Case ID: ohio-st_42/html/0094-01.html
Source: Caselaw Access Project
Author: {"author": "JOHNSON, C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Martin v. Alter.
    The owner in fee of real estate conveyed the same to a trustee to secure a debt to a third person. After the granting clause to the trustee in fee, there was a condition that if the debt was paid at maturity the conveyance was to be void, otherwise the trustee was authorized to sell the land at public sale to pay the same.
    
      Held: 1. This conveyance was a deed of trust in the nature of a mortgage and not an absolute conveyance in trust to secure the debt.
    2. The legal title remains in the grantor or mortgagor in possession after default, subject to the right of the trustee or creditor, to enforce the condition of the mortgage.
    3. The fact that the conveyance is to a trustee, with power of sale in case of default, does not change its character in this respect.
    4. A judgment against the grantor who remains in possession of the premises, with the acquiescence of the mortgagee, after default, is a lien on said premises, subject to said mortgage.
    ERROR to the District Court of Muskingum county.
    June 20, 1867, John Alter, who was then seized in fee and in possession of certain real estate, borrowed of Benjamin 'Wheeler $1,000 evidenced by his promissory note payable to the order of said Wheeler in one year after date.
    To secure the payment of this note, he executed and delivered to Albert W. Train, a conveyance in trust, whicli reads as follows:
    “ Know all men by these presents, that we, John Alter and Elizabeth D. Alter, his wife, of the county of Muskingum, in the state of Ohio, the receipt whereof we do hereby acknowledge, have given, granted, bargained, sold, aliened, conveyed and confirmed unto the said Albert W. Train, his heirs and assigns forever, the following described parcel of land situate in the city of Zanesville, county of Muskingum and state of Ohio, and being parts of lots one and two in the fifth square to the city of Zanesville, bounded as follows: Beginning at the north west corner of lot one in said square, thence south with the line of Second street seventy-five feet, thence east thirty-eight feet, thence north to Main street, thence west to the place of beginning ; to have and to hold the said granted premises, with all the appurtenances and privileges to the same belonging or in any wise appertaining to the said Albert W. Train, his heirs ar.d assigns forever, to their own proper use, benefit and behoof, as a good and indefeasible estate in fee simple, and I, the said John Alter, for myself, my heirs, executors and administrators, do covenant with the said Albert W. Train, his heirs and assigns, that before and until the sealing and delivery of these presents, I am lawfully seized in fee of the above granted premises and appurtenances ; that I have good right full power, and lawful authority to sell and convey the same to Albert W. Train, that the said premises are free from all incumbrance whatever, and that I do and will warrant and defend the same unto the said Albert W. Train, his heirs and assigns forever, against the lawful claims of all persons whatsoever. Provided, always, and these presents are upon this express condition, that whereas I, the said John Alter, have this day made my certain promissory note in writing, bearing even date herewith, for the payment of $1,000, with interest at ten per cent., payable semi-annually in one year from this date to the order of Benjamin Wheeler. Now therefore, if I, the said John Alter, shall punctually pay to the said Benjamin Wheeler, or to his order, the full amount of the said sum of money and the interest in the said note specified, at the time and place it become due and payable, according to the tenor and effect of said note, then the foregoing conveyance shall he void and of no effect, otherwise to be and remain in full force and virtue. But on the contrary thereof, if I, the said John Alter, shall fail to pay said sum of money in the said note specified, at the time and place it become due and payable, in that case it shall be lawful, and we, the said John Alter and Eliza D. Alter, do by these presents expressly authorize the said Albert W. Train, his heirs and assigns, upon such default accruing in the payment of said sums of money, either in principal or in interest upon giving thirty days notice of the time and place of sale in some newspaper published in Zanesville, Ohio, to sell to the. highest bidder for cash, without reserve and without appraisement, the before described parcel of land, and to apply the proceeds, first to the costs and expense of this trust, and five per cent, commission to the trustee for his services as such trustee, next to the payment of said promissory note, and any interest that may accrue thereon, and to pay the balance (if any), to the said John Alter, his heirs and assigns, and to execute a deed or de.eds to the purchaser or purchasers of said parcel of land, conveying the same to him or them in as full and ample manner as we, the said John Alter and Eliza D. Alter could possibly do. And we, the said John Alter and Eliza D. Alter, for our heirs, executors and administrators, do covenant to and with the said Albert W. Train, his heirs and assigns, that upon any sale being made by virtue of the power herein contained, that we will make, execute and deliver to the said purchaser or purchasers, their heirs and assigns, all such further assurance as may be necessary to rest in him or them an indefeasible estate in fee simple in the said parcel of land; and it is expressly understood that this conveyance is to be everywhere construed as a deed of trust, and not as a mortgage deed, and as giving to the said Albert W. Train, his heirs and assigns, as full and ample authority to sell and convey the said parcel of land, as we, the said John Alter and Elizabeth D. Alter, by a power of attorney, or any other instrument of writing, could possibly do. And it is further understood, that this instrument shall not and can not be revoked or annulled by the said John Alter or Eliza D. Alter, or either of them, or by the death of either or both of them, but shall remain in full force for all purposes herein specified. In witness whereof, we have hereunto set our hands and seals, this 20th day of June, A. D. 1867.
    “ JohN Altee, [Seal.]
    Eliza D. Altee, [Seal.]
    “ Signed, sealed and delivered in presence of
    Ella Altee,
    D. B. Gaby.” [U. S. Rev. Stamp.]
    
      This instrument was delivered and recorded as a mortgáge. At the May term 1876, of the court of common pleas of Muskingum county, the plaintiff in error recovered a judgment against said Alter for over $5,000, and on the 19th of May 1876, caused execution to issue thereon, which was levied on the same real estate embraced in the foregoing conveyance, of which said Alter was in possession, and so remained until his death in 1879. •
    His executors soon thereafter filed their petition in the court of common pleas to sell this real estate to pay debts, making Wheeler, Train, Martin and others, as well as the widow and heirs, defendants. Martin filed an answer and cross-petition claiming a judgment lien on the premises, subject to the mortgage to Train to secure the debt to Wheeler which remained unpaid.
    Upon the above state of facts the district court held, as a matter of law, that the conveyance of June 20, 1867, from Alter and wife to Train divested Alter of the legal title to the above described real estate, and that by reason thereof the judgment in favor of Martin did not become a lien upon said real estate,, and that the levy thereon of said execution did not bind the interest of John Alter in said real estate for the payment of said judgment. To this decision of the court on the said questions of law the said Edward Martin then and there excepted.
    - To reverse this judgment is the object of this proceeding in error.
    
      A. IF. Train, for plaintiff in error.
    
      F. A. Seborn, for defendant in error.
   JOHNSON, C. J.

No attempt was made by Wheeler or his trustee to take possession, nor to execute the power of salé contained in the conveyance by Alter to secure the debt, though past due over ten years. Alter remained, in the undisturbed possession of the premises until his death in 1879. In the meantime Martin obtained a judgment against him? and caused a levy to be made on tbe real estate covered bj tbe deed to Train.

Did this judgment operate as a lien on this real estate ?

If it was a deed of trust in tbe nature of a mortgage, then the incidents of an ordinary mortgage attach.

In the case'of a mortgage in the usual form, the legal estate remains in the mortgagor in possession, even after condition broken as to all the world, except the mortgagee.

The legal title remaining in the mortgagor is liable to levy and sale on execution. It descends to his heirs, subject to the conditional estate tp the mortgagee.

The latter may maintain ejectment or take other legal steps to obtain possession after condition broken, but until he does so, the mortgagor is at law owner of the fee. The mortgage is a conditional conveyance which becomes void upon payment of the debt, without a formal reconveyance. Lessee of Ely v. McGuire, 2 Ohio, 223 ; Lessee of Phelps v. Butler, 2 Ohio, 224; Farmers' Bank v. Com. Bank, 10 Ohio, 71; Lessee of Perkins v. Dibble, 10 Ohio, 438; Seymour v. King, 11 Ohio, 342; Mc Arthur v. Franklin, 16 Ohio St. 103 ; Swartz v. List, 13 Ohio St. 419; Allen v. Everly, 24 Ohio St. 97.

Inasmuch as the law requires an appraisement of the fee as unincumbered real estate, there is difficulty in selling land subject to a mortgage, unless the purchaser is willing to pay two-thirds of the whole value for the legal title, with the equity of redemption, which he would acquire by such purchase. Baird v. Kirtland et al., 8 Ohio, 21; Seymour v. King, 11 Ohio, 342.

Theconveyauce before us has the ordinary condition which distinguishes a mortgage from an absolute deed, or from a deed creating a trust. It is provided that if the debt is paid according to the terms stipulated, “ the conveyance shall be void and of no effect.” It is not an unconditional deed of trust, but a mortgage, or deed of trust in the nature of a mortgage. It is not an absolute and indefeasible title in the trustee for the purposes expressed in the trust, with nothing but au equity in the grantor, but an estate upon a condition, to secure a debt, to become void upon its payment.

Where the conveyance to a trustee is as collateral security, merely, for the payment of a debt, with the condition that it shall become void upon its payment and with a power to sell the land in case of default, it is a deed of trust in the nature of a mortgage. The grantor parts with his title conditionally only. If there is no such condition, but the conveyance is an absolute deed of trust for the purpose of raising money to pay a debt if not paid as agreed, the grantor. parts with all his legal estate, and whatever rights he has arc, in 'their nature, equitable merely. Hoffman et al. v. Mackall, 5 Ohio St. 130; Woodruff v. Robb, 19 Ohio, 217; Eaton v. Whiting, 3 Pick. 485.

The fact that the deed is made to a trustee with power of sale does not change its character in this respect, same cases.

Moore v. Burnett, 11 Ohio, 334, and Morris v. Way, 16 Ohio, 469, are deeds of trust without a condition that they were to be void if the debt was paid / hence they are the conveyances of an absolute estate in trust to secure a debt, with a power of sale in the trustee to execute the trust, while Woodruff v. Robb, supra, and the case at bar have such a condition. The former divests the grantor of his legal estate, leaving nothing but an equity in the grantor; while the latter is a security for the debt, defeasible upon its payment. The cases of Moore v. Burnett and Morris v. Way, are not in conflict with Woodruff v. Robb. Both forms of instruments are mortgages in equity. In the latter the legal.estate remains in the mortgagor after default, as against all the world, except the mortgagee, while in the former the legal title passes absolutely, leaving an equity merely in the grantor.

With this distinction between absolute deeds of trust with power of sale, and conditional deeds of trust with like power, defeasible upon payment of debt, the cases are reconcilable. In the former case there is no legal estate remaining in the grantor, and therefore no judgment lien, while in the latter the legal estate remains in the grantor in possession, in favor of judgment creditors, subject to the mortgage.

So in Baird v. Kirtland, 8 Ohio, 21, the deed was absolute, with a separate defeasance, or rather penal bond, by which the grantee covenanted upon payment of a debt, to convey back the land. Nothing but an equity remained in the grant- or. This is not subject to levy and sale.

In that case it' was conceded that if it was an ordinary mortgage, the legal estate remained in the grantor.

Here, neither Wheeler nor his trustee sought to enforce their conditional deed but suffered Alter to remain in possession. He was a mortgagor in possession, having, as against judgment creditors, the legal title to the premises, and therefore the judgment of Martin was a lien thereon subject to the Wheeler mortgage.

Judgment reversed.