Court Opinion

ID: 6574214
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:32:44.90225+00
Date Added: 2024-06-11T15:57:01.429656
License: Public Domain

Daggett, J.
It is understood, that the judge rejected the testimony offered by the defendants, on the authority of several decisions made at the circuit within the last thirty years. It is not pretended, that the question has ever been decided in this court. It is, therefore, open for examination.
Those decisions are founded entirely on the doctrine laid down in 2 Swift’s Dig. 197. 2 Chan Cas. 244. Row. on Mart. 1043 Judge Swift says: “ On a bill to foreclose, the title of the mortgrgee cannot be investigated, but he will be left to pursue the legal measures to establish it. Of course, it is not *160necessary to be brought in the county where the land lies. All the question that can arise, is, whether the mortgage deed ha* been properly executed ; the validiiy of the title must be decided at law, and not in chancery But when the obligation secured by the mortgage is void by the statute of usury, this will constitute a defence against a bill to foreclose.” In support of the first of these positions, viz. that the title cannot be investigated on a bill to foreclose, he cites 2 Chan. Cas. 244 In that case, “ a mortgagee sued to have his money, or that the defendant be barred of his equity of redemption. It happened, that by subsequent orders, possession was ordered to the mortgagee, and contempt prosecuted for not delivering the possession, and the heir who was so pro-ecuted, set forth in his examination a title ; and now the mortgagee would have debated the title, but was not admitted, because the course of the courtis, and the court can go no further in such a bill, but to take away the equity of redemption, and leave the defendant to such title as he hath, but not to amend it; and this was the true and ancient course, though of late sometimes the contrary hath been done. And now the Lord Chancellor agreed thereto, and discharged the contempt.” Judge Swift takes his position from the case quoted. Powell also uses the words found in the case To that case, then, we must look as to the sole authority, that on a bill of foreclosure the title of the mortgagee cannot be investigated If I understand this case, it may support any thing but the position for which it is introduced. It is not stated who the parties to the bill were, nor what the decree was, but it seems possession had been ordered (a practice with which we are not familiar, but which is well known in England, and has been substantially adopted in New-York,) and the heir, who was so prosecuted for a contempt in not obeying the order, set forth in his examination a title. The mortgagee would have debated this title ; but the court would not permit him, that is, would not suffer him to amend his title ; — and thus discharged the heir from contempt for disobeying the order. The court examined and investigated the title of the mortgagee, so far as to decide, that it was not sufficient, but would not permit him to amend it, on his bill to foreclose, and therefore decided against him, and discharged the heir from contempt. The case decides, that on a bill to foreclose, the plaintiff must rely on his title, and if he would amend it, must resort to other proceedings to do it; and it decides no more.
*161Chancellor Kent, speaking of this case, (4 Johns. Chan. Rep. 516.) observes : — “ It is so briefly and loosely reported as to be scarcely deserving of consideration.” It seems too much to set up the doctrine that a title of a mortgagee cannot be investigated on a bill to foreclose, upon the authority of this almost unintelligible case, especially as it is unsupported by any case or practice in Westminster Hall, or elsewhere. Yet the doctrine rests on this case entirely, so far as British authorities are cited.
Judge Swift also supposes, that the title is not drawn in question, because a bill to foreclose is not necessarily brought in the county where the land lies. It is admitted, that the bill may be brought in the county where the mortgagor or mortgagee dwells ; but it is believed, that this practice is perfectly consistent with the construction of the statute, which directs “ that all suits wherein the title to fend is to be tried and determined, and all actions of trespass quare clausum fre git, shall be tried in the county where the land lies.” This statute regards actions at law, and has never been deemed to apply to bills in equity, wherein the title to fend may be decided. A bill to redeem, when the mortgagor proceeds on the ground that the mortgage has been satisfied, and therefore prays for a restoration of his legal title, and a bill for the specific execution of a contract to convey fend, both involve the question of title ; and yet it is not necessary, in either case, to bring the bill in the county where the fend lies ; nor is such the practice. The statute of our state, like the English few, provides for the trial of titles to fend, in the vicinity, because the jury who are to settle titles come from the vicinage ; but surely such a provision is useless, where the questions are all to be settled by the judges. Hence, our superior court held jurisdiction of bills in equity, wherein the title to fend is concerned, lying in our neighbouring states; and the notable case of Penn v. Lord Baltimore, 1 Vesey 444. respecting fends in this country, in the English courts of chancery, is of the same character.
But the fetter position of the commentator, viz. that usury is a good defence to a bill of foreclosure, proves that the title in such bill may be investigated and defeated. If usury be a good defence, for the reason assigned by the commentator, viz. that the statute declares the contract void, it is difficult to see, why fraud may not be. In both cases, the deed is, by statute, declared utterly void. The authority, however, cited by the *162learned commentator, (3 Atk. 154.) no more supports this position, than the authority from 2 Chan. Cas. 244. supported the other.
Let us now examine the question on principle. It is very clear, that by a decree of foreclosure, the rights of the mortgagee become materially varied and strengthened, and of course, those of the mortgagor and those claiming under him, in an equal degree, diminished. The object of the bill is to appropriate the pledge, and to cut off all right to redeem, and give a perfect title to the mortgagee. The decree effects this object. The mortgagor can never redeem, except by paying the in-cumbrance. When the time limited for the payment of the mortgage money has expired, the debt is extinguished, and the estate becomes absolute, according to the decision of our court. Derby Bank v. London, 3 Conn. Rep. 62.
The bill proceeds on the ground of a debt due, and a valid collateral security, by a mortgage deed. That the deed was forged ; — that it was fraudulently substituted for another;— that it was obtained by duress; or that the grantor was a feme covert, when the deed was signed, may unquestionally be proved. In the case of Smith v. Chapman, 4 Conn. Rep. 344. this court sustained a bill in equity to validate a mortgage deed, where the wife of the mortgagor was one of the subscribing witnesses, and therefore the deed not duly attested within the requirements of our statute.
If in these cases, the court would permit a defence, and deny to the plaintiff any relief, because he had no valid title, why should not the court uphold a defence, when the deed is declared utterly void by positive law ? — A court of equity will no more enforce a usurious, a fraudulent or a corrupt contract, than a court of law. Such contracts will receive no countenance or support, either at law or in equity. They are, in the words of the law, utterly void every where.
Again, it is admitted in this case, that the mortgagor, or his assigns, might show that the debt had been paid, in part or in full. It will also, it is presumed, be acknowledged, that the defendants might show,’ that the debt, being negotiable, had been assigned, and the interest in the land released to a third person. If then, it may be shewn, that the plaintiff’s title was gone, why not show, that he never had one ?
Moreover, it has been decided repeatedly, by the Chief Justice, and by other Judges in conformity thereto, that a *163bill to foreclose must aver a title in the plaintiff. The bill without such allegation, would be insufficient. The court could not, on a bill destitute of such an averment, decree a foreclosure. Now, it is utterly beyond my comprehension, that in any proceeding, either at law or in equity, a defendant may not show, that a material allegation of the plaintiff is untrue. If such is the law in this case, it is a solitary exception to general rules in all analogous cases.
Surely, there can be nothing in the nature of this defence, which should incur the censure of a court of equity ; nor can a fraudulent conveyance ever deserve peculiar favour or protection. Nay, it is a rule in a court of equity, not to interpose and decree a foreclosure, when there is injustice in the case. The court will refuse such a decree. Powell on Mort. 1045, 6. 2 Term Rep. 271.
But there are not wanting authorities of great weight, bearing directly on this point. In the circuit court of the United States, for this district, the late Judge Livingston, in the case of Austin v. Lyman, after a discussion of this question, in which the doctrine of Swift and Powell was examined, decided in favour of the defence of usury to a bill of foreclosure. H is extensive practice at the bar, and great experience on the bench of the supreme court of New-York and of the United States, entitle his decision to much respect. In Fanning v. Dunham, 5 Johns. Chan. Rep. 42., Chancellor Kent thus observes : “ With respect to the relief that can be afforded here, I take the rule to be, that a plaintiff who comes to a court of equity for relief against a judgment at law, or other legal security, on the ground of usury, cannot be relieved, except upon the reasonable terms of paying to the defendant what is really and bona fide due to him. On the other hand, if the party claiming under such usurious agreement or other security, resorts to this court to render his claim available, and the defendant sets up and establishes the charge of usury, the court will decide according to the letter of the statute, and, deny all assistance, and set aside every security and instrument whatsoever infected with usury.” In the present case, the plaintiff resorts to the superior court “ to render his claim available,” by ap. propriating the pledge and cutting off the equity of redemption, as was before remarked. Is not, then, the position of this learned Chancellor directly in point ? I am aware, that the case before the Chancellor was a bill to set aside a judgment, *164and other legal securities, on the ground of usuiy ; but in the remarks above quoted, the Chancellor is laying down the law in cases of a bill to relieve against usurious securities, and in a bill to render them, available by foreclosure. He pointedly shows the difference, which, indeed, he demonstrates from a view of all the authorities, and the result is, that when a plaintiff seeks to enforce such securities — to render them available,— usury may be proved, and if proved, the court will deny all assistance. It will not be urged, that if usury may be interposed as a defence, fraud, when alleged by a third person not party to the fraudulent deed, will not equally avail.
In the case of De Butts v. Bacon & al. 6 Cranch 252. the supreme court of the United States, held the defence of usury good on a bill to foreclose, and affirmed the judgment of the circuit court of the United States for the district of Columbia, which decreed the mortgage void on that ground. The question now made, to be sure, was not raised in that case ; but is not the silence of the learned court and bar on the point, full evidence that it could not be raised with any prospect of success? In Baldwin v. Norton & al., 2 Conn. Rep. 161. on a bill of foreclosure, brought by a second mortgagee against the mortgagor and the first mortgagee, one question was, whether the plaintiff could introduce proof of usury in the first mortgage. The court decided, that he could not, because usury was not alleged in the bill. The nine judges gave their opinions seriatim; and in every instance, the question of usury was resorted to, discussed and answered. No judge suggested any difficulty in this proof to destroy the title of the mortgagee. Judge Swift, from whose Digest I have quoted above, did not suggest the contrary idea. Judge Edmond expressly recognized the doctrine, that usury would defeat the title. Is it not incredible, that neither of the judges should have resorted to an objection, which, it is now alleged, is the familiar practice of our courts ?
It is urged, however, that our courts have constantly sanctioned the ground now taken, by a majority of the court. I am not aware, nor do I believe, that there has ever been a decision on the point now raised — viz.—-whether fraud may be given in evidence, by a second mortgagee, or an attaching creditor, to defeat the first mortgage. The first time I ever heard a suggestion of the kind, was in Owen v. Granger, at Hartford, in 1802, when the Court, Judge Swift presiding. *165held, that usury could not be given in evidence on a bill of foreclosure. This was heard with astonishment, by several gentlemen of the profession, some of whom lived to witness his retraction of that opinion in his Digest of 1823, — as above quoted. I believe this opinion was followed at the circuit, in several cases; but it has never received the sanction of this Court till now.
The case of Broome v. Beers, 6 Conn. Rep. 198. is also cited as an authority bearing on this case. The first point decided, as appears by the condensed view of it, by the reporter, is: “A bill of foreclosure need not be brought in the county in which the land lies, as the title of the mortgagee cannot, under such a bill, be investigated.” The land lay in Litchfield county ;— the cause was tried in Fairfield county. This was a writ of error from a decree of Judge Brainard. On the trial of the writ of error, only three judges sat, the judge who tried it being absent. The Chief Justice and Judge Lanman reversed the judgment, against the opinion of Judge Peters and the Judge who tried it at the circuit. The view of the first point, as stated by the reporter, is faithfully taken from the opinion of the Court. That question, however, was not agitated at the bar, nor even mentioned by counsel. It probably appeared on their briefs. But I would ask, what point was investigated and decided ? The only point on the merits was, whether the title of Beers, the plaintiff, was prior to that of Broome, or whether it was contemporaneous with it. The Court held, that by the representation, which Beers made to Broome, prior to his taking the deed, that the deed to Minor, under whom Beers claimed, and the deed to Wright, under whom Broome claimed, were contemporaneous, the plaintiff, Beers, had no priority against Broome, but that they were tenants in common. The title to land thus lying in Litchfield county, was decided, by the superior court, sitting in Fairfield county, or else nothing was decided.
This decision supports, if it needed support, the position which I took before, that bills in equity relating to the title of land, need not be brought in the county w'here the land lies. But with all deference, I repeat the question, what was decided between these parties ? The bill was brought by Beers, a mortgagee, against Broome, to fore dose. What was investigated, and what decided ? Obviously, that Beers had no priority of title over Broome. To decide that’one man has not *166priority of title, is deciding on the title. The superior court decided, that Beers’ title was prior, and granted the bill The supreme court of errors decided, that Beers had no priority, and that, to use the language of the opinion, “ it would be contrary to the first principles of equity, often recognized and applied, to give success to the plaintiffs bill.” But if I rightly apprehend the doctrine now established, it is, that the title of the mortgagee cannot be investigated on a bill of foreclosure. In the language of Chief Justice Swift, “ all the question that can arise, is, whether the mortgage deed has been properly executed. The validity of ihe title must be decided at law, and not in chancery.” The mortgage deed was properly executed, as appears in the case of Beers v. Broome; then the superior court was correct in granting the bill; and the supreme court of errors could not, consistently with the principles of ihe case now in judgment, reverse the decision. The marginal note, therefore, in Beers v. Broome, should read thus : “ As the title of the mortgagee cannot be investigated on a bill to foreclose ; therefore the bill need not be brought in the county where the land lies. On this bill to foreclose, Beers’ title is investigated, and found not prior to Broome’s, but contemporaneous ; therefore, he has no right to foreclose Broome.”
I know not how to escape from this result, unless it be said, that this defect in Beers’ title could not be investigated in a court of law; and even then, the title is investigated in a county where the land did not lie. I ask, why not ? Suppose Beers to be in possession, and Broome to bring ejectment for an undivided part of the land ; could not Broome defeat Beers’ priority, by the same testimony, which would defeat it in a court of chancery ?- 1 can see no difference. I trust, then, that the case of Beers v. Broome will not add to the weight of authority, which before that was to be found in 2 Chan. Cas. 244. which Chancellor Kent said was deserving of no consideration. I must be pardoned for saying, that instead of being an authority for any point, it is felo de se.
The absurdity of this doctrine may be further illustrated thus. Suppose that A. mortgages to B. land worth 1000 dollars, to secure a debt of 300. A. afterwards mortgages the same land to B., for the security of a debt of 500 dollars, the consideration of which is usurious, and, of course, the security void. B. brings his bill to foreclose both mortgages. The title *167to neither can be investigated on this bill, and therefore a decree must pass for foreclosure, unless both cbls shall be paid within a specified time. If A. bring h-s bill to redeem, the law is well settled, that he cannot prevail, except on paying both debts. 5 Johns. Chan. Rep. 142. Suppose the mortgagor is in possession, and the mortgagee brings ejectment; the mortgagor cannot defend himself, for the deed first given is good, and the mortgagee has only to shew that, to enable him to recover. Or suppose the mortgagee is in possession, and the mortgagor brings ejectment, for a like reason he cannot recover ; for there is a valid d^ed against him. In such case, then, a usurious security for 500 dollars, s enforced, the pledge appropriated, and the equity of redemption cut oiT, in defiance of a plain statute, which declares it absolutely void.
This case has been under the consideration of the court two terms, having been continued for advisement As the judgment appears to me unfounded in principle, and destitute of all support from authority, I have taken the liberty of examining it with freedom.
This decision embraces the following positions.
1. That a bill in equity to establish or defeat a title to land, must be brought in the county where the land lies.
2. That the title of the mortgagee may not be investigated on a bill of foreclosure ; and therefore,
3. That an allegation of title in the plaintiff in such bill is unnecessary ; or, if necessary,
4. That it need not be proved by the plaintiff, and cannot be disproved by the defendant.
5. That a pledge may be appropriated by a bill and decree of foreclosure, when the mortgage deed was usurious or fraudulent, in direct opposition to the statute declaring them utterly void.
6. That usury and fraud are thus made the basis of a decree in a court ®f chancery.
As I cannot admit either of these positions, I feel constrained to dissent from a decision, which, in my judgment, involves them all.
New trial not to be granted.