First National Bank v. Elliott

TYSON, J.,

dissenting. — The theory upon Avhich the Justice delivering the opinion predicates the right of a judgment creditor to redeem from a mortgagee, as pur-, chaser at a sale under a poAver contained in a mortgage authorizing him to do so, without being required to pay the balance due by the mortgagor upon the mortgage debt, is based upon tAvo propositions: (1) That the mortgagee after foreclosure has no lien, legal or equitable, for this balance; (2) that the balance due by the mortgagor upon the debt is not such a claim for Avhich a court of equity Avould condemn the lands in the hands of a judgment creditor after he had acquired the title by redemption.

These tAvo propositions he deduces from the cases of Grigg v. Banks, 59 Ala. 311; Lehman v. Collins, 69 Ala. *660127; Cramer v. Watson, 73 Ala. 127; Parmer v. Parmer, 74 Ala. 285; Graham v. Ware, 79 Ala. 192; and Harris v. Miller, 71 Ala. 26.

The proposition numbered (2)1 insist is not a correct deduction from the principles announced'in those cases, as will be made to appear later in this opinion from a careful analysis of them.

The right of redemption here sought to be enforced “is purely the creature of legislation and can only be exercised by the persons named in the statute, in the mode, within the time and upon the conditions there prescribed.” This right cannot be enlarged by the court for the purpose of enforcing some supposed equitable claim residing in the party invoking the aid of the statute. Nor can the courts adopt a construction of the statute for the purpose of enlarging or narrowing the right conferred by it by dispensing with a compliance with its terms. — Bebee v. Buxton, 99 Ala. 117; Powers v. Andrews, 84 Ala. 289; Nelms v. Kennon, 88 Ala. 329.

It is admitted in the majority opinion that when the redemption is sought by the mortgagor, debtor, from the mortgagee, as purchaser, he must, pay the balance remaining unsatisfied upon the mortgage debt “as lawful charges” before he will be permitted to redeem. But it is held that what are “lawful charges” against the debtor are not “lawful charges” against his judgment creditor. And this 'conclusion is reached solely upon the idea that the statute was enacted for the benefit of the debtor in order to prevent a sacrifice of his lands, overlooking the fact that the statute by its terms also protects the purchaser as well. The party seeking redemption, whoever he may be, whether debtor or judgment creditor, is required to pay among other things, all “lawful charges.” Lawful charges against the debtor? No; but lawful charges upon the lands, without regard to the status of the title established by a -sale under the mortgage.

Section 3507 of the Code confers on the debtor, or his vendee, the right to redeem upon paying or tendering to the purchaser or his vendee the purchase money with ten per cent, per annum thereon and all other lanoful charges. Section 3510 provides, “All judgment cred*661itors of blie debtor * * * may in like manner redeem the land from such purchaser or any one claiming under him, by paying or tendering the amount bid for such land at the sale thereof and ten per cent, per annum thereon, together with all lawful charges; and by 'further offering to credit the debtor upon a subsisting judgment with a sum at least equal to ten per cent of the amount originally bid for the land.”

The different construction placed upon the two statutes as to what the words “lawful charges” mean in each finds no justification in any change of phraseology. For it is clear that the judgment creditor is required to do what the debtor is required to do and more, bo-wit: by offering to credit the debtor upon his judgment at least ten per cent of the amount originally bid by the purchaser for the land, thus conclusively showing that the policy of the statute is to favor the debtor rather than the redeeming creditor. As said in Posey v. Pressley, 60 Ala. 249: “Personal benefit to the creditor is not intended except so far as it is in relief of the debtor.” This being the adjudged policy of the statute, and there being no justification on account of any change in phraseology requiring a different construction, it cannot be, that the words “lawful charges,” when used in fixing the terms upon which a debtor may redeem, shall be given a more enlarged meaning, imposing upon him greater burdens than is given to them when used conferring the same right upon his judgment creditor. Such a construction not only does violence to the policy of the statute as declared by this court, but is unsound as a rule of construction.

In Lehman, Durr & Co. v. Robinson, 59 Ala. 235, the court quoted approvingly from Potter’s Dwarris on Statutes 194, this language: “If the same words occur in different parts of a statute or will, they must be taken to have been everywhere used in the same sense.” This same authority quoting from Lord Denman, says: “We disclaim altogether the assumption of any right to assign different meanings to the same words in an act of parliament, on the ground of a supposed general intention in the act. We think it necessary to give a fair and reason*662able construction to the language used by the legislature, but we are not to assume tlie unwarranted liberty of varying that construction for the purpose of making the act consistent with any views of our own.”

In Harris v. Miller, supra, after adopting the general definition given to the word “charge” in Grigg v. Banks and Lehman v. Collins and other eases, that it evidences “every lien or incumbrance or claim the purchaser may have on the premises and for which at law or in equity he would be entitled to hold the lands as security or to the satisfaction of which a court of equity would condemn them,” says: “It is a just and plain principle of the law of mortgages that payment of the mortgage debt is a condition precedent to redemption. — Gliddon v. Andrews, 14 Ala. 733. This principle the statute of redemption ivas not intended to disturb or change. And if the statute extends to sales at which the mortgagee becomes the purchaser, the mortgagor cannot redeem without paying the entire debt. The debt so far as it is not extinguished, by the bid at the mortgage sale, is a lawful charge on the land. * * * The statute and the statutory right of redemption cannot be perverted into an instrumentality by which the mortgagor may deprive the mortgagee of the security for the debt which the mortgage affords. The offer to redeem by the mortgagor did not vary his relation to the mortgagee.”

In that case the argument Avas made that by foreclosure the mortgage lien Avas extinguished and therefore any unsatisfied balance upon the mortgage debt could not be a hiwful charge upon the land. The court held that not/wi tiistanding the foreclosure it Avas a lawful charge, distinctly recognizing the principle announced in Parmer v. Parmer, 74 Ala. 288, Avhere it is said, the policy of the statute of redemption and of the equity of redemption at common law is “essentially the same” and the principle above quoted “the statute of redemption was not intended to disturb or change the plain principle of the law of mortgages, that payment of the mortgage debt is a condition precedent' to redemption.” Surely if the statute placed the mortgagor and mortgagee upon the same footing as to the matter of redemption as *663a redemption of the equity at common law, the person, whether he be the debtor, or a judgment creditor, offering to redeem must pay the entire mortgage debt. In support of this principle where the party offering to redeem was not precluded by the foreclosure proceedings see Gliddon v. Andrews, supra; Dozier v. Mitchell, 65 Ala. 511; Beach on Modern Equity, § 475; Pomeroy’s Eq. Jur., § 1220; 2 Jones on Mortgages, § 1070; Collins v. Riggs, 14 Wall. 491; Benedict v. Gilman, 4 Paige Ch. 58; 20 Am. & Eng. Ency. of Law, 620.

If I am correct, and my assertion to this effect finds support in the language used in Harris v. Miller, that the policy of redemption under the statute is the same as at common law, it is beyond the pale of controversy that a judgment creditor coming in to redeem from the mortgagee as purchaser, is bound to pay the balance due upon the mortgage debt as “lawful charges.” As accentuating the correctness of the proposition that such is the policy of the statute, no conveyance is required by the purchaser to the redemptioner, upon redemption by a debtor, to convey the title to him acquired, by such purchase. — Code, § 3507.

In my opinion this principle has been, expressly applied to redemption under the statute by judgment creditors in the cases of Grigg v. Banks and Cramer v. Watson, and the words “lawful charges” were clearly held in each of these cases to mean the same thing when applied to rights of a debtor offering to redeem from his mortgagee, as purchaser, and of a judgment creditor offering to redeem from a mortgagee, as purchaser. It is said in the majority opinion that the case of Grigg v. Banks is not conclusive of the question for the reason that “if Banks had sold under his mortgage after having first entered satisfaction of the judgment which he purchased, he would have been entitled to have been reimbursed what he paid in the extinguishment of the prior execution lien * * * and the fact that he had made a mistake in selling under the execution would not be visited upon him, but that a court of chancery would relieve him of such mistake and require the redemptioner to pay the mortgage debt.” The fact is, and this is shown in the *664statement of facts set out in the majority opinion, Banks did foreclose his mortgages upon the lands after he had acquired the title as purchaser at an execution sale, which execution was a prior lien upon the lands; and it was with his status as purchaser under execution sale and as purchaser of his own lands under the mortgages, that the court ivas compelled to and did deal with. The real question presented and the real question decided, was, not whether the judgment and execution created a lawful charge, but whether the mortgages constituted such a charge. While Chief Justice Bkicicell in the opinion delivered 'by him held that the purchase by Banks at the sheriff’s sale “had no other effect than to remove the lien of the attachment as a charge or incumbrance on the premises” and “clothed him with no other right or interest than that of demanding compensation for the money properly expended in its removal,” and that “though in a court of equity he held that estate as a trustee for the mortgagor without right to derive from it any personal benefit or a title antagonistic to that of the mortgagor,” yet, it is equally true that as against Grigg, the judgment creditor, the title acquired under the execution sale was absolute both at law and in equity; a sale from which Grigg could redeem under the statute and under the statute alone; and from that sale and not from the mortgages, redemption was sought. It appears from the record that Grigg expressly declined to recognize Banks’ right to require the mortgage debito be paid, and as I have said, this was the real question in the case. The Chief Justice, in the conclusion of his opinion, stated the doctrine, which is sound and equitable and applicable to the fact of the case in hand, to be: “It is a principle too well settled to be a matter of controversy and of very general, if not universal application, that a party fairly acquiring the legal estate will not be compelled to part with it until all charges or claims thereon, to which he is entitled in law or equity are satisfied.”

Justice Manning delivering 'an opinion in the case, adding as he says to the views expressed by the Chief Justice, said: “It is clear that if instead of having the *665land sold under the judgment and mortgages both, Banks had merely entered satisfaction of the judgment, and had caused the land to be sold and had purchased it under the mortgages only, appellant [Grigg] before she could redeem, as a judgment creditor under the statute, from him, would have had to reimburse to him, as a part of the ‘lawful charges’ w'hat the judgment of Holmes and Goldthwaite, 'an incumbrance on his title as mortgagee had cost him; and that he could also have interposed and required her to pay the entire.mortgage debt. * * Certainly nothing could be more contrary to some of the universally accepted and best established maxims of equity law, than for a court of equity to interfere, in a case like the present, to set aside the legal rights and superior equities of a party in possession and elevate above them a claim resting upon considerations which must be regarded as very much less meritorious. This, of course, does not refer to the claim of Mrs. Grigg against Gilmer, but to the contention between her and Banks.”

This last quotation is a distinct announcement that whether a ciaim is a “lawful charge” upon the lands is not, as said by my Brothers, dependent upon the question as to whether a court of equity would condemn the lands in the hands of a judgment creditor after he had acquired the title by redemption, but whether the claim is an equitable charge upon the lands as against the debtor.

In Cramer v. Watson the facts were these: Steele executed a mortgage to Patton, and then a second mortgage to Oramer and Cohen. Upon default, Patton foreclosed his mortgage by sale under the power contained in it, and Oramer and Cohen purchased at the sale at and for the amount due upon the mortgage debt. Watson, having obtained a judgment against Steele, sought to redeem from Cramer and Cohen and for that purpose, tendered to them- the amount of their bid and ten per cent per annum thereon, failing, however, to include in the tender the amount due Cramer and Cohen on their mortgage debt. This tender was refused by them because, among other things, it did not include their mort*666gage debt; and Watson filed his bill, which was treated by this court as a bill to redeem under the statute.

One of the questions • involved was whether Watson should be required to pay the mortgage held by Cramer and Cohen. On this point, the court said: “The payment of lawful charges upon the lands which have accrued to the purchasers is as essential, is as clear and distinct a right of the purchasers and as clear and distinct a duty of the party offering to redeem as is the payment of the purchase money and the statutory interest,” and that “the tender of the purchase money and interest, withholding or not including a tender of lawful charges, may rightfully be rejected by the purchaser.” “The offer to redeem by the appellee (Watson) did not include the payment of the mortgage debt due to the appellants. * * * The offer of payment of the mortgage debt seems to have been omitted upon the supposition that the appellants were bound to apply the rents accruing while they were in possession to its payment and these would operate its extinguishment. The mortgage debt due the appellants was a lawful charge upon the lands, to the payment of which whoever came to redeem under the statute toas hound. The words of the statute are ‘lawful charges/ and their proper significance is every lien or encumbrance or claim the purchaser may have upon the premises and for which, at law or in equity he is entitled to hold the lands as security or to the satisfaction of which a court of equity would condemn them.”

It may be said that Cramer and Cohen held a second mortgage, instead of an unpaid balance on a first mortgage. Upon principle this can make no difference for the reason that as holders of the second mortgage they were merely the assignees of the equity of redemption, and that equity had been as effectually foreclosed by the sale under the first mortgage as it would have been by a strict foreclosure or by sale under a decree of foreclosure in a proceeding had for that purpose, to which they had been made parties. — Powers v. Andrews, 84 Ala. 289; Childers v. Monette, 54 Ala. 317; Otis v. McMillan, 70 Ala. 59; Aiken v. Bridgeford, 84 Ala. 295; Harris v. Miller, supra.

*667Tlie second mortgage created a lien or incumbrance only upon tlie equity of redemption and tlie equity of redemption having been destroyed by the sale under the power in the first mortgage, Cramer’s and Cohen’s rights as lien-holders were destroyed also. So manifestly their right to have this mortgage debt paid them as a condition precedent to the right of the judgment creditor, Watson, to redeem from them, must rest, not upon the 'principle as announced in the majority opinion, but upon the broad principle of equity which 1 contend for, and which was distinctly enforced by the court in that case, that the lands were an equitable security in their hands for this debt.

It is but the application of the well known and often applied'equitable principle, that a court of equity will keep alive a superior equity as against a junior incumbrancer, notwithstanding as between the original parties the contractual lien out of which the equity arose has been extinguished. For, says Justice Somerville in Fouche v. Swain, 80 Ala. 153, in speaking of a first mortgage given by Prior, which had been extinguished by the execution of a deed by him to Mrs. Swain to the lands conveyed by the mortgage, which deed was subsequent to the execution and recordation of Prior’s mortgage held by Fouche, “it may have been satisfied as between her [Mrs. Swain] and Prior. * * * But as to any junior incumbrancer, her superior equity would still be preserved in its full force and vitality. There would be but poor show of logic in holding that this strengthening of her title by Mrs. Swain, has, after all, served to weaken it. It is common practice for courts of - chancery to keep alive equitable liens and incumbrances as against strangers or third parties. Equity could often be but badly administered without it.”

In Mitchell v. Brotan, 6 Cold. 505, which was cited with approval in Grigg v. Banks, the Supreme Court, of Tennessee, speaking of redemption in that State under a similar statute, said: “It is a well settled principle that a party who has -the legal title will not be forced to part with it until the debts he has against the party are satisfied, growing out of the transaction. The rule is, the *668party holding the legal title cannot 'be forced to a conveyance until the debts are paid.”

The only case cited in the majority opinion on the point here in question is Ogle v. Koerner, 140 Ill. 170, which is wholly unlike this case. In that case there had been a foreclosure of the senior mortgage and the mortgaged property had been purchased by the senior mortgagee for less than the debt. The junior mortgagee or his assignee, had redeemed the land from him, and after redemption the senior mortgagee sought to subject the lands again to the lien of his mortgage. From this statement it is apparent that the question was, not what the junior mortgagee should pay to redeem, but what was the effect of such redemption under the statutes of Illinois. Besides the statute of redemption of that State is unlike ours, in that the redempfioner was only required to pay the sum bid and statutory interest and did not contain the additional requirement of the payment of “all lawful charges.” — R. S. of Ill. 1874, Chap. 77, §§ 18-20.

Indeed, the policy that “lawful charges” are charges upon the land without regard to the status of the title established by a sale, is written in the face of the statute, as well as declared in the decisions above cited. Where redemption is sought it proceeds as though no sale had taken place, and the original security, whether it be a mortgage, or a judgment, under which the purchaser derives his title, if he be the mortgagee, or the owner of the judgment, constitutes the charge upon the lands. I say it is written in the face of the statute. We have only to refer to section 3511, where the redemption is sought by a judgment creditor from a “purchaser or person claiming under him” under a judgment. In such case, the redemption proceeds as though there had been no sale, and so long as the purchaser, or person claiming under him agrees to credit, and actually does credit, the debtor upon a subsisting judgment with the sum offered to be credited by the creditor seeking to redeem, he, the purchaser, may retain the land, unless the creditor makes ■a further offer to credit the debtor upon a subsisting judgment with an additional sum, not less than ten per *669cent of the original purchase money, to which the purchaser is required to respond 'by offering to give the debtor a similar credit. This system of bidding may continue until the purchaser from whom the redemption is sought has entirely satisfied his judgment against the debtor. And until the judgment is so- satisfied, the redemption cannot be perfected.

But whatever may be the decisions of other States as to the policy of their statutes of redemption, this court, in my opinion, is unalterably committed to the construction of our statute by the decisions we have quoted from, and the policy of the statute as there declared cannot be departed from.

■ Adopting the language of the court in Matheson v. Hearin, 29 Ala. 210, “We think the presumption a fair one that the opinions delivered in these cases (Harris v. Miller, Cramer v. Watson and Grigg v. Banks) have been acted upon as a rule of property. And, therefore, the reasons which impel the courts to uphold every settled rule of property require us to reaffirm and maintain those cases, not only as to the points necessarily involved and decided by them, but also as to the principles which are declared in them.”

It i's also said in the majority opinion that a mortgagee, for the unpaid balance of the mortgage debt after foreclosure sale, is a creditor Avithin the meaning of section 3514, and as such creditor, upon the offer of another creditor to redeem, he has a right to avail himself of the provisions of sections 3511 and 3512. This is in direct conflict with the principles declared in ‘the opinion in the case of Owen v. Kilpatrick, 96 Ala. 421, which in my opinion is a correct construction of the several sections of the Code providing the right of redemption, and also with-principles announced in Freeman v. Jordan, 17 Ala. 500, and Thomason v. Scales, 12 Ala. 309. The Avhole field of operation of section 3514 is to confer upon the class of persons therein named the right of redemption as to lands of the debtor other than those involved in the purchase.

‘The result of the holding of my brothers is not only to strike down the policy of the statute as declared in Har*670ris v. Miller, Grigg v. Banks and Cramer v. Watson, but to confer a special privilege upon the judgment creditor to the exclusion not only of the debtor himself, but to the exclusion of the debtor’s vendee, junior mortgagee or assignee of the equity of redemption. To elevate his right above those of these classes, by relieving him from the payment of “lawful charges,” which are “lawful charges” upon the lands as against them, notwithstanding he could have under his judgment only condemned to its satisfaction, before foreclosure, such interest as the debtor himself 'had in the land, which was, after foreclosure, as we have shown, the right to redeem upon the payment of the entire mortgage debt. For by section 3505 of the Code, the right of redemption is conferred not only upon the debtor and his vendee, but upon a junior mortgagee or assignee of the equity of redemption and by section 3515 conferred upon a child of the debtor to whom a conveyance has been made, which must be exercised and enforced in the same manner as the right of the debtor or his vendee is exercised under section 3507, and of necessity ladened with the same burdens. This right of redemption is conferred by the statute upon various classes of persons, including the judgment creditor, because of their relation to the debtor and depends for its exercise upon the existence of such relation. The conferring of this valuable^ privilege upon these various classes of persons, other than the debtor, was not only for the purpose of preventing a sacrifice of the debtor’s property, but to enable them to. protect, if possible, their claims, either as owners of the equity of redemption or as creditors. And just why they are not upon the same footing, in this sort of case. I am unable to see. Certainly it cannot be said with any show of equity or good conscience, that a judgment creditor should not bear the same burden as a junior mortgagee who is not only an o wner of the equity of redemption, but a creditor as well. The illustration made use of in the opinion does not seiwe to defeat the invidious preference, which I have pointed out, given the judgment creditor over a junior mortgagee, the debtor’s 'vendee, assignee of the equity of redemption, or child to *671whom a conveyance has been made by him. Nor does it serve to illustrate, that the debtor’s property is not sacrificed. On the contrary, it demonstrates conclusively that the policy of the statute, as declared in the opinion, is exclusively for the benefit of the judgment creditor, converting the statute into an instrumentality by which a profit of $5,000 less $500, which he is bound to credit the debtor with on his judgment, is secured to him; and this, too, by depriving the superior incumbrancer or claimant of it and giving it to him, who is the holder of an inferior claim. This process of taking the profit from one creditor and bestowing it upon another is certainly of no personal benefit to the debtor, beyond the ten per cent required to be credited on the judgment. He is still a debtor to the mortgagee in the sum of $5,000, the unsatisfied balance upon the mortgage debt and the balance remaining due upon the judgment after deducting the credit of $500, entailing a loss upon him of $4,-500, which confessedly has gone into the pocket of the judgment creditor. It is not an answer that the debtor can regain -this $4,500 by redeeming from the judgment creditor, for this he cannot do, as this right is conferred by the statute only upon another judgment creditor. Owen v. Kilpatrick, supra. Nor is it an answer that the debtor should not have permitted -his lands sold in the first instance under the mortgage, or that he should have redeemed from the mortgagee before the judgment creditor did. Had he been pecuniarily able to have prevented the sale under the mortgage, he would never have had any need for the statute, and for the same reason he would have had no judgment creditor. Indeed, it was on account of his impecunious condition and for the purpose of relieving it, as far as possible, that the statute was enacted. Under my contention, the judgment creditor being required to pay the entire mortgage debt, the debtor is entirely relieved of the balance, thereby saving the $4,500 which the judgment creditor is permitted to make, and in addition gets a credit of $3,000, instead of $500 upon the judgment. It is no answer that this construction yields no profit to the judgment creditor. Suffice 'it to say, that the statute was not enacted for the purpose of enabling him to reap a profit out of the unfortunate financial condition of his insolvent debtor, but, as I have repeatedly said, to protect the debtor and at *672the same time to secure to the purchaser from whom the redemption is sought, his right also. Nor is the position tenable that the unsatisfied balance is not a lawful charge, because, if the judgment creditor is required to pay it, together with ten per cent upon the whole debt to the mortgagee, and in addition give to the debtor the credit imposed by the statute, he would therebjr be required to pay more than the value of the property, thereby making the right to redeem a practical failure. The answer to this position is, the unfortunate debtor, or his vendee, junior mortgagee, an assignee of the equity of redemption, 'and a child of the debtor to whom he has executed a conveyance, is required to pay to the mortgagee this ten per cent, in addition to the whole debt, and if the legislature in imposing this penalty upon them did not regard it a hardship, certainly it cannot be so regarded by the courts in the case of a judgment creditor, and that, to such an extent, so as to relieve him from complying with the plain mandate of the statute requiring him to pay “all lawful charges.”

Great stress is placed upon the language used in Harris v. Miller, that “the charges may and will vary with different purchasers.” No one doubts this. For if a stranger ¡becomes the purchaser at a mortgage sale of lands, he would not be entitled to have paid to him more than the ‘amount of his bid,taxes, value of improvements, and ten per cent thereon by any redemptioner, whether he be the mortgagor or his vendee, a junior mortgagee, an assignee of the equity of redemption or a judgment creditor of the mortgagor. But because this is true, it does not follow as a logical sequence, that the charges may and icill vary with different redemptioners from the same purchaser. On the contrary, it may be said that no such conclusion can be logically deduced. Such a conclusion inevitably confers a special privilege upon the judgment creditor, an invidious distinction which I do not believe was intended to be conferred by the legislature. ,