Brine v. Insurance Company

APPEAL from the Circuit Court of the United States for the Northern District of Illinois.

This suit began by a bill in chancery, filed in the Circuit Court of the United States for the Northern District of Illinois, by the Hartford Fire Insurance Company, to foreclose a mortgage, in the form of a deed of trust, on a lot in Chicago. The deed was signed by Bartalott and Barbier, and their wives, and conveyed the lot to Benjamin E. Gallup, in trust to secure the payment of $7,000, loaned to them by the company, and the interest thereon as it fell due. The lot, the title whereto was in the grantors when that deed was made, was afterwards sold and conveyed by them to Samuel J. Walker. Walker sold, but did not convey, to Ida R. Brine, who, dying, left as her sole heir Ida Winter Brine.

Walker, after his sale to Ida R. Brine,-which was evidenced by a written instrument,-conveyed the lot to J. Irving Pearce, in order that the sum of $6,000, which she owed him on the contract of purchase, might be held by Pearce as security for a debt of Walker to the Third National Bank of Chicago. All the parties interested in the lot were made defendants, except the bank, whose interest was represented by Pearce.

A final decree was made, which ascertained the sum due on the mortgage, and allowed defendants one hundred days to pay it. If not paid within that time, the special master was ordered to sell the land for cash, making such sale in accordance with the course and practice of the court; and, after retaining his commissions, and paying the costs of the proceedings, deposit the remainder with the clerk, together with his report of sale, to abide the further order of the court.

From this decree Ida Winter Brine appeals.

The statute of Illinois bearing on the case is set out, and the assignment of errors mentioned in the opinion of the court.

Mr. Melville W. Fuller for the appellant.

As the mortgage or deed of trust conveyed land in Illinois, the right which the appellee acquired thereby depends upon the laws of that State in force at the time it was made. They created and defined the legal and equitable obligations of the contract which is sought to be enforced as fully as if they had been incorporated in it. A foreclosure, therefore, by suit, instituted in either the Federal or the State court, must be in accordance with them, so far as that right is involved. Bronson v. Kinzie, 1 How. 311; McCracken v. Hayward, 2 id. 608; Gantly's Lessee v. Ewing, 3 id. 707; Von Hoffman v. Quincy, 4 Wall. 535; Clark v. Reyburn, 8 id 318; McGoon v. Scales, 9 id. 23; Doe v. Heath, 7 Blackf. (Ind.) 154; Sheets v. Peabody, id. 613; Franklin v. Thurston, 8 id. 160; Cargill v. Power, 1 Mich. 369; Malony v. Fortune, 14 Iowa, 417; Scobey v. Gibson, 17 Ind. 572; Bixby v. Bailey, 11 Kan. 359; Carroll v. Rossiter, 10 Minn. 174; Wharton, Conflict of Laws, 273, 274. Their effect is to vest in the mortgagor, or his grantee of the equity of redemption, a new estate, to continue fifteen months after the sale under a decree of foreclosure. ''Farrell, &c. et al. v. Parlier'', 50 Ill. 274; D'Wolf et al. v. Hadyn, 24 id. 525; Campbell v. Vining, 23 id. 525.

The decree in question directs the master to sell, in pursuance of the course and practice of the court, by which for years mortgaged lands have been sold, by the marshal, without reserving after the sale any right of redemption, and of which this court will take judicial notice. Oliver v. Palmer & Hamilton, 11 Gill & J. (Md.) 426; Contee v. Pratt, 9 Md. 67; Newell v. Newton, 10 Pick. (Mass.) 470; March v. Commonwealth, 12 B. Mon. (Ky.) 25; Chitty v. Dendy, 3 Ad. & E. 319; United States v. Teschmaker et al., 22 How. 392; Romera v. United States, 1 Wall. 721; 1 Greenl. Evid., sects. 6 and 6 a.

The right of redemption is a substantial one. At sheriff's sale, under the statute, the purchaser obtains a certificate which entitles him only to a deed in fifteen months therefrom, provided no redemption is made; whereas, by a sale under this decree, that right is defeated, inasmuch as he acquires a present estate in the land, and the right of immediate entry thereon, not depending upon any subsequent contingency. Phillips v. Demoss et al., 14 Ill. 410; Karnes v. Lloyd et al., 52 id. 113; Martin v. Judd, 60 id. 78.

The statute securing this right of redemption is a binding rule of property, and, when not in conflict with the Constitution, the treaties, or the laws of the United States, should be administered by the Federal as well as by the State courts. Bronson v. Kinzie, supra; Clark v. Smith, 13 Pet. 195; Meade v. Beale, Taney, Dec. 339; Green v. Neal's Lessee, 6 Pet. 291; Shipp v. Millen's Heirs, 2 Wheat. 316; Thacher v. Powell, 6 id. 119; Parker v. Overman, 18 How. 137; Fitch v. Creighton, 24 id. 159; Lorman et al. v. Clark, 2 McLean, 568.

Mr. Edward S. Isham, contra.

The statute of Illinois, invoked by the appellant, regulates the process of her courts in foreclosure cases. Having been passed in 1841, it could not have been adopted by the act of Congress of 1828 as a rule for the Federal courts. Counsel for the appellant admits that it was never adopted by the court below, or here. It has, therefore, no application to the present suit, and no error was committed by disregarding it, and adhering to the precedents of the Chancery Court of England, and to the rules of practice and procedure prescribed by Congress and the Supreme Court, or adopted by the court below. Const. U.S., art. 3, sects. 1, 2; Temporary Process Act of Sept. 24, 1789; Judiciary Act of Sept. 24, 1789, sects. 2-4; Process Act of May 8, 1792, sect. 2; Process Act of May 19, 1828, sects. 1, 3 (4 Stat. 278); Act of Aug. 23, 1842 (5 id. 516); Act of June 1, 1872, sects. 5, 6 (17 id. 197); U.S. Rev. Stat., sects. 913 to 916 inclusive; Equity Rules Supreme Court, Nos. 89, 90; Robinson v. Campbell, 3 Wheat. 212; Sturges v. Crowninshield, 4 id. 122; Wayman v. Southard, 10 id. 1; Bank of the United States v. Halsted, id. 51; Bank of Hamilton v. Dudley's Lessee, 2 Pet. 492; Boyle v. Zacharie, 6 id. 348; Ross v. Duval, 13 id. 45; Williams v. Waldo et al., 3 Scam. (Ill.) 264; Bronson v. Kinzie, 1 How. 311; McCracken v. Hayward, 2 id. 608; Thompson v. Phillips, Bald. 246; Am. Law Review, vol. i. p. 23; Payne v. Hook, 7 Wall. 425; Cowles v. Mercer County, id. 118; Railway Company v. Whitton, 13 id. 270; Insurance Company v. Morse, 20 id. 445; Doyle v. Insurance Company, 94 U.S. 535.

The courts of the United States for the districts of Illinois, in executing their decrees, do, by their own forms, modes of procedure, and process, give just and full effect to the equity of redemption, in foreclosure proceedings, so far as it constitutes an estate in the mortgagor.

A State statute which furnishes a rule of property or decision, within the meaning of the thirty-fourth section of the Judiciary Act, undoubtedly controls the contract; but 'laws which relate to practice, process, or modes of proceeding before or after judgment, are exceptions to the thirty-fourth section.' Thompson v. Phillips, supra; Wayman v. Southard, supra. Of the latter character is the statute in question. It relates only to the means for carrying a judgment or decree into execution; but it cannot reach the procedure and process of the courts of the United States.

The party who, in asserting his rights ex contractu, invokes the jurisdiction of the Federal courts is entitled to the methods and process by which it is exercised. It is urged by the appellant that the law in force when the contract is made forms a part of it. No reason can, however, be assigned why the Federal enactment establishing the forms of remedy, and the modes of proceeding in the Federal courts, does not enter into the contract with the same effect as the statutes of a State which prescribe the modes and incidents of the remedy in her own courts. If the appellee, although subject to the jurisdiction of the courts of the United States, contracted, by implication, to exclude their procedure, then those courts from time to time, and without reference to the act of 1828, must adapt their equity practice to the constantly recurring changes in State legislation.

MR. JUSTICE MILLER, after stating the case, delivered the opinion of the court.