Court Opinion

ID: 3555303
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:06:34.385654+00
Date Added: 2024-06-11T14:06:47.023883
License: Public Domain

Foreclosure is the process by which a mortgagee himself acquires or transfers to a purchaser an absolute title to *Page 446 
the property, of which he has previously had a mere lien or incumbrance. By this process the mortgage title, which was before conditional, becomes absolute. The mortgagor's right of redemption is extinguished, and the mortgagee's title is perfected. By foreclosure the mortgage debt is paid and extinguished by an absolute transfer of the estate, — in full, if the estate is of sufficient value, or pro tanto, if the value is insufficient. But, although the debt is paid and extinguished, and the relation of debtor and creditor, mortgagor and mortgagee, no longer exists, the mortgage title is not destroyed. Thenceforth the mortgagee holds the estate by an absolute title, protected by the covenants of the mortgage, which still remain in force. The mortgage title is not extinguished by the foreclosure, but made absolute. Bellows, C. J., Stantons v. Thompson, 49 N.H. 272, 279. "If the mortgage is foreclosed, then the estate, which was conditional and defeasible in its creation, becomes absolute; and the incidents, privileges, and covenants attached to it, unchanged by anything which the mortgagor or any other person may have done in the mean time, remain attached to it as if the original conveyance had been absolute." Shaw, C. J., Ritger v. Parker, 8 Cush. 145, 149. The mortgagee's title, when perfected by foreclosure, relates back to the date of the mortgage deed, so as to avoid intervening incumbrances, in like manner as an execution levied on land has relation back to the original attachment. Goodwin v. Richardson, 11 Mass. 470, 475.
By the foreclosure of his mortgage Cephas C. Chamberlin acquired an absolute title to the demanded premises as against the mortgagors, Chamberlin and Morse. Their right of redemption was extinguished as to him, and his defeasible title became perfect as against them. His mortgage, by foreclosure, became an absolute title, which they had covenanted to warrant and defend against all incumbrances. His subsequent eviction by the paramount title of Cameron, as the assignee of the Atkinson mortgage, was a breach of their covenants; and when John E. Chamberlin afterwards acquired the title to the demanded premises, by force of those covenants his title immediately enured to Cephas by estoppel. The defendant is estopped to deny the title of the plaintiff to the demanded premises, under the mortgage executed by John E. Chamberlin, with covenants of warranty. Thorndike v. Norris, 24 N.H. 454, 461; Kimball v. Schoff, 40 N.H. 190; Foss v. Strachn,42 N.H. 40; Knight v. Thayer, 125 Mass. 25; Butler v. Seward, 10 Allen 466; Lincoln v. Emerson, 108 Mass. 87; Jarvis v. Deane, 56 Me. 9.
It is argued that the legal effect of Cephas C. Chamberlin's foreclosure was to vest in him absolutely the right to redeem the land from the Atkinson mortgage; that he became the absolute owner of this right by his own acts, and by operation of law; that the legal result following the acquisition of this right was, that he surrendered for it, and the law cancelled, the debt, and extinguished *Page 447 
the mortgage with all its covenants, for all purposes. This argument is based upon the erroneous assumption that Cephas C. Chamberlin, by the process of foreclosure, instead of obtaining an absolute title to the mortgaged estate against the mortgagors, by operation of law surrendered his debt and extinguished his mortgage for the absolute right of redeeming the estate from a prior mortgage which the mortgagors had covenanted did not exist; that he extinguished his mortgage title instead of perfecting it, and subjected himself to the burden and duty of removing an incumbrance from the estate against which the mortgagors had covenanted to warrant and defend his title. The proposition advanced is, that the mortgagors, by the process of foreclosure, were relieved of both the mortgage debt and the mortgage covenants, — of the debt because it was paid by the land, and of the covenants because they were extinguished by the payment of the debt; and that notwithstanding the land was subsequently taken from the mortgagee by a paramount title, he is without remedy because he failed to remove an incumbrance against which the mortgagors covenanted to protect him. The statement of this proposition shows its unsoundness. Baldwin v. Norton,2 Conn. 161.
The fallacy of the argument is twofold, in assuming, first, that Cephas C. Chamberlin's mortgage was of an equity of redemption merely; and secondly, that a second mortgage by foreclosure acquires additional rights against a prior mortgagee, or any right against the mortgagor other than the extinguishment of the mortgagor's right to redeem the second mortgage. As against the holder of the Atkinson mortgage, the mortgage of Cephas was of the equity of redemption only; but as against the mortgagors who had conveyed to him the land with full covenants of warranty, it was a mortgage of the fee. The fact that Cephas knew of the existence of the Atkinson mortgage did not change the character of the estate conveyed to him, or release the mortgagors from their covenants. Jones Mort., s. 735; Estabrook v. Smith, 6 Gray 572. When, therefore, the mortgagor's right of redemption was extinguished by foreclosure, the title of Cephas became absolute, not to the equity of redemption from the Atkinson mortgage merely, but to the land as against the mortgagors; and they are estopped by the covenants in their deed from alleging the existence of the Atkinson mortgage for any purpose. Nor did Cephas by the foreclosure of his mortgage acquire any additional rights from the mortgagors, or against the holder of the prior mortgage. The foreclosure merely extinguished the right of the mortgagors to redeem his mortgage by the payment of the debt secured by it. It gave him no additional rights, and imposed no additional duties upon him. His right, as subsequent mortgagee, to redeem the Atkinson mortgage, existed the same before as after the foreclosure and the right of the mortgagors to redeem the land from the Atkinson mortgage by the payment of their debt, and the duty of *Page 448 
performing their covenants to him by removing the incumbrance of the prior mortgage, still remained.
The fact that the mortgaged premises were worth as much or more than the sum due upon both mortgages at the time of the foreclosure, did not relieve the mortgagors from their covenants in the second mortgage. Whether the equity of redemption from the Atkinson mortgage exceeded in value the amount due upon the second mortgage is immaterial, because the foreclosure of the second mortgage, as against the mortgagors, was upon the land, and not upon the equity of redemption. If the land was of greater value than the second mortgage debt, the mortgagors could redeem. If they chose not to redeem, they were bound by their covenants to defend the title of the second mortgagee, when that title became absolute by the process of foreclosure.
Cephas C. Chamberlin was not bound to redeem the land from the Atkinson mortgage. He had the right to rely upon his covenants. He had neither assumed, nor had the law imposed on him, the obligation of the payment of the Atkinson mortgage debt; and if the mortgagors did not see fit to redeem the land at the price of both mortgage debts, they have no legal cause of complaint because he did not choose to do it. Elder v. True, 32 Me. 104.
Case discharged.
SMITH and CARPENTER, JJ., did not sit: the others concurred.
The defendant moved for a rehearing.