Court Opinion

ID: 6640615
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:45:00.62163+00
Date Added: 2024-06-11T15:59:13.649693
License: Public Domain

Elandrau. J.
By the Court. All the right that a mortgagee of land has in the mortgaged premises is to subject them to the payment of his debt. The mortgage is but an incident to the debt, for which the land stands as a pledge, or security. The mortgagee has but a chattel interest measured by the amount of the debt. 1 Hilliard on Mortgages 215-16. *267When the debt is paid tbe mortgage is cancelled. Tbe mortgagee is regarded in many respects as the trustee of tbe mortgagor’s rights, subject to tbe security, and as such has no right to speculate with tbe lands, but must observe tbe utmost good faith in making bis debt, doing no act that will prejudice tbe rights of tbe mortgagor. 1 Hilliard on Mortgages 339.
It is tbe policy of tbe law of this State that all forced or judicial sales of land, under mortgages .or executions for tbe collection of debts, should be confined to such portions of tbe incumbered premises as are sufficient to satisfy tbe debt. Pub. Stats. p. 572, Sec. 112; Ib. 644, Sec. 8; Ib. 671, Sec. 9. This is tbe unbending rule in sales under executions, and where a foreclosure of a mortgage is bad in chancery, tbe decree directs “ a sale of tbe mortgaged premises or such part thereof as may be sufficient to discharge tbe amount due on tbe mortgage and tbe costs of suit.” Pub. Stat. p. 671, Sec. 9. "When tbe foreclosure of a mortgage is bad by advertisement under a power of sale which authorizes a sale of tbe whole premises on default, a strict observance of tbe power and a sale of the whole premises, even if a lesser portion of tbe land would suffice to pay the debt, is regular, because it is fully authorized by tbe mortgagor; but notwithstanding such power, a court of chancery will always interfere upon tbe application of tbe mortgagor or bis representatives, and restrain the full exercise of such a power by tbe mortgagee where tbe land greatly exceeds in value tbe amount of tbe debt, and confine the sale to “ such part of the land as may be sufficient to discharge tbe amount due on tbe mortgage and costs.”
Tbe proper time to make such an application is before tbe sale takes place, as where the mortgage confers upon the mortgagee filie power to sell tbe whole premises, it is to be presumed that be will take advantage of it, and when the mortgagor allows the sale to take place without interference or objection on bis part, be must excuse such neglect fully, or a court of chancery will not relieve him. But when be shows good and sufficient reasons why he did not object and apply before tbe sale took pla.ce, and while tbe property remains in tbe bands of the original parties to tbe mortgage, as when it is purchased in by the mortgagee or assignee of the mortgage, and it is *268clear that a sacrifice, of tbe mortgagor’s interests have been made, a Court of Equity will interpose and set aside the sale, and order a re-sale to be made of such parts only of the land as may be sufficient to discharge the debt.
It is a very well settled rule of equity that if the owner of mortgaged lands sells portions of them to third parties, retaining part of them himself, the portion so remaining in the mortgagor, is primarily liable for the dpbt secured by the mortgage, and the portions sold are liable in the inverse order of their alienation. 22 Barb. S. C. R. 54; 8 Paige 277; 6 Paige 55; 5 John. C h. 225; 9 Paige 173; 2 Barb. Ch. 151; 11 Paige 59; 1 Hilliard on Mortg. 326; 29 Barb. S. C. 333; 4 Selden 271. As soon as the mortgagor aliens any portion of the mortgaged lands, an equity arises in favor of the grantee, to have the mortgage first satisfied out of the lands remaining in the hands of his grantor, and the mortgagee is bound to recognize this equity and respect it in all bis dealings with the mortgaged premises. So binding is this equity upon the mortgagee, that if he should release the lands retained by the mortgagor from the lien of the mortgage, his security would be cancelled to the extent of the value of the lands so released, and he would be permitted to collect only the balance of the debt out of the lands in the hands of the grantees of the mortgagor. And if the land released would have been sufficient to have paid the whole mortgage debt, his security will be entirely gone. See ease above cited,.
These rules are all founded upon the principle that the mortgagee has no greater interest in the land than to make his debt out of it; and that in doing so he must regulate his proceedings so as to do as little damage to the interests of other parties concerned in the land as possible, consistently with the full enforcement of his own.
When Newton sold a portion of the mortgaged premises to the Plaintiff, an equity arose in favor of the latter, that the lands remaining in Newton should be first subjected to the payment of the mortgage debt. If the owner of'the mortgage had foreclosed in chancery, an answer by the Plaintiff in this suit, who would have been a Defendant there, setting forth his equity, would have secured a decree ordering a sale of the *269premises in parcels, beginning with Newton’s and ending with the Plaintiff’s if the debt was not satisfied before reaching him. But the owner of the mortgage proceeded as he had aright to, to foreclose without invoking the aid of any court. The mere fact that the mortgagor by his own act, which was binding upon his grantee, had deprived him of the privilege of being made a Defendant where he could plead his equities, did not destroy those equities, nor cut him off from the means of enforcing them. A court of equity possesses and will exercise the power to relieve parties against their own acts when a literal enforcement of them will operate a forfeiture, or result in oppression.
The complaint alleges that the Defendants were fully advised before the sale, of the equities of the Plaintiff, and that the lands primarily liable would have more than paid and satisfied the debt. It also shows that the reason the Plaintiff did not apply to the court for the protection of his rights before the sale, was because he was an officer in the navy and absent upon a foreign cruise, and knew nothing about the foreclosure.
Absence is not, as a general rule, an excuse for delay; it is the voluntary act of the party, and he is responsible for its consequences ; but it may when necessary and not designed, as in this case, relieve a party from the charge of actual negligence, and especially when by admitting the plea, no newly acquired rights of innocent parties are to be disturbed, but the only effect will be to restore the parties to their original positions.
The case of Doolittle vs. Lewis and others, 7 John. Ch. R. 44, cited by the Defendant’s counsel, to show that the Plaintiff was too late, is a very different one from the case at bar. There the Plaintiff suffered the sale to take place without objection, and titles to be acquired under it by third parties without notice, and waited for upwards of five years before he filed his bill. The court held that he was too late, and on a similar state of facts, I doubt not that this court would follow the same rule of decision.
¥e think the Plaintiff under the circumstances of the whole case has not lost his right to be heard upon his equities, and that the demurrer to his complaint was improperly sustained. The *270judgment is reversed and the case remanded. If a re-sale takes place it must be at the expense of the Plaintiff,. Philip O. Johnson, as by a more timely application the first sale would have saved his rights.
Justice Atwater dissents.