Opinion
No. 33203.
June 6, 1938. Suggestion of Error Overruled June 30, 1938.
1. DEEDS.
A conveyance of land conveys to grantee all of grantor's interest therein, both legal and equitable, unless the deed provides to the contrary.
2. MORTGAGES.
Where owner of fee becomes absolutely entitled in his own right to charge on the same land with no intervening interest or lien, the charge will, at law, merge in ownership and cease to exist, and also in equity where no intention to prevent merger has been expressed and none is implied from the circumstances and the interests of the party, and a presumption in such a case arises in favor of the merger.
3. MORTGAGES.
Where owner of fee acquires incumbrance on land, no intention is expressed as to merger, and inferior incumbrance exists, equity will presume, if owner's best interest requires, that there was no intention for the merger to take place, and the merger will not be permitted.
4. MORTGAGES.
Where purchaser died before executing mortgage and obtaining loan to pay purchase price, as required by contract with vendors, purchaser's heirs and other claimants to legal title executed deed to one vendor, and such vendor executed trust deed, which was foreclosed, purchaser on foreclosure had priority over creditors of first purchaser's estate for amount of proposed mortgage and loan, since vendor acquired legal title and equitable lien for such amount, and intention of vendor and purchaser on foreclosure not to effect merger would be presumed.
5. ESTATES.
A merger will not be prevented in equity when fraud or wrong will result from operation of rule raising presumption against merger where it is against interest of party holding legal and equitable titles.
6. EXECUTORS AND ADMINISTRATORS.
A judgment ordering sale of realty formerly belonging to deceased to satisfy his debts was erroneous, under stipulation that sale would bring not more than $100,000, and under evidence establishing existence of equitable charge on land for $200,000, which was prior to claims of deceased's creditors.
APPEAL from the chancery court of Washington county; HON. J.L. WILLIAMS, Chancellor.
Wells, Wells Lipscomb, of Jackson, and S.B. Thomas, of Greenville, for appellants.
All of the right, title and interest, legal or equitable, held by Lillie A. Blum and Abraham Morgan Blum, sole heirs and devisees of Lawrence Blum, deceased, passed to Mrs. Jennie S. Blum by the warranty deed executed by them to her. All of the right, title and interest, legal or equitable, held by Herman Blum and his wife and Minette Sedonia Moyse and her husband, and Nathan Goldstein, passed by their quit claim deed to Mrs. Jennie S. Blum.
All of the right, title and interest, legal or equitable, held by Mrs. Jennie S. Blum, and especially her equitable first lien for $65,000.00 and interest and the equitable second lien for $135,000.00 and interest, passed by the warranty in her deed of trust to Carlyle, the original trustee, to Barcroft, the substituted trustee, and to the Connecticut General Life Insurance Company by the trustee's deed.
Sections 2110, 2122, 2124, 2125 and 2126, Code of 1930; Fink v. Henderson, 74 Miss. 8, 19 So. 892; Robertson v. Sullivan, 102 Miss. 581, 59 So. 846.
It is well settled in Mississippi that where the grantor conveys property by warranty deed, any rights acquired by him subsequent to such warranty inures to the benefit of the grantee and warrantee.
Fletcher v. Wilson, 1 S. M. 376; Taylor v. Eckford, 11 S. M. (19 Miss.) 1; Harris v. Byers, 73 So. 614, 112 Miss. 651; Garner v. Garner, 78 So. 623, 117 Miss. 694; Bush v. Person, 59 U.S. 82, 15 L.Ed. 273; Miss. Sawmill Co. v. Douglas, 65 So. 885, 107 Miss. 678; Fitzgerald v. Allen, 89 So. 146, 126 Miss. 878.
Under the facts in evidence and under the law, the Planters Trust Savings Bank, owner of the probated claim, was guilty of such laches, and its conduct was such as to estop it from seeking from a court of equity an order to sell the Mounds Plantation to pay its probated claim.
Griffith's Chancery Practice, sec. 33.
Litigants who do not pursue their remedies in a court of equity in good time are barred by the equitable doctrine of laches.
Ayres v. Mitchell, 3 S. M. 683; Johnson v. Jones, 13 S. M. 580; Wynn v. Kendall, 85 So. 85, 122 Miss. 809; Comans v. Tapley, 101 Miss. 203, 57 So. 567; Aetna Ins. Co. v. Robertson, 94 So. 7; State v. Woodruff, 150 So. 760.
Estoppel may arise from misleading silence or passive conduct joined with the duty to speak.
Kelso v. Robinson, 172 Miss. 829, 161 So. 135.
There was no merger of legal and equitable titles in Mrs. Jennie S. Blum and in the Connecticut General Life Insurance Company.
It is the universal law that there is no merger unless there is an intention on the part of the holder that such merger shall take place, and in the absence of evidence, intention of the holder of both legal and equitable titles, as to whether same will merge, will be presumed to accord with his interest. On the contrary, when it is not to the interest of the holder of both legal and equitable titles, it will be presumed that they did not merge.
Cade v. Toler, 155 Miss. 606, 124 So. 793; Brown v. Doe, 10 S. M. 268.
A merger will not take place if it be apparent that the junior mortgagee in purchasing did not so intend, or that a merger is against his manifest interest.
Great Southern Land Co. v. Valley Securities Co., 162 Miss. 120, 137 So. 310; Fortham v. Deters, 99 Am. St. Rep. 161; Shattuck v. Belknap Savings Bank, 63 Kan. 443, 65 P. 643; Hanlon v. Doherty, 109 Ind. 37, 9 N.E. 782; Coburn v. Stephens, 13 Ind. 683, 36 N.E. 132, 45 Am. St. Rep. 218; Moffet v. Farwell, 222 Ill. 543, 78 N.E. 925; Scott v. Hill, 50 S.W.2d 110; Commonwealth Building Loan Assn. v. Martin, 49 S.W.2d 1046; North Texas Building Loan Assn. v. Overton, 86 S.W.2d 738; Pearson v. Mulloney, 194 N.E. 458; McCraney v. Morris, 170 S.E. 276; Mueller v. Morrell, 112 N.J. Eq. 200, 163 A. 901; Anderson v. Starr, 294 P. 581.
The deed of trust in question was foreclosed in pais by the substituted trustee. Such sale was legal and valid.
William Payne and Ernest Kellner, both of Greenville, for appellees.
On the second appeal in this case this court decided, and whether correctly or not it is the law of this case both in the trial court and on this appeal, that notwithstanding their quit claim deed of September 8, 1927, to Jennie S. Blum, the appellees, Herman Blum and Minette Sedonia Moyse, held a two-thirds interest in the equitable lien of $135,000.00 against Mounds Plantation as against Jennie S. Blum, the appellant and the creditors of the estate of Lawrence Blum, deceased.
It is the law in this state and universally that when an issue between parties has been finally decided, whether correctly or not, it is conclusive in the same or any other proceeding between the same parties.
Griffith's Chancery Practice, sec. 698; Green v. McDonald, 21 Miss. 452; N.Y. Life Ins. Co. v. McIntosh, 46 So. 401.
In support of their contention that by their quit claim deed Herman Blum and Minette Sedonia Moyse conveyed to Jennie S. Blum their two-thirds interest in the equitable lien of $135,000 against Mounds Plantation, counsel cite Secs. 2110, 2122, 2124, 2125 and 2126 of the Code of 1930, and also the cases of Fink v. Henderson, 74 Miss. 8, and Robertson v. Sullivan, 102 Miss. 581.
We concede, of course, that any interest in land itself, under the code sections cited, shall and does pass by a deed of the owner of such interest in the land, but we deny that an equitable lien can or does pass by a deed of the owner of such equitable lien attempting to convey the land. It is settled in our state that neither the trustee in a deed of trust nor the mortgagee in a mortgage on land have any right, title or interest in the land until after condition broken.
Section 2128, Code of 1930; Adams v. Mortgage Co., 82 Miss. 263; Wright v. Wright, 160 Miss. 235; 1 Pomeroy's Equity Jurisprudence (4th ed.), sec. 165; Elson v. Barrier, 56 Miss. 394.
An examination of the deed from Herman Blum and Minette Sedonia Moyse attempting to convey Mounds Plantation to Jennie S. Blum does not disclose any intention whatsoever to assign or pass to Jennie S. Blum their interest in the equitable lien of $135,000 against Mounds Plantation.
41 C.J. 676, notes 14 and 15.
In this case the appellant must prevail, if at all, on the presumption against a merger to support its contention that Jennie S. Blum did not intend that the titles should merge, and, in order to come within the rule, in this case, it is necessary to assume that the deed to Jennie S. Blum was executed in satisfaction of her interest in the equitable liens against Mounds Plantation.
41 C.J. 777.
We say that, in attempting to acquire the legal title to Mounds Plantation from the heirs of Lawrence Blum, deceased, the record made by Jennie S. Blum and the appellant in this case is conclusive that she did not have in mind any question of an equitable lien against Mounds Plantation but was endeavoring to acquire the full legal title thereto free from any encumbrance in herself or anyone else.
It is held that where the mortgagee, after acquiring the equity, conveys or leases the entire property, that evidences an intention to merge the titles.
41 C.J. 778.
It is true that the question, whether or not a merger takes place in equity, depends upon the intention of the parties, and a variety of other circumstances: 15 Am. Eng. Ency. of Law, 1st ed., 314. But "a merger will be prevented by equity only, however, for the purpose of promoting substantial justice; it will not prevent a merger, where such prevention would result in carrying a fraud or other unconscientious wrong in effect:" 15 Am. Eng. Ency. of Law, 1st ed. 315.
Frothman v. Deters, 206 Ill. 159, 69 N.E. 97, 99 A.S.R. 145; Loomer v. Wheelwright, 3 Sandf. Ch. 135; Pom. Eq. Jur. (4th ed.), sec. 794, page 1625.
In controversy between junior lienor and a senior mortgagee who has taken the mortgaged property under an absolute conveyance in satisfaction of his mortgage debt, the burden of proof is on the latter to show that such debt was equal to the value of the property taken, and that the equity of redemption being worthless no harm resulted to the junior lien-holder.
Yates v. Mead, 68 Miss. 787.
We say that the appellant wholly failed to meet the burden of proof sufficient to sustain a non-merger in Jennie S. Blum of the legal and equitable titles to Mounds Plantation, and that, therefore, if Jennie S. Blum acquired the legal title to Mounds Plantation by the conveyance from the heirs of Lawrence Blum, deceased, the same is now held by the appellant charged with the liens in favor of the appellees.
In neither the answer nor the cross-petition of the appellant is it alleged or was any attempt made to prove that the facts alleged in the plea of laches either induced or influenced any action or non-action on the part of the appellant or that the appellant was in any manner, shape or form prejudiced by the facts alleged as constituting laches. In the absence of such allegations there is not the slightest merit in the contention that the appellees' rights herein have been cut off either by laches or estoppel under the facts alleged in the answer and cross-petition of the appellant. Injury must result to the party pleading laches or estoppel by reason of the action or non-action of the party so acting or failing to act. Certainly in the absence of even an allegation of injury to the appellant, to say nothing of the lack of any attempt to prove such injury, resulting from the facts alleged as constituting laches and estoppel against the appellees, there can be no merit in this contention of the appellant.
10 R.C.L. 396, sec. 143; Comans v. Tapley, 101 Miss. 203; Cox v. Mortgage Co., 88 Miss. 88.
On the second appeal to this court after stating that the decree of the trial court on the first hearing, in effect, considered and adjudicated the question of the taxes as an offset, this court went on to say that it was immaterial whether or not the taxes were pleaded, proved, considered and adjudicated by way of offset by the trial court on the first hearing, in determining whether or not the trial court erred in allowing the taxes as an offset against the liability of the appellees on their supersedeas bond, because, under the statute (Sec. 3525, Code of 1906) the question was an issue on the first hearing in the trial court and whether pleaded, proved, considered and adjudicated or not, the question was res judicata on the second appeal.
Dean v. Board of Supervisors, 135 Miss. 268.
Argued orally by W. Calvin Wells and S.B. Thomas, for appellants, and by Ernest Kellner, for appellees.
This proceeding was begun by the Planters Bank Trust Company, a creditor of Lawrence Blum, deceased, to subject land owned by Blum at his death to the payment of claims probated against his estate, one of which was the claim of the Planters Bank Trust Company. A decree was rendered in accordance with the prayer of the petition but was reversed on appeal to this court, Blum v. Planters' Bank Trust Co., 154 Miss. 800, 122 So. 784, for the reason that it had not been made to appear that the personal estate of the decedent was insufficient for the payment of claims probated against the estate. Among the defendants to the petition was Mrs. Jennie S. Blum, who claimed that the land was not subject to sale for the payment of the debts of the decedent, for the reason that she owned the legal title thereto, acquired since the death of the decedent, and in addition that when the title to the land was acquired by her she and her grantors had an equitable lien thereon to the amount of about $200,000.
On the second hearing the court denied the right of the creditors thereto to this equitable lien and again ordered the land to be sold for the payment of the decedent's debts. This decree was reversed on appeal to this court, 161 Miss. 226, 135 So. 353, and the claim to the equitable lien was sustained and decreed to be superior to the rights of the decedent's general creditors, and the case was again remanded. The facts and parties defendant to the petition are set forth in the opinion then rendered and will not be again set forth, which opinion must be read in connection herewith.
On the return of the case to the court below no further proceedings were had therein for several years, when Planters Trust Savings Bank, the successor in interest to the Planters Bank Trust Company, filed an amended petition again requesting the sale of the land for the payment of claims probated against decedent's estate. From this petition it appears that on the 24th of August, 1927, Jennie S. Blum, the then owner of the legal title to the land, executed a deed of trust thereon to secure the payment of $50,000, evidenced by promissory notes, which notes and deed of trust were assigned by the owner thereof to the Connecticut General Life Insurance Company, and on the 25th day of November, 1932, the deed of trust was foreclosed, and the land purchased by the Connecticut General Life Insurance Company for $25,000, the adequacy vel non of which is of no concern to the appellee, since which time that company has been in possession of the land. The petition further alleges that this deed of trust was void for the reason that Jennie S. Blum then had no title to the land but merely an equitable lien thereon. The prayer of the petition is that the deed of trust executed by Jennie S. Blum, and the sale thereunder to the Connecticut General Life Insurance Company, be decreed void, and that the court hear and determine the equities of the parties hereto in and to the aforesaid land and enter a decree for the sale of the land subject to said equities for the payment of the debts of the estate of Lawrence Blum, deceased.
The Connecticut General Life Insurance Company appeared and asserted the validity of the deed of trust and of its title to the land acquired at the sale thereunder, and also asserted that the equitable lien decreed against the land on the former appeal passed to it under the deed of trust and the purchase of the land thereunder and did not merge with its legal title to the land and was superior to the lien on the land for the payment of debts probated against Lawrence Blum's estate. It was agreed by all parties hereto that the land will not sell for more than $100,000.
The court below heard the case on bill, answer and proof, and decreed as follows: (1) That the sale of the land under the deed of trust be vacated and set aside; (2) appointed a special master and commissioner "to take and state an account of the equities of the parties hereto in and to the aforesaid land, and to sell the aforesaid land to satisfy said equities, all under the further orders and directions of this court;" and (3) that the Connecticut General Life Insurance Company has a paramount and prior lien "upon the Mounds Plantation (the land here in controversy) . . . to secure such sum as may be found to be owing to it on the aforesaid accounting under the loan made by Bolton Smith and Company to Jennie S. Blum, and which loan was secured by a deed of trust conveying said Mounds Plantation, executed by Jennie S. Blum on August 24, 1927, and recorded in Book 217, page 138, of the land records of Washington County, Mississippi, which deed of trust was assigned to the Connecticut General Life Insurance Company." The Connecticut General Life Insurance Company was granted an appeal to settle the principles of the case.
We are of the opinion (1) that Jennie S. Blum had the legal title to the land, and that the contrary was not decided on the second appeal herein, subject except as hereinafter stated to the payment of claims probated against the estate of Lawrence Blum, when she executed the deed of trust, which title passed to the Connecticut General Life Insurance Company on its purchase of the land at the sale thereof under this deed of trust; (2) that at the time Jennie S. Blum purchased the land she owned a part and her grantors the remainder of the equitable lien thereon established on the second appeal to this court, and that the part thereof owned by her grantors passed to her by their deed to the land; (3) that the legal title of Jennie S. Blum, together with her equitable lien on the land, passed to the Connecticut General Life Insurance Company by virtue of the deed of trust executed by her on the land, at the foreclosure of which the Connecticut General Life Insurance Company purchased the land and received a deed thereto from the trustee in the deed of trust.
A conveyance of land unless the deed provides to the contrary conveys to the grantee all the grantor's interest therein both legal and equitable.
But the appellee says that this equitable lien on the land disappeared when Jennie S. Blum acquired the legal title thereto by becoming merged therein and therefore cannot be asserted by her or her grantee. "When the owner of the fee becomes absolutely entitled in his own right to a charge or encumbrance upon the same land, with no intervening interest or lien, the charge will, at law, merge in the ownership and cease to exist. Under like circumstances a merger will take place in equity, where no intention to prevent it has been expressed, and none is implied from the circumstances and the interests of the party; and a presumption in such a case arises in favor of the merger." But if no intention, as here, was expressed by the parties thereto, yet there exists an encumbrance on the land inferior to that acquired by the owner of the fee, equity will presume, if his best interest requires, that there was no intention for the merger to take place, and the merger will not be permitted. 2 Pomeroy Equity Jurisprudence, 4th Ed., Secs. 790 and 791. Cade v. Toler, 155 Miss. 606, 124 So. 793; 41 C.J. 779; 19 R.C.L. 489. The authorities so holding will be found collected in the note to McCraney v. Morris, 95 A.L.R. 628.
If the merger here claimed is permitted, then Mrs. Blum held the land subject to the lien thereon for the payment of Lawrence Blum's debts, which would thereby become paramount to the superior equitable lien which she acquired along with the legal title to the land. It is clear, therefore, that her best interest requires that this lien be kept alive for her benefit unmerged with her legal title, and such, in equity, will be presumed to have been her intention. The exception to this rule is that a merger will not be prevented in equity when fraud or wrong would result therefrom. Pomeroy, op. cit. Sec. 794. No such result here appears. The same rule applies to the acquisition of the legal title to and the equitable charge on the land by the Connecticut General Life Insurance Company.
It thus appears that a sale of the land for the payment of the debts probated against the estate of Lawrence Blum would be vain and fruitless for the reason that it appears from the agreed state of facts that it would not bring at the sale thereof more than $100,000, none of which could be applied, because of the appellant's equitable charge thereon, to the payment of these probated debts. Consequently, the land should not have been directed to be sold, but the petition therefor should have been dismissed, and such will be the judgment rendered here.
So ordered.