Agnew v. Charlotte, Columbia & Augusta R. R.

Mr. Justice McIver.

I cannot concur in the conclusion reached by the majority of the court in this case. The general rule, as established in this State, undoubtedly is, that where *24the mortgagee buys the mortgaged premises, except under a sale for a foreclosure of the mortgage, the mortgage debt is extinguished. Schnell v. Schroder, Bail. Eq., 334; McLure v. Wheeler, 6 Rich. Eq., 343; Allen v. Richardson, 9 Rich. Eq., 53; Devereux v. Taft, 20 S. C., 555, recognized, also, in Trimmier v. Vise, 17 S. C., 499.

It is claimed, however, that to this admitted general rule there is at least one exception, viz., that where there is an express stipulation to the contrary, at the time the mortgagee acquires the title to the mortgaged premises, no extinguishment will take place. There is no doubt that there are strong authorities elsewhere, some of which are cited in the opinion of the majority of the court, which not only fully sustain the view there taken, but go much further, and establish the doctrine that in equity it is always a question of intention, and that even where such intention is not expressed, it may be inferred from the fact that it is to the interest of the mortgagee to keep the mortgage alive, as, for example, where there is an intervening encumbrance. But these authorities, while entitled to the highest respect, are not, like the decisions in this State, binding' upon this court, whose duty it is to determine what is the law of this State. Now, it is not pretended that there is any case in this State which establishes or even recognizes any such exception as ■ that contended for, to the well settled general rule. On the contrary, in all of the cases above cited, there were intervening encumbrances, which made it to the interest of the moi’tgagee that the mortgage debt should not be extinguished, and yet there is not the slightest intimation in any one of them that that circumstance could affect the result.

Indeed, it may be doubted whether the doctrine of merger, upon which the rule, wdth its exceptions, is rested, by the authorities elsewhere, is applicable to a.mortgage in this State. Merger applies to an estate, and as, since the act of 1791, a mortgage here is not the conveyance of an estate, but is simply a security for a debt, it may lead to confusion if such a doctrine be applied to a mortgage. The principle upon which the rule here is based is well stated by Mr. Chief Justice Simpson in Trimmier v. Vise, 17 S. C., at page 501, as follows: “The right of the mortgagor *25to redeem being the only interest that can be sold by a judgment junior to the mortgage, the purchaser at such sale, whether he be the mortgagee or a stranger, is supposed to give the amount of his bid for that interest, over and above the mortgage debt, leaving the land, when purchased by a stranger, still subject to be sold for the mortgage debt, and when purchased by the mortgagee' to be applied in satisfaction of his debt, which by operation of law is thereby extinguished.” Or, as is said by Mr. Chief Justice Moses, in Edwards v. Sanders, 6 S. C., at page 334: “All the right reserved by the mortgagor is transferred to the mortgagee, who then holds in the premises the interest both of the creditor and debtor, and there is nothing left on which the lien of the mortgage can operate. Where the sale is under a junior judgment, a third party purchasing must not only pay the bid which he has made for the only interest which the sheriff can sell, but, to enjoy an unencumbered estate in the land, he must satisfy the mortgage which still retains its lien. If the mortgagee purchases, to whom is such payment to be made? Not only is the lien destroyed, but the debt also.”

I am, therefore, unable to find any warrant for saying that there is any such exception as that contended for to, what I understand to bei the well settled rule in this State; nor do I see any reason why such an exception should be engrafted on the rule, inasmuch as a mortgagee always has it in his power to protect himself by the ordinary proceeding for the foreclosure of his mortgage.

It is said, however, that in this case there was an express agreement, entered into in writing, between the mortgagor and mortgagee, at the time of the purchase, that the mortgage was “to remain open to protect against claim of dower, liens, and encumbrances,” and that, as there is no case in this State where the general rule has been applied, in which there was any such agreement, the question is now an open one, and we are at liberty to follow the authorities elsewhere. This is all true, but how such an agreement can affect the rights of third persons not parties to it, is difficult to understand. But in addition to this, the fact that the intention w'hich, according to the authorities relied on, determines the question of merger, is expressed in writing, cannot be *26decisive. It may facilitate proof of its existence, but it cannot give it an effect which it would not otherwise have. According to those authorities, if the intention that there shall be no merger is ascertained, whether by express proof or implied from the circumstances, it controls. I do not see how it is possible that the mode in which it is ascertained can affect its nature or effects. It is true that there are some things which are required to be in writing, as, for example, a contract for the sale of land, which have no efficacy unless so expressed; but this is not of that class. It does not seem to me, therefore, that the fact that the intention that the mortgage should not be extinguished, was expressed in writing, takes this case out of the operation of the rule as settled in this State.

There is no doubt that at the time the defendant bought the land from Hoffman now in controversy it was covered by two liens — the mortgage to the railroad company and the judgment in favor of the plaintiff — and there is as little doubt that if any one else had been the purchaser, he could not have acquired an unencumbered title without satisfying both of those liens, as against those who held those liens he could not retain the land unless he paid the debts secured by such liens. How does the fact that the mortgagee was the purchaser alter the case ? To hold the land, it must pay or satisfy both of the liens; and being thus liable to pay the mortgage debt due to itself, the company united in itself the character of both debtor and creditor, and, according to a well settled rule, when this is the case, the debt was paid by operation of law, and the only remaining lien on the land was the judgment in favor of the plaintiff. This lien being senior to the title which the defendant acquired by purchase from Hoffman, any sale under it must give the purchaser at such sale the better title, and hence it seems to me that the plaintiff in this case is entitled to recover the land. Of course, I do not mean to say that the mere fact that the purchaser has bought the mortgaged premises makes him absolutely liable, in all events, to pay the mortgage debt, but I do mean to say that before he can retain the land he must pay, or in some other way satisfy, the mortgage debt; and hence, if he insists upon retaining the land, he thereby becomes liable for the mortgage debt.

*27It may be a hard case that the company should lose its debt as well as the land Avhich it received in payment of such debt, but it only adds another to the numerous cases in Avhich parties have incautiously bought and paid for property covered by liens, the enforcement of Avhich subsequently has deprived them of the property. In this case, however, it appears that the parcel of land here in controversy does not constitute the whole of the land covered by the mortgage, and it may be, under the case of Trimmier v. Vise, supra, that the defendant may yet enforce its mortgage upon the balance of the land. ■ Be that as it may, hoAvever, it does seem to me altogether anomalous that the defendant, after acquiring the fee simple title to the land in controversy, should still hold a mortgage upon it — a lien upon its own land.

But if I am Avrong in these views, and the defendant still retains its mortgage lien on the premises, still I do not see Avhy the plaintiff cannot recover the land and hold possession of it until it is sold under proper proceedings to foreclose the mortgage. If a person other than the mortgagee had bought the land at private sale from the mortgagor, he could only have bought the mortgagor’s interest therein, called the equity of redemption, and such interest'Avould still be liable, in the hands of such purchaser, to levy and sale under the plaintiff’s judgment; and if sold under that judgment and bought by the plaintiff, he, certainly, could recover from such purchaser the possession of the land and hold it until it Avas sold under a proceeding to foreclose the mortgage. Hoay does the fact, that the purchaser at private sale Avas the mortgagee, alter the case ? The mortgagee by such purchase acquired, and could only acquire, the equity of redemption, Avhich, in its hands as Avell as in the hands of any other purchaser, would be liable to levy and sale under the plaintiff’s judgment; and when so sold and bought by the plaintiff, it seems to me that he is entitled to recover the possession and hold it until the defendant sees fit to have it sold under its mortgage.

It may be said that this Avould lead to circuity of action, and involve the necessity of instituting another action, when the Avbole matter could be determined in the present proceeding, or rather in the action Avhich the plaintiff ought to have brought, viz., an action to redeem, Avhich it Avas argued Avas the plaintiff’s only *28remedy. This course Avould be open to two objections: first, it would force a plaintiff to advance from his OAvn pocket the Avhole amount of the mortgage debt, which might in many cases prove to be very inconvenient, if not impracticable, Avhereas if the land is sold at public outcry, and it is really Avorth more than the mortgage debt, the plaintiff’s interests would be very much better protected. Indeed, to allow the mortgaged premises, subject also to a junior lien, to be transferred to the mortgagee by a private arrangement betAveen the mortgagee and mortgagor, Avould open the door to collusion betAveen these parties, which might Avork serious detriment to the holder of the junior lien; but where the premises are sold at public sale under the mortgage, the supposition is that they Avill bring their full value and the interests of all parties are protected. Of course, I am not to be understood as intimating that there Avas any collusion in the present case, as there is no ground for such an intimation; but I am only looking to the general principle. '

The second objection to the remedy by action to redeem, suggested as the plaintiff’s only remedy, is that it Avould deprive the plaintiff of the right to throAv the mortgagee upon the balance of the mortgaged premises, upon the principle that Avhere there are tAvo creditors of a common debtor, one of Avhom has a claim or lien upon tAvo funds, and the other upon only one of these funds, the latter has an equity to require the former first to exhaust the fund upon which he has no claim or lien. It appears that the mortgage covered 1,159 acres, and the portion here in dispute is only 210 acres. What has become of the balance of the land does not appear. All that we know is that 568 9-10 acres, embracing the tract in dispute, has been conveyed to the defendant. If the remainder of the 1,159 acres is still in the hands of the mortgagor, then clearly the defendant ought to be required to go upon that for the mortgage.debt, to the relief of the 210 acres claimed by the plaintiff. This, however, could not be required if the plaintiff’s only remedy is an action to redeem. But even if this objection should not prove to be practically applicable to this particular case, yet -it is sufficient to illustrate my objections to the conclusion reached by the majority of the court.

It seems to me, therefore, that in any vieAv of the case the *29plaintiff is entitled to recover possession of the land in controversy.

Judgment affirmed.