Case ID: sw_134/html/0323-01.html
Source: Caselaw Access Project
Author: {"author": "WILLIAMS, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

BAILEY et al. v. BLOCK et al.
    (Supreme Court of Texas.
    Feb. 15, 1911.)
    1. Mortgages (§ 556) — ‘‘Deficiency. ’ ’
    A mortgage “deficiency” is the balance due after exhausting the property given as security.
    [Ed. Note. — For other cases, see Mortgages, Dec. Dig. § ’556.
    
    For other definitions, see Words and Phrases, vol. 2, p. 1943.]
    2. Mortgages ,(§ 556) — Deficiency — Enforcement.
    Mortgaged property must be sold at foreclosure sale, the proceeds applied, and the deficiency thus ascertained before recourse against property of the debtor other than that mortgaged, whether the fact is to be ascertained by the court as the basis of a deficiency judgment, or by the clerk or referee as the basis of a deficiency execution authorized by the decree of foreclosure.
    [Ed. Note. — For other cases, see Mortgages, Cent. Dig. §§ 1592-1597; Dec. Dig. § 556.]
    3. Mortgages (§ 562) — Deficiency—Execution.
    Rev. St. 1895, art. 1340, requires a mortgage foreclosure judgment to direct the sheriff to sell the property and to make any deficiency out of the mortgagor’s property, as in ordinary executions. Article 2343 requires executions to be levied without delay. Held, that a sheriff holding an order of sale under mortgage foreclosure cannot estimate in advance the proceeds that will probably result from the sale, and levy execution for the probable balance on other property, the judgment provided for by article 1340 and the writ thereunder being contingent .as to any deficiency until it is rendered certain by sale of the mortgaged property; and a sale of mortgagor’s general property under a foreclosure judgment before exhausting the mortgaged property is void.
    [Ed. Note. — Por other cases, see' Mortgages, Cent. Dig. §§ 1618-1621; Dec. Dig. § 562.]
    4. Execution (§ 258) — Sales—Attack.
    To make an execution sale immune from collateral attack, there must be a valid judgment and execution.
    [Ed. Note. — Por other cases, see Execution, Cent. Dig. §§ 736-739; Doc. Dig. § 258.]
    5. Mortgages (§ 562) — Deficiency—Execution Sales — Attack.
    Irregularity in selling a mortgagor’s general property on judgment in foreclosure, undep Rev. St. 1895, art. 1340, before exhausting the mortgaged property, is subject to collateral attack.
    [Ed. Note. — For other cases, see Mortgages, Dec. Dig. § 562.]
    6. Appeal and Error (§ 1177) — Review-
    Necessity for Remand.
    Though an execution sale under which defendants in trespass to try title claim be adjudged void on review, the cause will be remanded, where an adjustment of equities may be proper.
    [Ed. Note. — Por other cases, see Appeal and Error, Dec. Dig. § 1177.]
    - Error from Court of Civil Appeals of First Supreme Judicial District.
    ■ Trespass to try title by Mrs. Alice M. Bailey and another against B. Block and another.^ Prom a judgment of the Court of Civil Appeals (125 Si W. 955) affirming a judgment for defendants, plaintiffs bring error.
    Reversed and remanded.
    Geo. H. Breaker, I. P. Hutchinson, and Spotts & Matthews, for plaintiffs in error. Ross & Wood, Baker, Botts, Parker & Gar-wood, G. H.- Pendarvis, and H. J. Dannen-baum, for defendants in error.
    
      
      For other cases see same topic and section NUMBER in Dee. Dig. & Am. Dig. Key No. Series & Rep’r Indexes
    
    
      
      For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key No. Series & Rep’r Indexes
    
   WILLIAMS, J.

This is an action of trespass to try title for land in the city of Houston, the decision of which depends on the validity of a sheriff’s sale thereof made In 1886 to A. P. Lufkin, under a judgment in his favor against Mrs. Louise Bremond, independent executrix of the will of Paul Brem-ond, deceased, to whose estate the land belonged. The plaintiffs in error, plaintiffs below, claim under deeds from Mrs. Bremond, who was also the devisee under the will, and the defendants claim under the prior sheriff’s sale. The judgment under which the sale was made established the debt against Bremond’s estate, and also foreclosed a mortgage given to secure it on two pieces of land other than that in controversy, in the terms of article 1340, Rev. St. 1895. The order of ■sale, which was in conformity with the judgment, was received by the sheriff.November 5, 1886, and he advertised the mortgaged property for sale on the next sale day, and at the same time indorsed on the writ a levy on the property in controversy, and advertised it also for sale, as under execution on the next sale day. When that day arrived, he first sold pne piece of the mortgaged property and offered the other, but received no bid, and then sold the land in controversy to make up a balance of the judgment left unpaid.

It is found by the trial court that the sheriff, before levying on the land in controversy, ascertained that the mortgaged property would be insufficient to satisfy the judgment, and for that reason made the levy on other land.

The question, of course, is whether or not the sale of the land in controversy was void, and the decision of it depends on the effect of several statutory provisions. Article 1340 prescribes that the judgment to be rendered on foreclosure of a mortgage “shall be * * * that an order of such sale issue to the sheriff,” etc., directing him to sell the same (the mortgaged property) as under execution in satisfaction of the judgment;” and if the property cannot be found, or if the proceeds of such sale be insufficient to satisfy the judgment, then to make the money, or the balance thereof remaining unpaid, out of any other property of the defendant, as in ease of ordinary executions.”

Article 2338 prescribes the requisites of executions; the second and third subdivisions being:

“(2) If the judgment be for money simply, it [the writ] shall require the officer to satisfy the judgment out of the property of the debtor, subject to execution.

“(3) If the judgment commands the sale of particular property for the satisfaction thereof, the writ shall be framed accordingly.”

Article 2343, which is the chief reliance of counsel for defendant, is as follows: “When an execution against the propertyt of any person is issued to an officer, he shall proceed without delay to levy the same upon the property of the defendant not exempt from execution, unless otherwise directed by the plaintiff, his agent, or attorney.”

Much light is thrown upon the meaning and purpose of article 1340 by the history of the development of the law regulating the collection of balances, called “deficiencies,” due on mortgage debts after exhaustion of the property given to secure them. Original1 ly, the mortgagee could only enforce his mortgage against the property. Later it was established that, if he had a bond or obligation for the debt collateral to the mortgage, he might, after application of the proceeds of the mortgaged property, maintain an action at law thereon for any balance un•paid. Afterwards, by statute, rule of court, or otherwise, it became the practice in some jurisdictions for the creditor, after the foreclosure and sale of tbe property and the return thereof showing the result, to apply to the court which decreed the foreclosure for a deficiency judgment, and, in other jurisdictions, for the judgment of foreclosure to provide for a report of the sale, the application of the proceeds, and the issuance of execution for any balance ascertained in that way. The last was the procedure in this state (Paschal’s Dig. art. 1480) prior to the revision of 1879, when the further advance shown in article 1840 was made. To all of these practices one prominent requirement is common, and that is that the foreclosure sale is to be made, the proceeds applied, and the deficiency thus mathematically ascertained before any proceeding against the property of the debtor, other than that mortgaged,. is allowed. This is true whether the fact is to be ascertained by the court as the basis of a deficiency judgment, or by the cleric or referee as the basis of a deficiency execution authorized by the decree of foreclosure. Jones on Mortgages (6th Ed.) §§ 1709a et seq., 1920; Freer v. Tupper, 21 S. C. 81; McCall v. Rogers, 77 Ala. 349; Freeman on Executions, § 10; 27 Cyc. 1746, 1751, 1752, 1754, 1756, 1760, 1761.

Neither the court nor the clerk is allowed by such statutes to estimate in advance the proceeds that will probably result from a sale, and award judgment or execution for a probable balance. Is such a power given to the sheriff by our statute? It as plainly denies it to him, as other statutes referred to deny it to the court or the clerk. The law is so stated in the opinions in Seligson v. Collins, 64 Tex. 314, and Ward v. Billups, 76 Tex. 466, 13 S. W. 308. The point may have been involved in the former ease only incidentally and in the latter not at all, but we are satisfied that the statements made of the law are correct. To the same effect are the decisions in Thomas v. Simmons, 103 Ind. 543, 2 N. E. 203, 3 N. E. 381, and Mitchell v. Ringle, 151 Ind. 16, 50 N. E. 30, 68 Am. St. Rep. 212, based upon a statute like ours.

The judgment provided for in article 1340 is contingent as to the deficiency to be enforced against the general estate of the debt- or until it is made certain in the way prescribed, viz., by sale of the mortgaged property and application of the proceeds, and this is true also of the writ. Freeman on Executions, § 10. The officer has neither judgment nor writ to empower him to proceed against other property than that mortgaged until the prescribed' contingency has happened, viz., the sale and the application of the proceeds rendering certain the amount to be collected as under execution. The writ issued on such a judgment by force of article 1340 may operate as both an order of sale and an ordinary execution, but not necessarily so, since the latter office may be prevented from ever coming into effect by the satisfaction of the judgment from the sale or otherwise; and where it does so operate, its two functions are active successively, and not concurrently. This is made plain by the language of the statute, and results from the fact that the deficiency to be collected, as under execution, is uncertain until the sale has taken place. It is only “then,” and “if” the proceeds be insufficient, that the proceeding as under execution is authorized. It irresistibly follows that the function of the writ as a general execution first comes into-existence after the sale, and that it is in legal effect the same as the execution formerly required to be issued after the sale and return of the order of sale had taken place. The change in the law merely makes it the duty of the sheriff, instead of the clerk, to ascertain the deficiency after the sale, and empowers him then to proceed under the same writ, instead of a new one.

There is nothing in article 2343 that affects the question. It applies to executions “against the property” of the defendant, to be enforced “against property not exempt from execution,” which plainly are those mentioned in subdivision 2 of article 2338, for “money simply” to be satisfied “out of the property of the debtor subject to execution.” The procedure under writs like that here in question is prescribed by subdivision 3 of the last-named article to be in accordance with the judgment prescribed by article 1340. It is only where an order of sale becomes an ordinary execution after sale of the mortgag- . ed property, leaving a balance, that the further procedure as under ordinary execution is to be followed. An order of sale is a kind of execution, but it is not the kind referred to in article 2343, or, at least, is not such until a sale of the mortgaged property has been made. We think it clear, therefore, that never before the day on which the sale was made did the judgment or the writ empower the sheriff to proceed against Bremond’s estate as under execution.

And this conclusion necessarily answers the contention that the officer’s departure from the prescribed course amounted only to an irregularity which did not render the sale void, but only subjected it to direct attack. That contention is founded on the many decisions which hold that purchasers at sheriffs’ sales are not affected in collateral proceedings by the officer’s failure to take some of the steps required by the statutes preliminary to the making of sales, such as demand upon the defendant to point out property, the making or indorsement of levy, the giving of notice, and the like. The very foundation upon which those decisions rest is that at the time of sale the sheriff holds a valid execution, based upon a valid judgment, under which all the required things could lawfully have been done. Persons bidding may not be in a position to ascertain whether or not the steps preliminary' to sale have been taken, and are entitled to presume that the officer has done his duty. But all the authorities hold that there must, at the least, be a valid judgment and execution, authorizing the sale which the officer undertakes to make.

If what we have said proves anything, it is that the judgment and execution here in question did not empower the sheriff to proceed in any way against the general estate until the mortgaged property had been sold. When that had been done, the further power given was not to sell other property at once, but to make the money remaining unpaid out of such other property, “as in case of ordinary executions.” Until the prescribed contingency had happened, the officer had no power to call upon the defendant for, nor to make, a levy, nor to give the notices of sale — in short, to do anything required to be done “in case of ordinary executions.” 1-Iis power was the same, and no more, than it would have been had an execution for the money then, for the first time, been put in his hands, and we presume it will not be contended that a sheriff has power to sell under an execution on' the day of its receipt by him. No presumption could protect the purchaser in such case, because the want of power would appear from the face of the writ, and of this every one is required to take notice.

The principal arguments urged against the contention that the sale should be held void are based upon inconvenience. One is the danger that in extreme cases, before the sale of the mortgaged property could be made, the debtor might put his other property out of reach. The answer is that the process prescribed for foreclosure sales is not intended to meet unusual emergencies. Eor extraordinary cases extraordinary remedies are prescribed. It is to be understood that we are not holding that a mortgagee is bound to proceed for a foreclosure. Whether he may merely seek and obtain judgment for hisj debt, to be enforced by ordinary execution against the debtor’s property indiscriminately, is a question not before us. What we do hold is that when he proceeds under article 1340, and obtains the judgment and order of sale there prescribed, he must proceed in accordance therewith. Neither he nor the officer nor the purchaser is at liberty to disregard one of the most fundamental principles concerning the powers of officers, which is that their powers are prescribed and limited in the process under which they act, and the law controlling its execution, and these powers cannot be enlarged to meet the wishes or necessities of any one. It is true that hardships and losses generally follow mistakes made by officers as to the extent of their powers in such matters, as they often do from other mistakes of law; but it is in the power of purchasers to determine from the face of the process itself whether or not it authorizes that which is being done. Inconveniences of this kind are small when compared with those which would result from a loose construction of the processes prescribed by law, under which sheriffs are to act.

We hold that the sale was void, and that, upon the facts found, the plaintiffs were entitled to recover, but as an adjustment of equities may be proper, we will remand the cause in accordance with the established practice. Smithwick v. Kelly, 79 Tex. 564, 15 S. W. 486; Wilkin v. Owens, 102 Tex. 197, 114 S. W. 104, 115 S. W. 1174, 117 S. W. 425, 132 Am. St. Rep. 867.

Reversed and remanded.