Source: https://supreme.justia.com/cases/federal/us/195/1/
Timestamp: 2019-04-19 10:25:10+00:00

Document:
1. By the law of Illinois in respect of mortgages, the legal title passes to the mortgagee, who is entitled to possession, at least after condition broken. The mortgagor has an equity of redemption, and, in case of foreclosure by sale, has by statute twelve months within which to redeem by payment.
2. Where a mortgagee has rightfully taken possession of the mortgaged premises on condition broken, the filing of a bill to foreclose is in aid of the legal title, and not inconsistent with it.
3. Prior to the passage of a certain statute, where at the sale on foreclosure, the mortgagee bid in the property conveyed by the mortgage at less than the amount due, and the mortgagor did not redeem, failure by the mortgagee to take out a deed had no effect so far as the mortgagor was concerned on the original title of the mortgagee as against the mortgagor, though it might let in the right of redemption.
4. When, by a statute passed subsequently to a mortgage and going into effect after the mortgagee has taken possession as such, on condition broken, it is enacted that, if the mortgagee, being in possession, bids in the mortgaged premises at sale on foreclosure at less than the amount found due on the mortgage, and the mortgagor does not redeem, the legal title of the mortgagee and his right of possession shall be forfeited by failure to obtain a deed within the time prescribed to the mortgagor, who has not redeemed or in fact paid anything in extinguishment of the mortgage, such statute impairs the obligation of the prior mortgage contract, and operates to deprive the mortgagee of property rights without due process.
Five ejectment suits were brought by Lightcap against tenants of Mrs. Bradley, July 13, 1895, in the Circuit Court of Mason County, Illinois, and taken on change of venue to Fulton County, where they were consolidated; Mrs. Bradley was let in to defend, and the case went to judgment in her favor. This judgment was reversed by the Supreme Court of Illinois, after several hearings, and the case remanded to the circuit court. 186 Ill. 510. On the retrial, judgment was recovered by Lightcap, which was affirmed by the supreme court, 201 Ill. 511, and this writ of error prosecuted.
On the disposition of the case when brought to the supreme court the second time, the division of opinion among the seven members of the court found expression. Mr. Chief Justice Magruder, Mr. Justice Carter, and Mr. Justice Ricks concurred in the opinion of Mr. Justice Cartwright in affirmance of the judgment. Mr. Justice Wilkin and Mr. Justice Boggs filed dissents, and Mr. Justice Hand, while agreeing that the legal title was in Lightcap, was of opinion that the full beneficial interest was in Mrs. Bradley, and that she, being in possession, a court of chancery might protect her equitable interest and possession by enjoining the prosecution of the ejectment suit.
Breedlove notes, and Prettyman paid the difference, and the 1,200 acres were released from the Breedlove trust deed or mortgage.
February 22, 1872, Mrs. Bradley filed a bill in the Circuit Court of Mason County to set aside the release of the Breedlove trust deed or mortgage, on the ground of fraud, and for the foreclosure of that mortgage on the 1,200 acres for the payment of the balance of the original debt. McCune was a party, but seems to have left the state, and was brought in by publication. The bill was contested, and on August 22, 1879, the Mason Circuit Court entered a decree of foreclosure and sale on the McCune trust deed, finding the amount due Mrs. Bradley to be $31,500. The 680 acres were sold by the master in chancery October 27, 1879, bid in for Mrs. Bradley for $10,000, and a certificate was issued to her.
"SEC. 12. Whenever any lands or tenements shall be sold by virtue of any execution, it shall be the duty of the sheriff or other officer, instead of executing a deed for the premises sold, to give to the purchaser or purchasers of such land or tenements a certificate in writing, describing the lands or tenements purchased, and the sum paid therefor, or, if purchased by the plaintiff in the execution, the amount of his bid, and the time when the purchaser will be entitled to a deed for such lands or tenements, unless the same shall be redeemed, as is provided in this chapter, and such sheriff or other officer shall, within ten days from such sale, file in the office of the recorder of the county, a duplicate of such certificate, signed by him, and such certificate, or a certified copy thereof, shall be taken and deemed evidence of the facts therein contained."
"SEC. 13. It shall be lawful for any defendant, his heirs, executors, administrators, or grantees, whose lands or tenements shall be sold by virtue of any execution, within twelve months from such sale, to redeem such lands or tenements, by paying to the purchaser thereof, his executors, administrators, or assigns, or to the sheriff or other officer who sold the same, for the benefit of such purchaser, the sum of money which may have been paid on the purchase thereof, or the amount given or bid, if purchased by the plaintiff in the execution, together with interest thereon at the rate of ten percentum from the time of such sale, and on such sum being made as aforesaid, the said sale and the certificate thereupon granted shall be null and void."
or administrators, to complete such sale, by executing a deed to the purchaser. . . ."
"SEC. 24. In all cases hereafter where lands shall be sold under and by virtue of any decree of a court of equity for the sale of mortgaged lands, it shall be lawful for the mortgagor of such lands, his heirs, executors, administrators, or grantees to redeem the same in the manner prescribed in this chapter for the redemption of lands sold by virtue of executions issued upon judgments at common law, and judgment creditors may redeem lands sold under any such decree in the same manner as is prescribed for the redemption of lands in like manner sold upon executions issued upon judgments at common law."
In Rucker v. Dooley, 49 Ill. 377, the Supreme Court of Illinois at its September term, 1868, reasoning by analogy, held in an equity suit, as against a purchaser of real estate at an execution sale, who was never in its possession, and had no claim to it, except under his judgment and sale, and who had taken out a sheriff's deed twenty-nine years after the sale, and in favor of a bona fide purchaser, in possession, claiming by mesne conveyances from the judgment debtor, that, for the protection of purchasers for a valuable consideration, without notice, from the judgment debtor and those claiming under him, a sheriff's deed ought not to be issued after the lapse of twenty years, and that application for a deed made after the lapse of seven years, during which the judgment was a lien, and fifteen months, the time given for redemption, and within twenty years, should be made to the proper court by rule on the sheriff and notice to the parties interested.
and to Provide for the Redemption of Real Estate Sold Under Execution or Decree,"
"SEC 30. When the premises mentioned in any such certificate shall not be redeemed in pursuance of law, the legal holder of such certificate shall be entitled to a deed therefor at any time within five years from the expiration of the time of redemption. The deed shall be executed by the sheriff, master in chancery, or other officer who made such sale, or by his successor in office, or by some person specially appointed by the court for the purpose. If the time of redemption shall have elapsed before the taking effect of this act, a deed may be given within two years from the time this act shall take effect. When such deed is not taken within the time limited by this act, the certificate of purchase shall be null and void; but if such deed is wrongfully withheld by the officer whose duty it is to execute the same, or if the execution of such deed is restrained by injunction or under of a court or judge, the time during which the deed is so withheld or the execution thereof restrained shall not be taken as any part of the five years within which said holder shall take a deed. "
"under section 6 of chapter 83 of the Revised Statutes, in regard to limitations, the trust deed from McCune to Johnson, the decree of sale, and certificate of purchase constituted color of title which, coupled with her possession and payment of taxes for seven successive years, made her the legal owner of the lands to the extent and according to the purport of her paper title;"
"under section 4 of the same act, her possession and actual residence, through her tenants, for seven successive years, having a connected title in law or equity deducible of record from the United States, by virtue of the same trust deed, decree and sale, barred the action of plaintiff,"
that when the sale was made under the decree, and the mortgagee purchased at the sale, the mortgage was satisfied as to the land, and all rights of the mortgagee were represented by the certificate of purchase, and that, by force of the act of 1872, the mortgagee having failed to take the deed within the time limited by the statute, the certificate became null and void, her title terminated as it would on redemption, and she ceased to have any interest whatever in the premises, so that the mortgagor or his grantees, without any payment of the mortgage debt, was entitled to recover the possession from the mortgagee, in ejectment, on the strength of a perfect title.
After condition broken, the mortgagee became entitled to possession of the mortgaged premises, and could maintain an action of ejectment. The mortgagor had only an equity of redemption, and, in case of sale on foreclosure, had, by statute, the right to redeem within twelve months by making full payment.
existence is measured by that of the mortgage debt. When the latter is paid or becomes barred by the statute of limitations, the mortgagee's title is extinguished by operation of law. Pollock v. Maison, 41 Ill. 516; Harris v. Mills, 28 Ill. 44; Gibson v. Rees, 50 Ill. 383; Barrett v. Hinckley, 124 Ill. 32; Lightcap v. Bradley, 186 Ill. 510. Until it is extinguished, the legal title is in the mortgagee for the purpose of obtaining satisfaction of his debt."
The condition of the McCune mortgage was broken as soon as made by failure to pay taxes previously and then due, and again by failure to pay the notes maturing in 1869, 1870, and 1871, and Mrs. Bradley entered into peaceable possession of the tract of 680 acres before the act of 1872 took effect. If the assent of the mortgagor was necessary, which we do not hold it was, it should be implied in the circumstances. Her possession was that of mortgagee in possession, and she could defend, as against the owner of the equity of redemption, any action except for an accounting of the rents and profits, and to redeem. And, as she could pursue concurrent remedies, the character of her possession was not affected by the filing and pendency of the bill to set aside the release of the Breedlove mortgage. But that bill went to decree in 1879 of foreclosure of the McCune mortgage by sale, and sale was had. There was no independent purchaser, nor was the whole amount of the mortgage debt bid, but Mrs. Bradley, the mortgagee in possession, bid about one-third of the amount due. By the statute, the right of redemption of McCune and his grantee was barred and determined October 27, 1880, at the expiration of twelve months from the date of sale, and so it was by the express provision of the decree of foreclosure.
mortgagee in possession, an irrebuttable presumption of a deed arises on grounds of public policy.
The Supreme Court of Illinois in the present case decides that the act of 1872 applies to mortgagees in possession, and that it operates not simply as a statute of limitations on the right to obtain a deed, but in effect as a statute forfeiting, by the nullification of the certificate, the mortgagee's estate and right of possession by reason of laches, and means that, if a deed be not taken out within the time specified, the mortgagee has lost his debt, and the mortgagor has been reinstated in his former title by operation of law, and without having paid anything in redemption. Accepting the construction of the act by the state court, and its conclusion that it applies to Mrs. Bradley, then the question is whether such a statute so applied does not impair the obligation of the contract previously existing between the mortgagee and the mortgagor, or deprive the mortgagee of property rights without due process. That question was raised in the Supreme Court of Illinois, and the court held that it did not. 201 Ill. 511.
Confessedly subsequent laws which, in their operation, amount to the denial of rights accruing by a prior contract are obnoxious to constitutional objection.
one of the parties, unquestionably impairs its obligations and is prohibited by the Constitution."
"But this Court held, through Mr. Justice Miller, that all the laws of a state existing at the time a mortgage or any other contract is made, which affect the rights of the parties to the contract, enter into and become a part of it, and are obligatory on all courts which assume to give a remedy on such contracts, . . . that it is therefore said that these laws enter into and become a part of the contract,"
"the remedy subsisting in a state when and where a contract is made and is to be performed is a part of the obligation. . . ."
"What we are now considering is whether the change of remedy was detrimental to such a degree as to amount to an impairment of the plaintiff's right; and, as this record discloses that the sale left a portion of the plaintiff's judgment unpaid, it may be fairly argued that this provision of the act [which provided that the land 'shall not again be liable for sale for any balance'] does deprive the plaintiff of a right inherent in her contract."
"When we are asked to put this case within the rule of those cases in which we have held that it is competent for the states to change the form of the remedy, or to modify it otherwise, as they may see fit, provided no substantial right secured by the contract is thereby impaired, we are bound to consider the entire scheme of the new statute, and to have regard to its probable effect on the rights of the parties."
cases were considered, and the distinction was pointed out between a purchase by the mortgagee and by an independent purchaser, having no connection whatever with the original contract between the mortgagor and mortgagee, and whose contract was made under the law as then existing; as well as the distinction where the mortgagee bids the whole amount of the mortgage debt, as in Connecticut Mutual Life Insurance Company v. Cushman, 108 U. S. 51, which was cited with approval. There, the company bid enough to pay the full amount of the mortgage debt, principal, and interest, and on redemption contended that it was entitled to interest at the rate existing at the time of the execution of the mortgage, which had been reduced before the sale, though subsequent to the mortgage. Barnitz v. Beverly was distinguished. In that case, the sum bid at the foreclosure sale did not equal the amount due on the mortgage, the debt of the mortgagor was not thereby paid, and it was the mortgagee's rights under her contract as contained in the mortgage, and not her rights as a purchaser, that were in controversy. In the Cushman case, on the contrary, the amount bid at the foreclosure sale paid the mortgage debt, and the subsequent position of the mortgagee was as a purchaser only.
as an impairment of his contract contained in the mortgage."
In Illinois, the legal title vests in the mortgagee, but in equity that title is regarded as a trust estate to secure the payment of the money, and where the mortgaged premises are bid off by the mortgagee at foreclosure sale for the full amount of the decree, interest and costs, the mortgage may be held to have expended its force; but where the bid is for less than the full amount, a different rule would be applicable. Bogardus v. Moses, 181 Ill. 554, 559-560.
Entitled to pursue different remedies to collect the mortgage debt or to free the mortgaged premises of the right of redemption, foreclosure and sale, purchase and deed are in aid of the original title, and not inconsistent with it. Williams v. Brunton, 8 Ill. 600. If the right of redemption is determined by the efflux of time, which must be before a deed can issue, failure to take out the deed either has no effect so far as the mortgagor is concerned, because he is not injured, or the right of redemption still remains, and all the mortgagor can claim is that the relation between the parties is unchanged.
In the present case, there was no independent purchaser; the bid of the mortgagee was less than one-third of the amount found due; there was no redemption, and the right of redemption was cut off; the mortgagee was in possession before and at the time of foreclosure and sale, and when ejectment was brought, sixteen years thereafter, and the mortgage debt had never in fact been paid; so that the original mortgagor as plaintiff in ejectment could not recover, unless, by the subsequent law, the mortgagee had been subjected to the loss of all her rights, as against him, by laches in obtaining a deed, although as a general rule laches are not imputable to a party in possession to the loss of the right thereto.
And if the operation of the subsequent law is to impair the obligation of Mrs. Bradley's mortgage contract, or to deprive her of rights protected by the Constitution, we cannot decline jurisdiction because of a construction that we deem untenable.
Louisville Gas Co. v. Citizens' Gas Light Co., 115 U. S. 683, 115 U. S. 697; Terre Haute & Indianapolis Railroad Company v. Indiana, 194 U. S. 579.
By the judgment in this case, Lightcap had been held clothed with the legal title and the immediate right of possession. And this on the ground that the certificate of purchase discharged the McCune mortgage, and that the act of 1872 nullified the certificate after the lapse of five years. This gave to the limitation of time for taking out the deed the effect of destroying the right of possession taken under the mortgage, wiping out the mortgage with the certificate, and allowing the mortgagor to assert the legal title and right of possession as against the mortgagee as a wrongdoer. That is to say, though Mrs. Bradley was rightfully in possession, and though the mortgage debt had not in fact been paid, the bar of the statute as to the deed is held to be efficacious in turning Mrs. Bradley into a trespasser as respects the mortgagor, who, not having in fact paid anything, is treated as having made payment by the mortgagee's bid, and being at the same time entitled to assert the failure of the purchase by reason of laches in taking out the deed.
And yet, because a statute may take away the sword which a deed would give a mortgagee out of possession, it does not follow that it can lawfully operate on prior transactions so as to take away the shield afforded by possession. Rightful possession is a defense in ejectment (Sands v. Wacaser, 149 Ill. 530, 533, and cases cited), and Mrs. Bradley's possession could only be treated as wrongful as against the original mortgagor by the application of the subsequent law.
any remedy through a deed she might have had. But, reading the act, as the view of the supreme court compels us to do, as taking away her right to maintain her possession, we are of opinion that it materially impairs the obligation of her contract, and deprives her of property without due process.

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