Case ID: miss_21/html/0088-01.html
Source: Caselaw Access Project
Author: {"author": "Mr. Chief Justice Clayton", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

A. McIntyre vs. Wm. B. Whitfield et al.
    A stipulation in a mortgage, that the mortgagee may, on the failure of the mortgagor to pay the notes secured by the mortgage, take possession of the mortgaged property, and receive the rents and profits thereof, until the mortgage debt shall be paid, may be enforced by the mortgagee, who may take possession of the property accordingly upon such failure to pay.
    Yet the property, when taken possession of by the mortgagee, Would not thereby become absolutely his; the mortgagor would be entitled to have the property back on payment of the mortgage debt; and this right could only be foreclosed by a decree in equity.
    Where a mortgagee has taken possession of part of the mortgaged property, under a power authorizing him to do so on failure to pay, and to keep the property until payment, and has filed his bill to foreclose the equity of redemption in the property thus in his possession, and for the sale of the residue, the decree should give time to the mortgagor to redeem in, on failure to do which it will be erroneous.
    A mortgagee having power by the mortgage to take possession of the property on default of payment, and keep it and the profits until the debt was paid, took possession of part of the property, being slaves, and sold them ; and afterwards filed his bill for the sale of the residue to pay a balance due of the mortgage debt, after crediting it with the proceeds of the sale of the ' slaves: Held, that the proper decree would be to give the mortgagor time to redeem the property thus taken by the mortgagee, and for an account to be taken to ascertain the whole sum due on the mortgage after deducting payments; from which sum the value of the slaves when taken by the mortgagee, and their hires up to the day of the taking of the account, were also to be deducted. Should the mortgagor redeem, he was to be authorized by the decree to do so in four months on his tendering the mortgage debt due, less the value of the hire of the slaves since they came into the mortgagee’s possession ; and if there were any slaves sold by the mortgagee which he could not deliver up, the mortgagor need not tender their value.
    In error from the chancery side of the circuit court of Holmes county; Hon. Robert C. Perry, judge.
    William B. Whitfield and James M. Strong allege in substance, in their bill, that Whitfield sold to A. McIntyre a tract of land and thirteen slaves for $25,000, payable in four equal annual instalments, falling due on the 1st of January, 1840, ’41, ’42, and ’43, and took a mortgage on the land and negroes to secure the payments. The. first note was paid at maturity; the second note being due and unpaid, complainant (Whitfield) in the year 1841, took possession of all the «negro slaves, except one, viz., “ Eliza,” under and by authority given in the mortgage, in these words: “And if any or either of said notes, when they or either of them fall due and are not promptly paid at maturity, then and in that event the said William B. Whitfield is hereby authorized to take immediate and peaceable possession of the above described property, real and personal, and receive the rents, issues, profits and emoluments of the same, until the said note or notes, which may then be due and payable, be paid by said McIntyre, his executors,” &c.
    The bill further shows, that the negroes so seized by Whitfield have been in his possession, or that of his assigns, ever since. Whitfield offers to account for the value of these slaves and their hire, and says that this will about pay the second note; that in the year-, Whitfield assigned all his interest in the last two notes to Strong, and that they are due and unpaid. The bill prays a foreclosure of McIntyre’s equity of redemption in the negroes taken by Whitfield, and a sale of the land and the one negro remaining in the possession of McIntyre, the first for the benefit of Whitfield, the last for the benefit of Strong.
    The answer of McIntyre, which is made a cross bill, admits the purchase of the land and negroes, and the execution of the mortgage and notes; charges that Whitfield committed a fraud on him in concealing a paramount incumbrance in favor of one McClusky, covering part of the land, to the amount of $1100 and interest; denies that he was in default in regard to the second note; charges that complainants refused to allow him proper credits on it; that in the month of May, 1842, complainant (Whitfield) with the knowledge and consent of Strong, with force and fraud, clandestinely, in the night, and without his (McIntyre’s) consent, took all of the slaves, except the girl Eliza, into his (Whitfield’s) possession, and run them off to Texas, where he now has them in possession, claiming them as his own; charges that Whitfield is a non-resident, is insolvent; prays for a rescission of his purchase, and an account, and for a lien on the property yet in his possession for the balance that may be found due him.
    The answer of Strong to McIntyre’s cross bill, admits the McCIusky lien; that it is still unsatisfied; denies the fraudulent concealment charged; states that McIntyre was to take it up by the original contract, and to have credit on his payments therefor; denies that he ever consented to Whitfield’s taking possession of the property in any other manner than that pointed out by the mortgage; and states that if Whitfield took possession as charged, it was without his consent.
    The answer of Whitfield admits the existence of the paramount lien in favor of McCIusky, and that McIntyre was not informed of it at the time of the sale; states that he (Whitfield) did not know of it himself; denies the fraudulent concealment charged; states that when this lien was discovered, the matter was adjusted by him and McIntyre, on an agreement by McIntyre to take it up and receive credit on his notes therefor; denies taking the negroes in the manner charged; says that he took them in a peaceable manner, as the mortgage authorized; admits his removal of the negroes to Texas; states that he has part of the negroes in his possession in Texas, and that he has sold a part of them.
    Yarious depositions were taken, but they need not be noticed.
    The cause was referred to the clerk of the court, to state an account between the complainants and defendant, calculating interest on the three last notes up to the time of the reference charging the defendant with the amount, and crediting him with the value and the hire of the negroes taken by Whitfield, and crediting him also with the McCIusky lien and a credit of $500, indorsed on one of the notes. The commissioner was directed to report at the next term. At the next term the commissioner reported on the 9th of June, 1847, showing a balance of $8529 against McIntyre. On the day the report was made, a final decree was entered for the sale of the land and the negro left in the possession of McIntyre, to pay the amount reported due; the decree making no reference to the negroes taken to Texas by Whitfield. McIntyre appealed.
    
      A. J. Paxton, for appellant.
    
      Brooke, for appellees.
   Mr. Chief Justice Clayton

delivered the opinion of the court.

This was a bill filed in the circuit court of Holmes county, to obtain a decree of foreclosure and sale of certain mortgaged property. The mortgage contained a stipulation, that upon failure of payment of either of the notes secured by the mortgage, the mortgagee might take possession of the land and slaves, and receive the rents and profits thereof, until the debt should be paid. In pursuance of this stipulation, after the second note had fallen due, and remained unpaid, the mortgagee took possession of all the slaves except one, carried them to Texas, and there sold a part of them. The bill was filed to obtain a decree for the sale of the remaining slave and the land.

■ The decree is resisted, on the ground of fraud in the original sale for which the mortgage was given, failure on the part of the mortgagee to comply with his contract, and the taking of the slkves from the possession of the mortgagor. None of these grounds are made out by the proof, except the last, and this is avowed and justified under the mortgage. The only question is the effect of this course of the creditor.

The right to take and hold possession upon a given contingency, was conferred by the terms of the mortgage. There can be no valid objection to the exercise of this power, as a power of sale might likewise have been conferred, and might have been lawfully enforced. But the mortgagee went beyond the limit prescribed in the mortgage. After he took possession, he acted upon the assumption, that the property was absolutely his, and that the equity of redemption, and all right of the mortgagor were barred. In this he was in error, because upon payment of the mortgage debt, the debtor was entitled under this mortgage to have the property back, and this right could only be foreclosed by a decree in equity.

The court below directed an account to be taken, to ascertain what was due, after deducting all payments which had been made; the value of the slaves taken into possession by the mortgagee, with their hires from that time, up to the takipg of the account; and after deducting also the amount of a previous lien upon the land. At a subsequent day, after taking of the account, a decree was made, directing a sale of the land and the remaining slave, unless payment of the balance so ascertained, was made by a specified day.

In this decree, it is taken for granted, that the right of the mortgagor to the slaves taken by the mortgagee, was extinguished. This opinion was erroneous. The equity of redemption was not surrendered by the mortgage, upon default of payment. On the contrary, the stipulation was expressly, that the creditor might hold until payment should be made. It was a stipulation for a change of possession, not of property, upon default of payment. The case then resembles a proceeding for a strict, technical foreclosure. This mode of proceeding is not much favored in equity, but as the slaves are now beyond the jurisdiction of the courts of this state, it is perhaps the only remedy which can be made effectual. But it is the settled practice, in case of technical foreclosure, to give the mortgagor time to redeem. 4 Kent, Com. 182. It is right that the equity of redemption should be equally protected by the decree in this case, for a reasonable time. As the court below made no such provision, the decree must be reversed, and the cause remanded for farther proceedings. A new account will be taken, to ascertain, the whole sum due under the mortgage, principal and interest, after deducting the payments actually made. It must also state the value of the slaves at the time when taken by the mortgagee, and state the hires up to the day of the taking of the account. The amount of the lien which existed' upon the land, prior to the mortgage, and which is entitled to prior satisfaction out of the land, must also be stated.

If the mortgagor should tender and pay the whole sum due, less the value of the hire of the slaves, since they have been in possession of the mortgagee, then the mortgagee must restore said slaves, or such of them as are in his possession, and the title of the mortgagor be made absolute. For such as may have been sold by the mortgagee, he must, in addition to the hires, give credit for their full cash value when taken by him, and the tender of payment need not extend to this value of such as have been sold by the mortgagee. But if such tender and payment be not made within four months from the .time of entering such decree, then the mortgagor to be foreclosed of all equity of redemption in the slaves, so taken by the mortgagee^ and the decree to be for the sale of the other property contained in the mortgage. In either event, provision to be made by the decree, for the satisfaction of the prior lien upon the lands, so as to exonerate the mortgagor therefrom. The account may also extend to any other matter desired by either of the parties, and deemed pertinent by the court.