Tucker v. Toomer , 36 Ga. 138 ( 1867 )

Harris, J.

The principles involved in this case were decided in Bass vs. Freeman, 34 vol. Ga. Repts., p. 369.

In that case it was contended by counsel of Bass, that the instrument executed by him was a mortgage under the laws of Arkansas; that by the laws of that State, that, upon condition broken for the payment of the purchase money,— the title to the negroes ceased to be conditional, but became absolute in Freeman, and consequently as the legal title was in Freeman at the time of the emancipation of the slaves by war, the loss of the value thereof should, as there was no fault in mortgagor in causing their emancipation, fall upon the mortgagee, or at least in equity, be apportioned between the parties. The written opinion of Judge "Walker does not entirely cover all the points made and considered and passed upon by the entire Court, or it would have been readily perceived by plaintiff in error here, that all the material questions made by his bill of exceptions, had been adjudicated.

With what has been said, we might appropriately stop; but it may not be without value to add a remark or two ;— they will have accomplished some useful end, should they elicit professional thought and investigation.

It occurs to us that the fundamental vice of the whole claim of Tucker to relief, is founded upon the assumption that the sale of the negroes to him was conditional, and that an absolute title, free from any equity of redemption, revested upon breach of payment by him — in Toomer the vendor.

Even had the South Carolina mortgage in this case contained the most stringent agreement for the exclusion of interference by a Court of Chancery, as by taking away the equity of redemption, that Court will never permit such an agreement to prevail, or any agreement which would change a mortgage into an absolute conveyance, upon any condition or event whatever. Howard vs. Harris, 1 Vernon, 190; Leton vs. Shade, 7 Vesey, 273; Williams on Real Property, 355-6, top page.

In this we discover an adherence to the old law maxim, “Once a mortgage, always a mortgage.”

The whole equity of the mortgagor Tucker, consisted in, 1st, his equity of redemption, and 2d, in the right (had possession of the negroes been taken by Toomer and a sale made of them under the covenant allowing such sale, or under foreclosure,) to the excess of money raised over and above the payment of the debt, principal, interest and costs, to the mortgagee.

We conclude what we have to say by a quotation from Chancellor Kent’s Com. 4 vol., 157, as it covers the entire reasoning upon which the Bass case and this were decided.

“ In ascending to the view of a mortgage in the contemplation of a court of equity, we leave all these technical scruples and difficulties behind us. Not only the original severity of the common law, treating the mortgagor’s interest as resting on the exact performance of a condition, and holding the forfeiture or the breach of a condition to be absolute by nonpayment or tender at the day, is entirely relaxed; but the narrow and precarious character of the mortgagor at law, is changed under the more enlarged and liberal jurisdiction of the courts of equity — their influence has reached the'cowrts of law, and the case of mortgages is one of the most splendid instances in the history of our jurisprudence, of the triumph of equitable principles over technical rules, and of the homage which these principles have received, by their adoption in the courts of law.

The opinion of Judge Fleming, pronounced in overruling the motion in this case for new trial, is so marked by vigorous logic and sound common sense, that we append and adopt it as fully, expressing the reasons by which we are influenced in affirming his judgment.

OPINION OP JUDGE PLEMING.

Henry L. Toomer vs. John F. Tucker. Motion for New Trial.

This motion for new trial having been submitted without argument, I propose to do little more than to give the substance of my charge to the jury, — from which it will appear whether the exceptions to my charge, and which excejitions are the ground upon which this motion is made, are well founded. I charged the jury

1st. That the mortgage of the negroes, introduced as evidence in the cause for the purpose of proving payment, and upon which the argument has been made, is a South Carolina contract.

2d. That, being a South Carolina contract, it is governed in its construction by the laws of South Carolina.

3d. That by the laws of South Carolina, in a mortgage of personal property upon condition broken, the legal title to the property mortgaged, becomes vested in the mortgagee.

4th. That this vesting of the legal title in the mortgagee, does not operate eo instanti as a payment of the debt due on t.he mortgage, but is intended to give the mortgagee control of the property, so as to enable him with more ease and facility, speedily to collect his debt by applying the property, or so much of it as might be necessary for that purpose. That until such application was made, there was no payment. I don’t mean that the mortgagee upon taking possession of the property, may be negligent in the use of his power to apply it to the payment of his debt. If loss accrues by reason of his negligence, he would doubtless be answerable for such loss. I am now only controverting the position of defendant’s counsel, that condition broJeen operates as payment. I say that it gives him control of the property for the purpose of enabling him the more speedily to apply it to the payment of the debt. If he proceeds with due diligence to do this, it is then and then only, that the payment is consummated. If loss occurs without his fault, it must fall on the mortgagor. Suppose that upon condition broken, the mortgagee proceeds at once to assert his lights, he takes possession of the property, but before he could advertise and sell, the negroes die; would his debt be paid ? Assuredly not. Substitute emancipation for death, and where is the difference ? In either case he fails to realize anything, and surely he cannot be made to credit more than he does realize, unless the failure to realize has been the result of his own conduct. Now if such be the case where the morgagee proceeds with all the diligence he can, to assert his legal rights by taking possession of the property, how much stronger is the case for him, when he abstains from the assertion of his legal rights and suffers the property to remain in the possession of the mortgagor, at his (the mortgagor’s) own earnest request. If death or emancipation, while in the hands of the mortgagee and before he could realize, relieves the mortgagee from the obligation to give credit on his debt, then surely he is relieved from all obligation to give credit, if death or emancipation occurs while the property is in the hands of the mortgagor, and in his hands at his (the mortgagor’s) request.

Again, suppose that the mortgagee finds it impossible to take possession of the property, as may happen if the property is in the hands of a third party under purchase from the mortgagor, in such a case he may have to institute a suit,— is he bound to give credit before recovery had ? Assuredly not. ■ But he is bound to give credit if it be true that the debt is paid on condition broken. In such a case, the mortgagor, with the price of the negroes in his pocket, is entitled to be credited again with their value on the mortgage. There is no escape from this result, if' the position of the defendant’s counsel be right.

I would not speak disrespectfully of any position taken by the learned counsel who represent the defendant in this case, but I must say that I have no patience with this argument. It seems to me to be an outrage alike upon common sense and common justice.

That I am right in the views I have expressed, is evident from the practical operation of the law in South Carolina. What is the course pursued in South Carolina in the collection of debts of this kind? So far as I am informed, the course is this: upon condition broken the mortgagee either proceeds himself, or if he chooses, he places his mortgage in the hands of the sheriff or of some friend, who takes possession of the mortgaged property, to sell it and credit the net proceeds of the sale. If the property sells for less than the debt, the mortgagor is still liable for the deficiency; if it sells for more than the debt, the overplus goes to the morgagor. This I understand and believe to be the usual proceeding in South Carolina. If I am not mistaken in this, then clearly condition broken is not regarded as payment, although by the law of that State, condition broken vests the fee in the mortgagee. For if it be payment, then there can be no deficiency for which the mortgagor is still liable, — and if there be an overplus, the mortgagor would have no right to it. In one word, if the mortgaged property is the property of the mortgagee in the absolute sense contended for by counsel, — then the money for which it sells would also be absolutely his, and there would be no obligation to pay over the surplus. What better proof do we want that the vesting of the legal title in the mortgagee, is simply for the purpose of enabling him more speedily and effectually to collect his debt ? To this extent the mortgagee is but the trustee of the mortgagor, and the trust becomes executed when the property, or so much of it as may be necessary, has been applied to the payment of the debt. If before this is done, loss occurs without the fault of the mortgagee, by death or emancipation, it does not fall upon the mortgagee; for up to that moment the debt is unpaid, and remains unpaid unless the death or emancipation of the negroes, has the effect of payment. It does not necessarily follow that the loss must fall upon the mortgagee, because under the law he is the legal owner; for, though he be legal owner, he is made so for a special purpose. It has been harped on in the argument, that [the loss must fall on the legal owner; that I at this very term so decided. In the case referred to, the legal owner was the absolute owner, — not the legal owner for a particular purpose. He not only held the legal title, but he had the beneficial interest. An executor or administrator is the legal owner of the personal property of the estate; but if a negro dies or is emancipated, who loses — the executor or the heirs and distributees of the estate? Loss, then, does not necessarily follow the legal title. That the vesting of the legal title in the mortgagee does not operate as payment, is evident also from this; that if it be true, then when a mortgage of personal property has been taken to secure a debt, it destroys every other security that a creditor may have, and puts it out of his power to add to his security. Suppose for example that the creditor has in addition to his mortgage, taken personal security, as I believe was done in this case, he could never make that personal security liable. Why? Because, so long as the conditions of the mortgage were complied with, every installment paid as it fell due, he would have no right of action, — and upon condition broken, he would have no right to proceed against the security, for then the debt would have been paid. In other words, the failure to pay is payment.

I want no stronger argument against the proposition of counsel than is contained ■ in the proposition itself. Let me present another view, to show that the legal title vested in the mortgagee by condition broken does not create that absolute ownership which would cast the loss by emancipation on him. If under certain circumstances he is to be prejudiced, then under certain other circumstances he ought to be beneT fited. “ It is a bad rule that don’t work both ways,” If the mortgagee is to lose all by emancipation, when it would take all to pay his debt, then if there had been no emancipation and the property was more than sufficient to pay his debt, he ought to gain the excess. Why should he lose in the one case and not gain in the other ? If there had been but one thousand of this fifty thousand dollars remaining unpaid, the failure to pay that one thousand dollars would vest that legal title in him as fully and effectually and absolulely as the failure to pay fifty thousand dollars. If in the one case he is to lose the ninety negroes, in the other he ought to gain them. The truth is, that either proposition is monstrous. All this absurdity is avoided if what I contend for be true — that the legal title is vested in the mortgagee for the purpose of enabling him to collect his debt. He is bound to account to the mortgagor for such amount as he may realize from the property. I care not whether this accountability is at law or in equity; it is enough for my argument that he is accountable. If the property more than pays his debt, he is liable for the excess. If it falls short of paying his debt, the mortgagor is still liable for the deficiency. This must be law, for it is justice.

I grant that if loss occurs by reason of the neglect or fault of the mortgagee, he is responsible. But nothing of the kind has been shown in this case. Neither party is in fault. True, the mortgagee did not assert his legal right immediately on condition broken ; but it is also true that the mortgagor earnestly appealed to him for indulgence. The negroes were allowed to remain with the mortgagor at his own request, and were in his possession when emancipation came. The result, to my mind, is very clear; the mortgagee has lost his security, the mortgagor his means of payment, so far as that security, or those means depended on the negroes mentioned in the mortgage.