Case ID: neb_6/html/0386-01.html
Source: Caselaw Access Project
Author: {"author": "Maxwell, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

William Hurley, plaintiff in error, v. Benjamin Estes, and others, defendants in error.
    Mortgage: At common law the legal ownership of mortgaged real estate is vested in the mortgagee. In equity, however, a mortgage is a mere security for the debt, and is amere chattel in terest.
    -: In this state; a mortgage of real estate is a mere pledge, or collateral security, creating a lien upon the mortgaged property, but conveying no title or vesting no estate, either before or after condition broken. 2.
    -: trust deed. A deed of trust is a mortgage, and only differs from a mortgage with a power of sale, in its being executed to a third person, instead of a creditor. 8.
    -: When an instrument is given as security for the payment of money, or the performance of some collateral act, it is a mortgage whatever, may be its form. 4
    -: foreclosure. An action to foreclose a mortgage is a proceeding inrern so far as it is sought to subject the mortgaged properly to the payment of the mortgage debt. 5.
    -: statute of limitations : Where the debt is barred by the statute of limitations, no action can be maintained on the mortgage. 6.
    Error from the district court of Burt county. The facts appear in the opinion.
    
      Monlc & Selleok and Oa/rriga/n & Osborn, for plaintiff in error.
    “The authorities are uniform that a deed of trust, such as those of which we have been treating, places the legal title in the trustee.” 2 American Law Register,’ 755. Anderson v. Holloman, 1 Jones’ Law, 169. Thorn-hill v. Gilmer, 4 Smedes & Marshall, 153. Sargent v. Howe, 21 111., 148. Hannah v. Carrington, 18 Ark., 85. Ooolc v. Dillon, 9 Iowa, 407. Tailor v. King, 6 Munf., 358. Newman v. Jaclcson, 12 Wheat., 570. De
      
      vin v. Hendershott, 32 Iowa, 192. This distinction between mortgages and technical deeds of trust, it will be seen, is recognized by all the modern decisions. While, in some cases, the facts do not require the distinction to be kept in view, and they are treated as identical, whenever the question has arisen the courts have held that the deed of trust passes the legal title to the trustee. The plaintiff insists that the deed to Test created one of those technical and continuing trusts which are not at all cognizable at law, but fall within the exclusive jurisdiction of courts of equity, and are not affected by the statute of limitations, until some act is done by one of the parties to it in disaffirmance of the trust. It could not run as against the trustee until some act was done by the trustor hostile to his title, nor in favor of the trustee as against the cestui que trust until he had done some act disclaiming the trust and asserting a claim to the property in his own right. Gibbs v. Cwnmgham, 4 Md. Ch., 334. Hickers Appeal, 24 Penn. State, 482.
    
      Jesse T. Davis and John, D. Howe, for defendants in error.
    The trust deed did not convey the legal title to Test. If the operative words in such a deed are compared with those in a mortgage we see that the natural force 'of them is to place the legal title in the trustee or mortgagee, but the statutes (General Statutes, 881, § 55; session laws, 1855, 166, § 30) which provide that the mortgagor retains the legal title and right of possession, could not have been intended to cover mortgages and not deeds of trust. The diligence of counsel must convince us that the difference between a mortgage and a deed of trust is hard to distinguish; we cannot conclude that the legislature intended the word “ mortgagor ” to have the strict and narrow meaning contended for. It is .the substance of things that was intended to be provided for. A mortgage is a pledge of lands as security; a deed of trust, like the one in question, is that and nothing more. The interest created is in the nature of personalty. “ The statute of limitations was made to apply to the substance of the action, not the mere form.” 4 Neb., 28. The intention of the legislature was to make the statute of limitations, applicable to mortgages, applicable to deeds of trust of this sort. Laws, 1855, 166. Laws, 1858, 111. Laws 1861, 53, § 6. Revision of 1866, 395, §§ 10, 16. Kyger v. Riley, 2 Neb., 20. Webb v. Hoselton, 4 Neb., 308, and citations. Peters v. Dwmells, 5 Neb., 460. 8 Ohio State, 215. This be.ing then a mortgage not conveying the legal title (4 Neb., 318) it was barred at the end of the time when a suit on the note would have been barred.
   Maxwell, J.

On the twenty-third day of August, 1858, Benjamin Estes executed and delivered to the plaintiff his promissory note for the sum of $280.00, due in one year from that date, and to draw interest at the rate of five per cent per month from maturity. To secure the payment of said note, the defendant, Estes, executed and delivered to James D. Test a trust deed of the south-west quarter of the north-east quarter, and the south-east quarter of the north-west quarter, and the north-west quarter of the south-east quarter of section one in township twenty north, of range eleven east of the sixth principal meridian. Said deed had a condition therein written, providing that if the said Benjamin Estes should pay to the plaintiff the amount of said note, interest and costs, the said deed of trust given to said James D. Test should be void.” Default was made in the payment of the principal and interest of said note, and on the nineteenth day of October, 1872, the plaintiff filed his petition in the district court of Burt county, to foreclose said deed of trust, and set forth in his petition the facts above stated, and also that James D. Test had departed this life without executing the trust in favor of plaintiff, and praying for the appointment of a trustee to execute the trust, and that an account may be taken of the amount due on the note and trust deed, and that the land may be sold to satisfy the same. The defendants demurred to the petition of the plaintiff on the ground that the facts stated therein were not sufficient to constitute a cause of action. The demurrer was sustained by the court, and the cause dismissed. To reverse this judgment the plaintiff brings the cause into this court by petition in error.

A mortgage at common law is defined to be a conveyance of an estate, by way of pledge for the security of a debt, and to become void on payment of it. The legal ownership is vested in the creditor; but in equity, the mortgagor remains the actual owner until he is debarred by his own default, or by judicial decree. 4 Kent’s Com., 136. This author also refers to instruments containing a power of sale as mortgages. Id., 146.

In equity, a mortgage is a mere security for the debt, and is only a chattel interest, and until a decree of foreclosure, the mortgagor continues the real owner of the fee. The equity of redemption is considered to be the real and beneficial estate, tantamount to the fee at law; and it is accordingly held to be descendible by inheritance, devisable by will, and alienable by deed precisely as if it were an absolute estate of inheritance at law. 4 Kent’s Com., 160.

It is urged with much earnestness that the deed of trust conveyed the entire legal title of the lands in controversy to Test, and therefore a trust deed like the one at bar, although resembling a mortgage, is not in fact a mortgage, but an instrument conveying tbe entire legal estate to tbe trustee, and not a mere mortgage lien.

At common law, sucb an instrument would convey the entire legal title to tbe trustee, subject to tbe right of tbe debtor to defeat tbe estate upon performance of tbe condition. It is,, however, merely a mortgage.

In Flagg v. Foster, 2 Sumner, 533, Judge Story says: “ If a transaction resolve itself into a security, whatever may Toe its form, and whatever name tbe parties may choose to give it, it is in equity a mortgage.” In Page v. Foster, 7 N. H., 394, tbe court say: “ If it was intended as a security, it is a mortgage.” In Dougherty v. McColgan, 6 Gill. & Johns., 281, tbe coúrt say: “ Whenever the intention is to take security for a subsisting debt, or for money lent, and to avoid or restrict tbe equity of redemption, chancery, seeking to protect tbe debtor against tbe rapacity of tbe creditor, and to do full and exact justice between tbe parties, will defeat sucb intention by treating tbe transaction as a mortgage.” And in Cotterell v. Long, 20 Ohio, 464, it was held that, if a contract for the conveyanee of land be intended as security for a debt, it is a mortgage whatever may be its form or tbe name given to it by tbe parties. Story says: “ Tbe particular form or words of tbe conveyance are unimportant; and it maybe laid down as a general rule, subject to few exceptions, that whenever a conveyance, assignment, or other instrument, transferring an estate, is originally intended between tbe parties as a security for money, or for any other incumbrance, whether this intention appear from tbe same instrument or any other, it is always considered in equity as a mortgage.” Story’s Eq., section 1018.

In Eaton v. Whiting, 3 Pick., 484, tbe court held that a power to sell, superadded to an instrument intended as a security, did not deprive it of the- attributes of a mortgage.

In Woodruff v. Robb, 19 Ohio, 212, where Robb, being indebted to Woodruff in the sum of $1,017, and to Birdseye in the sum of $1,275, conveyed . a tract of land to one Henry Starr to secure the payment of such indebtedness, the court held: “The deed in question contained all the substantial qualities of a mortgage, andt nothing more.” It was- a mere security for a debt.

In Sargent v. Howe, 21 Ill., 149, Walker, J., says: “ This deed of trust was given to secure these notes, and in that respect it is the same as a mortgage, and it only differs from a mortgage with a power of sale in it's being executed to a third person instead of the creditor.”

In Webb v. Hoselton, 4 Neb., 318, this court say: “The fact that the mortgage in this instance is in the form of a deed of trust does not .change its character from a mere security for. .the. payment of money, nor does it convey the legal title.”

In Kyger v. Ryley, 2 Neb., 28, this court, in construing the statutes of this state relating to mortgages, say: “ The mortgage is' a mere pledge, or collateral security, creating a lien upon the mortgaged property, but conveying no title, or vesting no estate, either before or after condition broken.”

Where an instrument is given as security for the payment of money, or the performance of some collateral act, it is a mortgage whatever may -be its form, and as such it comes within the rule laid down in Kyger v. Ryley, supra, that when the debt is barred by the statute of limitations, no recovery can be had upon the mortgage. We adhere to that decision.

In Peters v. Dunnels, 5 Neb., 465, it was held, that a proceeding to foreclose a mortgage, so far as it sought to subject the mortgaged property to the payment of the mortgage debt, was a proceeding in rem, and that under the provisions of section seventeen of the code of civil procedure, which took effect September 1, 1866, absence from tbe state, death, or other disability of a non-resident, save the cases mentioned in the section, should not operate to extend the time within which actions in rem should be commenced by or against such non-resident or his-representatives.

As the statute of limitations has run against the claim, and that fact appears upon the face of the petition, the judgment of the district court must he affirmed.

J UDG-MENT AFFIRMED.