Court Opinion

ID: 9810476
Source: CourtListenerOpinion
Date Created: 2023-08-31 21:51:09.243202+00
Date Added: 2024-06-11T13:39:57.520689
License: Public Domain

*188Shepherd, J.
— after stating the facts: The controversy in this case is between Wells, whose advances in money and supplies (which are secured by a registered agricultural lien) contributed materially to the making of the crops, and the .plaintiffs, whose claim is based upon the legal title to the land upon which the crop was made, as well as upon the particular provisions of the unregistered contract to convey.
It is well settled that, so far as the questions involved in this action are concerned, a vendee, let into possession under a contract of purchase, stands on the same footing as a mortgagor in possession. Jones v. Boyd, 80 N. C., 258.
In discussing, therefore, the interesting question before us, the reasons and authorities applicable to the one will necessarily apply to the other. Without passing upon the contention of Wells, that, by a proper construction of the agreement, the vendees were entitled to the possession for at least two years, and that nothing was due the plaintiffs until the expiration of that time, and adopting the interpretation claimed by the plaintiffs, that, upon the failure of the ven-dees to make the first payment, they -wore entitled to enter without notice, we will first consider the rights of the plaintiffs by virtue of the ordinary relation of vendor and vendee, or what is the same as to this case, that of mortgagor and mortgagee.
It was said in Coor v. Smith, 101 N. C., 261, and Brewer v. Chappell, 101 N. C., 251, that, by reason of the legal title being in the mortgagee, and his right to enter without notice, the products of the land belong to him. It would be more correct to say that the products may, upon certain contingencies, become a security for the debt. While the mortgagor is permitted to remain in possession, he is the owner of the crops, and entitled to receive the rents and profits without liability to account. Dunn v. Tillery, 79 N. C., 497. It is only when the mortgagee enters that he is entitled to the possession of the growing crops, and this is because they are *189incident to his possession of the soil. He is held to strict account for them, and equity only charges them with the indebtedness when the land is insufficient to discharge it. It is in this sense only that the mortgagee can be considered as having any interest or “property” in the crops. It follows, therefore, that, if the crops have been severed before entry, or if, as in this case, there has been no entry at all, the mortgagee, even as against the mortgagor, has no legal right to recover them.
The cases cited in Brewer v. Chappell, supra, did not pass upon this question, but the authority chiefly relied upon is Jones v. Hill, 64 N. C., 198, where it is said that “the mortgagee is entitled to the estate, with all the crops growing on it,” and “tl-at there is no injustice in this, because the land, including all its products, is a security for the mortgage debt, and, to that extent, the property of the mortgagee.” That case is no authority for the proposition that a mortgagee, out of possession, may bring an action in the nature of replevin for the recovery of the crops. The plaintiff was the assignee of a mortgage creditor, and purchased the land at a sale under the mortgage. He purchased, says the opinion, “the land and all the crops growing on it.” After his purchase, he demanded the possession of the land of a tenant, who was in under the mortgagor. This was refused, and he brought his action for the rent, claiming the sum of fifteen hundred dollars. Having asserted his right to the possession, he alleged that the defendant was insolvent and was disposing of the crops. The Court extended its equitable aid by injunction to prevent their removal. Such relief is often given, either by injunction or by the appointment of a receiver, in actions of ejectment and suits for foreclosure. In ejectment, where the absolute owner is suing for possession, the relief is given because he is entitled to the present possession of the land, and, owing to the insolvency of the defendant, his right to the mesne profits will be defeated. *190In suits for foreclosure, the relief is only given where, by reason of the insufficiency of the value of the land and the insolvency of the mortgagor, the debt may be partially or wholly lost. In such case, as we will see hereafter, equity charges the growing crops and applies them to meet the deficiency. It may be that the crops can be thus charged, as between the parties, after severance, but before actual removal from the land. It is unnecessary, however, to pass upon this point, as no such case is presented here, and the rights of a third party have intervened. One of the reasons for granting equitable relief in the instances mentioned, grows out of this very capacity of the occupant to convert the products into personalty and pass the title to third persons.
When the mortgagee or vendor does not invoke the assistance of a Court of Equity, but relies solely upon his legal rights, he should not complain of the rigid and technical rules of the common law by which these rights are determined.
While a mortgagee is seized of the legal estate, in equity, as we have intimated, the lands mortgaged are considered only as a pledge or security for the debt, and the mortgagee is considered merely a trustee for the mortgagor. Greenleaf’s Cruise, Real Prop., vol. I, p. 577; Story’s Eq., vol. II, § 1013; Adams’ Eq., 115.
“The equity doctrine is, that the mortgage is a mere security for the debt, and only a chattel interest, and that, until foreclosure, the mortgagor continues the real owner of the fee.” Kent’s Com., vol. IV, 159. Accordingly, Lord Mansfield said that, unless possession has been taken of the premises, or a receiver has been appointed, the mortgagor is the “owner as to all the world, and entitled to all the profit made.” Chinnery v. Black, 3 Doug., 390.
“The principle is well settled that a mortgagor is not liable for rents and profits.” Boston Bank v. Reed, 8 Pick., *191462, citing Fitchburg Cotton Co. v. Melvin, 15 Mass.; Mead v. Lord Orrery, 3 Atk., 244; Keech v. Hall, Doug., 20; Higgins v. York Buildings, 2 Atk., 107.
In Lord Orrery’s case, Lord Haidwicke remarks: “As to the mortgagor, I do not know of any instance, where he keeps the possession, that he is liable to account for the rents and profits to the mortgagee, for the mortgagee ought to take legal remedies to get into possession. Nor does the mortgagee derive any profit from the land until actual entry, or other assertion of exclusive ownership, previous to which the mortgagor takes the rents and profits without liability to account.” Greenleaf’s Cruise, Real Prop., Note, vol. I, p. 582; Kent Com., vol. IV, 157.
Chief Justice Smith, in Oldham v. Bank, 84 N. C, 307, says, that a mortgage is an appropriation of real or personal property as a security for the mortgage debt, “and while the mortgagor, permitted to remain in possession, may take and use the rents and profits, the mortgagee, at least after default, may enter into or recover possession by action, in order that they may be applied to the reduction of his demand.” To the same effect is Dunn v. Tillery, 79 N. C., 497, and “ The Law in Relation to Crops,” by Wade Rogers, (So. Law Review, Oct. and Nov., 1882). This is also decided in Freedman’s Saving Co. v. Shepherd, 127 U. S., 502, where it is said that, “even where the income is specially pledged as security for the mortgage debt, with the right in the mortgagee to take possession upon the failure of the mortgagor to perform the conditions of the -mortgage, the general rule is that the mortgagee is not entitled to the rents and profits of the mortgaged premises, until lie takes actual possession, or until possession is taken in his behalf by a receiver.”
These authorities, and many others, which we could cite, abundantly show that, until entry, the mortgagee is not entitled to rents. If he is not entitled -to rents, how is it *192possible that he can, before entry, recover the specific crops, which have been severed, and especially against the lienee, who has, by his advances, materially assisted in their production ?
The correct doctrine, we think, is well stated in the learned opinion of Randall, C. J., in Wooten v. Bellinger, 17 Fla., 302. The Court said: “ Equity makes the mortgage, as between mortgagor and mortgagee, a charge upon the rents and profits, whenever the mortgagor is insolvent and the security is inadequate. * * * In this respect, it is said, by some authorities, that ‘the land, with .all its produce.’ is regarded as a security for the mortgage debt as between the mortgagor and mortgagee; and where the security of the land is hazardous, or clearly insufficient, a receiver may be appointed for the purpose of subjecting the rents and profits of the mortgaged land, thus charging the produce with an equity, though, up to the time of sequestration, there was no lien upon it; * * * yet, though the products may be subjected or charged in equity with unpaid interest, taxes, &c., they cannot be said to be incumbered so as to give a preference to the mortgagee or vendor claiming a lien upon the land as against another creditor, who may obtain an express lien upon the crops under the statute, or by chattel mortgage or execution. Gilman v. Brown, 1 Mason, 231; 1 Leading Cases in Eq ; 4 Amer., from 4 London Ed.; Tit. Vendor’s Lien, 490, 502.”
We must conclude, therefore, that if there be no entry or equitable proceeding by which the crops are sequestered, the mortgagee has no lien upon and cannot recover them in an action in the nature of replevin, either against the mortgagor or third persons.
Even after entry or sequestration' we hold that, where the mortgagor has been permitted to remain in possession and cultivate the soil, the lien for advances must prevail. We put this on the ground that this implied agreement to remain *193in possession must be presumed to have been made with reference to the general laws, and these provide that the agricultural lien shall be superior to all others except that of the landlord.
Another reason is, that equity will not charge the crops so as to defeat the superior equity of the lienee, who has borne the expense of their cultivation and production. To hold that, under such circumstances, the mortgagee may enter and appropriate to his exclusive use the entire crop, would be dealing a fatal blow to a numerous class of agriculturists in this State, many of whom are so unfortunate as to have their lands encumbered by mortgages. If the mortgagee could enter at any time and apply the entire crop to his indebtedness, no one could be found to make advances to the mortgagor, and the result would be that a great part of the mortgaged land would remain' uncultivated, while the mortgagor would be deprived of earning the means with which to redeem his property.
Such, we apprehend, was never the doctrine of North Carolina, and the Act of 1S89, oh. 47G, protecting the holder of the agricultural lien against the mortgagee in such cases, was but declaratory of a correct exposition of existing laws.
The case of Brewer v. Chappell, and of Coor v. Smith, supra, in so far as they are inconsistent with the principle declared in this opinion, are overruled.
Thus far, as proposed, we have considered this case as governed by the law7 applicable to the ordinary relation of vendor and vendee, or mortgagor and mortgagee, and our conclusion is that the action cannot, in such case, be sustained.
We will now proceed to enquire into the effect of the following clause of the agreement: “This contract to hold everything made on the land, unless otherwise agreed by *194Killebrew and Bullock,” the vendors. As no mops were in existence, this cannot be consideied as a reservation of them so as to confer a lien, and the most favorable view to the plaintiffs is, that the words amount to a mortgage upon crops to be made. This is binding, without registration, as between the parties, on the crops planted the year next after the execution of the mortgage (Wooten v. Hill, 98 N. C., 49), but it cannot affect the rights of subsequent mortgagees, although they were fixed with actual notice. Todd v. Outlaw, 79 N. C., 235. Even if registered, it must, as we have seen, be subordinated to the superior lien conferred upon the defendant Wells by §1799 of The Code.
We can see no injustice in this application of the statute. It was made in aid of agriculture, and its provisions extend not only to crops made on the land of the lienor, but to those made on any land which he may cultivate. It must be presumed, we repeat, that all contracts by which persons are permitted to enter upon and cultivate land, are made with reference to the general law upon the subject.
The position that the plaintiffs are entitled to priority as landlords is without merit, for the agreement expressly negatives such a relation until the expiration of two years.
It follows, therefore, that Wells must be first satisfied to the amount of his advances. If there be any balance, the plaintiffs are entitled to the same, to be applied as a part payment on the land. Judgment must be given accordingly, and the plaintiffs must be taxed with the costs of both appeals.