Jordan v. Peak , 38 Tex. 429 ( 1873 )

McAdoo, J.

The record in this case presents the naked question, Can the husband and wife, by deed of trust duly executed and acknowledged in the manner prescribed by law, legally encumber the homestead to secure the payment of a debt?

The bill of exceptions and the assignment of errors present some other points; but a proper disposition of the main question disposes of all the points raised in the record.

Now, what is the case presented by this record?

Mrs. Peak joined her husband in the execution of a deed of trust, upon property claimed as the homestead of the family, to secure the payment of a sum of money due by note to L. & H. Blum. The conveyance was made to P. C. Jordan, as trustee, and was acknowledged by the husband and wife in the manner pointed out by law. The deed of trust is in the usual form of such instruments, and contains in it the power of the trustee to advertise and sell the property on the non-payment of the debt, as stipulated in the deed. The note was not paid at maturity, and the trustee was proceeding to execute the trust, by sale of the property, when Peak and wife sued out a writ of injunction to stay further proceedings by the trustee. On final trial in the District Court, a decree was rendered perpetuating the injunction, and the defendants in the court below have brought the case to this court by appeal.

The question involved in this case is not a new one in this court. It was fully presented, was ably and thoroughly discussed, and clearly decided in Sampson & Keene v. Williamson, 6 Texas, 102, in a well considered opinion of Chief Justice Hemphill.

In that case there was a dissenting opinion by Judge Lipscomb, characterized by the ability of that distinguished judge. But, notwithstanding the dissenting opinion of Judge Lipscomb in that case, this court has uniformly held in all subsequent cases presenting the question, that the rule laid down by the court on this subject in that case was settled law.

In the case of Hollis and Wife v. Francois & Border, 5 Texas, 195, the court held that the wife has the power to join her husband in a mortgage of her own lands, for the reason that she can join with him in their absolute sale; and the rule was said, in that case, to be found in all the authorities.

This authority, to bind her separate estate for the payment of debts, extends to the debts of the husband as well as debts contracted for her separate use and benefit. In order thus to encumber her separate estate it is only necessary that the deed be executed by her in the mode pointed out by law.

If she can, by deed of trust or mortgage, with power in the trustee or mortgagee to sell on the non-payment of the debt, encumber her separate estate, why can she not so encumber the homestead ? And her power to do so is based on the same rules in Sampson & Keene v.- Williamson. Is not her power to do so stronger, even, in the case of the homestead than in the case of her separate property? The fee in the land in the latter case is in her ; in the former, if community property, it is in the husband. In the latter case, she, with him, charges the estate with the mortgage; in the former he does so with her consent, obtained in legal form. His power to sell the homestead absolutely, or to convey it by gift, or to encumber it in any manner he sees fit, is limited only by her consent, obtained in the mode pointed out by law. He cannot, it is true, so bind it by mortgage, even with her consent, that it can be subjected to forced sale; nor could he so bind it if he were a single man, and the head of a family; not because the homestead cannot be conveyed, or a mortgage or trust cannot be created upon it, but because a forced sale of it is forbidden by the Constitution of the State. More than this, there is no limit to the power of conveyance or disposal of the homestead, with the formal legal consent of the wife.

If property can be legally encumbered at all by mortgage, with power to the mortgagee to sell, then a single man who is the head of a family can so mortgage his homestead; for there is no legal prohibition or restriction whatever, except the prohibition of forced sale. If a married man, he has precisely the same control over the homestead as he would have if single, if the wife join with him in the deed, in proper form of acknowledgment.

In no case, however, and under no circumstances, can the homestead be bound by a mortgage which needs to be enforced by a foreclosure; and no sale of it by reason of such mortgage can be effected under an order or decree of a court, or under any process of a court. The prohibition of forced sale is absolute and complete.

It is urged that the opinion of Chief Justice Hemphill in Sampson & Keene v. Williamson was obiter dicta, because in that case the mortgage contained no power in the mortgagee to sell, but could only become operative by a foreclosure and forced sale; and the mortgage was adjudged to be inoperative and void in that case.

But the whole question of the power to charge the homestead at all was pressed upon the court in the arguments and briefs of counsel, and the question was one of such vital concern in the business affairs of the country, that it was deemed of great importance that the opinion of the Supreme Court be had upon it.

Were this the only case in which the question had been passed upon by this court, whatever might be the force of Judge Hemphill’s reasoning in his opinion, that case would not be certainly regarded as settling the law on the subject.

But as the question has arisen in numerous cases since, and this court has uniformly held the law as laid down in that case as settled by it, and reference has invariably been made to it as authority, it would scarcely now be proper to regard it otherwise than the very highest authority. In Lee v. Kingsbury, 13 Texas, 71, Judge Wheeler says : “That the husband, with the concurrence of the wife, may, in the forms prescribed by law, create a mortgage on the homestead, has been heretofore decided;” and he refers directly to Sampson & Keene v. Williamson as the case in which it had been decided.

It may be proper to notice more closely and in a more extended manner than it has been done in a previous part of this opinion, the question so earnestly urged by counsel, whether a trustee or mortgagee, acting under a deed of trust or mortgage, with power in the trustee or mortgagee to sell the property without foreclosure, can sell in any case after the breach of the conditions of the mortgage, against the consent of the mortgagor at the time of the sale.

If the mortgagor objected to the sale before the sale is completed, does this objection revoke the power? Is the power revocable by the mortgagor at all ? Can the power be revoked in any manner, or by any authority, short of a decree of a court of equity ? Will a court of equity interpose to revoke the power while the conditions remain undischarged, simply because the mortgagor desires to recede from the contract? Will a court of equity in such a case override a rule as old as equity itself — “he who seeks equity must do equity?” And is this rule varied either with the class of persons or the character of property involved ? Does the rule vary because the mortgagor is a married woman, or the property is a homestead %

It is insisted that a mortgage, or deed of trust, to secure the payment of a debt, is not a conveyance in the sense in which that word is used in Article 1003, Paschal’s Digest, and that therefore no estate, or interest in the property mortgaged, vests in the mortgagee or trustee, which he can convey.

How, what is a mortgage or a deed of trust executed to secure the payment of a debt ?

“A mortgage may be described as a conveyance of lands from a debtor to his creditor.” (Bouvier’s Law Dictionary.)

“ A mortgage is a conveyance of an estate by way of a pledge for the security of a debt, and to become void upon the payment of it.” (4 Kent, 138.)

“A mortgage is a conveyance of property, and passes it conditionally to the mortgagee.” (U. S. v. Foster, 3 Cranch., 358.)

A mortgage is not only “a security for the debt, but it is something more. It is a transfer of the property itself as a security for the debt.” (Conrad v. Atlantic Insurance Co., 1 Peters, 441.)

“A mortgage not only creates a lien, but operates to transfer to the mortgagee a qualified or conditional estate.” (Porter v. Creen, 4 Iowa.)

A mortgage is “a conveyance of the estate by way of pledge,” etc. (1 Hilliard on Mortgage, 3.)

In Ewer v. Hobbs (5 Met., 3), Chief Justice Shaw said : “The first great object of a mortgage is” (as in this case) “to give to the mortgagee an effectual security, by pledge or hypothecation, of real estate, for the payment of the debt, or the performance of some other obligation. The next is to leave to the mortgagor, and to purchasers, creditors, and all others claiming derivatively through him, the full and entire control, disposition and ownership of the estate, subject only to the first purpose — that of securing the mortgagee. Hence it is, that as between the mortgagor and the mortgagee, the mortgage is to be regarded as a conveyance in fee; because that construction best secures him in his remedy and his ultimate rights to the estate, and to its incidents, the rents and profits; but in all other respects, until foreclosure, when the mortgagee becomes the absolute owner, the mortgage is deemed to be a lien or charge, subject'to which the estate may be conveyed, attached, and in other respects dealt with as the estate of the mortgagor; and all statutes on the subject are to be construed, and all the rules of law or in equity are to be applied, so as to carry these objects into effect.”

Mr. Hilliard regards the opinion of Chief Justice Shaw, quoted from above, as settling the doctrine that, for the purposes of the security, the mortgage is to be regarded as a conveyance of the fee.

It appearing, therefore, from. the foregoing reasoning and authorities, that a mortgage or a deed of trust is a “ conveyance,” in the sense in which that word is used in Article 1003, Paschal’s Digest, it follows that a trustee is not precluded from the power to sell because of the want of title in himself sufficient to enable him to convey the fee in the land mortgaged to a purchaser.

In the early English decisions, when the practice was introduced of authorizing the mortgagee to sell the property for the payment of the debt, and which practice was introduced to avoid the difficulties and delays attending bills to foreclose, the validity of the power was questioned.

Lord Eldon declared that such a deed was of a very ex-traordinay kind — as it certainly was then, being of recent origin — and that there were clauses in it upon which it would be very difficult to induce a court of equity to act. But still the practice grew, until it gained a substantial footing in "the English courts, while in the States of the American Union the doubts of Lord Eldon seem never to have been entertained by the courts. (4 Kent, 146; Robertson v. Paul, 16 Texas, 474.)

That such a power is valid is now well established, not only by this court, but, so far as we can discover, by all the courts in this country and England.

The courts, and the profession generally, have regarded this doctrine as settled law, until quite a recent period. Unfortunately, we think, for the jurisprudence of the State, and for the security of the rights of property, and the good of society, the legal mind of the State has manifested, not only on this, but on other settled questions of law, a disposition, too much in accord with the general spirit of the times, to regard nothing as settled; everything as open to controversy. This court at least does not share in that disposition. If this were a new and unadjudicated question we would, if in doubt as to the correct rule, adopt that doctrine which, to our minds, presented the better and the sounder reason. This would be our only guide. But where a doubt should exist in a case which involves the overruling of the former settled deci-

sions of this court, and a destruction of the rights of property to the extent of many millions of dollars, created by contracts entered into in accordance with the settled decisions of this court for nearly a quarter of a century, we would feel the duty imperative to give the former settlement of the law the benefit of the doubt.

We do not, however, entertain a doubt as to the soundness and correctness of the former decisions of this court on this subject.. We believe the law on this subject was correctly settled in the first instance by our predecessors, and that there is every reason why the former decisions should be maintained, and none that they should be overruled.

We therefore hold that this cause must be reversed, and the injunction dissolved, and the cause dismissed.

Reversed and dismissed.