Evans and Iglehart vs. Joseph E. Merriken, 8 G. & J. 39

StepheN, Judge, delivered the opinion of the court. The question presented by the record to this court for adjudication is a new one, and has now for the first time engaged its attention. In deciding upon it, but little assistance can be obtained by an appeal to the rules and doctrines of the English law, and the only aid which can be derived from that source, must be drawn from a course of reasoning, founded upon the grounds and principles of analogy, as the English jurisprudence does not recognize the rights of property, in the subject matter upon which the mortgage in this case is made to operate.

In the discussion of this subject, the relative rights of mortgagor and mortgagee are involved, and upon them essentially depends the issue of this controversy. The nature and extent of these rights respectively, this court upon a recent occasion was called upon to decide; and perhaps it is not going too far to say, that the views then entertained and expressed by this tribunal, must very materially influence the decision of this case.

In 6 Gill and John. 74, this court say, “ upon the execution of the mortgage the legal estate becomes immediately vested in the mortgagee, and the right of possession follows as a consequence, subject only to the occupancy of the mortgagor, which is only tacitly permitted until the will of the mortgagee is determined.

It is said in 1 Powel on Mortg. 171, that as soon as an estate in mortgage is created, the mortgagee may enter into possession, but as the payment of interest is the principal object of the mortgagee, he seldom avails himself of that right, unless obliged so to do, to receive the payment of the interest, or with a view to compel the payment of the money.” Of the accuracy of the preceding view of the relative rights of the mortgagor and mortgagee, no doubt can be entertained, because, it necessarily results from the legal operation of the terms of the instrument, by which the mortgage is created.

By the deed of mortgage, the legal estate becomes vested in the mortgagee, defeasible at law upon the performance of the condition and payment of the money at the time stipulated ; but upon default of the mortgagor in the non-payment of. the money at that time, it becomes indefeasible at law, and defeasible only in equity, where the mortgage is considered only as a security for the debt,, and the mortgagor, notwithstanding his default, will be permitted to redeem.

It is true in 2 Burr. 978, Lord Mansfield, in delivering the opinion of the court, says, “ a mortgage is a charge upon the land, and whatever would give the money, will carry the estate in the land along with it, to every purpose. The estate in the land is the same thing as the money due upon it. It will be liable to debts; it will go to executors; it will pass by a will, not made and executed with the solemnities required by the statute of frauds.

The assignment of the debt, or forgiving it, will draw the land after it as a consequence ; nay it would do it, though the debt, were forgiven only by parol; for the right of the land would follow, notwithstanding the statute of frauds.” But in Doug.

Rep. 22, his lordship at a later period of his judicial life, in deciding that a mortgagee might recover in ejectment, (without giving notice to quit) against a tenant claiming under a lease from the mortgagor, granted after the mortgage without the privity of the mortgagee, held the following language, “ when the mortgagor is left in possession, the true inference to be drawn is an agreement, that he shall possess the premises at will in the strictest sense, and therefore, no notice is ever given him to quit, and he is not even entitled to reap the crop, as other tenants at will are, because all is liable to the debt, on payment of which the mortgagee’s title ceases.

The mortgagor has no power express or implied, to let leases not subject to every circumstance of the mortgage.” And the Supreme Court of the United States, in speaking upon the subject of the title passed by the deed of mortgage, and the interest acquired by the mortgagee, in the thing mortgaged, express themselves in the following terms, “ it is true that in discussions in courts of equity, a mortgage is sometimes called a lien for a debt; and so it certainly is, and something more. It is a transfer of the property itself, as security for the debt.

This must be admitted to be true at law, and it is equally true in equity, for in this respect equity follows the law. “ It does not consider the estate of the mortgage as defeated and reduced to a mere lien, but it treats it as a trust estate, and according to the intention of the parties as a qualified estate and security. When the debt is discharged there is a resulting trust for the mortgagor.

It is therefore only in a loose and general sense, that it is sometimes called a lien, and then only by way of contrast to an estate absolute and indefeasible.” From these decisions, it results that the mortgagee must be considered as having an estate or interest in the subject matter of the mortgage, not absolute it is true, because such an estate is not imported by the terms of the mortgage deed, but an interest commensurate with the object contemplated to be attained by it, as a security for the payment of the debt due from the mortgagor to the mortgagee. * From these general views and considerations, relative to the respective rights of the parties to the instrument of mortgage, we are led to the consideration of the question arising in this case, and involved -in the decision of this controversy.

And that question is, whether the issue of a female slave, herself, the subject of the mortgage, born after the title of the mortgagee has become absolute at law, and during the possession of the mortgagor, is liable for the payment of the mortgage debt. For it must be borne in mind, that the question is not, whether the mortgagee is entitled to hold the issue as his own property, in absolute right, but as security for the payment of his debt only.

Upon the fullest consideration we have been able to bestow upon the subject, aided by all the lights and information with which we have been furnished, by an examination of the decisions of the courts of our sister States upon similar subjects, we have come to the conclusion that right and justice' require, that .the issue so born should be liable, and that neither the principles of law or equity forbid it.

In the language of Lord Mansfield, before adverted to, when speaking of the growing crop, wrhen possession is taken by the mortgagee, we think, “ all is liable to the debt on payment of which the mortgagee’s title ceases.” This identical question has been decided in the State of Kentucky, and there put to rest.

The case may be found in 1 Litt. 317, where the court speak as follows, “ nor can there be any doubt, but that the children born of Fanny, after the execution of the mortgage, are as much liable as Fanny herself is, for it is a settled rule, that the offspring belongs to the owner of the mother, for partis seguiturventrem, is a maxim of the common, as well as 'of the civil law.” In the case before this court, the title of the mortgagee had become absolute at law when the issue was born.

In a court of law therefore, his title to the mother had then become absolute and indefeasible, and he must of course be entitled at law to her offspring born during such his title, subject to the equitable right of the mortgagor to redeem in equity, on payment of the mortgage debt. This view of the subject is confirmed by the rule of law which is held to prevail in a case somewhat analogous.

In Story on Bailments, 200, he says, “ by the pledge of a thing, not only the thing itself is pledged, but also as accessory, the natural increase thereof— as if a flock of sheep are pledged, the young afterwards born are also pledged.” And if such is the principle in the case of a pledge, where only a special property passes a fortiori, ought the rule to obtain in the case of a mortgage, where the whole legal title passes conditionally to the mortgagee, and more especially where by forfeiture, the title has become perfect and absolute at law.

In page 197, the same author in speaking of the difference between a mortgage of goods, and a pawn, says, “a mortgage of goods is in the common law, distinguishable from a mere pawn. By a grant or conveyance of goods in gage or mortgage, the whole legal title passes conditionally to the mortgagee, and if not redeemed at the time stipulated, the title becomes absolute at law, though equity will interfere to compel a redemption.

But in a pledge a special property only, as we shall presently see, passes to the pledgee, the general property remaining in the pledger.” We do not deem it necessary, further to discuss this question, or to extend our remarks for the purpose of proving the justice of the claim of the mortgagee ; though much might be said under that aspect of the case, as we consider the law to be clearly established in his favour.

We will only remark in conclusion, that we are happy to find that in this instance, the law of the land, and the law of nature, so far from being at variance are in perfect harmony; and that whilst on the one hand, full and ample justice will be administered to the honest creditor, the claims and feelings of nature will not he violated on the other.

We do not think, that the defence founded upon the bar arising from the act of limitations, can avail the appellee in this case, even if he has placed himself in a situation to claim the benefit of it, because' the proof in the cause does not bring home to the appellants, or either of them, a knowledge of-his adversary claim, for a sufficient length of time to make the bar 'available. Upon the whole we think, that the decision of the court below was incorrect, and ought to be reversed with costs in both courts. DECREE REVERSED WITH COSTS IN BOTH COURTS.