National Exchange Bank v. Holman

Mr. Justice McIver

concurred in the result only, for the reasons stated in his séparate opinion, which was as follows:

I concur in the conclusion that the judgment of the Circuit *167should be affirmed, upon the ground that the defendant having, by his answer, rested his defence of payment upon the ground that the plaintiff had agreed to receive the mortgaged property in satisfaction of the mortgage debt, and having wholly failed to adduce any evidence of any such agreement, judgment necessarily followed in favor of the plaintiff so soon as the mortgage and the debt which it was intended to secure were established, as to which there was no real controversy.

It is true that the defendant, in his argument, having made the question whether the mortgage debt had not been extinguished by reason of the sale of the mortgaged property at a different place from that prescribed by statute, the Circuit Judge proceeded to instruct the jury that this was a mere irregularity, and that such irregular sale would not operate as a conversion of the mortgaged property by the mortgagee to his own use and a consequent extinguishment of the mortgage debt, or a waiver of all claim for any deficiency of the mortgage debt that might be left unpaid by such irregular sale. But that was a point not raised by the pleadings and could not properly arise in the ease thus made. The defence really relied on by the defendant was the second defence set up in the answer, the first defence — the general denial — having been practically abandoned. So that as a matter of fact the only issue raised by the pleadings, and the only issue which the jury were called upon to try, was, whether the plaintiff had accepted the mortgaged property under an agreement to receive the same in satisfaction of the mortgage debt. That defence rested solely on an alleged agreement, and the defendant having wholly failed to establish such agreement, or, indeed, to offer any competent evidence tending to establish the same, the plaintiff was, of course, entitled to judgment; and it was not competent for the defendant to insist in argument upon another defence, resting upon a wholly different ground from that of contract, which was pleaded.

It is one thing for a mortgagee to agree to receive, and actually receive, the mortgaged property in payment of the mortgage debt, and quite another thing for the mortgagee to waive or destroy his claim for any deficiency by violating the law in the sale of the mortgaged property. One is a defence of payment rest*168ing on contract, upon the principle that anything accepted as payment shall operate as such, while the other rests upon a totally different principle — a forfeiture consequent upon a violation of law, and has in it no element of contract whatever. Hence even if the Circuit Judge did err in instructing the jury as to a point which could not properly arise under the pleadings, this would constitute no more ground for a new trial than if he had erroneously laid down an abstract principle of law, entirely foreign to the issues raised by the pleadings.

I am not, however, prepared to assent to the proposition upon which Mr. Justice McGowan’s opinion rests, that the failure to advertise and sell the mortgaged property in the .manner prescribed by statute was a mere irregularity ; but, on the contrary, it seems to me that the true rule was laid down in the dictum (for it is conceded to be nothing more than a dictum) in Darnall & Susong v. Darlington (28 S. C., at page 258), Avhich may be more correctly stated as follows: where a mortgagee of personal property takes possession thereof and converts it to his own use, without a sale, or where a sale is made neither in accordance with the terms of the statute nor in accordance with the wishes and consent of the mortgagor expressed in writing, he thereby waives all claim for any deficiency, and can maintain no personal action against the mortgagor based upon the mortgage debt. This view is not only supported by authority (Jones on Chattel Mortgages, section 711), but is founded in good reason. The power with which a mortgage creditor is invested to seize and sell the property of his debtor, without the aid of judicial process, and before the validity and amount of his debt has been judicially ascertained, is a very high power and should be strictly guarded against abuse. Accordingly the legislature has, very properly, by the act of 1882 (18 Stat., 124), amending section 2348 of General Statutes, undertaken to declare how this high power shall be exercised, and I do not see by what authority this court can undertake to dispense with any of the safeguards which the legislature has seen fit to throw around persons exposed to the exercise of such power.

True, it may be said that, after condition broken, the mortgagee of personal property is the absolute owner of such property, and *169therefore when he seizes and sells it, he is selling his own, and not the property of another. But while it may be true that the mortgagee has the absolute legal title, yet it is well settled that he does not hold the property as his own, but subject to the mortgagor’s right to redeem before sale, and even after sale subject to the mortgagor’s right to demand an accounting for the proceeds of sale. So that in fact the mortgagee is not the real owner of the property absolutely in such a sense as to enable him to use it as his own. And if he undertakes to convert it to his own use, he is still liable to account to the mortgagor for any excess in its value over and above the mortgage debt; and if such value is less than the mortgage debt, he forfeits or waives all claims against the mortgagor for any deficiency, by reason of his illegal conduct in dealing with property entrusted to him for a specific purpose and to be dealt with in the manner prescribed by law. So if the mortgagee undertakes to sell in any other way than that prescribed, he thereby converts the property to his own use, and the same consequences follow.

It does not seem to me that the cases cited in the opinion above referred to are sufficient to sustain the view' there taken. The first case was Monk v. Jenkins (2 Hill Ch., 9), in which the plaintiff, as administrator of Judy, a woman of color, filed a bill against the executors of her former master for the delivery of certain property alleged to have been given her by the will of her former master, under the allegation that she had been duly emancipated on the 14th of April, 1806, by a deed of manumission. The defendants set up two defences: 1st, that no such deed as was required by the act of 1800 had ever been executed; 2nd, that the alleged deed had never been recorded within the prescribed time. The Circuit Chancellor dismissed the bill for want of jurisdiction, as the proper remedy was at law, but he also overruled both defences. Notwithstanding this the defendants appealed from so much of the decision as overruled their pleas; and made the further ground that the plaintiff, or rather his intestate, had no civil status, having never been legally emancipated, and hence the bill could not be maintained.

Inasmuch as the bill had been dismissed, and there was no appeal therefrom by the plaintiff, it is somewhat difficult to un*170derstand how the appellants could have any standing in the Court of Appeals. Nevertheless that court did entertain the appeal, and Chanctdlor Harper, after sustaining the decision below overruling the two defences set up in the answer, proceeds to consider the question whether Judy had been legally emancipated (a question which, so far as I can perceive, was not considered below), and reaches the conclusion that neither the former master of Judy nor his executors could dispute the validity of her emancipation, even if there had been no deed, because it appeared that she had been in the uninterrupted enjoyment of freedom from the date of the deed to the time of her death, and was recognized as a free person by the will of her former master.

It is quite clear, therefore, that anything said in the opinion as to the validity of the mode of emancipation was a mere dictum. The learned chancellor, however, did proceed to consider the question whether the failure to observe all1 of the requirements of the act of 1800 would invalidate the emancipation, and as even dicta from such an eminent jurist are entitled to the highest respect, I will proceed to consider whether that which he said is applicable to the present case. After laying down the general rule as quoted in the opinion of Mr. Justice McGowan, he proceeds to consider the terms of the act of 1800, in which he finds “a plain recognition by the act itself that slaves may be emancipated or set free otherwise than according to its direction;” and hence he reaches the conclusion that even if all the terms of that act had not been complied with, the emancipation might still be valid, inasmuch as prior to that act a slave might be emancipated in any manner by which the master might signify his intention to do so. So that even if that decision be regarded as something more than a mere dictum, and even as absolute authority, it seems to me that it is not applicable to the present question. The act of 1882 contains no plain recognition of the legality of sales made otherwise than as therein prescribed. On the contrary, the only departure from the mode there prescribed which is recognized by the act is where the mortgagor consents in writing that some other mode may be pursued.

The other case of State v. Massey (2 Hill, 379), as it seems to me, has still less application. In that case it was held that the *171failure to comply with the provisions of the act of 1799 requiring a new jury list to be prepared every three years did not vitiate the array, because, as it was said by O’Neall, J., in delivering the opinion : “This is purely directory to public officers in the discharge of their duty. * * * It was not intended to secure any right, benefit, or privilege to the defendant; it was merely to regulate the drawing of the jury in such a way as to divide the duty of serving upon the jury among the inhabitants of a district.” Surely no such remarks as these would be applicable to the provisions of the act of 1882.