Opinion
No. 33245.
May 30, 1938.
1. MORTGAGES.
Issuance of an injunction under moratorium statute without proof showing that mortgagor had made effort at refinancing was improper (Laws 1936, chapter 287, section 3).
2. MORTGAGES.
Before an injunction is issued under a moratorium law notice must be given to lienholder, if reasonably possible (Laws 1936, chapter 287).
3. MORTGAGES.
Before an injunction is issued under moratorium law, evidence must establish the existence of an emergency (Laws 1936, chapter 287).
4. EQUITY.
Where property owner agreed in writing with lienholder that, if lienholder would pay taxes, paving assessments and cost of repainting residence, owner would under extension agreement proceed to make monthly payments, but owner's wife refused to execute formal extension agreement, lienholder which advanced nearly $2,500 under the agreement was not entitled to dismissal of owner's bill under moratorium statute on theory that equity would regard as done that which ought to be done and thereby bring into operation the section of moratorium law regarding extension agreements (Laws 1936, chapter 287, section 12).
5. MUNICIPAL CORPORATIONS. Subrogation. Taxation.
Where property owner agreed in writing that, if lienholder would pay taxes, paving assessments and cost of repainting residence, owner would, under extension agreement, proceed to make monthly payments, and lienholder on face of agreement advanced nearly $2,500, but owner's wife refused to execute formal extension agreement, lienholder was entitled to be recognized as subrogee of liens of city, county and state for taxes and special assessments, and of statutory lien for repairs.
6. MECHANICS' LIENS. Municipal Corporations. Taxation.
The moratorium laws do not apply to liens of city, county and state for taxes and special assessments or to statutory liens for repairs (Laws 1936, chapter 287).
7. CONSTITUTIONAL LAW.
Whether an emergency exists under which continued operation of moratorium law depends is open to judicial inquiry (Laws 1936, chapter 287).
8. EVIDENCE.
Courts take judicial notice of general conditions throughout their territorial jurisdiction.
APPEAL from the chancery court of Pike county; HON. R.W. CUTRER, Chancellor.
Roach Jones, of McComb, for appellant.
The court erred in holding that the appellees were entitled to any relief by virtue of Chapter 287 of the General Laws of Mississippi of 1936.
A mortgagor must not only allege, but, if required so to do by answer, prove the exhaustion of all federal agencies.
Jones v. Spearman, 165 So. 294, 174 Miss. 781.
The appellees totally failed to make sufficient allegations in their bill of complaint to entitle them to any relief under Chapter 287 of the Laws of 1936. The only allegations found in the bill of complaint with reference to being unable to refinance the indebtedness through an agency or instrumentality of the United States government is the following allegation: "Complainants would further show that on account of general conditions they are unable to refinance things." We submit that this allegation does not meet the requirement of Chapter 287 of the Laws of 1936, but granting merely for the sake of argument that it does so, we direct the court's attention to the denials of the appellants' answer.
In view of this denial in the answer of the appellant it clearly became the duty of the appellee on the trial of the motion to dissolve to prove that they had complied with Section 3 of Chapter 287 of the Laws of 1936 with reference to endeavoring to refinance the indebtedness through an agency or instrumentality of the United States government. The appellees totally failed to comply with this condition precedent to their right to relief under said laws.
This case should be reversed and the bill dismissed for the reason that it is admitted by the appellees, that the injunction in this cause was issued on the 31st day of July, 1937, without any notice to the appellants and without any hearing first being had on the bill requesting the injunction.
Federal Land Bank of New Orleans v. Lee, 165 So. 613, 174 Miss. 774.
Both appellees are residents of Pike County, Mississippi, where the property was advertised for sale. The notice of sale designates the 8th day of July as the date of sale. No extreme situation or emergency existed to prevent the appellees first giving the appellants notice of their intention to request an injunction, and as the appellees and the chancellor both reside in Pike County they had plenty of time before the foreclosure to give the appellants notice, but instead of doing so they had the court to grant the injunction without bond and without any notice whatever to the appellants and without the court taking any testimony to ascertain that the appellees were entitled to the injunction. Under authority of Federal Land Bank of New Orleans v. Lee, supra, we submit that this action of the court was error.
The appellant insurance company, relying upon the good faith of the appellees, proceeded to comply with its part of the extension agreement in full and made expenditures in the amount of $2,441.18. After the appellees, however, had obtained all of the benefits to accrue to them under the extension agreement they refused to accept any of the burden and failed and refused to sign the extension agreement when it was presented to them, and failed and refused to pay the monthly payments of $76.26, as they had agreed to do. We submit that it is unconscionable and inequitable for a court of equity to condone such action.
We contend that if the equitable maxim of "Equity regards that as done which ought to be done" is brought into operation and effect that the appellees were entitled to no relief under Chapter 287 of the Laws of 1936. It is admitted by the appellee, S. Paul Klotz, that he failed to keep up the monthly payments of $76.26 as provided in the extension agreement.
L.H. McGehee, of McComb, for appellees.
My friends complain in their brief, not in the lower court however, that the proper allegation was not in the bill of complaint, but the bill of complaint does show that on account of general conditions they were unable to refinance things, which is tantamount to the words used by the court in the Jones and wife v. Spearman, et al., 165 So. 294, 174 Miss. 781, my contention being that that is a mere oversight and raises a question that should have been raised on the trial of this case, and by the answer of the appellees in order that proper amendments might be made to bring the case within the statute so that all questions going to the right and the wrong of the case might be properly settled.
My friends strenuously argue that there was an agreement between appellees and appellants to extend these payments, which was true. There was a letter written by the agent of the Atlantic Life Insurance Company to the assistant treasurer in Richmond, Virginia, as shown by the record, and signed by Dr. Klotz, but not Mrs. Klotz, on January 2, 1937, but this agreement was not consummated as will be seen by another letter written by the company in May 1937, and the reason Doctor Klotz gives is in the last paragraph of said letter, paragraph four, wherein they say to him, "If I should fail in any respect to fully and completely discharge any one of all the matters set out above in items 1, 2 and 3, I further expressively agree that I will not invoke the aid of the Mississippi moratorium laws in order to hinder, obstruct or delay the orderly foreclosure of the deed in trust held by you in securing the indebtedness herein referred to in the event you decide to take such action." This court will notice, and by the testimony of Doctor Klotz, that this letter is not signed and the reason given for not signing it is because they wanted him to agree not to invoke in any event the Mississippi moratorium laws.
We think the judgment of the court below should be affirmed. The Chancellor is on the ground familiar with the local conditions existing here now, and since this depression started in 1929, we think this case comes squarely under Chapter 287, Laws of 1936.
On April 20, 1929, appellees, husband and wife, gave a deed of trust to appellant on their residence for the principal sum of $4,000, the title being in the husband. The stipulated payments were made for a while, but in the fall of 1936, these payments had become considerably in arrears; and at that time, city, county and state taxes were outstanding for the year 1936, and also in whole or in part for 1934 and 1935. There was also a paving lien upon the property for $1,386.18. On January 2, 1937, appellee, the husband, and, as aforesaid, the owner of the property, agreed, in writing, with appellant that if appellant would advance and pay the taxes, including the paving assessments aforesaid, amounting in the aggregate to about $2,175, and would also advance to the contractor the cost of repainting the residence in the sum of $264.50, appellee would, under an extension agreement, proceed at once towards the retirement of the aggregate amount due at the rate of $76.26 per month. These advances were made by appellant, but the wife refused to execute the formal extension agreement, later tendered appellees by appellant. Appellant then agreed to reduce the payments to $60.32 per month, but this offer was refused.
Thereupon the trustee advertised the property for sale under the original deed of trust, designating July 8, 1937 as the day of sale. Before the arrival of that day appellees exhibited their bill under the moratorium statute, and an injunction was issued thereon without notice or any reason shown or appearing for not giving notice. The only allegation in the bill in regard to any efforts on the part of complainants to refinance the loan, as is required by Section 3, Chapter 287, Laws 1936, is the general averment "that on account of general conditions they are unable to refinance things." Soon thereafter appellant filed its answer and motion to dissolve. In its answer appellant denied that appellees had been unable to refinance the indebtedness, and denied that they had made the efforts in that respect which are required under the cited chapter of the laws.
Proof was taken, but not a word was offered by complainants to show that they had made the efforts at refinancing, specifically required by the statute; nor was there a word in excuse of the issuance of the injunction without notice. In Jones v. Spearman, 174 Miss. 781, 165 So. 294, this court expressly held that a mortgagor must not only allege, but, if required to do so by answer, must prove the exhaustion of all federal agencies, and that this is a condition precedent to relief under the moratorium act. In Federal Land Bank v. Lee, 174 Miss. 774, 165 So. 613, we held that before an injunction is issued under the moratorium law, notice shall be given to the lien holder, if reasonably possible; and there the court called attention to the emergency nature of the moratorium law, and the necessity of showing in all things the emergency to exist in the case at hand.
These decisions had been rendered and the opinions published more than a year before the injunction in this case was issued. It is evident, therefore, that they were overlooked or else were disregarded. We observe that in a few other sections of the state no attention is being given to the requirement which we have announced, that these injunctions must not be issued without notice when reasonably possible to give notice. In view of this fact and that these moratorium injunctions are issued without bond, we now further announce that after the publication of this opinion if the moratorium law is to be any further enforced, when any injunction is issued thereunder without notice, and when reasonably possible to give the notice, we shall regard the complainant in thus demanding his alleged right to an injunction, to have so impregnated his said demand with a violation of the law in immediate respect to it that his bill should and will be dismissed for that reason alone.
Appellant insists that this bill should be now finally dismissed because of the extension agreement made on January 2, 1937, in faith of which appellant advanced the sum of nearly twenty-five hundred dollars, as mentioned in the first paragraph of this opinion. Although the extension agreement was not formally executed, appellant invokes the maxim that "Equity will regard that as done which ought to be done," and that thereby the provisions of Section 12, Chapter 287, Laws 1936, would come into operation under which as to extension agreements for monthly installments extending over a period of more than three years, the moratorium statute is not available.
There are manifest difficulties which beset the pathway of the stated principle in this case, but none in the application of the doctrine of subrogation, by which, under the circumstances such as aforesaid, appellant is to be recognized as the subrogee of the liens of the city, county and state for the taxes and special assessments paid by appellant, and of the statutory lien for the repairs (see authorities reviewed in Box v. Early, Miss., 178 So. 793), to which liens the moratorium laws do not apply and as to which the joinder of the wife is not necessary; and whereby if complainants are to avail of the moratorium laws they must first remove the obstacle of the subrogated liens aforesaid, which can be done only by a precedent payment to appellant of the amount of said lien advancements with legal interest or by a tender thereof in cash with the bill; otherwise there would be a recourse to the moratorium statutes never contemplated by them under such circumstances as are here involved, and which, if enacted therein, would run beyond the boundaries of constitutional limitations already stretched as far as can possibly be supported.
The decree will be reversed and the cause remanded; and inasmuch as appellees were not entitled to the injunction under the showing made, a decree will be entered here dissolving the injunction, but without prejudice to the right of appellees to amend their bill in the respects aforesaid, and to pay, or tender into court, in cash, the amount necessary to retire the subrogated items aforesaid, and thereupon, notice being given, to apply for a new injunction, which shall not be issued until all the requirements herein mentioned are fully complied with by appellees.
Except for the re-enactment of said moratorium statute by House Bill No. 152, Laws 1938, the decree herein would have been already without further effect, inasmuch as Section 16, Chapter 287, Laws 1936, expressly provided that no postponement thereunder should extend beyond May 1, 1938. We think it may be now seriously questioned whether any such emergency continues to exist in this state as will support the further operation of the re-enacted so-called moratorium law, especially as to deeds of trust and mortgages given before the passage of these statutes. Whether the emergency still exists upon which the continued operation of such a law depends is always open to judicial inquiry. Wilson, etc., Corporation v. Colvard, 172 Miss. 804, 814, 161 So. 123. Courts take judicial knowledge of general conditions throughout their territorial jurisdiction, and we must begin to have some comprehension, as everybody else who is observant, that general business conditions have now returned to that which is as nearly normal as will perhaps ever again exist upon the general average in this section. It may, therefore, well be now inquired, whether there is constitutional warrant for the further continuance of the enforcement of said moratorium laws.
Appellant, by its answer and by some of its proof, has apparently raised this question, but has not pressed it in argument. We, therefore, go no further in response to it than what is said in the foregoing paragraph.
Reversed, injunction dissolved and remanded.