Case ID: va_30/html/0759-01.html
Source: Caselaw Access Project
Author: {"author": "CARR, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

*Taylor’s Adm’rs and Devisees v. Chowning.
    March, 1832.
    (Absent Tucker, P.)
    
      Mortgages — Power Given Mortgagee to .Sell -When Sale Valid.- Though if a mortgage be made to secure a debt, and power be thereby given to the mortgagee to sell the subject to pay the debt, the mortgagee cannot execute the power, the character of creditor and trustee, in snch case, being incompatible; yet, if the mortg-ag-ee in fact execute the power fairly, and make sale of the subject for cash, and if the mortgagor be apprised of the sale, and present at it, and make no objection to the mortgagee’s proceedings, but on the contrary acquiescent them, he shall be regarded as waiving his objection to the defect of the mortgagee’s power to sell, so far as the purchaser is concerned, and shall not be allowed in equity to redeem, as against the purchaser.
    This was the sequel of the case of Chown-ing v. Cox, which was before this court in February 1823, and is reported 1 Rand. 306. A reference to that report will be necessary in order to understand, fully, the report of the subsequent proceedings.
    Elizabeth Thompson, by deed dated the 18th November 1801, conveyed a parcel of land called Laurel Grove in Westmore-land, to Peter P. Cox, to secure a debt of 1500 dollars, monej' of certain wards of Cox, which she had borrowed of him; and thereby entrusted and empowered Cox himself to sell the mortgaged subject to pay the debt. In 1803, Chowning purchased Laurel Grove of Mrs. Thompson for ,£876. out of which he undertook to pay certain debts she owed, and .among them the debt of 1500 dollars to Cox. Chowning exhibited a bill in chancery in 1806, to injoin Cox from selling the land under the deed of November 1801, upon the ground of some alleged defect in Mrs. Thompson’s title. This injunction was dissolved in April 1812. And on the 29th May 1812, Cox proceeded to sell the land at public auction to William Taylor. In August 1812, Chowning exhibited his original bill in this cause, against Cox and Mrs. Thompson, wherein he alleged, that Cox had sold the land to- — -, whether on the purchaser’s ‘own account or on that of Cox, he professed not to know, and he objected, that Cox being the creditor secured by the deed of November 1801, could not lawfully act as trustee for himself, and had no rightful power to make sale of the mortgaged subject; and, therefore, he prayed that he should be permitted to redeem the land, upon payment of the principal and interest of the debt remaining due on the mortgage. Cox, in his answer to this bill, stated all the circumstances of the sale of May 1812, and that the purchaser was William Taylor. Yet Chowning did not make Taylor a party defendant in the suit. The chancellor, on the hearing, dismissed the bill, as to so much thereof as sought to set aside the sale. Chowning appealed from the decree. This court declared, that the deed of November 1801, did not give Cox any rightful power to sell the land for payment of a debt due to himself, so as to bar ' Chowning’s right of redemption: but it added, “If there were no other persons than the debtor and creditor, interested in this controversy, the court would not only reverse the decree, but provide for a sale under the directions of the court of chancery. But the person who purchased under the former sale, and who has the legal title, has not been made a partj'. Had he been before the court, he might have given a different aspect of the cause. ' He might have shewn, that, although the sale cannot be justified on the sole ground of the powers derived from the deed, yet it ought to be confirmed in his favor, in consequence of the subsequent acts of the appellant. He ought, therefore, to have been a party; and the chancellor erred in pronouncing a final decree, without affording an opportunity to bring him before the court.” The chancellor’s decree was accordingly reversed, and the cause remanded to the court of chancery.
    Chowning then exhibited a supplemental bill and bill of revivor, setting forth the former proceedings, and the decree of this court of February 1823; and stating, that, at the sale of the land in question, by Peter P. Cox, on the 29th May 1812, *William Taj'lor, late of Westmore-land deceased, was the purchaser, at a very inadequate price; that Taylor was well apprised of the authority under which Cox pretended to make the sale, and that Cox was acting as a trustee under a deed in which he himself was a mortgagee, and, therefore, had no rightful power to make the sale; and that Taylor had taken pos-sesion of the land, and he and his representatives had enjoyed the profits thereof for many years; and that Cox also was now dead. Therefore, this bill made the administrator with the will annexed of Taylor, and his heirs, and the executors of Cox, parties defendants; and prayed, that Taylor’s real and personal representatives should be ordered to account for the profits of the land, since the same came to Taylor’s possession; that an account of the debt due by Chowning for which the land was mortgaged, should also be taken; and that Chowning should be allowed to redeem the land, upon payment of any balance of debt, which, after crediting him for the payments he had made, and for the profits which should be found to have accrued to the holders of the subject, should be found due from him.
    The administrator and heirs of Taylor, in their answers, insisted, that whatever might be the merits of the controversy as between Chowning and Cox, Chowning had no just claim to the relief he asked as against Taylor and his representatives. For, they alleged, the sale of the land made by Cox, was a sale at public auction for cash, fairly conducted in all respects; that Taylor became the purchaser at that sale for the full cash value of the property, without notice or suspicion of any defect in Cox’s title, or in his power to make fhe sale, and Chowning himself was present at the sale, and made no objection whatever to Cox’s proceeding; and that Taylor had paid the whole purchase money to Cox. They stated, that Taylor died in 1814, and they exhibited his will, whereby it appeared, that Taylor devised this land to two of his sons.
    *Cox’s executors answered, that their testator sold the land to Taj'lor, •at public auction, for cash, in Chowning’s presence, without any objection on his part; that Taylor paid Cox the purchase money, which was £626. and Cox acting as a trustee, conveyed the land to Taylor, with a covenant of special warranty; that the debts charged upon the land, and to satisfy which it was sold, amounted to .£571. 6. 9. ; that their testator was, therefore, accountable to Chowning for the balance £54. 13. 3. with interest from the date of the sale of the mortgaged subject; and they insisted, that Chowning had no other just claim against their testator’s estate. They also alleged, that they had fully administered the assets ■of their testator’s estate; and they exhibited their accounts of administration, audited and settled by a commissioner of the county court of Westmoreland, by which it appeared probable, that Cox’s estate was insolvent.
    Cox’s deed of conveyance of the land to Taylor, was dated the 13th October 1813. This deed recited Mrs. Thompson’s deed to Cox of the 8th August 1801, whereby she conveyed the land to Cox, as a security for 1500 dollars due to him, and constituted him the trustee to make sale of the mortgaged subject; the sale of the 29th May 1812, made to Taylor by Cox, as trustee, in pursuance of that deed; and the payment of the purchase money, £626. by Taylor to Cox ; and in consideration thereof conveyed the land to Taylor, with a covenant of warranty in the following words — -“And the said Cox, as trustee aforesaid, and in pursuance of the written terms and stipulations of the sale aforesaid, published and declared, and by the said Taylor read, known and understood, on the day of sale of the said land under the said deed of trust” [the deed of the 8th August 1801] “and before the biddings were opened, doth, for himself and his heirs, especially warrant the title of the said land against him the said Cox and his heirs, but against no other person or persons.”
    Taylor, byr his will, dated the 24th March 1814, devised this land in these words: I give unto my two sons, William s'and David, my plantation in West-moreland county called Laurel Grove, to be equally divided between them; and in case the land should be recovered by William Chowning or his heirs, I give them the money with interest from the purchase or sale of the said land by Peter P. Cox, trustee : if there should be a judgment, and the said land ordered to be re-sold, it is my desire that my executors should attend the sale, and bid to the amount of my claim (with interest) on the said land, or more if they think proper to do so for my said sons; which sum, in case it should exceed the claim on the land, to be paid out of their estate, say William and David’s estate or proportion- -all over what has been paid for said land, to be paid by them.”
    It was proved, that Cox’s sale of the 29th May 1812, was made in pursuance of public advertisement duly' made, of the time, place and terms of sale, and of the authority under which Cox undertook to make the sale: that the sale was attended by a number of persons, and there were other bidders besides Taylor; that the sale was, in all respects, fairly conducted; that the price was an adequate one; that Cox professed to sell as a trustee, under the deed of the 8th August 1801, and declared that he would only make a conveyance with special warranty against himself and his heirs; that Chowning was present at the sale from first to last; that after twelve o’clock of the day of sale, when Cox proposed that the sale should commence, Chowning requested a postponement for an hour, saying he had hopes of being able to raise 1000 or 1200 dollars, which it was understood Cox was willing to receive, and to give further time for the payment of the balance of the debt; that Cox consented to this postponement; that Chowning left the place and was absent some two or three hours, and upon his return, stated that he had been disappointed in his expectation of raising the money, and that the sale of the land must go on, and then, and not till then, the sale was commenced and proceeded; thatChowning did not make or hint any objection whatsoever to the sale.
    *The chancellor was of opinion, that the aspect of the case as between Chowning and the representatives of Taylor, was not substantially different from that which it bore, at the time of the decree of the court of appeals, as between Chown-ing and Cox; and that, upon the principles of the decree of the court of appeals, Chown-ing was entitled to redeem the land, upon the payment of the balances due by him upon his contract with Mrs. Thompson, to the representatives of Taylor, the purchaser of the land, so far as it should appear that the purchase money paid by Taylor had been applied to the discharge of Chowning’s debts, and the interest thereon accrued and accruing; and that Chowning was entitled to a credit and set-off against the debt he owed, for the rents and profits of the land received by Taylor in his lifetime or by his representatives since his death. Therefore, he directed a commissioner to take an account of the rents and profits of the land since the sale thereof made by Cox to Taylor, ascertaining by whom the same were received; to inquire and report, whether Cox had paid Mrs. Thompson the whole of the debt due to her, and had paid the same out of the purchase monej’ paid him by Taylor; and to set-off the amount of the rents and profits against the balances of debt due by Chowning, so as to shew how much was now due from or to Chowning- to or from the defendants or either of them. From this decree Taylor’s administrator and devisees appealed to this court.
    Leigh, for the appellants.
    Taylor’s representatives, in defending themselves upon the supplemental bill, have, in the language of this court, “given - a different aspect to the cause.” For, though the circumstances attending Cox’s sale of May 1812, which Taylor’s representatives have relied on in their defence, were alleged by Cox in his answer to the original bill, yet he adduced no proof of them whatever; and this court neither did nor could pay any respect to them, except so far as they served to shew the propriety 'sand necessity of conventing Taylor as a party before the court. Whatever was the defect of Cox’s power, his sale was, in itself, perfectly fair, in all respects. The only objection to it, was, that Cox being himself the creditor and mortgagee, could not rightfully act as trustee in selling the mortgaged subject, though Mrs. Thompson the mortgagor, and Chowning, who purchased of her subject to the mortgage, both, undoubtedly, intended to confide that trust and power to him. Chowning was exactly apprised of all the facts, and had ample time for deliberation. He had suspended the proceedings of Cox, by an injunction, for six years, during which time he never hinted this objection. After this long delay, Cox proceeded to make the sale, regularly, and in execution of what he deemed his power and trust; a sale at public auction, for cash; so that the purchaser was to part with the purchase money the instant the biddings were closed, to be applied to the discharge of Chowning’s debts. Chown-ing, present at the sale from first to last, so far from making any objection to Cox’s right to make the sale, after a vain endeav-our to raise money to pay the debt, and so to prevent the sale, declared publicly, that the sale must proceed. Nay more, though he was apprised by Cox’s answer to his original bill, that Taylor was the purchaser, he forbore to make him a party for years, and thus deprived him of all pretense to prefer any claim against Cox, to refund the purchase money he had paid him, or to demand security that it should be refunded: he never made Taylor a party, till Cox was dead, and his estate insolvent. Chowning’s objection to the sale, was founded on the equity he had to insist, that Cox, who was interested as a creditor, should not exercise the powers of a trustee — that the trust should be executed by some disinterested person; an equity not founded on his own contract, but on the policy of the law, which, in spite of the contract of the parties, denies to a person standing in the relation Cox did, the character or powers of a trustee. He waived this equity by wilful acquiescence in Cox’s sale, without objection ; nay, by positve *assent to it. He barred himself from asserting it against Taylor, by his subsequent conduct: seeing Taylor purchase the land, knowing he was to pay cash, knowing that the purchase money was to be applied to the payment of his own debts, he stood quietly by till all this was ^one, and never asserted his equity against Taylor, until, by reason of Cox's death and insolvency, if Taylor shall lose the land, he must lose his money too. To these obvious objections to the equity, so late asserted by Chowning against Taylor, it is no answer to say, that he was ignorant of the incompatibility of Cox’s interest in the trust witn the character of trustee, and of his own legal right to object to his proceedings on that ground. For, in the first place, Chowning, was certainly apprised of his rights, at least as early as August 1812, when he exhibited his original bill against Cox, and willfully forbore to make Taylor a party; and, in the next place, he was exactly informed of all the facts, from the beginning, and he cannot be allowed to excuse himself for neglecting to assert his rights, and thereby involving the innocent purchaser in loss or difficulty, on the ground of ignorance of the law. 1 Fonb. Bq. book 2, ch. 3, § 4, pp. 151-6, and the cases collected in the notes. If it be said, that Taylor also, as well as Chown-ing, was apprised of all the facts, and therefore he, no more than Chowning, shall be allowed to allege ignorance of the legal defect of Cox’s power to sell; the answer is, that the objection to Cox’s proceeding as trustee, lay for Chowning only ; and as he alone had a right to make the objection, so he had a right to waive it; and the bidders at the sale had a right to infer that he did waive it. Chowning must be considered as the actor; for Cox was in effect acting as his trustee, since he stood in the place of Mrs. Thompson, who had expressly constituted Cox the trustee to sell the mortgaged subject, to pay the debt which Chowning undertook to pay out of the purchase money he contracted to pay her for the land. In the cases in which it has been held, that money paid under a mistake of the law, cannot be recovered *back, the receiver as well as the payer has been conu-sant of the facts: and it is because the payer is the actor, and because to permit him to recover it back, would be to allow him to involve the receiver in a debt or duty which but for his own mistake he never would have incurred, that the receiver is exempted from all obligation to refund the money. Brisbane v. Dacres, 5 Taunt. I4'4, 1 Com. Law Rep. 43.
    Johnson, for the appellee.
    Though the sale was made in May 1812, yet Cox did not make a conveyance to Taylor till October 1813. Hence it is to be inferred, that the terms of sale which required the purchase money to be paid in cash, were not strictly complied with; that the purchase money was not in fact paid, till about the time when the conveyance was executed. And the very peculiar covenant inserted in Cox’s deed, evinces, that Taylor was as well apprised as Cox himself, of the equity asserted by Chowning in his original bill filed in August 1812, and that Taylor contracted and intended to take on himself the hazard resulting from Chowning’s claim. Taylor’s will too, made in March 1814, clearly indicates his knowledge of Chown-ing’s suit then in prosecution for the recovery of the land, and that his rights were to abide the result of that suit. Therefore, Taylor was no wise injured by, and had no just ground to complain of, Chown-ing’s neglect to make him a party to his original bill. And he must be considered as having not only purchased, but as having also paid the purchase money, and taken his conveyance, with actual notice. He made the purchase at Cox’s sale, with actual and exact knowledge of the power under which Cox professed to make the sale;' that is, in other words, with full notice of Chowning’s equity to redeem the land, notwithstanding the sale thus made without competent authority. He saw the authority under1 which his vendor was acting : it was his business to inquire and to ascertain, whether that authority was legal and sufficient to warrant the vendor in proceeding' to sell; and he *must bear the consequences of his neglect to do so, or, if you please, of his ignorance of the principle of law which condemned Cox’s proceedings. Chowning was passive, and there was no necessity that he should be otherwise. Ifor the sale made by Cox, being made without lawful power to sell, could convey no just right to the vendee; and whether the title should remain in Cox, or be by him conveyed to the vendee, Chowning’s right to redeem the subject would remain the same. Why should he be bound to interfere to prevent a sale, which no wise impaired his rights? Cox and Taylor, the unauthorized vendor and the negligent or wilful purchaser, were the actors, if indeed, it be material to determine which of the parties is to be considered as the actor. But, in truth, the cause depends on very simple principles: here was a mortgaged subject sold by the mortgagee, who had (acknowledgedly) no power to sell it, and purchased by a person who had exact notice of the power under which the sale was made, and who meant to take, and did take, the hazard of any defect in the power of the vendor; and the plain legal consequence is, that the mortgagor has, in equity, the same right to redeem as against the purchaser, which he had as against the mortgagee. The former decree of this court is decisive of the controversy. The court indeed declared, that “had Taylor been before the court, he might have given a different aspect to the cause.” But how’ by shewing, "that, though Cox’s sale could not be justified on the sole ground of the powers derived from the deed, yet it ought to be confirmed in Taylor’s favor, in consequence of the subsequent acts of Chown-ing.” Now, certainly, Chowning has done no act whatever, subsequent to the sale, that can have the remotest tendency to the confirmation of it.
    
      
      
        He decided the cause in the court of chancery,
    
    
      
      Mortgages — Power to Sell Given mortgagee- Valid-ityA sale made by a mortgagee under a power given him. without the intervention of a court of equity, independently of a statutory provision, is void. King v. Tuscumbia, C. & D. R. Co., 11 Fed. Cas. 556, citing Chowning v. Cox, 1 Rand. 306; Taylor v. Chowning, 3 Leigh 654
      But the debtor may sanction and confirm a sale of real estate, made by his creditor as trustee, and will be considered as having done so by being present at the sale and malting no objection. Gordon v. Cannon. 18 Gratt, 401, citing Taylor v. Chowning, 3 Leigh 654. To the same effect, the principal case is cited in Floyd v. Harrison, 2 Rob. 179, 186, 189.
      Trustees — Duties.—The principal case is cited on this question in foot-note to Wilkins v. Gordon, 11 Leigh 547; Spencer v. Lee, 19 W. Va. 188.
      Deed of Trust Considered as Mortgage. — On this question, the principal case is cited in foot-note to Breckenridge v. Auld, 1 Rob. 148; Spencer v. Lee, 19 W. Va. 192; King v. Tuscumbia, C. & D. R. Co., 14 Fed. Cas. 556.
      See monographic notes on “Mortgages” appended to Forkner v. Stuart, 6 Gratt. 197, and “Deeds of Trust” appended to Cadwallader v. Mason, Wythe 188.
    
   CARR, J.

When the case of Chowning v. Cox (of which this is the sequel) was formerly before this court, I consider that the court decided a mere abstract principle. This is apparent from the whole opinion. It commences thus : *“This case presents the general question, whether a deed executed by a debtor, conveying land to his creditor, and purporting to constitute him the trustee for selling the land, and applying the proceeds of the sale to the payment of the debt due to himself, can be regarded otherwise than as a mere mortgage, to which the right of redemption is incident.” Such a deed "was decided to be a mortgage. But when the court came to apply the general principle to the case before it, it said, “If there were no other persons than the debtor and creditor interested, it would reverse the decree, and provide for a sale under the directions of the court of chancery'. But the person who purchased under the former sale, and who has the legal title, has not been made a party. Had he been before the court, he might have given a different aspect to the cause. He might have shewn, that, although the sale cannot be justified on the sole ground of the powers derived from the deed yet, it ought to be confirmed in his favor, in consequence of the subsequent acts of the appellant. He ought, therefore, to have been a party, and the chancellor erred in pronouncing a final decree, without affording an opportunity to bring him before the court.” The decree was therefore reversed, and the cause sent back.

It is thought, that by the words “the subsequent acts of the appellant,” the court meant to limit the defence of the vendee to the acts of Chowning done after the sale. I do not believe the court meant any' such restriction. It had ^aid, in a prior sentence, that if the vendee had been a party, he might have given a different aspect to the cause; thus throwing the whole open to him. It proceeded afterwards to particularize one of the means by which this new aspect might be given; namely, by shewing Chowning’s acts of confirmation or assent subsequent to the sale. But, suppose the vendee before the sale, had gone to Chowning, and said, “I see that Cox has advertised your land for sale; is it your purpose to suffer him (who is the creditor) to act also as the trustee? if so, 1 am inclined to buy and Chowning had answered, “Yes; you may buy safely:” Can it be imagined, *that this court meant to shut out such a defence? Is it not a fundamental maxim, that no man shall be affected by res inter alios acta? Had not the court pronounced, that Chowning had done wrong in bringing this cause to hearing, without making the vendee, who had the legal title, a party? And would it enable him to profit by' his own wrong? which he surely would do, if by omitting to make Taylor a party to his original bill, he could cut him off: from a defence, which as an original party he would unquestionably have had. It is clear to me, then, that Taylor comes- to his defence, wholly unprejudiced by what has been done; and free to avail himself of any matter of fact or law arising out of the old case or the new.

Taking the general principle to have been correctly decided by the court, we are to inquire, whether, under all the circumstances of the ca'se, the sale of the land made by Cox, shall stand or be set aside? That the parties to the deed intended to give Cox the full power to sell and convey the land, no body can doubt. They expressly swear, that such was their intention. Nor is this an unheard of thing: in the state of New York (as their reported cases shew us) nothing is more common than to give to the mortgagee a power of sale: and in such cases, if he is proceeding to sell, improperly, as the debtor thinks, he files his bill, stops the sale, and brings the matter into equity, just as the debtor does here in deeds of trust. In the case before us, it is the less strange that Mrs. Thompson should place so much confidence in Cox, as to make him the trustee, because he was not, in his individual character, the creditor: the answers and the deed itself declare, that it was the money of his wards, which he was lending out upon the security of this land. Chowning bought the land -with a full knowledge of this in-cumbrance, and it w'as a part of his contract to discharge it. He went on to pay a part of the money; but failing' to pay the rest, Cox advertised the land for sale. Chown-ing then filed a bitl of injunction to stay the sale, on the ground of defect of title; but made no *objection to Cox’s selling as trustee. This injunction was dissolved: Cox again advertised to sell the land for cash, to discharge the incumbrance. The sale took place on the 29th May 1812, Chowning being present and makng no objection. Taylor became the purchaser; and in August after, the original bill was filed to set the sale aside, not for unfairness, but because the deed was a mortgage, and the plaintiff had a right to be let in to redeem. I am clearly of opinion, that under all the circumstances, it would operate a cruel injustice to set aside the sale. This deed being in law a mortgage, we must presume, that Chown-ing knew it to be so; for every man is bound to know the law, and ignorance does not excuse. This is laid down in many cases. In Bilbie v. Lumley, 2 East, 471, the court said, “Every man must be taken to be conusant of the law. ' Otherwise there is no saying to what extent the excuse of ignorance might be carried. It would be urged in almost every case.” But, besides the conclusion of law, we have the statement of the plaintiff in his original bill, that he did know this to be a mere mortgage: after describing the deed as having a power of sale, he says, “that at the time of entering into the said agreement [with Mrs. Thompson] your orator understood, that there was a mortgage on the said laud, as evidenced by this indenture, and that it was nothing more. ’ ’ Possessing this knowledge, he made no objection in the first bill he filed, to a sale by Cox. Failing in that bill, he attended the sale; stood by, and saw an innocent purchaser buy and pay his money, and receive his deed, and made not one word of objection. The sale too, we are told by witnesses, was well attended, and conducted with perfect fairness. After this, can he be heard to object to this sale? It is not worth while to quote the cases which decide, that a man thus concealing his right shall be bound : they are too familiar. If we were even to say (contrary to the conclusion of law, and the statement of the bill) that Chowning did not know that this was a mere mortgage, and therefore was not guilty of fraudulent concealment, still I ^should be of opinion, that he could not succeed; for where equity is equal, the law must prevail ; and here the vendee has the legal title, and far superiour equity, since Chowning, to say the least, was guilty of gross negligence.

I am, therefore, of opinion, that the decree be reversed ; that the sale of the land made by Cox to Taylor be confirmed, and so much of the bill as sought to set it aside, dismissed.

The other judges concurring, decree reversed.