Court Opinion

ID: 6905406
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:59:31.182242+00
Date Added: 2024-06-11T16:06:19.646855
License: Public Domain

Denied July 25, 1916.
On Petition for Rehearing.
(158 Pac. 953.)
Mr. Justice Burnett
delivered the opinion of the court.
4-6. The principal contentions of the defendant in his petition for rehearing are that the court erred in the former opinion in holding that the plaintiff conveyed to Winnard and Goodman only the equity of redemption in the land in question, and that he was properly a judgment debtor, entitled to redeem the premises from the execution sale under the decree. Apparently counsel impute to the phrase “equity of redemption” the common-law signification, but this is erroneous. It is true, indeed, that under our Code, and decisions in pursuance thereof, the mortgagee takes no title by virtue of the mortgage it being only a lien upon the premises. Mr. Chief Justice Seevers in Mayer v. Farmers’ Bank, 44 Iowa, 212, 216, says:
‘ ‘ The equity of redemption must not be confounded with a right of redemption. A mortgagor has an equity of redemption until the sale, and not afterward. * * After sale, he has a right of redemption if the statute gives it. ’ ’
In Sellwood v. Gray, 11 Or. 534 (5 Pac. 196), Mr. Justice Lord states the following:
*266“In this state a mortgage does not operate, as at common law, to vest in the mortgagee an estate upon condition, the breach of which works a forfeiture of his estate and renders it absolute. It is, in fact, what the parties intended, and as equity treated it, a mere security for the repayment of the debt or obligation, and serves simply to create a lien or encumbrance upon the property. The title, both before and after condition broken, remains in the mortgagor until foreclosure and judicial sale. The mortgage works no change of ownership in the property. It is still the property of the mortgagor, in law and in equity, is liable for his debts, may be sold under execution, conveyed or devised, is subject to dower, or may be again mortgaged, as any other estate in land. Nor do any of the qualities or incidents of an estate in land attach in the mortgagee. He has but a lien upon the land as a security for repayment, and which cannot operate to affect the possession of the mortgagor without his consent, or to transfer his estate in the land, except after default, and by force of a judicial sale under a decree of foreclosure. But, before such proceedings are had, payment of the debt by the mortgagor will extinguish the lien and free the estate from the mortgage. Although this right of the mortgagor to intervene, after default and before judicial sentence, and discharge the mortgage, is usually termed his ‘equity of redemption,’ it is not so in fact, or in equity, in the sense which recognizes the legal estate in the mortgagee, defeasible before and absolute after default, and which, on the condition of paying his debt, allowed him to redeem a forfeited estate and demand a reconveyance. * * His equity of redemption is the right to redeem from the mortgage—to pay off the mortgage debt—until this right is barred by a decree of foreclosure; but until this right is barred, his estate in law or in equity, is just the same after, as it was before, default. It is a right, though, of which the law takes no cognizance, and is enforceable only in equity, and has nothing to do with our statute of redemptions.”
*267The words “equity of redemption” constitute a terminology coming down to us from common-law times, when a mortgage actually passed the title to the mortgagee, subject to redemption and reconveyance to the mortgagor on his paying the debt. In modem jurisprudence the same words are used to designate the fee-simple estate of the mortgagor encumbered by the lien of the mortgage, there being no title conveyed to the mortgagee by that instrument: Kortright v. Cady, 21 N. Y. 343 (78 Am. Dec. 145); Navassa Guano Co. v. Richardson, 26 S. C. 401 (2 S. E. 307); 3 Words and Phrases, p. 2447; 2 Words and Phrases (Second Series), p. 310. The common-law term is now applied to an estate materially different from that originally so designated. It was this modern estate which Higgs, as owner thereof, conveyed to Winnard and Goodman, and which by mesne conveyances ultimately vested in Phillips, as trustee of the bankrupt, Lueders. Higgs could not transfer any greater or more perfect title than this, for he had it not to sell. It was also the estate which the foreclosure extinguished, for Section 427, L. O. L., explicitly says “a decree of foreclosure shall have the effect to bar the equity of redemption.” Unless he becomes a judgment debtor under the decree, the one who hitherto held the equity of redemption is cut off from all right to redeem the land. Prior to the decree his right to redeem depended upon his mortgage contract, but that was swept out of existence by the decree of foreclosure. If it could be explained that the bankrupt estate of Lueders owed anything on the decree or judgment, then its transfer, to Mahoney might enable him to prevent redemption by another. But neither Lueders nor his estate was liable for any part of the money due on the decree. Not a dollar of it *268could be demanded from that source. The only effect the decree of foreclosure had in that direction was to destroy all the title inuring to Lueders because he took subject to the mortgage. His contract right to redeem, or, in other words, his equity of redemption, named in Section 427, L. O. L., all he took as successor of Higgs in his character as owner or mortgagor, was gone beyond recall. After the decree it could not be made the basis of any further operation affecting the title. When Higgs conveyed, he was not a judgment debtor, and could not transfer any right of such a character, for there was nothing of the kind in existence to sell. When, and not until, by the decree it had been determined that Higgs was a judgment debtor, a statutory privilege appertaining to one thus declared to be personally liable for the debt came into being for the first time. It related exclusively to the particular lands in question, and only then or afterward could anyone become the successor in interest of the judgment debtor within the true meaning of Section 245, L. O. L., read in connection with Section 427, L. O. L., both being parts of the same act.
After decree, with all propriety, the judgment debtor could have assigned to Jones the right to redeem tract A, reserving to himself the redemption of tract B. Jones would then have been the successor in interest of the judgment debtor in a part of the property separately sold, within the meaning of Section 245, L. O. L. In short, there cannot be a successor to a judgment debtor until there is a judgment debtor to succeed. This statutory right of redemption is not referable to, nor does it depend upon, any conveyance of the preexisting equity of redemption, for the latter, as Mr. Justice Lord said in Sellwood v. Gray, 11 Or. 534 (5 Pac. 196), has nothing to do with our statute of re*269demptions. The distinction between the equity of redemption, properly so called, and the statutory right of redemption, is clearly pointed out by Mr. Justice Somerville in Powers v. Andrews, 84 Ala. 289, 291 (4 South. 263, 264), thus:
“It has often been said by this court that this right of redemption under the statute is purely the creature of legislation, and has no existence without it. It is essentially different from the equity of redemption, recognized by the common law. That right is property, capable of sale by transfer, or under execution, or decree of a chancery court. It can only be exercised before a foreclosure of the mortgage, under a decree of a court of equity, or before a sale, under a power in the mortgage. It cannot be exercised after a valid foreclosure, either under a power of sale, or under a decree, unless in the case of voidable sales, where the mortgagee has acted as both seller and purchaser without the consent of the mortgagor, so as to justify the court in setting aside the sale for constructive fraud. * * The statutory right of redemption, on the contrary, comes into existence only after the equity of redemption proper has been cut off by sale or foreclosure. Until then, it would seem, it cannot spring into life. And we have uniformly decided that this privilege is neither property, nor the right of property, that it is not subject to levy or sale as such under execution, and that it is a right or privilege personal to the debtor.”
For illustration, suppose Brown, without giving any personal obligation on his part, mortgages his land to secure the promissory note of Smith. In the event of foreclosure the mortgagor, Brown, not having become a judgment debtor, because he did not owe anything, would not have the statutory right of redemption. His contract right of redemption or his equity of redemption, to use the phrase of the Code, would be barred by the decree. The judgment debtor, Smith, *270would have the privilege of redeeming; but it would avail him nothing, because he never had any estate to which he could be restored.
Contending that, even after foreclosure, title to the premises sold at foreclosure remains in the mortgagor or his successor in interest until execution and delivery of sheriff’s deed, counsel has cited Dray v. Dray, 21 Or. 59 (27 Pac. 223), and Kaston v. Story, 47 Or. 150 (80 Pac. 217, 114 Am. St. Rep. 912). The first of these cases treated of an execution sale on a judgment at law, and had no reference to foreclosure decrees. It further makes a very clear distinction between equity of redemption and the right of a judgment debtor to redeem after sale, saying that the latter is purely a legal right. The court did not have under consideration the statute on foreclosures, which says the decree shall have the effect to bar the equity of redemption. In its facts, Kaston v. Story is not hostile to the theory that only one in debt at the time upon the decree is qualified to exercise or transfer the statutory right of redemption, for there, as disclosed by the record in this court, it was the judgment debtor who conveyed, and that, too, subsequent to the decree, when he had nothing to sell except that legal right. In very truth, Kaston, the plaintiff there, succeeded only to this statutory privilege of redeeming, not from the mortgage, but from the sale: Flanders v. Aumack, 32 Or. 19, 30 (51 Pac. 447, 67 Am. St. Rep. 504, note). He had nothing to do with the equity of redemption, for that had been barred by the decree.
Commonwealth etc. Assn. v. Parker, 84 Ala. 298 (4 South, 268), cited by the defendant, holds that the conveyance of the equity of redemption prior to foreclosure waives the subsequent statutory right of redemption, because redemption itself implies a present *271ownership in property. This case is not in point here, even on that theory, for Higgs sold his equity of redemption subject to the mortgage which his grantees assumed, but did not pay. This of itself would be an exception to what would otherwise be a waiver under the Alabama case, and he would be entitled to all the privileges conferred by statute and attendant upon the personal decree against him in the foreclosure suit. Moreover, that case, as well as Powers v. Andrews, 84 Ala. 289 (4 South. 263), is distinguishable from the one in hand, for our statute recognizes the successor in interest of the judgment debtor as a proper redemptioner, thus making provision for an assignment of the right which the Alabama statute did not. This is taught by Rosenberg v. Croisan, 18 Or. 470 (23 Pac. 847). Miller v. Ayres, 59 Iowa, 424 (13 N. W. 436), only teaches that the right of redemption under consideration is purely a creation of statute, and that a surety, not being within its terms, cannot exercise that privilege.
It is contended that our former decision overruled Willis v. Miller, 23 Or. 352 (31 Pac. 827), but there a redemption in the name of the judgment debtor was recognized and enforced. The principal question there involved was the effect of the redemption. The plaintiff contended that such a redemption from foreclosure sale returned the land to the redemptioner discharged of all claims on account of the mortgage debt, while the defendant maintained that it was yet liable for the unpaid deficiency remaining due on the decree. Justices Bean and Moore upheld the plaintiff’s contention, while Mr. Chief Justice Lord approved the defendant’s position. The fallacy of what was said in Lauriat v. Stratton (C. C.), 11 Fed. 107, about who is a judgment debtor, and followed in Willis v. Miller, *272arguendo, lies in the assumption that he who purchased the equity of redemption prior to the entry of the decree has some right to the land after foreclosure, and hence sustains the same relation to the decree as the successor in interest of a judgment debtor in a judgment at law. This leaves out of the calculation the effect given to the decree by the statute, namely, barring the equity of redemption, while a judgment at law does not bar the title but only operates as a lien upon it. In equity the previous title is extinguished by the decree, while at law the title does hot pass until delivery of the sheriff’s deed..
The doctrine of Williams v. Wilson, 42 Or. 299 (70 Pac. 1031, 95 Am. St. Rep. 745), is directly opposed to the theory of the defendant that one who once held the equity of redemption has on that account some right to operate as a redemptioner after the decree of foreclosure. Following the statute, the substance of that case is that the decree ends all title of the mortgagor and those claiming subject to the mortgage, and thenceforward whatever rights they exercise must be by virtue of the decree acting upon the fund created by the sale. If the holder of the equity of redemption had any power over the property after decree, the functions of the court rendering the same would be useless and of no effect; but the true doctrine is that upon foreclosure the court seizes upon the title affected by the mortgage, divests it of that lien, and also of all subsequent claims, as well as the equity of redemption named in the statute, and offers the pledged estate, thus shorn of encumbrances, for sale for the purpose of creating a fund to satisfy the various demands against it. The decree puts a quietus upon the equity of redemptidn and all subsequent liens. Claimants, including the erstwhile holder of the equity of redemp*273fcion, must then and afterward look to the fund and not to the land for satisfaction.
In the case of Yoakum v. Bower, 51 Cal. 539, it was decided that a defendant in execution can redeem from an execution sale, notwithstanding he has conveyed to another the property sold under execution. This was under a statute almost identical with ours. Again, in Harvey v. Spaulding, 16 Iowa, 397 (85 Am. Dec. 526), the Code provided that the judgment debtor might redeem at any time within one year from the date of sale, and it was held that he could do so, although he had previously sold the land to another party. Also, in Livingston v. Arnoux, 56 N. Y. 507, construing an enactment substantially like our own, the court says:
“The right of the judgment debtor whose title has been sold on execution to redeem from the sale does not depend upon the condition of his title at the time of the sale or redemption. The language of the statute is direct and unambiguous. The right is given to the person against whom the execution issued, and whose title was sold thereon. It follows the person, and not the land, and continues for the period allowed by law, although the debtor meanwhile may have parted with his title. The right secured to the judgment debtor to redeem, although he has conveyed the land, is often an important and valuable one. Where he has conveyed with warranty, he is enabled thereby to protect the title of his grantee, and secure himself against liability; and if he has received a full consideration for the land, it is just and equitable that he should discharge it, by redemption, from the lien acquired by the purchaser on the sale, although he may not have bound himself by any covenant to do so. Nor is there any incongruity in holding that the right of redemption coexists in the judgment debtor and his grantee. Where the former has conveyed the land, his redemption will inure to the benefit of the holder of the legal title, and the owner has the means of pro*274tecting Ms own interest, if the judgment debtor is either unable or unwilling to make the redemption.”
It is plain that Higgs was a judgment debtor under the decree, and as such he had a right to redeem, irrespective of the condition of the title when he made the offer. We adhere to the former opinion.'
Affirmed. Behearing Denied.
Mr. Justice Eakin took no part in the consideration of this case.