Summary
In Jones v. Spearman, 174 Miss. 781, 165 So. 294, this court expressly held that a mortgagor must not only allege, but, if required to do so by answer, must prove the exhaustion of all federal agencies, and that this is a condition precedent to relief under the moratorium act.
Summary of this case from Atlantic Life Ins. v. KlotzOpinion
No. 32024.
January 13, 1936. Suggestion of Error Overruled March 23, 1936.
1. MORTGAGES.
Mortgagors who failed to allege and prove that mortgage indebtedness could not be refinanced through any federal agency held not entitled to relief under moratorium statute (Laws 1934, chapter 247, sections 3, 4).
2. MORTGAGES.
Failure of commissioner appointed to carry out chancellor's decree granting foreclosure of mortgage to name one of mortgagors in notice of sale held not to invalidate sale, since all interested parties were in court and were expected to follow proceedings and ascertain sale day fixed in order (Code 1930, section 457 et seq.).
3. MORTGAGES.
Mortgagors held not entitled to make case under moratorium statute after rendition of foreclosure decree against them, since exhaustion of all federal agencies was condition precedent to granting order enjoining foreclosure, and such condition must exist before injunction was issued (Laws 1934, chapter 247, section 3).
4. MORTGAGES.
Mortgagors who failed to make case under moratorium statute until after rendition of foreclosure decree held not entitled to relief, since necessary diligence had not been exercised (Laws 1934, chapter 247, section 3).
APPEAL from the chancery court of Itawamba county; HON. JAS. A. FINLEY, Chancellor.
I.L. Sheffield, of Fulton, for appellants.
Appellant met the requirements of the statute and the court granted the injunction but upon the hearing instead of fixing the rental value, the reasonable, normal value of the property, or the income from the property he granted an order directing the immediate sale thereof.
The learned chancellor made a fatal error in granting an immediate order of sale. This could not have been done if the mortgagee had himself filed the bill and I respectfully say that the Moratorium Act supersedes all other sections of the code during the period of its life.
This court has already passed upon the constitutionality of the Moratorium Act.
Wilson Banking Co., Liquidating Corp., v. Colvard, 172 Miss. 804.
After the rendition of the decree by the chancellor, W.C. Bourland, Commissioner, in pursuance of the order of the chancery court made at the April term, 1935, published a notice of sale. In the meantime M.A. Jones, complainant, and his wife, Mrs. Mattie Jones, had made another application to the Federal Land Bank and the loan requested had been refused and so the complainant filed another bill seeking another injunction and showing in this bill a copy of the letter from the Federal Land Bank refusing the loan of M.A. Jones and showing that he was unable, under federal regulations, to refinance this loan. The court rendered a decree refusing to grant this injunction and I respectfully submit to this court that it is simple and elementary that in this the learned chancellor committed fatal error.
The second notice published by W.C. Bourland, Commissioner, in pursuance of the decree of the chancery court was fatally in error. It gave the names of the mortgagors as merely M.A. Jones when in truth and in fact the mortgagors, whose names are required to be given, were M.A. Jones and wife, Mrs. Mattie Jones. The statute requires the names of the mortgagors to be published in the notice and is mandatory and it requires the names of all the mortgagors and a notice which does not give the names of the mortgagors is void. This notice did not give the names of the mortgagors and is, therefore, void.
Wilkinson v. Federal Land Bank, 168 Miss. 645; Section 2167, Code of 1930; Gilliam v. McLemore, 141 Miss. 253, 106 So. 99.
It was the duty of the court to take proof as provided by section 4, chapter 247 of the Laws of 1934, as to the reasonable rental value, etc., and requiring the mortgagor to pay such part thereof as appeared to the court to be equitable under the facts. The court failed to do this and took the theory that although the injunction had been granted and that question was "moot" yet he held that the complainant had not complied with the act.
Homer F. Benson, A.T. Cleveland, and W.L. Elledge, all of Fulton, for appellees.
This chapter was passed by the Legislature to grant relief to debtors in distress from inequitable foreclosures of mortgages on real estate.
Rea v. O'Bannon, 171 Miss. 829; Chapter 247, Laws of 1930.
What is this mortgage moratorium law? May a debtor just lay down on his creditor and hold on until dispossessed by law? The proof in this case shows we contend that such is exactly what appellant was doing.
The courts are open to mortgage creditors desiring to foreclose mortgages or deeds of trust on real estate; and if, on the hearing of the cause, it shall be determined that a foreclosure would, under the circumstances, be inequitable, the proposed sale may be postponed, etc.
Wilson Banking Co., Liquidating Corp., v. Colvard, 172 Miss. 804.
We see that as the cases begin to come in for decision under this chapter that judicial discretion and equitable principals remain with the chancellor and his court.
We thus see that a mortgagor may not openly indicate to the world every indication of purpose to abandon his contract of indebtedness and to hold on to the land until removed by judicial process.
Such mortgagor, once having assumed such an attitude, may not then avail himself of the provisions of the moratorium law to further his fraudulent designs.
Pleading in the language of the statute must fall when it runs counter to the equally established rule that ultimate facts are required to be alleged and not conclusions either of law or fact. When he avers that he is unable, etc., to refinance, he avers a conclusion which is not good either preliminary or ultimately. He should have averred sufficient facts from which it might appear that he was unable to refinance.
59 C.J. 1199, par. 739; 32 C.J., page 398.
The court having jurisdiction of both the subject-matter and the parties then under the pleadings it takes the only course open to it to give full and final relief, to-wit, a sale of the land and a writ of possession against the appellant, it being found by the court that appellant all along had no right to anything else.
The procedure set up for the enforcement of this statute does not contemplate a cross-bill by a mortgagor.
Rea v. Turner, 163 So. 539.
The court below found that appellant had made no application to any government agency for two and a half years prior to the time he filed his bill. The petitioner said in his sworn bill that he was unable to finance through government agencies. He had not tried to finance through such, had made no effort whatever. The court will take judicial notice of the activities and facilities of government agencies.
Wilson Banking Co. v. Colvard, 172 Miss. 804.
This appellant made a willful false allegation; by means of it he set in motion the most powerful agency of a court of equity, its extraordinary writ of injunction. No matter that there may not have been culpable intent. The legal effect is the same.
13 C.J. 8, par. 10-C; 32 C.J., page 67, par. 50, and page 403, par. 682.
It is a constructive fraud on the court for a petitioner to act as did appellant in the lower court. The conduct of appellant as shown by his own testimony and his own acts and conducts throughout the existence of this indebtedness, coupled with this last monstrous, contemptuous fraud on the court moved the court justly and correctly to the judgment that this appellant had not complied with the statute and that this sale was unjustly restrained and that appellant had no right to invoke the statute or any known equitable right and that appellee had a right to be placed in statu quo as of the wrongful suing out of the writ of injunction and had a right to subject this security to the payment of his note.
Everybody knows that when the court orders a sale it is in nearly every case made by its clerk for the simple reason the clerk is already under bond and this eliminates the question of bond and the faithful application by the commissioner of the proceeds of a sale.
German-American National Bank v. Interstate Bank, 114 Miss. 740.
Appellants, M.A. Jones and wife, filed their bill in the chancery court of Itawamba county against appellees, Spearman and the trustee in a deed of trust held by Spearman on eighty acres of land owned by appellants, seeking under the mortgage moratorium statute (chapter 247, Laws 1934) to enjoin the foreclosure of the deed of trust in pais. The cause was heard on original bill, answer, and cross-bill, proofs, and exceptions to the commissioner's report. There was a final decree dismissing the original bill and granting the relief sought by appellee Spearman in his cross-bill. From that decree appellants prosecute this appeal.
Appellants owned eighty acres of land in Itawamba county. On October 24, 1930, they executed a deed of trust on the land to secure a note of that date for seven hundred dollars in favor of R.E. Barrett, due November 12, 1930. On August 6, 1931, Spearman became the owner by purchase of the note and deed of trust. Appellants had paid practically nothing on the indebtedness up to January 1, 1935; in fact they had failed to keep the taxes on the land paid. Spearman requested the trustee in the deed of trust to proceed to foreclose by advertisement and sale; accordingly, the trustee advertised the land to be sold on January 14, 1935. Pending the advertisement and before the sale, appellants filed their bill under the mortgage moratorium statute alleging that they had exhausted every means of refinancing the loan and had failed; that they were unable under federal regulations to refinance the indebtedness through any agency or instrumentality of the United States government. The bill contained fully the allegations required by the moratorium statute. Spearman filed an answer to the bill denying all of its material allegations, and made his answer a cross-bill seeking foreclosure by decree of the court.
On the trial the evidence showed that some time during the year 1932 appellants applied to the Federal Land Bank for a loan with which to pay this indebtedness and the application was denied; that appellants had made no application to the Federal Land Bank or any other federal agency since that time for a loan. The evidence tended to show further that during the year 1932 the federal land banks were making few loans, but beginning with 1933 they had become much more liberal in making loans. The chancellor in his opinion, made a part of the record, found as a fact that it had been at least two and a half years since appellants had made application to the Federal Land Bank for a loan, and according to some of the testimony probably longer than that, and further that during the year 1932 the federal land banks were practically "shut down and not loaning any money," but beginning with 1933 and continuously since had been very liberal in making loans.
The court rendered a decree dissolving the injunction and granting the prayer of Spearman's cross-bill for foreclosure, and appointing a commissioner to carry out the decree. The commissioner accordingly advertised the sale for June 3, 1935.
On June 1, 1935, only two days prior to the day fixed for the sale, appellants exhibited to the chancellor in vacation a petition setting up that since the decree of sale they had exhausted all federal agencies for a loan to pay the indebtedness without avail, and praying for another writ of injunction under the provisions of the moratorium statute. It was also averred in the bill that the advertisement of sale by the commissioner was void. Spearman and the commissioner were made parties defendant, and the sale by the commissioner sought to be enjoined. The court dismissed the petition. The land was sold by the commissioner on June 3, 1935, as advertised, and purchased by Spearman. The sale was reported to the court, exceptions were filed thereto by appellants, and the report and exceptions thereto were heard on June 8, 1935. The exceptions were overruled, and the report confirmed. No proof was offered to sustain the exceptions. The questions raised by the exceptions were principally those theretofore raised in the progress of the cause.
Appellants contend that upon the hearing, under section 4 of the moratorium statute, it was the duty of the court, in lieu of a present order of sale, to direct and require appellants to pay all or a reasonable part of the income or rental value of the land toward the payment of taxes and interest on the mortgage indebtedness together with a reasonable sum for the upkeep of the property. In other words, the court had no right to go into the question as to whether the allegation in the bill that all federal agencies had been exhausted without success was true or false. There is no merit in that contention. Every material allegation in the bill, as in any bill in equity, is issuable. A mortgagor must not only allege, but if required so to do by answer prove, the exhaustion of all federal agencies. Appellants failed to do this, as found by the chancellor, whose finding was amply justified by the evidence.
The commissioner's notice of sale failed to name appellant's wife as one of the mortgagors. Appellants contend that under the authority of Wilkinson v. Federal Land Bank of New Orleans, 168 Miss. 645, 150 So. 218, 151 So. 761, the notice was void and therefore the sale was. In the Wilkinson Case, section 2167, Code 1930, providing a method of foreclosure on deeds of trust in pais, was under consideration. The court held that as expressly provided by the statute the mortgagor or mortgagors had to be named in the advertisement. Such foreclosures are outside court procedure; the notice of sale by the trustee is all that is required to apprise the mortgagor or mortgagors that foreclosure is to take place. That statute has no application whatever to foreclosures in chancery. The advertisement and sale under such decrees are regulated by section 457 et seq., Code 1930. There is no provision that all the mortgagors shall be named in the sale notices. In fact there is no sound reason for any such requirement, all the interested parties are in court — mortgagors as well as mortgagees — they know who the commissioner is, they are expected to follow up the proceedings and ascertain the sale day fixed in order to protect their rights.
Were appellants entitled to make a case under the mortgage moratorium statute after the decree of foreclosure had been rendered? We think this question must be answered in the negative. Appellants had to stand on the case they had when they filed their bill. Section 3 of the moratorium statute expressly so provides. The exhaustion of all federal agencies without avail is a condition precedent to the granting of the order enjoining the foreclosure. It is a condition that must exist before, not after, the injunction is issued. Furthermore, the equitable principle of diligence would bar appellants from relying on a case made after the decree of foreclosure had been rendered.
Affirmed.