Summary
In Catchings v. Edmondson, 194 Miss. 882, 13 So.2d 630, the Court said: "It has often been ruled by this Court that where a mortgagee enters into possession of property under foreclosure, he is entitled to retain possession until the mortgagor or those claiming under him shall pay the mortgage debt, even though the foreclosure proceedings be wholly void and as such had conveyed no title whatever; and that this right to retain possession is not affected by any statute of limitations which otherwise would run against the debt.
Summary of this case from Payne v. SmithOpinion
No. 35378.
May 24, 1943. Suggestion of Error Overruled June 14, 1943.
1. LIMITATION OF ACTIONS. Mortgages.
Where foreclosure has conveyed no title because land was misdescribed in mortgage, but land of which possession was taken by mortgagee with knowledge of mortgagor is the land which was intended to be conveyed by mortgage, mortgagee may retain possession until payment of mortgage debt, regardless of limitations.
2. MORTGAGES.
Where foreclosure conveyed no title because land was misdescribed in deed of trust, but land of which possession was taken by purchaser at trustee's sale with knowledge of mortgagor was the land intended to be conveyed by deed of trust, purchaser to whom mortgage note was transferred could not be ousted of possession until mortgage debt was paid, as against contention that he was entitled only to amount paid at trustee's sale.
3. MORTGAGES.
A purchaser of mortgaged property at trustee's sale which conveyed no title because land was misdescribed in deed of trust, was not precluded from demanding tender of payment of mortgaged debt as condition of his being ousted of possession because he did not raise the point by demurrer or in answer, where case proceeded on the merits disclosing that purchaser could not be deprived of possession except by payment of mortgage debt.
4. MORTGAGES.
In suit by mortgagor's heirs to oust from possession of mortgaged property purchaser at trustee's sale which conveyed no title because of misdescription of land in trust deed, after purchaser introduced mortgage note assigned to him by mortgagee, burden of proof as to payments or usury or the like was upon heirs.
ON SUGGESTION OF ERROR. (Division B. June 14, 1943.) [13 So.2d 924. No. 35378.]1. MORTGAGES.
Where trustee's sale was invalid because of misdescription in deed of trust, and mortgage note was transferred to purchaser at such sale, the mortgagor's liability upon reformation and foreclosure of the deed of trust was controlled not by any transactions between original mortgagee and purchaser as assignee, but by the note and deed of trust which remained subject to foreclosure.
2. MORTGAGES.
Where trustee's sale was invalid because of misdescription in deed of trust, and mortgage debt was assigned to purchaser at such sale, purchase price on reformation and re-foreclosure, if not exceeding the mortgage indebtedness, would belong to original purchaser as mortgagee.
3. MORTGAGES.
Where trustee's sale was invalid because of misdescription in deed of trust, and mortgage debt was assigned to purchaser at such sale, proceeds on reformation and reforeclosure, if in excess of mortgage debt, would go first to discharge the mortgage debt and expense of reformation and foreclosure, and balance would go to mortgagor.
4. MORTGAGES.
Where purchaser at trustee's sale paid amount of bid to mortgagees and thereafter acquired balance of the mortgage debt from mortgagees, whether he paid anything for it or not, he simply stepped into mortgagee's shoes.
APPEAL from chancery court of Copiah county, HON. V.J. STRICKER, Chancellor.
Henley, Jones Woodliff, of Hazlehurst, for appellant.
It is submitted that the error in this description could not mislead anyone, especially when taken in connection with the fact that the grantor intended to include in the deed of trust all of his lands and especially in connection with the proof made at the trial of the case that the grantor owned only that thirty acre tract of land located south of the Mount Pleasant Road in the SE 1/4 of the SE 1/4, Section 7, Township 1 North, Range 1 West, being the identical description as contained in the deed of trust except the range number was 1 East, and the further fact of which the court will take judicial knowledge, based upon the map of Copiah County, that the Mount Pleasant Road does not extend through the SE 1/4 of SE 1/4, Section 7, Township 1 North, Range 1 East, but it does run through the said SE 1/4 of SE 1/4, Section 7, Township 1 North, Range 1 West. It is submitted that a description using general words is sufficient.
41 C.J. 400.
The Mississippi Supreme Court has frequently had occasion to uphold the validity of general clauses in aid of a specific description.
Fidelity Deposit Co. of Maryland v. B.F. Sturtavent Co., 86 Miss. 509, 38 So. 783; Prentiss Mercantile Co. v. Thurman, 173 Miss. 6, 161 So. 746; Eiland v. Castle, 186 Miss. 513, 191 So. 492; Wasson v. Connor, 54 Miss. 351; Staple Cotton Cooperative Association v. Thorne, 162 Miss. 649, 138 So. 597; Cummings v. Midstates Oil Corporation, 193 Miss. 675, 9 So.2d 648.
Under the circumstances here involved, it is submitted that, while a reformation might be had by the cross-complainant, such a procedure would not be necessary in view of the fact that the complainant is in possession of the land and the court of equity is authorized to treat that as done which should have been done.
Cox v. Hartford Fire Ins. Co. et al., 172 Miss. 841, 160 So. 741.
We submit that the same equity rule should be applied in this case and the court should treat the instrument as having been reformed without the useless procedure of vacating and reopening the foreclosure proceedings and then proceeding to reform the deed of trust and authorizing a new foreclosure.
This should be especially true where, as in the present case, the indebtedness due the defendant has not been tendered in the court. The defendant and cross-complainant is entitled to be treated not as a trespasser but as a mortgagee in possession. This is true even though the foreclosure proceedings were defective.
Bonner v. Lessley, 61 Miss. 392; Clark v. Wilson, 56 Miss. 753; Watson v. Perkins, 88 Miss. 64, 40 So. 643; Hubbard v. Massey et al., 192 Miss. 95, 4 So.2d 230; Wirtz v. Gordon et al., 187 Miss. 866, 184 So. 798, 192 So. 29; Bryan v. Brasius, 162 U.S. 415, 40 L.Ed. 1022; Lesser v. Reeves, 142 Ark. 320, 219 S.W. 15; Haggart v. Wilezinski, 143 F. 22, 74 C.C.A. 176; 41 C.J. 1010.
We, therefore, submit that the complainant is entitled to no relief and that the original bill of complaint should be dismissed for two very sound reasons. (1) In a court of equity it is permissible to treat that as done which should have been done and where it is perfectly clear that the lands involved in the suit were intended to be described in the deed of trust, to give effect to the deed of trust as it was intended without the necessity of a reformation. (2) That even if the foreclosure proceedings be regarded as void. the defendant and cross-complainant is entitled to be treated as a mortgagee in possession after condition broken and to have this possession undisturbed until the indebtedness due on the property is tendered.
L.F. Easterling and Hilton Kendall, all of Jackson, for appellees.
Conceding for the sake of argument that the "cover-all" provisions applied to the land and that it was the intention of the grantor to convey all land that he owned, which we deny, still it is obvious that since the so-called deed of trust incorrectly described the land, neither Lotterhos Huber Co., Inc., nor appellant acquired any lien on the land actually owned by Edmondson. A lien could only be imposed upon a hearing of the evidence and determination of the question of whether or not a mutual mistake had been made, and only by decree of reformation. It is admitted that the land owned by the appellees described in the original proceedings was not covered by the deed of trust, not so described, and not so sold. Therefore, it follows that there was no lien on the land actually owned by R.B. Edmondson at the time of the attempted sale and at the time of the attempted transfer of the indebtedness, but a mere right in a proper court to secure reformation if the facts justified it.
Hesdorffer v. Welsh, 127 Miss. 261, 90 So. 3.
It is manifest that the deed of trust conferred no lien on the land and that the attempted sale was void. The appellant, in taking possession of the land, became a trespasser. He was not a mortgagee in possession because there was no mortgage describing the land correctly. The sole right of the appellant was by proper procedure in a proper court of equity on proper evidence to secure a reformation so as to include the right land and to be reimbursed the amount that he had paid at the attempted sale of the land. To this extent he became subrogated to the rights of Lotterhos Huber Co., Inc., that is, to the extent that the amount bid and paid at the void sale operated to reduce the indebtedness if there had been a lien thereon. He was not entitled to make a profit, but equity, in the attempt to do justice to all parties, as held in repeated decisions of this court, will subrogate him to the rights of the original holder to the extent that he was out or the money out of pocket which went to reduce the lien, if any, on the land. The evidence does not show that he paid a penny more than three hundred dollars and the taxes. This was found by the court and is justified by the record.
It is further contended that, treating appellees as complainants, the statement of the cause of action filed in the chancery court did not tender the amount of money due, and, therefore, was deficient. Authorities are cited covering cases of mortgagees in possession where there had been illegal foreclosures of deeds of trust. In these cases, it is held that a mortgagee in possession cannot be dispossessed without payment or tender of the amount due under the instrument. We submit, however, that the distinction here is that there was no lien on the land in question. If anything, there was a mere right in the proper courts to secure a lien by reformation, to make the instrument speak the real intent of the parties, and it will be observed that there was no demurrer to the bill, no motion to make it more specific, but that the appellant answered the same and then propounded his cross-bill for equitable relief. Under the authorities of this court, even had it been necessary under the peculiar facts of this case to have offered to do equity in the bill or tender the amount due, by not demurring to the bill and calling the court's attention to it, the appellant waived this objection, if it be an objection. All parties treated the whole case as a transfer so that appellant could secure equitable relief against the suit in ejectment.
Griffith's Mississippi Chancery Practice, Equity, Sec. 525, p. 567.
See also Carey v. Hart (Ala.), 94 So. 298.
The main contention advanced by counsel seems to be that the court should have fixed a lien on the land for the full amount of the note given by R.B. Edmondson to Lotterhos Huber Co., Inc., and authorities are cited that an assignee succeeds to all rights of the assignor, but we submit that appellant having bid at the void sale under a void deed of trust on the land the sum of three hundred dollars and the evidence showing that he did not pay any more and that he secured an assignment of the note and deed of trust after the sale, upon reformation of the instrument he became only entitled to be reimbursed what he was out on the transaction. Under the rules of equity, by the mere purchase at the void sale and the payment of the money to the trustee where the money was applied on an indebtedness existing on the land, appellant would be entitled to be subrogated to the rights of the original holder to the extent that he was out of pocket on the transaction. The note is one thing, and the deed of trust securing the same is another. In this case on the facts we contend that there was no lien on the land owned by appellees. It was not described in the deed of trust. The lien could only be imposed after a hearing and a finding that the grantor in the deed of trust intended to include the land.
The purchaser of land at an invalid sale under a mortgage or deed of trust, whose purchase-money has been applied to the payment of the debt secured, is entitled to be subrogated to the rights of the beneficiary in such instrument, so as to fasten a lien on the land for the recovery of his money thus applied.
Jackson v. Overton (Miss.), 96 So. 742; Clark v. Wilson, 56 Miss. 753.
See also Weaver v. Norwood, 59 Miss. 665; Bonner v. Lessley, 61 Miss. 392; Pool v. Ellis, 64 Miss. 555, 1 So. 725; Sharpley v. Plant, 79 Miss. 175, 28 So. 799; Hill v. Billingsly, 53 Miss. 111.
We submit that the cases cited by counsel will be found on examination to show that the mortgage or deed of trust was a valid instrument and transferred a valid lien on the property, but that there was an error in the mode or method of foreclosing on it. We do not think any cases can be found such as the one here that would give an assignee the right under the facts of this case to profit by an error, to get more than he paid, to receive that to which he was not entitled. Having bid in property on which there was no lien and which was improperly described, by such purchase he acquired only such rights as a court of equity can enforce, and no more. Furthermore, he was a pure volunteer and in taking possession of the property where it was not properly described in the deed of trust, he became a mere trespasser without any right to hold the property, because there was no lien on that particular property.
L.F. Easterling and Hilton Kendall, all of Jackson, for appellees, on suggestion of error.
We think it is obvious that the sale under the deed of trust to Catchings, though void for lack of a proper description, by operation of equitable principles subrogated Catchings to the rights of the beneficiaries as to the security, that is, to the extent, and to the extent only, of having given a lien on the land for the recovery of his money, that is, the money he paid at the sale. The assignment of the balance due on the note after the sale, whether to Catchings or to someone else, did not operate and was not intended to convey or assign any rights as to the land itself. It was a purely personal obligation, so understood by the parties at the time of the assignment. This assignment may have been, and probably was, taken after Catchings went into possession under the void foreclosure sale. His rights to enforce a lien against the land for the money he was out accrued by virtue of the trustee's deed. His right to possession accrued thereunder and thereby, and not by virtue of an assignment of the note. This is purely an equitable right, enforceable only in equity, to the end and for the purpose of doing equity between the parties. As found by the court and as shown by the record, the balance of the note was assigned to Catchings sometime after he had gone into possession. He does not state in his cross-bill when. If he acquired the balance due on this note after suit was brought, it seems obvious that he would not be entitled to any lien. We think that the assignment of the note carried no lien at any time. It carried a mere personal obligation which could not have been asserted against Edmondson if he had bought the land at the void sale. The right of Catchings must be tested by general principles. It does not depend on who buys the balance on the note. The principle is the same and applies to any purchaser to the same extent. The fact that the purchaser of the note is the same person as the purchaser of the land does not affect the legal principle.
Under the authority of Clark v. Wilson, 56 Miss. 753, and subsequent cases, the full right of the purchaser at a void sale on a deed of trust is to be subrogated to the rights of the mortgagee so as to fasten a lien on the land for the recovery of his money, that is, the money that he was out on the sale. Something that happened after this foreclosure and after possession was taken cannot affect or vary this rule.
We, therefore, most respectfully but earnestly submit and insist that Catchings is not entitled to recover more than he paid for the security, the land, and that he would have no lien on the land for the balance of the note which he secured to be assigned to him after he purchased at the sale and took possession; that the lower court having so held, the opinion should be withdrawn and order of reversal recalled, and a judgment be entered affirming the judgment of the court below.
Argued orally by W.S. Henley, for appellant, and by R.L. Jones, for appellees.
On January 1, 1934, R.B. Edmondson was the owner of the tract of land in Copiah County described as follows: All that part of the SE 1/4 of the SE 1/4 Sec. 7 Tp. 1, N.R. 1 West, lying South of the Mount Pleasant Road, containing about 31 acres.
Proof was made, and it is undisputed, that this was the only land which Edmondson owned in that county.
On the date aforesaid Edmondson was indebted to Lotterhos Huber Company in the sum of $530.79, and to evidence same he executed to them his promissory note due on July 1, 1934, with six per cent interest from date, etc. To secure the indebtedness he executed and delivered at the same time a deed of trust, intending thereby to include therein the land above described, but in the deed of trust the land was described as being in Range 1 East, the description being otherwise identical.
Default was made in the payment of the note, and on February 5, 1938, the trustee sold the land described in the deed of trust at public sale to appellant, Will Catchings, whose bid therefor at the sale was $300, which sum Catchings paid to the trustee and the trustee executed to Catchings the trustee's deed which conveyed not the land intended to have been described in the deed of trust, but the land as actually therein described — land situated six miles away.
Upon the purchase at the trustee's sale Catchings immediately took possession of the land first above described, that is to say of the land intended to have been conveyed in the deed of trust, and with knowledge on the part of the mortgagor that the possession was being taken by Catchings in virtue of the foreclosure by the trustee, the mortgagor not being aware, so far as this record discloses, that there had been any misdescription in the deed of trust, and apparently Catchings did not then know of the error; and Catchings has at all times since remained in the exclusive possession of the property as first above described. Sometime after his entry into possession, but exactly when is not shown, the note of the mortgagor above mentioned was transferred in writing by Lotterhos Huber Company to Catchings.
On June 12, 1940, R.B. Edmondson died intestate, after which on October 30, 1940, his heirs at law filed their declaration in ejectment against Catchings. On motion of the latter, the case was transferred to the chancery court and such proceedings were thence had in that court that a decree was rendered reforming the deed of trust so as to make it describe the land as first hereinabove described, and ordering that unless the complainants therein, the heirs at law aforesaid, should pay to Catchings the sum of $339 within a period of thirty days, the land would be sold by a commissioner of the court, etc. It will thus be seen that the court allowed Catchings only the amount bid by him at the trustee's sale plus $39 in taxes paid on the land by Catchings, whereas it was and is the contention of Catchings that the decree should have awarded him the full amount of the debt as evidenced by the note, with interest, etc., as well as the taxes paid, and this is the principal question debated on this appeal.
Had Lotterhos Huber Company purchased at the trustee's sale, and had thereupon gone into immediate possession with the knowledge of the mortgagor, as Catchings did, there would be no difficulty in a solution of the question presented. It has often been ruled by this court that where a mortgagee enters into possession of property under foreclosure, he is entitled to retain possession until the mortgagor or those claiming under him shall pay the mortgage debt, even though the foreclosure proceedings be wholly void and as such had conveyed no title whatever; and that this right to retain possession is not affected by any statute of limitations which otherwise would run against the debt. The cases so holding have been recently reviewed in Hubbard v. Massey, 192 Miss. 95, 4 So.2d 230, 494, and in Wirtz v. Gordon, 187 Miss. 866, 184 So. 798, 192 So. 29.
And there is no reason whatever, and certainly none founded in the principles of equity, why this rule shall not apply to a case where the foreclosure has conveyed no title arising out of the fact that the land was misdescribed in the deed of trust but when it is clear, as it is here, that the land of which possession was taken by the mortgagee, and with the knowledge of the mortgagor, is the land which was intended to be included in and conveyed by the mortgage, and we therefore hold that the stated rule does apply to such a case.
Catchings who now owns the mortgage debt, by reason of the transfer of the mortgage note to him and having taken and retained possession as aforestated, occupies precisely the same position and holds the same rights as had Lotterhos Huber Company taken possession after condition broken, and had retained the mortgage note as their own for the balance due on it; wherefore he cannot be ousted of his possession until the full amount of the mortgage debt, plus taxes and improvements, less the value of the use of the land, shall be paid to him.
It has been argued by appellees that Catchings is in no position to demand a tender of payment, because he did not raise that point either by demurrer or in his answer. The rule on that subject is stated in Griffith Miss. Chan. Prac., Sec. 525, p. 567: "If the bill show on its face that the requirements as to tender have not been met the defendant may interpose a special demurrer. If it do not so appear it may be raised by a plea in the answer; but inasmuch as it is a matter which, in its procedural aspects, may be waived it must be raised promptly and before the hearing on the merits — else it will not stay the hearing in chief, and will operate only to the extent that the court will insert in the final decree such conditions as will fully protect the interests of the opposite party and as will effectuate the maxim which requires equity to be done by those who seek equity."
Here the case proceeded on the merits, and therein it was developed that as a substantive matter Catchings could not be deprived of his possession except by payment of the mortgage debt, from which it follows that any decree to affect his possession must carry as a condition the requirement that he be first paid the debt, and as a further consequence that any new foreclosure, since this would oust him unless he should become the highest bidder, must be for the mortgage debt and not for only a part thereof as was attempted here.
It has been argued also that inasmuch as it was denied in the answer to the cross-bill that anything was actually due on the mortgage note and because there was an averment in the said answer that the note was usurious, Catchings should recover nothing on the note because he made no proof addressed to the stated averments. Catchings had and introduced the note duly assigned to him, and thereupon the burden of proof as to payments or usury or the like was upon appellees, not upon Catchings, and appellees made no attempt whatever to meet that burden.
Reversed and remanded.
ON SUGGESTION OF ERROR.
The mortgagor Edmondson is not concerned with transactions or payments between the mortgagees, Lotterhos Huber and Catchings, which are subject to adjustment between them by decree. Edmondson's liability and Catchings' rights now arise out of the simple fact that in view of our decision there is due by Edmondson a note on which he had paid nothing. When the deed of trust is reformed and foreclosed, the liability of Edmondson is controlled not by transactions between Lotterhos Huber and their assignee Catchings but by the transaction of the note and the deed of trust which now remain unsatisfied and subject to foreclosure for the amount of indebtedness against which there are no credits recognized as having been made by or for the account of Edmondson.
Edmondson has no interest whatever in the outcome of the reformation and foreclosure of the deed of trust unless the land brings more than the mortgage indebtedness. Lotterhos Huber and Catchings alone are concerned. If the land brings no more than the mortgage indebtedness and is purchased by Catchings he will have to pay no part of the purchase price to anyone, for the simple reason, as mortgagee, it will belong to him. If someone else than Catchings purchases, the result will be the same; as mortgagee the purchase price will be due him. If, however, the land brings more than the mortgage indebtedness the proceeds will go first to discharge that indebtedness and, of course, the expense of reformation and foreclosure, and the balance will go to Edmondson, the mortgagor.
When Catchings paid Lotterhos Huber the $300 he bid at the first foreclosure sale and thereafter acquired the balance of the mortgage indebtedness from them, whether he paid anything for it or not, under the law he simply stepped into the shoes of Lotterhos Huber.
Overruled.