Opinion
No. 28713.
February 17, 1953.
APPEAL FROM THE CIRCUIT COURT, ST. LOUIS COUNTY, FRED E. MUELLER, J.
Paul J. Kaveney and Joyce Pueser, of St. Louis, for appellants.
A. G. Schumacher, Clayton, for respondents.
Plaintiffs (respondents) instituted this action in an effort to enjoin defendants (appellants) from selling certain real estate under the power of sale contained in a deed of trust. Defendant Clifford A. Falzone is the trustee and Frank R. Philpott, the remaining defendant, is the owner of the notes secured by the deed of trust.
This suit was filed on November 29, 1951, which was two days before the date upon which the sale was to have been held. The court issued a temporary restraining order and an order to show cause. Defendants in due course filed their return and answer. There being no dispute about the facts the cause was submitted to the court upon the pleadings. The decree was in favor of plaintiffs and the defendants were permanently enjoined from proceeding with the sale of the property under the terms of the deed of trust.
The appeal was originally taken to the Supreme Court. That court determined that title to real estate, within the meaning of Section 3, Article V of the Constitution, V.A.M.S., was not involved and transferred the cause to this court. Oehler v. Philpott, Mo.Sup., 253 S.W.2d 179.
It is admitted that plaintiffs have owned the real estate in question during all the period involved herein; that under date of March 5, 1932, they executed a principal note for $600 and six semi-annual interest notes in the sum of $18, each, all of which became due and payable on March 5, 1935; that defendant Philpott is the owner and holder of the said notes and they are secured by the deed of trust that the defendants are now attempting to foreclose. The parties were also in agreement upon the fact that no payments had been made on the debt evidenced by the notes and no agreements were executed extending or renewing the said notes beyond March 5, 1935.
The plaintiffs' petition alleged that the ten year statute of limitations had run against the bringing of any action on said notes and that therefore no proceeding under the power of sale in the deed of trust could be had because of the provisions of Section 516.150 (unless otherwise indicated all statutory references are to RSMo. 1949, V.A.M.S.)
The applicable portions of Section 516.150 are as follows:
"No suit, action or proceeding under power of sale to foreclose any mortgage or deed of trust, to secure any obligation to pay money or property, shall be had or maintained after such obligation had been barred by the statutes of limitation of this state; nor in any event after the lapse of twenty years from the date at which the last maturing obligation secured by the instrument sought to be foreclosed is due on the face of such instrument, * * * unless before the lapse of said twenty years the owner of the debt thereby secured or some person for him shall file an affidavit duly verified, or file an instrument in writing acknowledged as deeds are required to be acknowledged in order to entitle them to record in this state, showing the amount due and owing thereon."
Defendants' answer contained an allegation that on August 30, 1951, they caused to be recorded in the office of the recorder of deeds of St. Louis County, Missouri, the affidavit of Paul J. Kaveney (made on behalf of defendant Philpott) showing the amount due and owing upon the notes in question.
As has already been indicated, the plaintiffs contend that since the notes are barred under the provisions of Section 516.110 the defendants are precluded from exercising the power of sale contained in the deed of trust by the first clause of Section 516.150.
The defendants concede that this contention of plaintiffs would be correct except for the filing of the aforementioned affidavit on behalf of defendant Philpott. They argue that the provision for filing the affidavit, and thus avoiding the application of the prohibitory features of the statute, applies to the clause relating to the note as well as to the twenty year limitation provision concerning the deed of trust. It appears clear, therefore, that the only issue upon this appeal is whether the filing of the statutory affidavit by the owner of the debt, after the obligation has become barred by the statutes of limitation and before the lapse of twenty years from the date of the last maturing obligation described in the deed of trust, will have the effect of permitting the lawful exercise of the power of sale notwithstanding the provision that no foreclosure proceeding may be had if the obligation is barred.
The common law rule required that a mortgage be foreclosed within twenty years or its enforcement was barred. The fact that the note was barred by the ten year statute did not prohibit foreclosure under that rule. Milby v. Murphy, Mo. App., 121 S.W.2d 169; Stock v. Schloman, 226 Mo.App. 234, 42 S.W.2d 61.
In 1891 the legislature enacted the original statute of what is now Section 516.150. This act was substantially the same as the first clause of the present section. Under it the only limitation on foreclosure of a mortgage was that the note be not barred by the statutes of limitation. The determination of the question as to whether a note is barred generally depends upon facts not appearing upon the public records since it may be kept alive for an indefinite period of time by payments or other acts that toll the running of the statute. This created a situation in which a title examiner could not safely approve a title, where an unreleased deed of trust appeared of record, regardless of the age of the instrument.
It would appear that this condition led to the amendment of the statute in 1921. At that time the provision was added to the effect that in any event the foreclosure must occur within twenty years after the maturity of the obligation secured by the instrument unless, before the lapse of said period, an affidavit is filed of record showing the amount due and owing on the note. Laws of Missouri 1921, page 203. The statute has not been changed since 1921.
That this statute is one of repose and not of extinguishment is now well settled. It may be used defensively, but not to obtain affirmative relief; or, as it has been aptly stated, as a shield, but not as a sword. Carwood Realty Co. v. Gangol, Mo.Sup., 232 S.W.2d 399; Milby v. Murphy, supra.
In the instant case the plaintiffs did not ask that the deed of trust be canceled or that title be quieted. They did ask for an injunction against the exercise of the power of sale. From a technical viewpoint this is affirmative relief. Actually, it is defensive as against the enforcement of the deed of trust. If defendants had filed a suit seeking a decree of foreclosure, the statute could have been pleaded in the answer as a defense. Since no suit was pending it was necessary for plaintiffs to seek injunctive relief in order to assert the provisions of the statute in question. Plaintiffs have chosen the proper action and are not precluded from relief by the aforementioned rule. Boyd v. Buchanan, 176 Mo.App. 56, 162 S.W. 1075.
Defendants rely almost entirely upon the case of Carwood Realty Co. v. Gangol, supra, as authority for the assertion that the timely filing of the affidavit will remove the statutory restriction against foreclosure, where the note secured by the deed of trust is barred by limitation. In that case the foreclosure sale had occurred several years before the plaintiffs filed the suit in which they sought to cancel the trustee's deed and quiet title. The affidavit had been filed within the required period, but plaintiffs contended that the notes had been barred by limitation before the sale was held. It was admitted that payments had been made upon the notes within the ten year period preceding foreclosure. Plaintiffs contended, however, that these payments did not toll the running of the statutes of limitation as they were made by volunteers since the property had been conveyed many years before "subject to existing encumbrances". [232 S.W.2d 401.] The Supreme Court assigned two reasons for denying plaintiffs the relief they sought. The first was the applicability of the rule that a plaintiff under such circumstances is not entitled to assert the statute as a ground for seeking affirmative relief. The additional reason is stated in the opinion as follows, 232 S.W.2d loc. cit. 401: "In the second place, the appellant's entire reliance is upon the first clause of the quoted statute and in complete disregard of the italicized portion, 'unless before the lapse of twenty years the owner of the debt thereby secured or some person for him shall file an affidavit duly verified, * * * showing the amount due and owing thereon.' On the face of the note, the principal sum was due three years after date, on November 20, 1915. There is no objection to the contents or form of the affidavit and it was agreed that it was properly executed and duly filed within twenty years of the date of the maturing obligation on August 2, 1934. Therefore, aside from any questions concerning extensions of the obligation, Coleman v. Trueblood, 351 Mo. 188, 172 S.W.2d 863, the statute was complied with and the foreclosure was not void." (Italics ours.)
We think this statement clearly supports the contention asserted by the defendants. The only attack made against the validity of the foreclosure was that the notes were barred by limitation. It definitely appears that they were barred unless they had been extended by the payments made thereon. It is undoubtedly the law that there can be no foreclosure if the notes are barred and nothing further has been done. Coleman v. Trueblood, 351 Mo. 188, 172 S.W.2d 863. Therefore, the only meaning that can be attributed to the quoted statement is that, since the affidavit had been timely filed, there could be a valid foreclosure, regardless of whether or not the notes had been barred.
We believe that the result in the Carwood case was correct because of the first reason assigned by the court but we frankly confess that we are not in agreement with the construction placed upon the statute as a basis for the second ground of the decision. We are of the opinion that the amendment of 1921 was for the purpose of establishing a definite period of limitation within which mortgages and deeds of trust could be enforced, the date of expiration thereof being ascertainable from an examination of the record. In order to prevent injustice the legislature provided a method whereby the owner of a note, if the obligation was unpaid and he desired to continue the lien, could file the affidavit as to the amount still due and unpaid thereon. We find nothing in the amendment, however, that would indicate any intent to change the clear and explicit terms of the first clause which provides that there can be no foreclosure if the obligation is barred by limitation. In other words, it is our view that the statute provides two separate and distinct bars to the foreclosure of a mortgage or deed of trust, (1) foreclosure, is prohibited if the statutes of limitation have run against the obligation; and (2) even though the note is not barred, the lapse of twenty years from the date the obligation becomes due, as appears upon the face of the mortgage, will bar foreclosure unless, before the expiration of said period, an affidavit is filed for record showing the amount due upon the obligation.
However, the Carwood case has not been questioned or overruled by a subsequent decision of the Supreme Court and therefore under Article V, Section 2 of the Constitution, it is a controlling decision and we are required to follow it. It necessarily follows that plaintiffs were not entitled to the injunction herein decreed.
The cause is reversed and remanded with directions to the trial court to set aside its decree, dissolve the injunction and dismiss the petition of plaintiffs.
BENNICK, P. J., and ANDERSON, J., concur.
On Transfer to Supreme Court.
In accordance with the provisions of Article V, Section 10, Constitution of 1945, and of Rule 2.06 of the Supreme Court, the court, on its own motion, after opinion, orders this case transferred to the Supreme Court for the purpose of re-examining the existing law.
BENNICK, P. J., and ANDERSON and HOLMAN, JJ., concur.