. L. 313;) Pope vs. Biggs, 9 B. & C. 245, (17 E. C. L. 369.)
    2d. Because it is submitted, that at common- law a mortgagee having given notice of the mortgage and breach of condition to the tenant in possession, and claimed the rent, the mortgagor is not entitled to the rent in arrear at the time of the notice, nor to that which accrues afterwards.
    Authorities: Powsley vs. Blackman, Cro. Jac. 659; Keech vs. Hall, Doug. 22; Moss vs. Gallimore, Ibid. 282; Bac. Ab’t, Title Mortgage, 635, Ap’x. 240; Chris, note to Black, yol. 2d, 159; Cruise on Real Prop. Title Mortgage; Bradby on Distress, 97; Kent Com. vol. 4, 165 ; Powell on Mortgáges, 207; Rawson vs. Riche, 7 A. & E. 451 (34 E. O. L. 142;) Doe dem, Marriott vs. Rdwards, 5 Barn & Ad. 1065, (27 B. C. L. 268;) Alchorne vs. Gome, supra; Pope vs. Biggs, supra ; Wadilove vs. Barnett, 2 Bing. N. C. 538, (29 E. O. L. 410;) Partington vs. Woodcock. 5 Nev. & Man. 672, (36 E. O. L. 418 ;) Evans vs. Elliott, 9 A. & E. 342, (36 E. C. L. 159 ;) Jones vs. Clark, 20 Johns. 52; Eitch-bourg Manufacturing Co. vs. Melven, 15 Mass. 268.
    3d. Because it is submitted that under the provisions of the A. A. 1791, the mortgagor having leased the premises, and his lessee having entered and being in possession, the mortgage is as at common law.
    Authorities : A. A. 1791, 5 Stat. 169 ; Durand vs. Isaacs, 4 McC. 54; Stoney vs. Shultz, 1 Hill, (Ch.) 498; Mitchell vs. Bogan, 11 Rich. Law, 686; Dwar. on Stat. 578; Broom’s Maxims, 288; 1 Plowden, 133; Jacob’s Law Die. Possession, 241, and Entry, 355; Taylor, Land. & Ten. sec. 572, 766, 767; Newton vs. Harlem, 1 Man. & Gran. 644. (39 E. 0. L. 581;) Archbold, Land. & Ten. 3, 112; A. A. 1712, (2 Stat. 677, 578;) A. A. 1812, (5 Stat. 676;) A. A. 1817, (6 Stat. 67;) Cruger vs. Daniel, 1 McM. Eq. 196; Mathews vs. Preston, reported in note to Boyce vs. Boyce, 6 Rich. Eq. 307.
    
      Edward Me Crady, Jr., for plaintiff.
    The plaintiff does not dispute the title under which he entered, but attempts to show “ that the right which the landlord then bad was defeasible or limited in its nature, and has since expired or been defeated.” This he is permitted to do ; “ for in that case he does not dispute the title, but confesses and avoids it by matter ex post facto." Alchome v. Gome,(
      
      ) 2 Bing. 54; Pope vs. Biggs, 9 B. & C. 245 ; Hopcroft vs. Keyes, 9 Bing. 618 ; Higinhoiham vs. Barton, 11 A. & E. 807; Marriot vs. Kdwards, 6 Car. & P. 208; Arcbbold’s Landlord and Tenant, 219; Smith’s Leading Cases, Duchess of Kingston’s Case, 612, 658, and cases there cited. The same doctrine has been recognized in our own Courts in the case of Given vs. MiUinax, 4 Bich. (Law) 592.
    To show, then, as we are permitted, that McSweeny’s (the lessor’s) title expired after Laffan entered under it, it is necessary, first, to recur to the rights of the mortgagor at common law, and, second, to inquire how far those rights have been affected by our statutory provision, A. A. 1791.
    At common law, the mortgagee, by mortgage subsequent to the lease, took subject to the lease, and hence could not evict the lessee until expiration of term, but might give notice of forfeiture of mortgage, and demand rent, and dis-train for that due at notice and accruing afterwards. But the lessee who took subsequent to mortgage might be regarded as a trespasser, and evicted without notice, though if the mortgagee stood by and allowed the mortgagor to receive rents, he could not afterwards claim them of the tenant. And as a tenant, in the latter case, might be regarded as a trespasser, so, on the other hand, he could not be required to hold under the mortgagee, without his assent 'signified, before the Act of Anne, by formal attornment, and since that Act in some way equivalent to an attornment, such as by paying rent. See Powsley vs. Blackman, Oro. Car. 650, and Moss vs. Gallimore, Doug. 279, the leading cases upon the subject, and a long current of authorities, English and American, and our own cases of Stoney vs. Schultz, 1 Hill, (Ch.) 498; Matthews vs. Preston, reported in Boyce vs. Boyce, 6 Rich. Eq. 311.
    The tenant in this case bas attorned and paid rent, (see bis plea,) and by the common law, therefore, is liable to the mortgagee for the rents, and, consequently, is not liable to the mortgagor. Has his liability been changed by our A. A.1791?
    The provisions of this Act have been four times under the consideration of our Courts of Appeal — twice in the Court of Law, and twice in the Court of Equity. The first case was that of Dzirand vs. Isaacs, 4 McC. (Law) 154. The question in this case was whether the proviso in the second section applied to the first section, and it was held that it did. The next case was that of Stoney vs. Schultz, in which the rights of the mortgagor and mortgagee at common law were reviewed; and following the case of Moss vs. Galimore, the Court held “ that Schultz being out of possession, the rights and powers of Brooks as mortgagee must be determined as at common law ; and according to that, he had a right to receive and retain the rents, having given notice to the tenant in possession.” Then followed the case of .Matthews vs. Preston, reaffirming the case of Stoney vs Schultz, and maintaining the liability of the tenant to account for rents after notice of the mortgage and condition broken, and compelling the tenant to pay the rent again to the mortgagee, although she had already paid it to the mortgagor. And, lastly, came the case of Mitchell vs. Bogan, 11 Rich. (Law) 636, in which the ruling in the foregoing cases was approved and adopted. The Judges dissenting in their elaborate opinion, admitting that the ruling in these cases was too strong for them to venture to set aside, and we shall hereafter show that this case does not come within, the reason of their dissent in that case.
    We may take it, therefore, as the settled ruling in these cases, that, where the mortgagor is out of possession, the rights and powers of tbe mortgagee must be determined by tbe rule of tbe common law; and wbat they are under that rule, we have already ascertained.
    This brings us to tbe most difficult question in tbe ease : When is tbe mortgagor out of possession ?
    Without attempting to answer whether he is out of possession in all the oases put in the dissenting opinion in Mitchell vs. Bogan, we shall endeavor to show that the mortgagor is out of possession when his tenant for years is in.
    
    But before we proceed to do so, it is as well to observe that the maxim, that the possession of the tenant is the possession of the landlord, cannot apply to this case. For the question we are considering is: Who, under this Act, is the landlord ? That maxim embodies the rule of law as between landlord and tenant, on the one hand, and the rest of the world on the other; but can have no application in questions arising between themselves ; and to rely upon it in this, is to assume the very question in the ease.
    The word possession is a term of art, and has a fixed technical signification, and, as such, must be construed according to its known meaning. (Dwaris on Statute, 578; Broom’s Maxims, 288.) What, then, is possession ?
    “Possession is either actual where a person actually enters into lands or tenements descended or conveyed to him, or, in law, where lands, &c., are descended to a man, and he hath not actually entered into them.” (Jacob’s Law Die. Title Possession, p. 241.) “ Where entry may be made into land or anything, it shall not be in the party before entry.” (Ibid. Entry, 355.) “And there are principles of law that, if there may be entry, then it shall not be in the party before entry. ***** But in the case here, entry might have been made; for which reason it seems that before entry the lease and possession continues in the lessee.” (Plowden, 133.)
    
      We maintain, therefore, that the mortgagor and landlord, who has a tenant for years in, is out of possession. Because,
    1st. “An estate for years is a contract for the possession of lands and tenements for some determinate period, and takes place where a man letteth them to another for the term of a certain number of years agreed upon between the lessor and lessee, and the lessee enters thereon.”
    2d. If, therefore, there can be no possession without entry, and the landlord who has a tenant in has possession, why the care of all conveyancers to insert in leases a right to re-enter upon condition or covenant broken? This clause is inserted to enable the lessor, in case of a breach of covenant, to re-enter and eject the tenant; for, in such case, without the proviso, he would possess no such power. (Taylor Land, and Ten. § 291.) If the landlord must secure to himself the right to do that which is essential to possession, he surely is out of possession until that is done.
    8d. Before condition broken, or expiration of term, the lessor has not the right to enter, and, if he does, may be treated as a trespasser. (Taylor Land, and Ten. §767.) And after condition broken, or expiration of term, his right to enter only enables him to maintain an action in ejectment. (Newton vs. Harlon, 1 Man. & Gran. 644.) It surely would be a contradiction in terms to say that the landlord was in possession, where his right to entry, the essential of possession, only enabled him to maintain an action in ejectment to obtain possession.
    4th. The distress for rent itself is an admission and affirmance of the continuance of the plaintiff’s possession, de facto, up to the time of the distress; for the lessor can only distrain during the continuance of the term of the lessee. (Taylor Land, and Ten. § 572; Archbold Land, and Ten. Ill, 112.)
    5th. But we are not left alone to the technical signification of tbe word possession in the A. A. 1791, for the provisions of oar statute abundantly show that the landlord is out of possession by the tenancy of his lessee.
    The A. A. 1712, § 16, recites that, “ whereas landlords are often great sufferers, not only by tenants running away in arrear * * * * * * but also refusing to deliver up the possession of the demised premises, whereby,” &c., and provides a method whereby justices “ may put the landlord or landlords into the ¡possession of the said demised premises.”
    Section eighteen provides a penalty against a tenant who shall give notice of his intention to quit, “ and shall not accordingly deliver up the possession thereof at the time in such notice contained.” (2 Stat. 578.)
    The A. A. 1812, entitled “An Act to afford landlords an expeditious and summary mode of regaining possession from tenants who shall hold over after the determination of lease” provides proceedings to give landlords “repossession" (5 Stat. 676.)
    The A. A. 1817 provides a method by which the sheriff shall put the landlord “ in possession.” (6 Stat. 67.)
    See, also, A. A. 1833, 6 Stat. 485.
    It is clear, from these instances, that in our statute the landlord who has leased his lands is regarded as out of possession, and that remedies were necessary to be provided to put him in.
    
    6th. The reasoning in Durand vs. Isaacs, the leading case under this Act, is that, where the mortgagor was out of possession, “the right of some third person must be involved; and, according to the forms of procedure in a common law Court, such a third person could not be a party, and it would be nugatory to. order the sale of a man’s property who was not before the Court.” Now, “ the tenant in possession” is “ a third person ” as to the mortgagor and mortgagee, and “ is always a proper party to a bill of foreclosure.” (Cruger vs. Daniels, 1 McM. Eq. 196.)
    We are aware that the reasoning in Durand vs. Isaacs has been assailed, in the dissenting opinion, in Bogan vs. Mitchell. But this case is clear of the question in that, viz.: Whether the proviso in the second section of the Act relates to the first, inasmuch as this case arises entirely under the second section. And moreover, though that reasoning, if correct, does strengthen our position, we are notin the least dependent upon it, having reached our conclusion by entirely different and, as appears to us, stronger line of argument. But if the dissenting opinion be correct, the same question arises, and our argument holds equally good upon the paraphrase of the Act therein given. The proviso is thus paraphrased : “ Provided, that nothing herein contained introductory of change shall extend to actions now pending, or to cases where the mortgagor's right of possession shall have ceased,” &o. The question we are discussing is Whether “ the mortgagor’s right of possession has ceased” when he has a tenant in possession?
    In conclusion, we would observe that to exclude mortgagors, who have tenants in possession, from the proviso of this Act, is to exclude from its operation the largest class of cases that arise under it; and that if the design of the Act is to be conjectured, it is most probable that the framers intended to extend the benefit of the proviso only to mortgages of homesteads, and intended to leave the mortgagor, who was receiving rents and yet refusing to pay interest, to his liability as at common law. But that whatever was the motive of the framers of the Act, this case must be decided upon logical deductions from previous cases, and not upon any idea of what the law should have been, and these support the plea.
    
      Philips, Gampbell, contra.
    
      
      (a) This principle is recognized throughout this case, hut the facts were held not to support the plea, the plea attacking the landlord’s title by alleging forfeiture of mortgage before lease.
    
   The opinion of the Court was delivered by

Wardlaw, A. J.

McSweeny mortgaged a dwelling house to McKeegan, and afterwards demised the same to Laffan. Interest on the bond secured by the mortgage not having been paid, and the condition of the mortgage having been thereby unperformed, McKeegan gave notice of these facts to Laffan; demanded from him payment of the rent, in arrear and to become payable, and required him to attorn; Laffan attorned to McKeegan; McSweeny, by his bailiff, Kennedy, distrained; Laffan replevied, and became plaintiff in replevin; McSweeny, as avowant, and Kennedy, as cognizor, claimed rent under the demise above mentioned; Laffan, the plaintiff in replevin, filed a plea setting forth substantially the facts here stated; McSweeny and Kennedy demurred; the Circuit Judge sustained the demurrer, and Laffan appeals.

This Court assents to the propositions contained in the first ,two grounds of appeal, and concedes, first, that a tenant may show that the title under which he entered is determined, and second, that at common law a mortgagee is legal owner of the mortgaged land, entitled by conveyance from the mortgagor to the outstanding terms, to the reversion thereof, which was in the mortgagor at the date of the mortgage, with rent, in arrear or to become payable, incident thereto, and to all rent upon leases made by the mortgagor after the execution of the mortgage.

But the third ground of appeal brings up the effect of our Act of 1791 upon mortgages of land, and especially the meaning of the words “ when the mortgagor shall he out of possession" and the distinctions which have been founded thereon.

Is, in the sense of the Act of 1791, a mortgagor out of possession when tenant for a year is in occupation under a lease from him? If so, McKeegan, being out of the purview of the Act, stands as a mortgagee at common law, entitled under bis notice to the tenant, to receive the rent, and the demurrer should have been overruled. If not, the demurrer was properly sustained.

The opinions which I held when I was a member of the Law Court of Appeals, and which the argument of this case has not changed, have been so fully set forth in the elaborate examination of this whole subject which I subjoined to the case of Mitchell vs. Bogan, that for them I will now content myself by referring to that case. My belief is that the perplexing words which have been made so much to impair the application and excellent provisions of the Act were really intended by the Legislature to exclude from the operation of the Act only cases where, before the Act was passed, the possessory right of the mortgagee had been exerted, by action, entry, or otherwise, so that the mortgagor was out of possession, actual or legal. But upon the supposition that the Act was not designed to embrace pre-existing mortgages, and that a prospective signification must be given to the words in question, I see that mortgagor includes every person claiming under the mortgagor, and mortgagee every person claiming under the mortgagee; that the Act makes by no other words provisions for the conjunction in the mortgagee of all the rights of both mortgagor and mortgagee, (an omission which was, for the removal of doubts, awkwardly, and, as I think, unnecessarily supplied by the amendatory Act of 1797, 5 Stat. 311,) and calling to mind the common law as to the mortgagor’s possession under his equity of redemption and the inefficacy of the statute of limitations in behalf of the mortgagee whilst that possession continued, I conclude that mortgagor out of possession can at most embrace only those cases where neither legal or actual possession is in the mortgagor or any other person deriving right from him. In the paraphrase which I ventured to make, (11 Bich. 722,) “ where mortgagor's right of posses sion shall have ceased," must, under tbe requirements of the context be understood to mean where all right of possession in either the mortgagor or any person claiming under him shall have ceased.

Equity bad long before 1791 regarded a mortgage as a mere security of tbe mortgage debt, and bad treated the right of the mortgagor before foreclosure as an estate. It was wise to extend to the law courts these beneficent principles of equity, and I cannot persuade myself that a few words of doubtful import, contained in a proviso, were intended so as to mutilate the general provisions, and to increase distinctions, diversities, expense and delay in many instances, where in all symmetry, uniformity, cheapness and expedition were desirable. The Legislature knew that many large tracts of granted land in the interior were vacant, that is, in forest, and not actually occupied by anybody, and that many houses in Charleston were occupied by tenants under lease, and why mortgages of these tracts and these houses should not come within the improved system, I have never been able to comprehend.

It is not, however, my purpose to commit this Court to my own opinions. As the organ of the Court, I now go so far only as this case requires. The Court holds, that where there is a mortgage in fee, the mortgagor, whilst he retains the fee, is not deprived of the ownership of the land and rights incident thereto, by the temporary occupation of a tenant who holds under him. If the mere yielding of the mortgagor to a tenant of the occupation establishes the condition of “ mortgagor out of possession ” contemplated by the Act of 1791, the mortgagee instantly becomes owner, and therefore it is in the power of a mortgagor, by thus going out, to deprive the mortgagee of the easy and judicious remedy at law which the Act gives to 'him, where a judgment has intervened between his mortgage and his judgment on the mortgage debt. If, on the other band, some entry or notice by tbe mortgagee must precede tbe transfer of tbe legal title to bim, it would be bard to say where tbe title was after tbe mortgagor was out of possession and before tbe mortgagee entered. Or wbat would be the result of the mortgagor’s again taking possession in his own person after the expiration of the lease, without entry or notice by the mortgagee; at any rate, the title would be in the mortgagor or mortgagee at the pleasure of the mortgagee. It may be imagined what confusion and risk would follow, if the title could be shifted according to circumstances depending upon oral testimony without any written document. In the case of Mathews vs. Preston, 6 Rich. Eq. 307, note: The defendant, John Preston, became subject to a decree for rents because he had not excepted and appealed at a proper time; but the opinion of Chancellor Durgan shows that the complainant was a second mortgagee, who could not have had the legal estate, and that the claim for an account of rents and profits depended upon the doctrine of equity; that the land, with all its produce, is a security for the mortgage debt, first of the first mortgagee, and if not required by him, of the second mortgagee. A full recognition of the meaning ascribed to mortgagor out of possession, in Durand vs. Isaacs, (4 McC. 54,) may be found in the very complicated case of Stoney et al. vs. Shultz et al. 1 Hill, Ch. 465, where the mortgagee’s legal ownership was extended to both cases of lease and cases of vacant possession; but when it is perceived that the executors of Williamson were at best only equitable assignees of Brook’s mortgage, and that an account was to be taken as well of rents received by them or of rents in arrear by the tenants who held under the mortgagor, it may be seen that all that was in this case decided concerning the rents might well have been brought under the principle which was plainly declared in the case of Mathews vs. Preston.

In no other case to be found in our reports has it been held that a lease made by the mortgagor brought him under the words mortgagor out of possession and transferred the legal title with its incidents to the mortgagee.

It is the opinion of this Court that the plea of the plaintiff in replevin was insufficient in law, and that the demurrer to it was properly sustained.

Motion dismissed.

Dunkik, 0. J., and Glover, J., concurred.

Motion dismissed.