Court Opinion

ID: 5436384
Source: CourtListenerOpinion
Date Created: 2022-01-08 17:54:55.632659+00
Date Added: 2024-06-11T08:31:51.263467
License: Public Domain

By the Court, Shafter, J.:
In the opinion delivered in this case on the former hearing, we considered, “ that it was unnecessary to determine whether the entire transaction was sufficient to constitute an equitable mortgage, for if such should be found to be the case it could not be enforced in the present state of the pleadings, because the decree must be based upon the allegations of the complaint; and it is alleged that the mortgage was executed by the corporation—that is* to say, that it is a legal mortgage.” Though there is.an averment in the complaint that the mortgage, the foreclosure of which is sought in this action, was executed by the company, still the document is set forth in hcec verba, and if it is not the mortgage of the defendant by legal as distinguished from equitable conclusion, the averment may be rejected as surplusage. We held in Stoddard v. Treadwell, 26 Cal. 303, that a contract may be declared on according to its legal effect or in hcec verba. If the former mode should be adopted, then the defendant may, by the rule of the common law, in a proper case, crave oyer of the instrument; and if it appear that its provisions have been misstated, he may set out the contract in hcec verba and demur on the ground of variance. But where a plaintiff himself sets forth the contract in the terms in which it is written, and then proceeds to put a false construction upon its terms, the allegation, as repugnant to the terms, should be regarded as surplusage, *650to be struck out on motion. Utile per inutile non vitiatur. From this it follows that if the complaint in this case discloses all the facts essential to an equitable mortgage binding upon the defendant, then, if the averments are true in fact, the plaintiff is entitled to the benefit of them. And further, by the one hundred and forty-seventh section of the Practice Act, the Court “ may grant him any relief consistent with the case made by the complaint and embraced within the issue.” We have re-examined the complaint in the light thrown upon it by the re-argument, and are satisfied that it contains all the facts essential to an equitable mortgage. As the facts averred are identical with the facts found or admitted, it is unnecessary to state the form in detail; for, in passing upon the legal effect of the finding, we must necessarily consider and pass upon the legal effect of the averments.
As the statement on motion for new trial does not specify the particulars in which the evidence is alleged to be insufficient, we must assume not only the facts admitted in the pleadings, but those also which are set forth in the findings. It appears from these two sources conjointly, that the defendant corporation on the 16th of April, 1860, by Josiah Bates and Samuel S. Atchinson, its trustees, duly authorized for that purpose, made and delivered to the plaintiff and four others, its promissory note for the sum of forty thousand pounds sterling, payable one day from the date thereof, with interest thereon from date until paid, at the rate of twenty per cent per annum. That the consideration of said note was forty thousand pounds, loaned and advanced by the payees and others to the corporation before the date of the note. That to secure the payment of the note the corporation at the date thereof, by its said trustees, Bates and Atchinson, executed, acknowledged and delivered to the payees the “ mortgage ” set out in the complaint. In the indenture referred to the parties are described as “ The Sierra Nevada Lake Water and Mining Company, a corporation, by their trustees, Josiah Bates and Samuel Atchinson, of the first part, and plaintiff *651(and the other payees in the note, naming them) parties of the second part.” The conclusion of the indenture is as follows:
“ In witness whereof the said parties of the first part have hereunto set their several hands and seals the day and year above written.
“ Josiah Bates, [seal.]
“ Samuel S. Atchinson.” [seal.]
The acknowledgment of the mortgage is to the effect that Bates and Atchinson were personally known to the Notary as trustees of said corporation, and that they personally appeared and acknowledged each for himself that he executed the instrument for the uses and purposes therein mentioned “ as and for the free act and deed of said Sierra Nevada Lake Water and Mining Company.” At the execution of the note and mortgage Bates was President of the company, and Bates and Atchinson were a majority of the trustees; and at and before that time they agreed for and on behalf of said corporation with the said mortgagees to subscribe the name of “ The Sierra Nevada Lake Water and Mining Company ” to the said mortgage, and intended so to do, but failed by accident or mistake. The plaintiff was personally interested in the securities to the amount of twenty-four thousand eight hundred and forty-seven pounds sterling, with interest from the date of the note; and the other payees, Ridgway, F. and H. Wedgwood, and Robe, made defendants herein, refused to join as plaintiffs in this action. The remaining defendants are creditors of the Sierra Nevada Lake Water and Mining Company, having judgment liens on the property described in the mortgage, but subsequent thereto.
It is a rule of conveyancing long established, that deeds executed by an attorney or agent must be executed in the name of the constituent. It was so resolved in Coombes’ Case, (5 Coke, 135, by Fraser,) and the rule was recognized and applied by us in Echols v. Chenery, 28 Cal. 159. Tested by this rule, *652the instrument in suit is not a legal mortgage of the Sierra Nevada Lake Water and Mining Company. The paper is signed and sealed, not by the corporation, but by Bates and Atchinson, acting, so far as the signatures, seals and®testatum clause throw any light upon the subject, for themselves and in their own right. Though the mortgage does not bind the company at law, it by no means follows, however, that it may not be asserted against it in equity. We consider it as settled that an agreement under seal, made by an attorney for his principal, though inoperative at law for want of a formal execution in the name of the principal, is binding in equity if the attorney had authority; and if the instrument so defectively executed be a conveyance of real estate, it will be sustained in equity as an agreement to convey, and will be good against the principal, subsequent lien creditors and subsequent purchasers with notice. Or, more precisely stated, an agreement in writing to create a mortgage, or a mortgage defectively executed, or «any imperfect attempt to create a mortgage, or to appropriate specific property to the discharge 5f a particular debt, will create a mortgage in equity, or a specific lien, which will have precedence of subsequent judgment creditors. (Am. Leading Cases, 605; Leading Cases in Equity, 666, and cases there cited.) The jurisdiction is sometimes put upon the ground that equity will aid the defective execution of a power—sometimes upon the jurisdiction to reform mistakes in written instruments, and sometimes upon the maxim that equity considers that as done Which ought to be done. These different modes of expression all amount to the same thing in substance. It was held by this Court in Beatty v. Clark, 20 Cal. 12, that “ though equity will not aid the non-execution of a power, still, where a party undertakes to execute a power, and by mistake does it imperfectly, equity will, in favor of creditors and others peculiarly within its protective favor, aid the defective execution.” We held in Boclley v. Ferguson, 30 Cal. 511, that a deed of land had as a conveyance might be good in equity as a contract to convey j and that the equitable right to the legal title was as available for the purposes of *653defense in an action of ejectment, under our system, as the legal title. We held in Daggett v. Rankin, 31 Cal. 322, “that an agreement in writing to give a mortgage, or a mortgage defectively executed, or an imperfect attempt to create a mortgage, or to appropriate particular property to the discharge of a particular debt, will create a mortgage in equity, or a specific lien upon the property so intended to be mortgaged.” We considered further “ that the maxim in equity upon which this doctrine rests is that equity looks upon things agreed to be done as actually performed; the true meaning of which is that equity will treat the subject matter, as to collateral consequences and incidents, in the same manner as if the final acts contemplated by the parties had been executed exactly as they ought to have been. (See also Racouillat v. Sansevain, ante, 376.) The facts found or admitted in the case at bar bring it broadly within these principles. Bates and Atchinson were a majority of the Board of Trustees through which the corporate powers were to be executed. The corporation gave the note described in the complaint by Bates and Atchinson, they being duly authorized for that purpose; and they also agreed, “ for and on behalf of the corporation,” to give a mortgage collateral to the note, to which mortgage the name of the company was to be signed; and the failure to do so was the result of accident or mistake. The power being given, it is. apparent on the face of the indenture that the trustees intended to act under the power in the matter of executing the mortgage. The corporation is named in the document as “ party of the first part, by Josiah Bates and Samuel Atchinson, Trustees.” The note which the mortgage was given to secure is described as a note made by the company. Furthermore, the trustees state in their acknowledgment that they executed the mortgage “ as and for the free act and deed of said Sierra Nevada Lake Water and Mining Company.”
It is urged that the defective execution of the mortgage was caused by a mistake of law, and that therefore the defective execution cannot be aided. The answer is that where there is a defective execution of a power, it is a matter of no equita*654ble moment whether the error came of a mistake of law or a mistake of fact. It is enough that the power existed and that there was an attempt to act under it. The relief is not so much by way of reforming the instrument as by aiding its defective execution ; which aid is administered through or by the application of the maxims already quoted. Or, as in the class of cases to which this belongs, the instrument defectively executed as a deed is considered as properly executed as a contract for a deed; and therefore as requiring neither reformation nor aid, but as ripe for enforcement according to the methods peculiar to Courts of equity. Under our laws a contract for a mortgage need not be under seal; and when made through an attorney, his authority need not be evidenced by a sealed instrument. (Wood’s Digest, 106, Sec. 6; Ang. & Ames, on Corps. 193-266.) Though the indenture in this case is under the seals of the trustees, yet when considered as an agreement for a mortgage, it may be treated as a simple contract, nevertheless (Lawrence v. Taylor, 5 Hill, 107 ; Worrall v. Munn, 1 Seld. 239; Wood v. A. & R. R. R. Co. 4 Seld. 167), and we consider it clear, from the authorities, that it is not indispensable, in order to bind the principal at law even, that such contract should be executed in the name and as the act of the principal. On the contrary, it will be sufficient, if upon the whole instrument it can be gathered from the terms thereof that the party described himself and acts as agent and intends thereby to bind his principals and not to bind himself. (Haskell v. Cornish, 13 Cal. 45; McDonald et al. v. Bear River and A. W. and Mining Company, 13 Cal. 221.)
The other objections taken by the appellants to ’the judgment, though not pressed in argument, have been fully considered by us, and they are all overruled.
Judgment affirmed.