195 U.S. 1
LYDIA BRADLEY, Plff. in Err.,
H. W. LIGHTCAP.
Argued April 21, 1904.
Decided May 31, 1904.
Messrs. John S. Miller, Merritt Starr, and W. W. Hammond for plaintiff in error. [195 U.S. 1, 2] Five ejectment suits were brought by Lightcap against tenants of Mrs. Bradley, July 13, 1895, in the circuit court of Mason county, Illinois, and taken on change of venue to Fulton county, where they were consolidated; Mrs. Bradley was let in to defend, and the case went to judgment in her favor. This judgment was reversed by the supreme court of Illinois, after several hearings, and the case remanded to the circuit court. 186 Ill. 510, 58 N. E. 221. On the retrial, judgment was recovered by Lightcap, which was affirmed by the supreme court (201 Ill. 511, 66 N. E. 546), and this writ of error prosecuted.
On the disposition of the case when brought to the supreme court the second time the division of opinion among the seven members of the court found expression. Mr. Chief Justice Magruder, Mr. Justice Carter, and Mr. Justice Ricks concurred in the opinion of Mr. Justice Cartwright in affirmance of the judgment. Mr. Justice Wilkin and Mr. Justice Boggs filed dissents, and Mr. Justice Hand, while agreeing that the legal title was in Lightcap, was of opinion that the full beneficial interest was in Mrs. Bradley, and that she, being in possession, a court of chancery might protect her equitable interest and possession by enjoining the prosecution of the ejectment suit.
The facts are in substance these:
Tobias S. Bradley loaned T. B. Breedlove, June 3, 1867, $19,616, evidenced by notes payable in one, two, three, four, and five years, respectively, and secured by a trust deed on 1,200 acres of land in Mason county, Illinois. On Bradley's death, Lydia, his widow, became the sole owner of the trust deed and notes. October 8, 1867, Breedlove conveyed the 1,200 acres to Prettyman, subject to the mortgage to Bradley. August 13, 1868, Prettyman conveyed 680 acres to McCune, and McCune gave a trust deed thereon to E. G. Johnson, trustee, to secure the payment of $15,000, evidenced by three notes, to the order of Lydia Bradley, and due in one, two, and three years after date. Mrs. Bradley, through her agent, accepted these notes and trust deed as part payment of the [195 U.S. 1, 3] Breedlove notes, and Prettyman paid the difference, and the 1,200 acres were released from the Breedlove trust deed or mortgage.
November 13, 1868, McCune conveyed the 680 acres to Prettyman, subject to the trust deed to Johnson. No taxes were paid by McCune or by Prettyman, and no part of the mortgage debt was ever paid.
May 24, 1871, Mrs. Bradley redeemed from the tax sales for taxes of 1868 and 1869, and in 1872 for the taxes of 1871, and she has paid all other taxes assessed on the land since the trust deed or mortgage was given.
Early in the summer of 1871, Austin Johnson, whom Mrs. Bradley, in July, 1870, had appointed her business agent, went on the land on her behalf, and, in 1872, Mrs. Bradley and Austin Johnson together went upon the land, and she took personal and exclusive possession of it, which, by herself and her tenants, she has retained ever since.
February 22, 1872, Mrs. Bradley filed a bill in the circuit court of Mason county to set aside the release of the Breedlove trust deed or mortgage, on the ground of fraud, and for the foreclosure of that mortgage on the 1,200 acres for the payment of the balance of the original debt. McCune was a party, but seems to have left the state, and was brought in by publication. The bill was contested, and on August 22, 1879, the Mason circuit court entered a decree of foreclosure and sale on the McCune trust deed, finding the amount due Mrs. Bradley to be $31,500. The 680 acres were sold by the master in chancery, October 27, 1879, bid in for Mrs. Bradley for $10,000, and a certificate was issued to her.
Mrs. Bradley proceeded to develop and improve the 680 acres, drained the tract, erected farm buildings, laid tiles, reduced the land to cultivation, and has maintained exclusive possession to this date.
September 4, 1893, Prettyman gave a quitclaim deed of the land to Lightcap, which was recorded November 30, 1894. July 13, 1895, these actions in ejectment were commenced. [195 U.S. 1, 4] The McCune trust deed or mortgage was executed August 13, 1868, and at that time chapter 57 of the Revised Statutes of Illinois contained these sections:
The statutes contained no limitation of time within which a sheriff's or master's deed must be taken after the period for redemption had expired, and prescribed no penalty or loss of right to the purchaser by reason of delay or failure in taking out such deed.
In Rucker v. Dooley, 49 Ill. 377, 95 Am. Dec. 614, the supreme court of Illinois, at its September term, 1868, reasoning by analogy, held in an equity suit, as against a purchaser of real estate at an execution sale, who was never in its possession, and had no claim to it, except under his judgment and sale, and who had taken out a sheriff's deed twenty-nine years after the sale, and in favor of a bona fide purchaser, in possession, claiming by mesne conveyances from the judgment debtor, that, for the protection of purchasers for a valuable consideration, without notice, from the judgment debtor and those claiming under him, a sheriff's deed ought not to be issued after the lapse of twenty years, and that application for a deed made after the lapse of seven years, during which the judgment was a lien, and fifteen months, the time given for redemption, and within twenty years, should be made to the proper court by rule on the sheriff and notice to the parties interested.
March 22, 1872, an act of the general assembly of Illinois was approved, entitled, 'An Act in Regard to Judgments and Decrees, and the Manner of Enforcing the Same by Execution, [195 U.S. 1, 6] and to Provide for the Redemption of Real Estate Sold Under Execution or Decree,' which went into force July 1, 1872, the provisions of which were not materially different from those above quoted, but 30 was as follows, the additions to former acts being indicated by italics:
[195 U.S. 1, 11] Messrs. E. A. Wallace, George W. Wall, and Lyman Lacey, Jr., for defendant in error.
Statement by Mr. Chief Justice Fuller:
Mr. Chief Justice Fuller delivered the opinion of the court.
Among the defenses it is stated Mrs. Bradley relied on were that 'under 6 of chapter 83 of the Revised Statutes, in regard to limitations, the trust deed from McCune to Johnson, the decree of sale, and certificate of purchase constituted color of title which, coupled with her possession and payment of taxes for seven successive years, made her the legal owner of the lands to the extent and according to the purport of her paper title;' that 'under 4 of the same act her possession and actual residence, through her tenants, for seven successive years, having a connected title in law or equity deducible of record from the United States, by virtue of the same trust deed, decree and sale, barred the action of plaintiff;' and 'that she was mortgagee in possession after condition broken, and entitled to possession as such.' The supreme court of Illinois overruled all these defenses, and held [195 U.S. 1, 17] that when the sale was made under the decree, and the mortgagee purchased at the sale, the mortgage was satisfied as to the land, and all rights of the mortgagee were represented by the certificate of purchase; and that, by force of the act of 1872, the mortgagee having failed to take the deed within the time limited by the statute, the certificate became null and void, her title terminated as it would on redemption, and she ceased to have any interest whatever in the premises, so that the mortgagor or his grantees, without any payment of the mortgage debt, was entitled to recover the possession from the mortgagee, in ejectment, on the strength of a perfect title.
Before and when the trust deed to Johnson, which may be treated as if a mortgage to Mrs. Bradley, was given, the legal title passed to the mortgagee according to the law of Illinois in respect of mortgages.
After condition broken the mortgagee became entitled to possession of the mortgaged premises, and could maintain an action of ejectment. The mortgagor had only an equity of redemption, and, in case of sale on foreclosure, had, by statute, the right to redeem within twelve months by making full payment.
The law in general as it is today was thus declared in Ware v. Schintz, 190 Ill. 189, 193, 60 N. E. 67, 69:
The condition of the McCune mortgage was broken as soon as made by failure to pay taxes previously and then due, and again by failure to pay the notes maturing in 1869, 1870, and 1871, and Mrs. Bradley entered into peaceable possession of the tract of 680 acres before the act of 1872 took effect. If the assent of the mortgagor was necessary, which we do not hold it was, it should be implied in the circumstances. Her possession was that of mortgagee in possession, and she could defend, as against the owner of the equity of redemption, any action except for an accounting of the rents and profits, and to redeem. And, as she could pursue concurrent remedies, the character of her possession was not affected by the filing and pendency of the bill to set aside the release of the Breedlove mortgage. But that bill went to decree in 1879 of foreclosure of the McCune mortgage by sale, and sale was had. There was no independent purchaser, nor was the whole amount of the mortgage debt bid, but Mrs. Bradley, the mortgagee in possession, bid about one third of the amount due. By the statute the right of redemption of McCune and his grantee was barred and determined October 27, 1880, at the expiration of twelve months from the date of sale, and so it was by the express provision of the decree of foreclosure.
The certificate of purchase was issued to Mrs. Bradley, but it does not appear that she obtained a deed. It is assumed, and we assume, that she did not, although it is suggested that after the lapse of so many years, and under the circumstances, in an action at law by the original mortgagor against the [195 U.S. 1, 19] mortgagee in possession, an irrebutable presumption of a deed arises on grounds of public policy.
The supreme court of Illinois in the present case decides that the act of 1872 applies to mortgagees in possession, and that it operates not simply as a statute of limitations on the right to obtain a deed, but in effect as a statute forfeiting, by the nullification of the certificate, the mortgagee's estate and right of possession by reason of laches, and means that if a deed be not taken out within the time specified, the mortgagee has lost his debt, and the mortgagor has been reinstated in his former title by operation of law, and without having paid anything in redemption. Accepting the construction of the act by the state court, and its conclusion that it applies to Mrs. Bradley, then the question is whether such a statute so applied does not impair the obligation of the contract previously existing between the mortgagee and the mortgagor, or deprive the mortgagee of property rights without due process. That question was raised in the supreme court of Illinois, and the court held that it did not. 201 Ill. 511, 66 N. E. 546.
Confessedly, subsequent laws which, in their operation, amount to the denial of rights accruing by a prior contract, are obnoxious to constitutional objection.
In Bronson v. Kinzie, 1 How. 311, 11 L. ed. 143, the statute objected to gave the mortgagor twelve months to redeem after the sale, and Mr. Chief Justice Taney said:
In Barnitz v. Beverly, 163 U.S. 118 , 41 L. ed. 93, 16 Sup. Ct. Rep. 1042, it was held that a state statute which authorized redemption of property sold in foreclosure of a mortgage, where no such right previously existed, or extended the period of redemption beyond the time previously allowed, could not apply to a sale under a mortgage executed before its passage, and Mr. Justice Shiras, referring to Brine v. Hartford F. Ins. Co. 96 U.S. 627, 637 , 24 S. L. ed. 858, 862, said:
In Hooker v. Burr, 194 U.S. 415 , ante, p. 706, 24 Sup. Ct. Rep. 706, these and many other [195 U.S. 1, 21] cases were considered, and the distinction was pointed out between a purchase by the mortgagee and by an independent purchaser, having no connection whatever with the original contract between the mortgagor and mortgagee, and whose contract was made under the law as then existing; as well as the distinction where the mortgagee bids the whole amount of the mortgage debt, as in Connecticut Mut. L. Ins. Co. v. Cushman, 108 U.S. 51 , 27 L. ed. 648, 2 Sup. Ct. Rep. 236, which was cited with approval. There the company bid enough to pay the full amount of the mortgage debt, principal and interest, and on redemption contended that it was entitled to interest at the rate existing at the time of the execution of the mortgage, which had been reduced before the sale, though subsequent to the mortgage. Barnitz v. Beverly was distinguished. In that case the sum bid at the foreclosure sale did not equal the amount due on the mortgage, the debt of the mortgagor was not thereby paid, and it was the mortgagee's rights under her contract as contained in the mortgage, and not her rights as a purchaser, that were in controversy. In the Cushman Case, on the contrary, the amount bid at the foreclosure sale paid the mortgage debt, and the subsequent position of the mortgagee was as a purchaser only.
And we said: 'If the mortgage had been foreclosed, and the mortgagee had thereby realized his debt, principal and interest in full, upon the sale, there can be no doubt that he would not have been heard to assert the invalidity of the subsequent legislation, nor would an independent purchaser at the sale have been heard to make the same complaint. Of course, this does not include the case of a mortgagee who purchases at the foreclosure sale, and bids a price sufficient to pay his mortgage debt in full with interest, and an action thereafter commenced against him to set aside the sale because it was made in violation of legislation subsequent to the mortgage. In such case we suppose there can be no doubt of the right of the mortgagee to assert, as a defense to the action, the unconstitutionality of the subsequent legislation [195 U.S. 1, 22] as an impairment of his contract contained in the mortgage.'
In Illinois the legal title vests in the mortgagee; but in equity that title is regarded as a trust estate to secure the payment of the money; and where the mortgaged premises are bid off by the mortgagee, at foreclosure sale, for the full amount of the decree, interest and costs, the mortgage may be held to have expended its force; but where the bid is for less than the full amount, a different rule would be applicable. Bogardus v. Moses, 181 Ill. 554, 559, 560, 54 N. E. 984.
Entitled to pursue different remedies to collect the mortgage debt or to free the mortgaged premises of the right of redemption, foreclosure and sale, purchase and deed are in aid of the original title, and not inconsistent with it. Williams v. Brunton, 8 Ill. 600. If the right of redemption is determined by the efflux of time, which must be before a deed can issue, failure to take out the deed either has no effect, so far as the mortgagor is concerned, because he is not injured, or the right of redemption still remains, and all the mortgagor can claim is that the relation between the partices is unchanged.
In the present case there was no independent purchaser; the bid of the mortgagee was less than one third of the amount found due; there was no redemption, and the right of redemption was cut off; the mortgagee was in possession before and at the time of foreclosure and sale, and when ejectment was brought, sixteen years thereafter; and the mortgage debt had never in fact been paid; so that the original mortgagor as plaintiff in ejectment could not recover, unless, by the subsequent law, the mortgagee had been subjected to the loss of all her rights, as against him, by laches in obtaining a deed, although, as a general rule, laches are not imputable to a party in possession to the loss of the right thereto.
And if the operation of the subsequent law is to impair the obligation of Mrs. Bradley's mortgage contract, or to deprive her of rights protected by the Constitution, we cannot decline jurisdiction because of a construction that we deem untenable. [195 U.S. 1, 23] Louisville Gas Co. v. Citizens' Gaslight Co. 115 U.S. 683, 697 , 29 S. L. ed. 510, 515, 6 Sup. Ct. Rep. 265; Terre Haute & I. R. Co. v. Indiana, 194 U. S. --, post, p. --, 24 Sup. Ct. Rep. 767.
By the judgment in this case Lightcap had been held clothed with the legal title and the immediate right of possession. And this on the ground that the certificate of purchase discharged the McCune mortgage, and that the act of 1872 nullified the certificate after the lapse of five years. This gave to the limitation of time for taking out the deed the effect of destroying the right of possession taken under the mortgage, wiping out the mortgage with the certificate, and allowing the mortgagor to assert the legal title and right of possession as against the mortgagee as a wrongdoer. That is to say, though Mrs. Bradley was rightfully in possession, and though the mortgage debt had not in fact been paid, the bar of the statute as to the deed is held to be efficacious in turning Mrs. Bradley into a trespasser as respects the mortgagor, who, not having in fact paid anything, is treated as having made payment by the mortgagee's bid, and being at the same time entitled to assert the failure of the purchase by reason of Laches in taking out the deed.
And yet, because a statute may take away the sword which a deed would give a mortgagee out of possession, it does not follow that it can lawfully operate on prior transactions so as to take away the shield afforded by possession. Rightful possession is a defense in ejectment ( Sands v. Wacaser, 149 Ill. 530, 533, 36 N. E. 960, and cases cited), and Mrs. Bradley's possession could only be treated as wrongful as against the original mortgagor by the application of the subsequent law.
As we have said, when Mrs. Bradley took this mortgage there was no statutory limitation as to the time within which a master's deed must be taken out, and no loss of right by reason of failure to do so was prescribed. After she had filed her bill, and while she was in possession, the act of 1872 went into effect, and, it may be conceded, limited Mrs. Bradley's right to obtain a deed on foreclosure sale, and so far affected [195 U.S. 1, 24] any remedy through a deed she might have had. But, reading the act, as the view of the supreme court compels us to do, as taking away her right to maintain her possession, we are of opinion that it materially impairs the obligation of her contract, and deprives her of property without due process.
Judgment reversed, and cause remanded for further proceedings not inconsistent with this opinion.