Opinion
No. 32634.
March 1, 1937.
1. CONSTITUTIONAL LAW.
Mortgage moratorium statute must be construed and administered as a whole, and in such manner as to preserve its constitutionality (Laws 1936, chap. 287).
2. MORTGAGES.
Interim payments of reasonable income or rental value of property are essential condition to injunction under moratorium statutes to stay foreclosure sale (Laws 1936, chap. 287).
3. EQUITY.
Equity will require complainant to do equity as a condition to relief, despite general rule that affirmative relief may not be granted defendant in absence of a cross-bill.
4. MORTGAGES.
Decree granting stay of foreclosure sale under moratorium statute without requiring interim payments of reasonable rental held error, though mortgagee did not file cross-bill (Laws 1936, chap. 287).
5. MORTGAGES.
Exclusion of evidence of rental value of property, in proceedings under moratorium statute for stay of foreclosure sale, held error, though mortgagee did not file cross-bill since interim payments should nevertheless be required (Laws 1936, ch. 287).
APPEAL from chancery court of Sunflower county. HON. J.L. WILLIAMS, Chancellor.
Everett, Forman Everett, of Indianola, for appellant.
Where a bill is filed in the chancery court to enjoin a foreclosure, the debtor claiming the benefits of the Moratorium Statutes, it is necessary for the defendant to file a cross-bill against the complainants before the court will hear evidence tending to establish the reasonable, normal, actual value of the mortgaged property, or the reasonable value of the income from the mortgaged property, or the reasonable rental value thereof.
In the trial of this cause the court sustained an objection to the evidence sought on cross-examination of one of the complainants, J.L. Davis, as to the value of the property or the rental value thereof, as we understood at the time, on the theory that such evidence was not permissible, the defendants not having filed a cross-bill. We wholly disagree with the lower court on his holding.
Chapter 247, Laws of 1934, and chapter 287, Laws of 1936, provide a complete scheme for the filing of such bills, for their hearing and for a final determination thereof.
A decree pro confesso nor a final decree can be had without the court taking the evidence provided for in section IV. Indeed, this could not be done if the defendant did not file an answer, for the statute creating the remedy made specially for the benefit of the debtor, specifically provides: "That suits for the foreclosure of mortgages and deeds in trust shall be deemed ready for final hearing at any time after the expiration of thirty days from the completion of the service of summons on all parties."
Jones v. Spearman, 165 So. 294.
How will the court fix the amount the complainants should pay to the defendants each month on the indebtedness owing, if the court refuses to hear the evidence provided for by section IV of the Moratorium Act?
The evidence in this case shows that the court sustained objections to the proof as to the value, etc., provided for in section IV of the Act, then before the signing of the final decree, by a motion, the defendants asked the court to let them reopen the case and to offer further evidence with reference to the reasonable value and the reasonable rental value of the mortgaged property and the court overruled this motion.
The decree of the court is not in accordance with the allegations of the bill of complaint, and is not in accordance with the prayer of the bill of complaint, that the court fix monthly payments that the complainants might be able to make; yet the court disregarded the prayer of the bill of complaint and gave to the complainants a two year stay of foreclosure without the payment of anything.
Moody Davis, of Indianola, for appellees.
We agree with the attorneys for appellant in that the only question presented on this appeal is that where a bill is filed under the Moratorium Statute, by the debtor, seeking to enjoin a foreclosure attempted to be made otherwise than as provided under the Moratorium Statute, the defendant is entitled to no affirmative relief unless the same is properly asked for. But we cannot agree with appellant's attorneys in their interpretation of chapter 247, Laws of 1934, and chapter 287, Laws of 1936, which interpretation seems to be based entirely on section 4 of said acts, disregarding altogether the other sections, especially section 3 of both acts.
In the case at bar only an answer was filed, and, by consent, the cause was heard in vacation. The answer admitted one of the conditions charged in the petition and denied the other. But, on the hearing, the denial in the answer was overcome by proof. In other words, the conditions precedent to the granting of the injunction were charged and proved as the statute required and hence the court was required to perpetuate the temporary injunction for the period of time prescribed by the Act of 1936.
In the case at bar only an answer was filed, but not a cross-bill to foreclose. Hence, by no stretch of imagination can it be said that the bill of complaint and answer thereto, filed in this cause, is a suit to foreclose, etc. If so, the provisions of section 4 cannot be said to be applicable for that provision is only applicable to a suit to foreclose.
The appellant, and not the appellee, is alone responsible for not receiving the benefit prescribed by section 4 because the appellant did not, as it had the right to do, file a cross-bill to foreclose and thereby convert the suit, made by the bill and answer thereto, into a suit to foreclose. Being responsible for its nonaction, that is, in failing to file a cross-bill, the appellant cannot blame the lower court, nor this court nor the appellee for its failure to derive the benefit granted by said section 4, to a mortgagee in "suits for the foreclosure of mortgages and deeds of trust."
The only question put in issue by the pleadings was that the appellant was attempting to foreclose its deed of trust on appellees' land in a manner other than as provided in the Moratorium Act and that under the terms of the act appellees were entitled to have the threatened foreclosure enjoined. Any affirmative matter enuring to the benefit of the appellant was not an issue and the court below was correct in refusing to hear any evidence tending to establish the same.
The appellees first asked that the threatened foreclosure be enjoined for a period of two years. They also asked the court to fix the amount to be paid by them to the defendants each month on the indebtedness owing. The latter was in anticipation that a cross-bill would be filed, but as one was not filed it is superfluous and the court was not bound by it. The appellees were offering to do more than the law required of them to do and it cannot be said that the court would order them to do more than the law required them to do, especially to the extent of awarding the appellant affirmative relief which it did not see proper to ask for itself, nor can the appellants complain of the lower court's action in not granting to it relief which it did not ask for, and which, if granted, would have imposed an obligation upon appellees which the law, in this case, does not impose on them. Furthermore the awarding of this relief is on the condition that the deed of trust would be foreclosed in equity. Had the court below granted this relief to the appellant, it would, notwithstanding the relief awarded it, foreclose in pais at the expiration of the two-year period, and not in equity.
The relief granted was such which cannot be said to have surprised or prejudiced the defendant. Such being true the lower court was right in granting, even under the general prayer, the relief granted to the complainants.
Griffith, Chancery Practice, sec. 186.
Appellant is the holder of a deed of trust upon the homestead of appellees. The secured debt being long past due, appellant, through the trustee, advertised the property for sale. Before the day of sale appellees filed their bill for an injunction under the so-called Moratorium Act, chapter 287, Laws 1936. The bill contained all the allegations required under the statute, and concluded with a prayer that the sale be stayed for a period of two years and that the court will "fix the amount to be paid by the complainants to the defendants each month on the indebtedness owing in accordance with" the said moratorium law. Appellant answered the bill, but did not file a cross-bill. Appellant offered evidence of the reasonable normal value of the property and of a reasonable rental income to be adjudged against the property, but the chancellor declined to hear or consider evidence of that nature, because the holder of the debt and security had filed only an answer and had not demanded any relief by cross-bill, with the result that a decree was made and entered enjoining the sale for a period of two years but allowing nothing to the mortgagee during that time.
The sole question presented is whether the failure to file a cross-bill deprives the mortgagee of the right to the ad interim payments required by the statute to be made by the mortgagor. The moratorium statute must be construed as a whole, and in such a manner as to preserve its constitutionality; and it must be administered within like requirements. It was so construed by this court in Wilson Banking Co. v. Colvard, 172 Miss. 804, 161 So. 123, 126, and therein the court said: "And if the sale is postponed during the operation of the law, the court must determine the reasonable value of the income on said property, or the reasonable rental value thereon, and shall require the mortgagor to pay all or a reasonable part of said income or rental value toward the upkeep of the property, and in payment of taxes, insurance, and interest on the mortgage debt." It is, therefore, an essential condition of the relief by way of injunction, under the statute, to stay a sale under a mortgage or deed of trust that the mortgagor make the ad interim payments mentioned; and thus there arises simply the application of the ancient principle that he who seeks the equity provided by a statute must do the equity which that statute requires of him.
It is the general rule, of course, that affirmative relief may not be granted to a defendant without a cross-bill, but the rule runs no further than the reasons upon which it is founded. So it was said in a note to section 376, Griffith's Miss. Chan. Practice that, without a cross-bill, it has been the practice of our chancellors to require the doing of equity as a condition of relief to a complainant when, upon the hearing, the facts revealed a case for the application of the maxim that "He who seeks equity must do equity." It would be an oddity in legal logic that when the law in positive terms requires of a complainant that he shall do certain things in favor of the defendant else the complainant shall have no relief, to say, at the same time, that unless the defendant by cross-bill expressly asks for the things which the complainant is already obliged to do or perform, this failure of the defendant will release the complainant from the performance which the law itself requires of him as a condition of relief. See the text and cases cited thereunder, 21 C.J. pp. 667, 668, section 849. That section reads in part as follows: "While generally affirmative relief cannot be granted to a defendant without a cross-bill or its equivalent, (nevertheless) under the maxim that, He who seeks equity must do equity, plaintiff (complainant) will be required, as a condition of the relief he asks, to acknowledge, admit, provide for, secure or allow whatever equitable rights, if any, defendant may have, and to that end the court will, by its affirmative decree, award defendant whatever relief may be necessary to protect and enforce these rights."
Inasmuch as the ad interim payments required of the mortgagor by the statute are essential conditions of the award of relief to stay the sale, essential not only by the terms of the statute itself but also to its constitutional integrity, the mortgagee was not required to file a cross-bill in order to have these payments adjudged and awarded, from which it follows that it was error to exclude the offered evidence, and error to make a decree staying the sale for two years without any payments whatever to the mortgagor.
Reversed and remanded.