Summary
In Lewis, this Court looked first to the statutory language of Chapter 251 to determine whether the second lender's action was time barred.
Summary of this case from Hubbard v. Bancorpsouth BankOpinion
No. 32217.
May 4, 1936. Suggestion of Error Overruled May 18, 1936.
1. MORTGAGES.
Purpose of statute limiting time within which suit could be brought on note secured by mortgage which had been foreclosed was to alleviate distressed mortgage debtors and to discourage foreclosure of mortgages during depression (Laws 1934, chap. 251).
2. STATUTES.
Constitutional requirement that title of bill should indicate clearly subject-matter of proposed legislation is directory and not mandatory (Const. 1890, sec. 71).
3. STATUTES.
In construing statute, Supreme Court will presume that Legislature attempted to comply with constitutional requirement that title of bill should indicate clearly subject-matter of proposed legislation (Const. 1890, sec. 71).
4. STATUTES.
Although constitutional requirement that title of bill should indicate clearly subject-matter of proposed legislation is only directory, title of act may be resorted to to ascertain legislative intent and to relieve any ambiguity in body of act (Const. 1890, sec. 71).
5. MORTGAGES.
Statute requiring suit on note secured by mortgage to be brought within one year of foreclosure of mortgage was applicable only to suit on note secured by mortgage which had been foreclosed, and was not applicable to suit on notes secured by another mortgage on same realty which had not been foreclosed (Laws 1934, chap. 251).
APPEAL from circuit court of Hinds county. HON. J.P. ALEXANDER, Judge.
Barron C. Ricketts and M.A. Lewis, Jr., both of Jackson, for appellant.
The only question in issue upon this appeal is whether or not Chapter 251, Mississippi Laws of 1934, applies to suits upon promissory notes secured by a second deed of trust where the first deed of trust was foreclosed more than a year prior to the filing of such suit; or where, as in this case, suit was not brought within one year after the date of the approval of the act.
An examination of the language of the act itself does not disclose whether or not the Legislature intended it to apply to notes secured by a second mortgage, or deed of trust, where the first deed of trust has been foreclosed. It could reasonably be presumed from the language of the act that it was intended to apply only to notes secured by the deed of trust under which sale of the security was actually made.
Certainly, in the absence of any express language in the act itself to the effect that this period of limitation shall apply to the notes secured by any and all junior deeds of trust when the first deed of trust has been foreclosed, there is created a reasonable doubt as to whether it was actually intended that the act should be applicable to such cases.
There is no ambiguity in the title to this act. Its meaning is clear. Its language indicates positively that this is an act to fix the period of limitation for suits upon notes where the mortgages or deeds of trust securing the very notes upon which suit is brought have been foreclosed.
Section 71, Constitution of Mississippi; 59 C.J. 1005, sec. 599; 25 R.C.L. 1031, sec. 267; 37 A.L.R. 927.
It has long been a well settled rule of law in this state that the intention of the Legislature shall control any construction of an act of that body and that it will be presumed that the Legislature did not intend any manifest injustice to result from the operation or administration of its acts.
Pattison v. Clingan, 47 So. 503; Canal Bank Trust Co. v. Brewer, 114 So. 127; Gunter v. City of Jackson, 94 So. 844, 130 Miss. 637; Robertson v. Texas Oil Co., 106 So. 449, 141 Miss. 356; Huber v. Freret, 103 So. 3, 138 Miss. 238.
To adopt the construction placed upon this act by the trial court would be to place a junior mortgagee in a worse position than the holder of an unsecured note. The holder of an unsecured note does not run against the bar of the statute of limitations until six years after the maturity of the note. To adopt the construction placed upon this act by the trial court would result in a junior mortgagee being barred of suit upon promissory notes held by him within one year from the date of foreclosure or sale of the property by a senior mortgagee. Such a situation is unjust to a junior mortgagee and clearly outside the intention of the Legislature when this act was passed.
W.H. Cox, of Jackson, for appellees.
It is the appellees' position in this case that Chapter 251, Laws of 1934, applies to the suit of a second mortgagee on one or more of a series of promissory notes secured by a second mortgage, where suit thereon is not brought within one year after the foreclosure of the first mortgage on the same property, or within one year after the passage of this act in this case on April 4, 1934.
The court will notice the language of the act to be very broad and sweeping in its application to all foreclosures. The act provides that in all cases of foreclosure of any deed of trust, whether a first, second or third lien on the property, that such foreclosure of such security for any such lienholder was to set in operation the said period of limitations.
In Nelson Smith v. W.H. Shelton, 1 Miss. Dec. 78, this court held that a foreclosure sale under a prior deed of trust cut off any rights or interest in the trust property under a junior mortgage.
In Weir v. Jones, 84 Miss. 602, it was held that a sale under a senior mortgage vests title in the purchaser to the exclusion of all junior encumbrances. To the same effect see Bainbridge v. Woodburn, 52 Miss. 95.
The vendee of a trustee in a mortgage gets the title to the property as it stood when such mortgage was executed, unaffected by any subsequent encumbrances or liens. Brown v. Bartee, 10 S. M. 268.
It is therefore apparent that a foreclosure of the first mortgage was for all intents and purposes actually in effect a foreclosure of the second mortgage of the appellant, secured by the notes in suit.
It is the foreclosure which the Legislature has designated as setting in motion the said one year statute of limitations.
Inasmuch as it was the mortgagor whom the Legislature desired to protect in such case, it is not apparent that any protection would have been afforded him at all by such legislation, if the appellant's conception thereof be correct. Appellant contends that the Legislature intended said act to apply only to the indebtedness secured by the mortgage actually foreclosed, and not to a second mortgage who did not actually offer the property for sale under her own deed of trust.
Such an enactment would be most beneficial to the mortgagees holding second and third mortgages on properties foreclosed by the senior mortgagee, but would afford little, if any, consolation to the debt-ridden and discouraged mortgagor whose morale the Legislature proposed by such series of enactments to rejuvenate.
A consideration of this statute in connection with the moratorium act unmistakably and clearly demonstrates the fact that Chapter 251, Laws of 1934, is an inseparable part of a scheme provided by the Legislature for the relief of mortgagors whose property had been taken away from them during a financial panic and under the circumstances and conditions of which the Legislature took note and declared to be unfair and contrary to the announced public policy of this state. It was, therefore, provided within constitutional lines that all of these outstanding deficiency obligations held by mortgagees should be sued on within one year, or thereafter be treated as barred and extinguished.
The Legislature was privileged to enact that even though the appellant may have had six years within which to bring her action, upon such foreclosure of said security, unless she brought an action on the notes in suit within one year after such foreclosure, she would be barred of such action. The Legislature is privileged in its wisdom and discretion to lengthen or shorten the applicable periods of limitation at will.
McBride v. Burgin, 108 So. 148, 142 Miss. 859; Jennings v. Lowery Berry, 112 So. 692, 147 Miss. 673; Hamner v. Yazoo Delta Lumber Co., 100 Miss. 349, 56 So. 466.
Appellant brought this action in the circuit court of Hinds county against appellees on two promissory notes of six hundred dollars each, theretofore executed by appellees in favor of appellant. Judgment was sought for the principal and accrued interest. Appellees' defense was the one-year statute of limitation provided by chapter 251, Laws 1934. There was no dispute as to the facts. The case was tried, by agreement, before the circuit judge acting as judge and jury, resulting in a judgment sustaining appellees' defense. From that judgment appellant prosecutes this appeal.
In 1926 appellees became indebted to the Penn Mutual Life Insurance Company, and to secure the indebtedness, evidenced by notes, executed a mortgage on property owned by them on Pearl street in the city of Jackson. In 1927 appellees became indebted to appellant, for which they gave their notes secured by a mortgage on the same property. Default having been made in the payment of the Penn Mutual Life Insurance Company indebtedness, their mortgage was foreclosed on the 1st of January, 1934, and the property purchased by the life insurance company. The foreclosure was regular in all respects. At the time of the foreclosure there was a balance due of approximately fourteen thousand dollars; the Penn Mutual Life Insurance Company purchased the property for twelve thousand dollars. More than a year after the foreclosure, and also more than a year after chapter 251, Laws 1934, went into effect, appellant brought this suit against appellees to recover the balance due on her mortgage indebtedness.
The question in the case is whether or not chapter 251 applies to the indebtedness secured by a junior mortgage as well as to the indebtedness secured by a foreclosed senior mortgage? The statute is in this language:
"An Act to fix the period of limitations within which suits may be brought on notes secured by mortgages, trust deeds, or otherwise, where such mortgages have been foreclosed.
"Section 1. Be it enacted by the Legislature of the State of Mississippi, That in all cases, foreclosure of any deed of trust, mortgage, vendor's lien, or other instrument, no suit or action shall hereafter be commenced or brought upon any installment note, or series of notes of three or more, whether due or not, where said note or notes are secured by mortgage, deed of trust, or otherwise, upon any property, real or personal, unless the same is commenced or brought within one year from the date of the foreclosure or sale of the property pledged as security for said note or notes. Provided, further, that no action shall be commenced or brought upon any such note or notes where such security has heretofore been foreclosed, except such action be brought or commenced within one year from the effective date of this act.
"Sec. 2. That this act take effect and be in full force from and after its passage." "Approved April 4, 1934."
Chapter 251, along with the mortgage moratorium statute, chapter 247 of the Laws of 1934, was enacted for the purpose of alleviating to some extent distressed mortgage debtors. The body of the statute, without regard to the title, is ambiguous; it is left uncertain whether the statute applies to deficiency suits by other mortgagees than the foreclosing mortgagee. The outstanding purpose of this legislation, along with chapter 247, was to discourage the foreclosure of mortgages during the depression period. The title to the act clears up the uncertainty in the body thereof; in unmistakable language it plainly names the notes secured by the foreclosed mortgage.
Section 71 of the Constitution provides that every bill introduced in the Legislature shall have a title which ought to indicate clearly the subject-matter of the proposed legislation, and that every committee to which a bill is referred shall express, in writing, its judgment of the sufficiency of the title, and that this be done whether the recommendation be that the bill pass or do not pass. Although the requirement that the title indicate clearly the subject-matter of the proposed legislation is directory and not mandatory, we have the right to indulge the presumption that the Legislature attempts to comply therewith. There are numerous decisions to the effect that although such a constitutional provision does not make the title a part of the act, it may be resorted to as an aid to the ascertainment of the legislative intent and may serve the purpose of relieving any ambiguity in the body of the act. 59 C.J. pp. 1005-1007, and cases in notes.
The foreclosing mortgagee is the one causing the trouble, and it is at him the statute is aimed. To apply the statute to appellant would work in this way: Appellant received nothing by the foreclosure; the proceeds were not sufficient to pay the first mortgage. Appellant therefore is in no better position than an unsecured creditor. Why, in such a case, should an unsecured creditor have the benefit of the six-year statute of limitation, and appellant be bound by the one-year statute?
Reversed, and judgment here for appellant.