Omaha Hotel v. Kountze Kountze/Dissent Miller

MILLER, J., dissenting.

The decision of the court, with the grounds on which it is based on this case, is so wide a departure from the former practice in similar cases, and is likely to work so much injustice in future, that I feel it to be my duty to dissent and to give the reasons for it. I am at a loss to see the value of the learned search into the practices and precedents of the English law in writs of error and appeals, and deem it only necessary to say that in our system the right to a writ of error and to an appeal depends wholly upon statutes granting that right, and not upon any principle of the common law, nor upon any power in any court to review the decisions of any other court which is not also the creation of positive statute, and which, in the courts of the United States, must necessarily depend upon an act of congress. So, also, the mode of exercising this right, the conditions on which the writ of error or appeal may be had, and the effect of the writ on the progress of the case, are all prescribed by statute. A striking illustration of this is in the fact that every writ of error or appeal, once allowed, transferred the case itself, its record, and all proceedings under it, in the English courts, into the reviewing tribunal, and left nothing in the inferior court on which it could act. The acts of congress proceed upon a wholly different principle. They allow a party to take an appeal or writ of error, which does not remove the record of the case into the appellate court, but which may be heard there upon the transcript of the record, the original remaining in the inferior court. Unless the plaintiff in error takes other steps which the law prescribes, the court which rendered the judgment complained of can proceed to execute its judgment and enforce its decree in favor of the successful party, though the case be pending in the appellate court. In fact, unless the other steps mentioned be taken, a valid sale of the property of the plaintiff in error may be made in the very moment in which the appellate court is deciding to reverse the judgment on which it is sold. It is this other step, then, which the party appearing may take, and which totally suspends the power of the inferior court to proceed, that is wholly and absolutely statutory, which is no part of the common law, and which is here for consideration in this case, and which should be decided alone on the language and meaning of the statute. That step is the giving of a bond which, because it has the effect of suspending the action of the inferior court, is called a supersedeas bond, in analogy to the effect of a writ of supersedeas in the English law, from the superior to the inferior court. The law of this subject is found in section 1000 of the Revised Statutes:

'Every justice or judge signing a citation or any writ of error shall, except in cases brought up by the United     States, or by direction of any department of the government,      take good and sufficient security that the plaintiff in      error, or the appellant, shall prosecute his writ or appeal      to effect; and if he fail to make good his plea, shall answer      all damages and costs, where the writ is a supersedeas and      stays execution, or all costs only where it is not a      supersedeas as aforesaid.'

As thus stated in the Revision, the law is the result of the act of September 24, 1789, § 22, and the amendment to that section by the act of December 12, 1794. 1 St. 84, 404.

It has never been doubted under these statutes that the appealing party could have his election to make his writ of error operate as a supersedeas or not, and that the amount of security to be given would depend very much on this choice. If he did not wish to stay execution, he was only required to secure payment of the cost of the appeal. If he did wish to stay execution, he must give bond to answer all damages as well as costs, so that both the condition of the bond to be given and the amount of it must depend on the effect it had on further proceedings in the inferior court.

The decisions of this court, and the practice of the judges under it, are given with reasonable accuracy in the opinion of the majority, from the date of the last of these statutes until the adoption of rule 29 of this court in 1867. The case of Rubber Co. v. Goodyear, decided in that year, (6 Wall. 156,) and some decided previously, had shown great oppression in exacting security in an excessive amount to stay execution in cases where but little damage could accrue to the appellee, because, as in case of proceedings in rem, where there was no personal liability, and there could be no loss except from the delay, and in cases of mortgage foreclosures, where there could be no other decree but for a sale of the property. The result was the adoption of the twenty-ninth rule, in which the court undertook to define what damages were allowable in the various classes of cases where the plaintiff in error or appellant obtained a stay of execution or supersedeas pending the appeal. This rule was intended for the guidance of the judges whose duty it was to approve bonds in appeals or writs of error. It was the construction of the members of the court of that day as to the damages which, in the various kinds of cases mentioned in it, the party who had obtained a supersedeas, and had failed in his appeal, was liable, under the act of congress, to pay for his false clamor to the party whom he had unjustly delayed after final judgment against him, for only final judgment can be reviewed in this court. But two of the justices who participated in framing that rule, in which all concurred, remain, and neither of them concur in the construction now given to its by the majority of the court, nor in the construction of the statute under which it was framed.

In the case before us the bond sued on was given to suspend an order of sale in a suit to foreclose a mortgage, and the question is whether the bond, which is substantially conformable to the rule of the court, covers the rental value of the mortgaged property during the three years of delay while the case was pending in this court, the mortgaged property having been sold for a sum much below the amount of the debt, for the payment of which it was decreed to be sold, during which time the mortgagor was in possession of the property, which was a public hotel, and the jury find the rent was worth $38,241.75. The opinion of the court is based upon two propositions: (1) That the mortgagor had a right to the use and occupation, even after condition broken, until judicial sale, and was not bound to the mortgagee for their value; (2) that the rule does not make any provision for rent pending the appeal. I do not agree to either proposition. The mortgagor, after condition broken, has no right in law or equity to the possession of the mortgaged property, unless it be so expressed in the mortgage. If it be personal property, it is everyday practice for the mortgagee, after condition broken, to seize the goods and chattels and hold them until the debt be paid, or to sell in satisfaction of the debt. If the mortgagor refuse to deliver possession on demand, the mortgagee can recover it by replevin, and this is often done. How could this be so if the mortgagor's right to possession remained after condition broken? If the mortgaged property be real estate, the common law allowed mortgagor an action of ejectment after condition broken, and this was formerly the usual mode of foreclosure, and is retained in many states to this day. How can there be any right in the mortgagor to possession when this right to recover by an action of ejectment belongs to the mortgagee? The two rights are inconsistent and cannot co-exist. It is conceded that in such case as the present one, where the mortgaged property is insufficient to pay the debt, the mortgagee has the additional equitable right to have a receiver appointed to take possession, and in the end, if necessary, the rents and profits will be appropriated to pay the deficiency. How can all this be done if the mortgagor has the right to continue in possession after he has broken the condition of his mortgage?

The truth is, the idea has obtained footing in practice because it is easier to get a decree and sell the property than to dispossess the mortgagor, and hence attempts to do so are rare. But when the mortgagee has pursued the former course and obtained his order of sale,-a decree which is final, for no other decree can be appealed from,-this right of the defaulting mortgagor to further possession of the property, while he transfers the litigation to another court and protracts it for three years, is an inequitable abstraction, founded neither in the common-law rights of the parties nor in any principle of equitable jurisprudence. The whole error is founded on the idea that so long as the mortgagor is permitted to retain possession he is not accountable for rent, and not upon the existence of any right to retain possession. And so the act of congress says, if you wish to appeal this case to another court and go through another trial, instead of appointing a receiver to take possession, we will require of you a bond to secure all damages suffered by the appellee by reason of the delay; and as he is entitled to have the land sold at once for his debt, or to have possession delivered so that rents and profits may be appropriated where they ought to go, you can only suspend the operation of the decree by giving such a bond.

If this be not so the grossest injustice must result in many cases. In all cases of insolvent mortgagors the rule, as construed by the court, offers a strong inducement to keep the mortgagee out of his money as long as possible, without interest, or any other compensation for the delay. An insolvent corporation, a railroad company, for instance, makes default in its mortgage bonds which amount to twice the value of the property mortgaged. A decree is obtained for its sale, and before a receiver can be appointed the directors take an appeal, give a small bond, little more than the probable costs, and then use the road for three years, making millions of dollars out of it with which to pay debts subsequent to the mortgage, or distribute among interested parties. No more striking instance of its injustice is needed than the case before us, where an utterly insolvent corporation, with a decree for money largely in excess of the value of the hotel mortgage, is stayed by a bond for $50,000, under which the corporation receives rent, or uses the property to the value of $38,000, while they litigate, without a shadow of right, in this court for three years, and appropriate this $38,000 to their own use, and are not held responsible for this, though the bond expressly mentions the use and detention of the property as one of their liabilities if they fail to make good their plea. But, it is said, the rule only provides for the use and detention of the property before the decree which is appealed from. The language of the rule is that in such cases, mentioning mortgage foreclosure suits specifically, 'indemnity in all such cases is only required in an amount sufficient to secure the sum recovered for the use and occupation of the property, and the costs of the suit and just damages for delay, and costs and interest on the appeal.' That the use and detention here spoken of, like all the other class of damages there mentioned, is such as may thereafter be recovered, is as plain as that the delay and the costs and interest are such as follow, and not such as precede, the decree. It is senseless without it meant this, and such has been the practical construction since its adoption.

Not only is this true in practice, but in the leading case, construing this rule for the first time, of Jerome v. McCarter, 21 Wall. 30, the chief justice expressly held that the rent mentioned in the rule is that accuring after the appeal.

That was an appeal from a foreclosure decree and a motion for additional security in this court. Mr. Phillips, for appellant, in support of the sufficiency of the bond, cited Roberts v. Cooper to show that nothing could be recovered for the use and detention of the property. But the chief justice, after citing the rule verbatim, said:

'This is a suit on a mortgage, and therefore under this rule     a case in which the judge who signs the citation is called      upon to determine what amount of security will be sufficient      to secure the amount to be recovered for the use and      detention of the property, and the costs of the suit, and      just damages for the delay and costs and interest on the      appeal.'

Here is a construction of the rule by a unanimous court in a case where the precise question was presented.

The decision of the court in this case overrules it, and establishes in its place a rule which, in many cases, must work injustice, and in no case is equitable; for, in the language of that rule, leaving out the words 'use and detention,' this is a necessary part of the other words, 'just damages for delay.'

FIELD, J., concurs with me in this dissent.