Case Name: George S. Trimm et al., Appellants, v. Sarah Ann Marsh, Respondent
Court: New York Commission of Appeals
Jurisdiction: New York
Decision Date: 1874-01
Citations: 54 N.Y. 599
Docket Number: 
Parties: George S. Trimm et al., Appellants, v. Sarah Ann Marsh, Respondent.
Judges: 
Reporter: New York Reports
Volume: 54
Pages: 599–631

Head Matter:
George S. Trimm et al., Appellants, v. Sarah Ann Marsh, Respondent.
(Argued June 12, 1873;
decided January term, 1874.)
The legal title to mortgaged premises remains in the mortgagor, and his title is not affected by default in payment or by surrender of possession to, or the taking of possession by the mortgagee.
The interest, therefore, of a mortgagor out *of possession may be sold on execution, and the owner of the mortgage in possession can procure such sale and become the purchaser, and, after obtaining the sheriff’s deed, can set up the title thus acquired as a defence in an equitable action to redeem, brought by the mortgagor or his grantee. (Gbay, 0., dissenting.)
It seems that payment or tender, by the owner of the equity of redemption to a mortgagee in possession, of the amount unpaid, extinguishes the lien of the mortgage, and the former may thereupon recover possession in an ordinary action of ejectment.
Subbéll v. Sibley (50 N. Y., 472) commented on and distinguished.
The authorities treating of the rights of mortgagor and mortgagee, collated and discussed in dissenting opinion of Gbay, 0.
Appeal from order of the General Term of the Supreme Court in the first judicial department, reversing a judgment in favor of plaintiffs, entered upon the decision of the court at Special Term, and ordering a new trial. (Reported below,. 3 Lans., 509.)
This was an action for an accounting as to the amount due upon a bond and mortgage, and for the recovery of the possession of the mortgaged premises, upon payment of the-amount due.
In 1858 one Ridgway, being the owner of certain- premises situate in the city of New York, mortgaged them to an insurance company to secure $2,000; the insurance company assigned the mortgage to the defendant Sarah A. Marsh. Ridgway afterward conveyed the premises to the plaintiff Brown, who subsequently, in October, 1865, entered into an agreement with plaintiff Trimm to convey the same to him. In 1861 the defendant Sarah commenced an action to foreclose this mortgage, making plaintiff Brown and others parties, and obtained judgment of foreclosure. The premises were sold under the judgment in 1862, and defendant Sarah A. Marsh became the purchaser, and received a sheriff’s deed. ¡Immediately after the sale she entered into possession of the premises, and she or the other defendant has ever since been "in possession. In October, 1864, by an order of the Supreme Court, granted after due notice and hearing the parties interested, the foreclosure sale was set aside, and declared null ahd •void, and a resale was ordered, which never took place. In November, 1864, the defendant Sarah A. Marsh recovered a judgment against plaintiff Brown, which was duly entered and docketed, and in 1865 she caused an execution to be issued upon said judgment to the sheriff of New York, who, in May of the same year, sold all “ the right, title and interest ” •of which the said Elizabeth C. Brown was seized or possessed ¡in the said land, the said Sarah A. Marsh becoming the 'purchaser and taking the sheriff’s certificate of sale. In September, 1865, she conveyed the said premises by deed to the other defendant; and, in September, 1866, after the commencement of this suit, she also transferred to him the sheriff’s certificate, and he soon after received the sheriff’s deed. The defendant "William B. Marsh had notice of all the facts when He took his title, and was not a bona, fide purchaser for value. Since the defendants went into possession of the premises they have assumed and claimed an absolute title, free from any right of redemption in the plaintiffs or either of them.
The plaintiffs commenced this action to redeem the said premises from the mortgage and judgment of foreclosure, and the principal defence relied on by the defendants was their title under the judgment and execution sale against plaintiff Brown. The referee decided the same in favor of plaintiffs, holding that the execution sale, being made by the assignee‘of the mortgagee in possession, was null and void and conferred no title upon the purchaser.
Wheeler H. Pekham for the appellants.
It was proper for the referee to try the main issue first; and on that being decided the court had power to refer the case back to him to take the account. (2 V. S. Eq. Pr., 194, 195 ; Palmer v. Palmer, 13 How., 363, 365 ; Pratt v. Stiles, 17 id., 211; Bantes v. Brady, 8 id., 216; Edwards on Beferees, 650; Griffin v. Cranston, 5 Bosw., 662; Goodyear v. Rubber Co., 48 Barb., 523; McMahon v. Allen, 27 id., 336.) Defendant’s motion to dismiss the complaint on the ground that there was a tender alleged in the complaint, and that no tender was actually made, was properly denied. (Phelps v. McDonald, 26 N. Y., 84; Grant v. Morse, 22 id., 323 ; Gates v. Andrews, 37 id., 659; Manley v. Ins. Co., 1 Lans., 25 ; 2 Crary, 270 ; 2 Van Sant., 113, 114; Beekman v. Goddard, 18 J. R., 544; Vroom v. Ditmas, 4 Paige, 526 ; 2 Barb. Ch. Pr., 199; Calkins v. Isbell, 20 N. Y., 152; Grugion v. Gerard, 4 Y. and C. Exch. Cas., 128 ; Kerr v. Purdy, 50 Barb., 24; Westlake v. Ins. Co., 14 Barb., 206.) The sale having been set aside, plaintiffs have a right to redeem. (2 Ldg. Cas. in Eq., 49; Hill v. Sands, 5 N. Y. Leg. Obs., 19; Nelson v. Cowing, 6 Hill, 336; Hollister v. Bender, 1 id., 150; McBride v. Farmers' Bk., 26 N. Y., 450; Raynor v. Wilson, 6 Hill, 469.) The equity of redemption of a mortgagor, after default and after the mortgagee has taken possession, cannot be sold on execution. (Waters v. Stewart, 1 Cai. Cas., 47, 57; Francis v. Nash, Hard., 53; Impey on Sheriffs, 157; Denton v. Livingston, 9 J. B., 96 ; Baxter v. Gilbert, 12 Abb. Pr., 102; Mattison v. Baucus, 1 Coms., 295; Baltes v. Ripp, 3 Keyes, 210; Hitchcock v. Harrington, 6 J. B., 293; Collins v. Torry, 7 id., 282, 283 ; Van Duyne v. Thayre, 14 Wend., 234; 4 Kent’s Com., 43-48 [marg.], 8th ed.; .3 R. S., 32, § 7; 4 Kent’s Com., 47, note d; Cooper v. Whitney, 3 Hill, 102; Phyfe v. Riley, 15 Wend., 248; Jackson v. Willard, 4 J. R., 41; Fox v. Lipe, 24 Wend., 167; Craft v. Merrill, 14 N. Y., 456, 460 ; Pell v. Ulmar, 18 id., 140,142; Miclles v. Townsend, 18 id., 584; Randall v. Raab, 2 Abb. Pr., 314.) The estate of a mortgagee in possession, by lapse of time, ripens into an absolute estate. (Ang. on Lim., ch. 34; Demarest v. Wynkoop, 3 J. Ch., 134; Calkins v. Isbell, 20 N. Y., 147; 1 Story’s Eq., § 1028 a; Rafferty v. King, 1 Keen, 602, et seq.; Rawle on Cov., , tit. 84; Bobst v. Brock, 10 Wall., 519-530.) The lands being held adversely, plaintiff Brown could not convey; the deed would be void. ( 3 R' S., 30, § 167; 2 Hill, 526.) • The mortgagee being in possession, as such could not change her title by the enforcement of general liens on the property, or by acquiring titles, the effect of such liens. (Blackwell on Tax Titles ; Burhans v. Van Zandt, 3 Seld., 525.)
Justus Palmer for the respondent.
The whole case should have been sent back to the referee on the ground that there had been a mistrial. (Pratt v. Stiles, 17 How., 311.) A mortgagor of real estate is the legal owner of the land, and the mortgage is a mere security for the debt. (Packer v. Rock, and Syr. R. R. Co., 17 N. Y., 295 ; Power v. Lester, 23 id., 527; Runy an v. Mersereau, 11 J. R., 534; Kortright v. Cady, 21 N. Y., 343; Astor v. Hoyt, 5 Wend., 603.) A mortgagee cannot bring ejectment. (2 R. S., 312-357.) The interest of a mortgagee cannot be sold on execution against him, although the debt be due. (Jackson v. Willard, 4 J. R., 42; 1 id., 590; 3 J. Gas., 329.) An equity of redemption may be sold under judgment against the mortgagor, except where the judgment was for the mortgage debt. (1 Cai. Gas., 47; 2 R. S., 31, 32, 368.) The fact that the mortgagor is not in possession does not affect his legal title in the premises. (Code, 282-462; 2 R. S., 31, 359-368; Waring v. Smyth, 2 Barb. Ch., 119.) The omission to make a tender was not only material on the question of costs, but rendered the whole proceedings defective. (Beekman v. Frost, 18 J. R., 144 ; 1 J. Ch., 288; 2 Barb. Ch. Pr., 199.)

Opinion:
Earl, C.
The only legal proposition involved in this case, which we deem it important to consider, is whether a mortgagee of real estate in possession can cause the equity of redemption of the mortgagor to be sold on an execution and become the purchaser of the same, and, after obtaining the sheriff's deed, set up his title thus acquired against the claim of the mortgagee to redeem from the mortgage in an equitable action commenced by him for that purpose; or, to state the proposition in other words, has the owner of the equity of redemption of mortgaged premises, after default and after the owner of the mortgage has taken possession, such an interest in the premises as can be sold upon execution against him ? If this question be answered in the affirmative, the decision of the General Term was right and must be affirmed.
The respective rights of the mortgagor and mortgagee in the land mortgaged have been the subject of much discussion, and it is impossible to reconcile all that learned judges and writers have said upon the subject. By the common law of England the legal estate was vested in the mortgagee, to be defeated by the performance of a condition subsequent, to wit, payment at the law day. In default of such payment, the title became absolute and irredeemable in the mortgagee. But, two centuries ago, courts of equity assumed jurisdiction to relieve mortgagors against forfeitures, and, thenceforth, in equity a mortgage has been regarded as a mere security, as creating an interest in the mortgaged premises of a personal nature, like that which the mortgagee has in the » debt itself.
These equitable principles have had an increasing influence upon courts of law, and Chancellor Kent says that "the case of mortgages is one of the most splendid instances in the history of our jurisprudence of the triumph of equitable principles over technical rales, and the homage which those principles have received by their adoption in the courts of law." (4 Kent's Com., 158.)
The common-law rale, as modified by the equitable principles above alluded to, still prevails in England. There the courts still hold that the legal title passes to the mortgagee, and becomes by default absolutely vested in him at law, and that the mortgagor has, after default, nothing but an equity of redemption to be enforced in a court of equity. After default the mortgagor can again become reinvested with the title to his land only by a reconveyance by the mortgagee. The same rule prevails in the New England States, and in many of the other States of the Union. But this common- law rule has never, to its full extent, been adopted in this State. Here the mortgagor has, both in law and equity, been regarded as the owner of the fee, and the mortgage has been regarded as a mere chose in action, a mere security of a personal nature. (Waters v. Stewart, 1 Caines' Cases in Error, 47; Jackson v. Willard, 4 John., 42; Runyan v. Mersereau, 11 id., 534; Astor v. Hoyt, 5 Wend., 603; Packers. Rochester and Syracuse Railroad Co., 17 N. Y., 283-295; Kortright v. Cady, 21 id., 343; Powers. Lester, 23 id., 527; Merritt v. Bartholick, 36 id., 44.)
Prior to the Revised Statutes the mortgagee could maintain ejectment to recover the mortgaged premises. This right has been taken away (2 R. S., 312), and now the mortgagor, both before and after default, is entitled to the possession of the premises, of which he cannot be deprived without his consent, except by foreclosure. It is not disputed that before possession taken by the mortgagee the mortgagor has an interest in the real estate which can be sold upon execution ; that his widow is entitled to dower; that he can convey and devise his interest as real estate; that at his death it descends to his heirs; that he has every attribute and right of an absolute owner of the real estate, subject to the lien of the mortgage, and that his title can be defeated only by foreclosure. It is not disputed that the mortgagee before possession taken has only a chose in action; that he holds the mortgage only as security for the debt; that he can sell the bond and mortgage by mere delivery as personal property; that at his death they pass to his personal representatives as a portion of his personal estate; that he has no such estate in the land as can be sold on execution, or as can give his widow dower; and that he has no attribute of ownership in the land. ' It was said by Judge Jambs, in Power v. Lester (supra), that "a mortgage is a mere security, an incumbrance upon land. It gives the mortgagee no title or estate whatever. The mortgagor remains the owner, and may maintain trespass even against the mortgagee. A mortgage is but a chattel interest; it may be assigned by delivery, and cannot be seized and sold on an execution." Judge Pratt says, in Packer v. The Rochester & Syracuse Railroad Company (supra), that "a mortgagee has a mere chose in action, secured by a lien upon the land. Since the Revised Statutes there is no attribute left in the mortgagee, before foreclosure, upon which he can make any pretence for a claim of title. For the mere right, when he goes into possession by the consent of the mortgagor, to retain possession, is not an attribute of title. He would have the same right in case of a pledge."
At' common law, payment or tender at the law day extinguished the lien of the mortgage and reinvested the mortgagor, without a reconveyance by the mortgagee, with his title. But tender or payment after the law day did not have this effect, an cl in such case a reconveyance was necessary; and such is still the rule in England and in many of the States of the Union. But it has always been the law of this State that payment or tender, at any time after the mortgage debt became due and before foreclosure, destroyed the lien of the mortgage and restored the mortgagor to his full title. As the mortgagee had no title, a reconveyance was not required by the law as expounded by our courts. So that here the term law day, which occupies such a prominent place in the early discussions as to morf> gages, has no particular significance. The mortgagor has his " law day " until his title has been foreclosed by sale under the mortgage, and it is a misnomer in this State to call the mortgagor's right in the land, before or after default, an equity of redemption; a mere right to go into equity and redeem. This was a proper description of the mortgagor's right in the land according to the law as expounded in England. But in this State the interest.of the mortgagor in the land is the same before and after default, and is a legal estate, with all the incidents and attributes of such an estate.
But it is claimed by the learned counsel for the appellants that the position of the mortgagee is materially changed when he gets possession. It is true, notwith standing the provision of the Bevised Statues which prohibits an action of ejectment by the mortgagee to obtain the possession of the mortgaged premises, that after he has lawfully obtained the possession he may retain it until the debt secured by the mortgage has been paid. Before taking possession the mortgagee has no title in the lands. How can the mere possession change the title from the mortgagor to the mortgagee, or in any way diminish the estate of the one or enlarge the estate of the other ? Before taking possession the mortgagee had a mere lien upon the real estate pledged for the security of his debt. After possession he has in his possession the property pledged as his security, the title remaining as it was before. The mortgagor's title is still a legal one, with all the incidents of a legal title subject to the pledge, and the mortgagee's interest is still a mere debt secured by the pledge. If the mortgagee should die in possession, the debt would still go to his personal representatives to be administered as personal estate, and the mortgagor's title would go to his heirs. Payment, or even tender, would destroy the mortgagee's right to retain possession, and would enable the mortgagor to maintain ejectment to recover possession. The mortgagee, in such case, so far from having any title, holds the land as the land of the mortgagor, and is liable to account to him for the rents and profits. Judge Comstock, in Kortright v. Cady (supra), says: " The mortgagee's right to bring ejectment, or, being in possession, to defend himself against an ejectment by the mortgagor, is but a right to recover or to retain possession of the pledge for the purpose of paying the debt. Such a right is but the incident of the debt, and has no relation to a. title or estate in the land. The notion that a mortgagee's possession, whether before or after default, enlarges his estate, or in any respect changes the simple relation of debtor and creditor between him and his mortgagor, rests upon no foundation. We may call it a just and lawful possession, like the possession of any other pledge, but where its object is accomplished it is neither just nor lawful for an instant longer."
I cannot doubt, therefore, that the mortgagor, after default, and after the mortgagee has taken possession, has such an estate in the land as can be sold upon execution. It is not necessary to decide whether, in such a case, the mortgagee hag also such an estate in the land as can be sold upon execution, because, if he has, it does not follow that the mortgagor has not also such a right. They might each own an estate which could be sold. But I am of opinion that the mortgagee has no estate in the land which can be sold on execution. His interest is a mere chose in action, a debt secured by a pledge of real estate. His debt is not merged in the real estate by the possession. He has no interest in the real estate which he can sell, or which can be sold separate from the debt. Such a sale would convey nothing. Whoever took the real estate from him would take it subject to the same liability as he was under to account for the rents and profits to the mortgagor. It has been decided that a transfer of the mortgage without the debt is a mere nullity. (Merritt v. Bartholick, supra.)
The fact that, at the time of the execution sale, the defendants were in possession, claiming the absolute title, can make no difference, as land held adversely to the true owner can be sold upon execution against him. (Tuttle v. Jackson, 6 Wend., 213 ; Truax v. Thorn, 2 Barb., 156.)
I am, therefore, of the opinion that the title of the defendant under the execution sale was valid, and that the plaintiff had no right to redeem.
The order of the General Term must be affirmed, and judgment absolute rendered against the plaintiffs, with costs.
Reynolds, C.
The precise question to be determined in this case is whether a mortgagor, after having surrendered possession to his mortgagee, has such an interest in the mortgaged premises as may be sold on execution. The circumstance that Mrs. Marsh took possession as purchaser under a decree of foreclosure, the sale having been subsequently vacated, does not, perhaps, place her in any better position than that of a mortgagee in possession; and in that aspect only the case will be considered. So long as a mortgagor remains in possession, it is entirely clear that he has such an estate or interest in the mortgaged premises as may be the subject of sale under an execution. He has, unquestionably, in our law a legal/estate, and yet it is usually called an equity of redemption merely; but this is to be said only in respect of his relation to the mortgagee; as to all the world he is the oVner. The mortgagee has a mere lien for the payment of his debt, and it is a chattel interest. He has no legal estate in the land which enables him to exercise dominion as owner. He may take all needful measures to protect his security, but nothing more. He has not the land, nor can dower or curtesy result from the mortgagor's interest. Lord Mansfield said, in The King v. St. Michaels (Douglas, 602), " A mortgagor in possession gains a settlement because the mortgagee, notwithstanding the form, has but a chattel, and the mortgage is only a security. It ,is an affront to common sense to say the mortgagor is not the real owner." It has often been held in this State that the interest of a mortgagor is attended with all the incidents of absolute ownership. He may maintain trespass even against the mortgagee, and his widow is entitled to dower. (Coles v. Coles, 15 Johns. R., 319; 3 Johns. Ca., 329; 1 Johns. R., 590; 4 id., 42.) The question then is, what effect has the actual possession of the mortgagee upon the legal estate of the mortgagor ? v
Ordinarily, the mere change of the actual possession of real estate would not divest the legal title of the owner, and I can see nothing in the fact of actual possession by a mortgagee that should work such a result. Legal estates in land cannot be transferred by the mere act of taking possession, whether with or without the consent of the owner, unless the possession be held adversely for a sufficient time to ripen into a legal title. The possession of a mortgagee is, apparently, attended with more incidents of legal ownership than any other, mere possession. It is sanctioned by a right which defends the possession against the true owner of the fee until the mortgage debt is fully discharged. In such case the creditor, instead of leaving his debtor in possession and relying upon his intangible legal lien for his security, takes the thing pledged in his own possession and enjoys its use until his debt is paid. He must account for profits and waste to his debtor, and when his debt is paid by the receipt of rents and profits, or in any other manner, his lien is extinguished and his possession is no longer justified by law. Calling the interest of a mortgagor a mere right of redemption in equity proves nothing as to the location of the legal estate in the land. The right of redemption supposes a mere remedy to enforce the legal or equitable rights of the plaintiff, and is not essentially different from the action of ejectment to recover possession wrongfully withheld from the true owner. In the one case, it is true, the remedy is incumbered with the obligation to discharge the lien, and in the other it is not; but I am unable to see that this circumstance can have any effect upon the legal title.
We are referred by counsel for the appellant to the case of Hubbell v. Sibley (50 N. Y. R., 468, 472) in support of his position. That case involved simply a question as to the operation of the statute of limitations, and although the question as to the rights of a mortgagee in possession was incidentally alluded to in the opinion of Judge Grover, nothing was decided by the court dther than that the action was barred by the statute. The action was for an accounting to ascertain the amount due upon certain mortgages upon lands in which the plaintiff claimed to have a title to one undivided half, and for leave to redeem on paying the amount due. The defendant had foreclosed the mortgages by advertisement, had purchased at the sale and was in possession. The plaintiff claimed that the foreclosure was void, and hence his demand for an accounting and for leave to redeem. The only defence considered was the statute of limitations, and it was held to be a purely equitable action and barred by the ten years' statute. The defendant was, in the only aspect of the case considered by the court, regarded as a mortgagee in possession, and it was truly said that he might defend his possession until his debt was paid. (Phyfe v. Riley, 15 Wend., 248 ; Chace v. Peck, 21 N. Y. R., 581.) But, as has been suggested, all this does not show that the mortgagor is divested of the fee ; but of course it is subject to the incumbrance. Before the Revised Statutes, a mortgagee, after forfeiture by non-payment, might recover the possession of the mortgaged premises, and it was said, in such case, the mortgagee had the legal title, for it prevailed over that of the mortgagor. The Revised Statutes provided that thereafter no action of ejectment should be maintained by a mortgagee, or his representatives or assigns, for the recovery of the possession of the mortgaged premises. (2 Rev. Stat., 312, § 58.) Since that enactment it' has been universally assumed that the forfeiture by non-payment does not, per se, change the legal title, and it remains precisely as before. If, then, it was changed in the present case, that change resulted from the mere fact of possession; and that, as before said, I think does not follow.
It may be added that if the mortgagor tenders the mortgagee in possession the amount of money due on the mortgage, there appears to be no reason why he may not recover the possession of the premises in an ordinary action of ejectment. A tender of the amount due upon a mortgage extinguishes the lien, whether accepted or not. (Farmers' Fire Ins. Co. v. Edwards, 26 Wend., 541.)
I therefore, with considerable hesitation, incline to the opinion that the possession of a mortgagee does not divest the technical legal fee of the mortgagor.
Actual possession, while good enough as against a stranger or a trespasser, does not in very many (and in most) cases prove title. , It was held in Huntington v. Smith (4 Conn. R., 235) that the interest of a mortgagee before foreclosure could not be taken in execution. The legal estate must vest somewhere, and if not in the mortgagee it must remain in the mortgagor. Regarding, therefore, as we must, the inte rest of the mortgagee as a mere lien for the security of a debt, actual possession by the mortgagee does not impair the relation of debtor and creditor; it still exists and must continue until actual foreclosure. "While it is true that the mortgagor may no t dispossess the mortgagee without discharging the lien, this circumstance proves nothing as to the actual residence of the legal title. The fact that the interest of the mortgagee and the lien of the mortgage is extinguished on, payment or tender of the amount due, shows the nature of the interest, and it is not a legal estate. That was in the mortgagor, and the sale under the execution divested his title.
The order should be affirmed and judgment absolute given against the plaintiff, with costs.