Harter v. Twohig/Opinion of the Court

In respect of the nature of a conveyance in mortgage at common law, the legal title vested in the mortgagee, and was forfeited upon default, but equity established the right of redemption after default. And, variously modified, where the common-law doctrine prevails, a mortgage is still regarded as a conveyance in fee, although a conveyance as a security; while in many of the states this has been changed, chiefly by statute, so that a mortgage is regarded merely as a pledge. The common law, so far as applicable, and not inconsistent with the constitution of the United States or the organic law of the territory, or with any law of the territorial legislature, was adopted and declared to be law within the territory of Nebraska by act of March 16, 1855 (Laws Neb. 1855, p. 328); but by section 30 of an act approved February 21, 1855 (Laws Neb. 1855, p. 166), it was provided that, 'in the absence of stipulations to the contrary, the mortgagor of real estate retains the legal title and right of possession thereof.' Thus, irrespective of the terms of the instrument in particular cases, instead of the mortgagee being entitled to immediate possession of the mortgaged property as an incident of the title, the mortgagor was entitled to possession until foreclosure. The conveyance in this case was, however, a trust deed, and not a mortgage, and by section 676 of the law of the territory, also approved March 16, 1855 (Laws Neb. 1855, pp. 55, 119), it was provided: 'Deeds of trust of real or personal property may be executed as securities for the performance of contracts, and sales made in accordance with their terms are valid. Or they may be treated like mr tgages, and foreclosed by action in the district court.' This recognized the distinction between a trust deed and a mortgage, and, while providing that a trust deed might be treated like a mortgage, and foreclosed as mortgages might be, did not undertake to deal with the legal title which passed by the conveyance to the trustee. The section was in terms adopted from the Code of Iowa of 1851 (Code Iowa, 1851, c. 118, § 2096; Laws Neb. 1855, p. 55), which Code likewise contained the provision as to the retention of the legal title by the mortgagor above quoted from the law of Nebraska of February 21, 1855 (Code Iowa, 1851, § 1210). And it has been repeatedly held by the supreme court of Iowa that the legal title vests in the trustee under such a deed. Devin v. Hendershott, 32 Iowa, 192, 194; Newman v. De Lorimer, 19 Iowa, 244; Tucker v. Silver, 9 Iowa, 261; Cook v. Dillon, Id. 407.

It is true that in Webb v. Hoselton, 4 Neb. 408, decided at January term, 1876, the supreme court of Nebraska held that a conveyance in the form of a deed of trust to secure the payment of a promissory note, conditioned that in case of failure to pay the trustee shall sell, or, upon payment, reconvey, is, in effect, only a mortgage. Of course, in many particulars, the attributes of deeds of trust and mortgages with a power of sale are the same. Both are intended as securities. In both, if not controlled by statute, the legal title passes from the grantor, but in equity he is, before foreclosure, considered the actual owner; and in both the grantor has the right to redeem. But that case did not involve the application of the territorial act to which we have referred, and changes had taken place in legislation during the intervening period.

The land in question was unoccupied and wild land, and, there being no adverse holding, upon breach of condition, if not before, the legal title which Kountze held drew to it the possession, although in subjection to the right of redemption in Wilbur and his grantees; so that, when this bill was filed to redeem from the trust deed, the question at once arose whether there was then an equity of redemption outstanding which complainant could assert, and which a court of equity would recognize.

Although actual possession by a mortgagee under a claim of ownership, continued for the time required by statute, might be requisite to convert a mortgage title into a title absolute, yet, notwithstanding that, in a case such as this, whether or not redemption will be accorded depends upon the equities between the parties.

Twenty-nine years had elapsed after the breach of condition before this bill was filed, but in the meantime the proceedings for foreclosure complained of had been had. This was in 1876, the sheriff's deed being given in 1877,-11 years before complainant's bill was filed. It is settled law in Nebraska that a judgment rendered against a person or in his favor is reversible after his death, if the fact and time of death appear upon the record, or in error coram nobis if the facts must be shown aliunde. The judgment is voidable, and not void, and cannot be impeached collaterally. Jennings v. Simpson, 12 Neb. 558, 11 N. W. 880; McCormick v. Paddock, 20 Neb. 486, 30 N. W. 602. Here, however, the petition to foreclose was filed after the death of Isaac Harter, and, without pausing to examine the other irregularities relied on, it is sufficient to say that we think the foreclosure decree was void. But if the initiation of those proceedings operated to acknowledge an outstanding right of redemption at that time, their culmination and the deed of the sheriff must be recognized as evidence of the assertion of an extinguishment of such equity.

By section 6 of chapter 57 of the General Statutes of Nebraska of 1873 (Gen. St. 525) it was provided that: 'An action for the recovery of the title or possession of lands, tenements, or hereditaments, can only be brought within ten years after the cause of such action shall have accrued. Thi section shall be construed to apply also to mortgages.'

In McKesson v. Hawley, 22 Neb. 692, 35 N. W. 883, a sale had taken place under a trust deed, and grantees under the purchaser at the trustee's sale-one Hartley-had taken and held adverse possession of the land for more than 10 years prior to the commencement of the action, which was brought to redeem from the trust deed, on the ground that the proceedings to sale under it were invalid. The supreme court of Nebraska held that the provisions of the above section applied; that an action to redeem from a mortgage was barred in the same time an action to foreclose would be, and could not be maintained after 10 years from the date when the right of action accrued, which was, in that case, as soon as adverse possession was taken under the alleged purchase from the trustee; and the court said: 'But it is contended by plaintiff that the possession of defendant and her grantors was not adverse; that the title of the trustee was a recognition of the plaintiff's title; and that, as the foreclosure proceedings were void, defendants could hold only as assignees of the rights of the trustees, and therefore not adverse. Such, to our mind, cannot be the law. Notwithstanding the fact that the foreclosure proceedings might have been void, it is clear that the purpose of such proceedings was to cut off and destroy the title of plaintiff; and therefore the conveyance by the trustee to Hartley, had it been legal, would have terminated plaintiff's title. The grantees of Hartley taking and holding the property or asserting their right to hold it under warranty deeds from him, was clearly adverse to plaintiff. They held as owners, and the statute would run in their favor.'

Even if in the case in hand the possession may be regarded as constructive merely, yet, as the legal title was in the trustee, and not in Wilbur, and only a bare right to redeem could be transferred to and by Wilbur's grantees, we hold that the same principle by analogy applied to them and to Twohig, which could only be overcome, if at all, by superior equities on his part. And we do not perceive that any such equities existed.

It appears from the record that from 1867 to 1877, inclusive, the land was assessed and taxed in the name of Isaac Harter; from 1878 to 1885, inclusive, in the name of Isaac Harter, Jr., one of the heirs of Isaac Harter; and from 1886 to 1889, inclusive, in the name of H. W. Harter, another of said heirs; that, after the maturity of the trust deed, Isaac Harter paid the annual taxes from and including those of 1861 to the day of his death, and that his heirs, the appellants, paid the annual taxes from that time down to and including those for 1888; that the land was treated during all this time as belonging to Harter and his heirs, and notoriously known as the 'Harter land.' It further appears that both Lockwood and Virtue knew of the outstanding trust deed, which was, indeed, acknowledged before Virtue, and the claim of Harter thereunder, and that Lockwood and his wife knew of the pendency of the foreclosure suit; that Mr. and Mrs. Lockwood left the county and state in 1866, and Virtue in 1864, and never returned, except that Virtue paid a temporary visit there in the summer of 1888, when he conveyed to Twohig, and that the Lockwoods and Virtue paid no attention whatever to the land, nor asserted any ownership therein, after their departure. The record discloses another fact: that when Virtue left Dakota City he placed his business affairs in the hands of an agent, who attended thereto, and that taxes were paid on certain lands in Dakota City as late as 1877 on behalf of Virtue, while no attention was given to the land in controversy. In the summer of 1888 the affidavit of Isaac Harter, Jr., was filed in the county court, in the course of disposing of other real estate than this, to the effect that Isaac Harter, upon his decease, had left no debts unpaid; and therefrom it also appeared that Isaac Harter died February 7, 1876, whereupon the clerk who had filed the affidavit obtained a quitclaim from Virtue, and set up this claim to the land. The land, which was worth perhaps $120 in 1858, had suddenly increased in value to about $12,000 in 1888, chiefly within the year or two preceding.

Under these circumstances we think the doctrine of laches was applicable; that the claim was stale; and that no court of equity would be justified in permitting the assertion of an outstanding equity of redemption after such a lapse of time, and in the entire absence of the elements of good faith and reasonable diligence.

Decree reversed, and cause remanded, with directions to dismiss the bill.