Learned v. Foster

Colt, J.

The plaintiff attempts to avoid the foreclosure of a mortgage under a power of sale, mainly on the ground that the *369real purchasers at the sale were the owners of the equitable interest in the mortgage. The legal title to the mortgage was held by Foster at the time of the sale in trust for the defendants as heirs of Wetherbee. The purpose of the sale was to foreclose the mortgage and to divide the estate among the defendants as equitable owners. It was made after breach of condition, and, in treating this objection, must be taken to have been made in accordance with all the requirements of the mortgage deed. The estate was sold to Carver, by whom it was several years after-wards conveyed to the defendants, to be held by them according to their several interests. There was no actual payment of money to any one in the transaction; and there was no provision in the mortgage deed giving to the mortgagee the right to become a purchaser at the sale.

The sale thus made must be regarded at law as a valid transfer of the estate under the power in the mortgage deed. If the title had passed into the hands of a bond fide purchaser without notice, it would have been a good title in his hands against the right of redemption here set up. It is effectual in favor of the present defendants against the plaintiff, unless defeated by the equitable considerations upon which he relies, and which relate to the duties growing out of the trust relation existing between mortgagor and mortgagee. In the execution of the power, the mortgagee is bound to the exercise of entire good faith ; he is subject to the rule which applies generally to trustees with power to sell, and which enables the party beneficially interested to defeat a purchase of the trust property made by the trustee. The sale in such case is not absolutely void ; it is an abuse of authority for which the equitable owner may set it aside, and retain the property, or affirm it and receive the consideration at his option. Litchfield v. Cudworth, 15 Pick. 23, 31. Ball v. Carew, 13 Pick. 28, 31. Ives v. Ashley, 97 Mass. 198. Burns v. Thayer, 115 Mass. 89.

It is well settled, however, that this right to avoid the sale will be treated as waived unless asserted within a reasonable time. In the case at bar the sale took place in 1857, more than thirteen years before the filing of this bill. Samuel Learned, who was then the owner of the equity subject to the mortgage, had occupied the premises since 1853, and had paid interest semi*370annually up to June, 1856. Foster entered upon the premises before the sale, and in pursuance of the sale gave a deed of the land to Carver, who with the defendants has since been in quiet possession. The deed to Carver was duly recorded, and Learned, who has all the time lived within a mile, had knowledge of the defendants’ possession. There has been no payment or offer of payment by any one on account of the mortgage debt. And nothing has been done by Learned, except to convey to the plaintiff Adelaide, by a deed delivered on the premises, in September, 1870, conveying his interest to the same, if he had any.

The plaintiff, under these circumstances, and after this lapse of time, cannot be permitted in equity to impeach the foreclosure, under which the defendants claim, upon the grounds here relied on. The fact that neither the present owner of the equity, the plaintiff in this suit, nor her grantor, Learned, had actual notice of the sale under the power, does not excuse the delay here apparent. Learned knew the terms of the power of sale under which Foster held and that no notice to him was required. He knew that there had been default of payment for many years, that Foster had entered, and that the defendants were in possession, taking the rent and profits. He had at §11 times the means of knowledge that the .power had been executed ; he could have learned it at the registry of deeds or by inquiry of the mortgagees. There was enough to put a reasonable man upon his inquiry if there had been an intention on his part to preserve in good faith his right to redeem. He must be treated as having constructive notice of the sale. The plaintiff Adelaide is of course affected by the previous loches or acquiescence of her grantor, and it is not necessary to decide whether if this were otherwise she is in a position, by virtue of the conveyance, to exercise the mortgagor’s right to avoid the sale. Perry on Trusts, § 198.

By the terms of the report this case is submitted upon the facts agreed by the parties at the hearing, no question of equity pleading was raised, and it is not open now to the plaintiff to object that this defence relied on is not set up in the answer.

As to the remaining objections: The notice of sale was not defective within the rule stated in the recent case of Dyer v Shurtleff, 112 Mass. 165.

*371It is no objection to the validity of the sale that no affidavit of the sale was ever recorded. Field v. Gooding, 106 Mass. 310.

There is nothing to show that the entry of Foster in 1870, made in the presence of two witnesses, for the purpose of foreclosure was intended as a waiver or abandonment of the rights acquired by the previous sale under the power. Without such intention it can have no such effect. The fact stated is equally consistent with a desire to avoid in the future any such question as is here raised. There is nothing in the act which shows an intention to open the foreclosure, or to treat the land as only security for a present existing debt. Nor is the act, as in Fay v. Valentine, 5 Pick. 418, inconsistent with a previous incompleted attempt at foreclosure. Bill dismissed with costs.