In Kelso v. Robinson, 172 Miss. 828, 161 So. 135, as to equitable estoppel, this Court said: "Estoppel may arise from misleading silence or passive conduct joined with a duty to speak.Summary of this case from Nichols v. Gaddis McLaurin, Inc.
April 22, 1935. Suggestion of Error Overruled June 10, 1935.
1. LANDLORD AND TENANT.
Mortgagor who leased foreclosed property for two years after foreclosure held not estopped under doctrine that tenant cannot dispute his landlord's title, to contest purchaser's title on ground that foreclosure sale was invalid, where suit to cancel trustee's deed was brought after mortgagor had surrendered possession of premises at end of lease.
2. LANDLORD AND TENANT.
Mortgagor who leased property from purchaser at foreclosure sale held estopped to deny validity of trustee's deed resulting from foreclosure sale, where mortgagor had actual notice of advertisement of sale, was present at sale and made no objection, and, during tenancy, allowed purchaser to make extensive improvements on property.
Estoppel may arise from misleading silence or passive conduct joined with a duty to speak.
One of established rules of doctrine of equitable estoppel is that, if a person knowingly suffers another to expend money on land under an erroneous opinion of title, although he does it passively by looking on without making known his claim, he will not be subsequently permitted to enforce his legal right.
APPEAL from the chancery court of Sunflower county.
HON. J.L. WILLIAMS, Chancellor.
Bill by Augustus Robinson, Jr., against F.B. Kelso, trustee, and the Metropolitan Life Insurance Company, in which the Insurance Company answered, making its answer a cross-bill. From a decree sustaining the bill, defendants appeal. Reversed, and bill dismissed.
H.C. Mounger, of Greenwood, for appellants.
If there were any defect in the notice, the complainant by his conduct and consent waived it. He had been advised the sale would take place, had consented to it, had given the Metropolitan Life Insurance Company notice that he could not go on with his loan or work the place, and made arrangements to rent a part of it for the next year.
Dunton v. Sharpe, 70 Miss. 850, 12 So. 800; Smith v. Walsh, 63 Miss. 584, 590; Staton v. Bryant, 55 Miss. 261, 272.
It may be stated as a general rule that if a person having a right, and seeing another person about to commit, or in the course of committing, an act infringing upon that right, stands by in such a manner as really to induce the person committing the act, and who might otherwise have abstained from it, to believe that he assents to its being committed, he cannot afterwards be heard to complain of the act.
XI Am. Eng. Ency. (2 Ed.), pages 428 and 430; 10 R.C.L., Estoppel, page 759; 28 Am. Eng. Ency. of Law (2 Ed.), page 809; Georgia Pacific Ry. Co. v. Strickland, 80 Ga. 776, 12 Am. St.Rep. 282, 284; Kelly v. Skates, 117 Miss. 886, 78 So. 945; Chandler v. Peters, 44 S.W. 867; Cooley's Const. Lims. (7 Ed.) 250; Brown v. British American Mort. Co., 86 Miss. 388, 38 So. 312; Rawlings v. Anderson, 149 Miss. 632, 115 So. 714, 716.
The court was in error in setting aside the sale, giving any relief to the complainant, and in decreeing possession of the land to Robinson.
The complainant nowhere in his bill proposes to pay or makes a tender of any amount due the Metropolitan Life Insurance Company. He should have done this before he was entitled to any relief.
Pounds v. Clark, 70 Miss. 263; Cook v. Reynolds, 58 Miss. 243; Mortgage Co. v. Jefferson, 69 Miss. 770; Walten v. Austen, 49 Miss. 569; Chapter 247, Acts of 1934.
Sylvanus W. Polk, of Memphis, Tenn., for appellants.
It is not necessary to include the name of a subsequent grantee in the trustee's notice of sale unless the subsequent grantee clearly and unequivocally assumes the debt secured by the trust deed, and the holder thereof had notice of, ratified and accepted the assumption.
Wilkinson v. Federal Land Bank, 168 Miss. 646, 150 So. 218, 151 So. 761; Castleman v. Canal Bank Trust Co., 156 So. 648; Gilliam v. McLemore, 141 Miss. 253, 106 So. 99; Hodges v. Southern Bldg. Loan Assn., 166 Miss. 677, 148 So. 223.
The omission to insert a clause in a deed that a grantee assumes to pay an indebtedness secured by a trust deed on the property conveyed is strong evidence that the parties did not intend that he should be liable.
The assumption must be clear and unequivocal, and until the holder of the debt has notice of the assumption, approves, ratifies and accepts said assumption, there are no reciprocal rights and obligations between the subsequent grantee and mortgagee; and the subsequent grantee by agreement with his grantor can relieve himself of the obligations he has assumed without the consent of the mortgagee.
Arthar Bruce, of Greenwood, for appellants.
The trustee's notice must include the name of the grantee only if he assumed the debt.
In Wilkinson case, Ward not only assumed the indebtedness, but he reassumed it and agreed to carry out all the conditions, etc. The assumption "was expressly and plainly set forth in the conveyance." Not only that, but both the grantor and grantee joined in a written application requesting that the grantee be admitted to membership and that Ward's stock be transferred to Paden, that Paden be recognized and accepted as the principal mortgagor, and the stock was transferred with the approval of appellee. Absolutely not one of these things happened in this case.
Castleman v. Canal Bank Trust Co., 156 Miss. 648; Wilkinson v. Bank, 168 Miss. 646, 150 So. 218, 151 So. 761; Kroger Grocery Co. v. Lewelling, 165 Miss. 71, 82, 145 So. 726; National Surety Co. v. Miller, 155 Miss. 115, 131, 124 So. 251; 15 C.J. 941, sec. 332; 7 R.C.L. 1003, 1004; American Freehold Land Mortgage Co. v. Jefferson, 69 Miss. 770, 781, 12 So. 464, 466, 30 Am. St. Rep. 587.
The court held the sale valid in the Castleman case, and we cannot see how the sale in the instant case differs from the Castleman case, and confidently believe that the opinion in the Castleman case is controlling in this case.
We believe the notice of the substituted trustee's sale was properly made and posted in every way and complied with all the laws and decisions of this state with reference thereto. But, even if we admit that it was not proper in every respect, still Augustus Robinson, Jr., the only person who is complaining with regard thereto, knew of the sale, had notice of the sale, was present at the sale, and signed the original trustee's notice as one of the three witnesses to the sale, gave his consent to the sale, and thereby, waived any defect in the advertisement if, in fact, there were any defect therein.
Cooley's Con. Lims. (7 Ed.) 250; Brown v. British American Mortgage Co., 86 Miss. 388, 38 So. 312; Rawlings v. Anderson, 149 Miss. 632, 115 So. 714, 716; Section 2431, Hemingway's Code of 1927; Section 2167, Code of 1930; Kelly v. Skates, 117 Miss. 886, 78 So. 945; Eagle Lbr. Supply Co. v. DeWeese, 135 So. 490, 494; Dunton v. Sharpe, 70 Miss. 850, 12 So. 800; Guffey v. O'Reilly, 88 Mo. 418, 57 Am. Rep. 424; McDonnell v. De Soto Sav., etc., Assn., 175 Mo. 250, 75 S.W. 438, 97 A.S.R. 592, 609.
A tenant cannot dispute the fact that his landlord's title, under which he entered as lessee, was good when he entered.
Rhyne v. Guevara, 67 Miss. 139, 6 So. 736; Pino v. Dufour, 174 La. 227, 140 So. 31; McWhorter v. Stein, 39 So. 617; Peters v. Pilcher, 211 Ala. 548, 100 So. 902; Rogers v. Martin, 99 So. 551, 87 Fla. 204; Asher v. Rossi, Orleans No. 7636; 10 R.C.L., Estoppel, sec. 97, pages 782-783; Staton v. Bryant, 55 Miss. 261; Gentry v. Gamblin, 79 Miss. 437, 28 So. 809; Helm v. Yerger, 61 Miss. 44, 52.
It seems to be well established by a general rule, that if a man knowingly suffers another to expend money on land under an erroneous opinion of title, though he does it passively by looking on, without making known his claim, he shall not afterwards be permitted to exercise his legal right against that person.
11 Ency. of Law (2 Ed.) 431; Dickerson v. Colgrove, 100 U.S. 584, 25 L.Ed. 619, 621; Buckingham v. Smith, 10 Ohio, 298; Bryan v. Ramirez, 8 Cal. 461, 68 Am. Dec. 340, 344; Wendell v. Van Rensselaer, 1 Johns. Ch. 344; Kirk v. Hamilton, 12 Otto 68-79, 26 L.Ed. 79, 83; 10 R.C.L., Estoppel, sec. 76, page 579 and sec. 95, page 780; Hafter v. Strange, 65 Miss. 323, 3 So. 190, 7 A.S.R. 659; McDonnell v. DeSoto Sav., etc., Assn., 175 Mo. 250, 75 S.W. 438; 28 Ency. of Law (2 Ed.) 809; Georgia Pacific Ry. v. Strickland, 80 Ga. 776, 12 Am. St. Rep. 282, 284.
Before a borrower who has executed a deed to secure a debt can have affirmative equitable relief such as the setting aside of a sale by the creditor under exercise of a power contained in a security deed, and injunction against the creditor and persons claiming under him, to prevent interference with the debtor's possession of the property, such debtor must pay or tender the creditor the principal and interest due.
21 C.J. 172 et seq.; 10 R.C.L. 392, 141; Eaton's Equity, 67, 68; Liles v. Bank of Camden County, 151 Ga. 483, 107 S.E. 490; Brown v. Roughton, 155 Ga. 828, 118 S.E. 557; Farnell v. Brady, 159 Ga. 209, 125 S.E. 57; Biggers v. Home Bldg. Loan Assn., 176 S.E. 38; Duncan v. Moore, 67 Miss. 136, 7 So. 221; Stewart v. Brooks, 62 Miss. 492; Newman v. Taylor, 69 Miss. 670, 13 So. 831; Walker-Durr Co. v. Mitchell, 97 Miss. 231, 52 So. 583; Alabama V. Ry. v. Thomas, 86 Miss. 27, 38 So. 770.
A defendant, purchaser for value in good faith, can obtain relief for valuable, permanent, and not ornamental improvements in a suit at law and has no ground because thereof for a suit in equity.
Allen Allen and Moody Johnson, all of Indianola, for appellee.
The foreclosure sale attempted to be made by F.B. Kelso, substituted trustee in this case, was absolutely void. The law looks with disfavor upon forfeitures and divestitures and will not recognize them under any circumstances until and unless he who has invoked their aid has complied strictly with the letter of the power and the law.
Section 2167, Code of 1930; Wilkinson v. Federal Land Bank of New Orleans, 151 So. 761, 763.
It may be shown, although not expressed in a deed, that the grantee agreed as part of the consideration to pay or assume an existing encumbrance.
22 C.J., secs. 1558 and 1564; Fry v. Prewett et al., 56 Miss. 783; Sunflower Bank v. Pitts, 108 Miss. 380, 66 So. 810; Dodge v. Cutrer, 101 Miss. 845, 58 So. 208; Elliott on Contracts, sec. 247.
The possession by the person who occupies land puts the whole world on notice of, and inquiry as to, the extent of his claim.
Bolton v. Roebuck, 77 Miss. 710, 713; Frye v. Rose, 120 Miss. 778.
The presence of appellee at the sale did not cure this defect. The notice had not brought him before the sale and his appearance at the invitation of appellants did not lend any force or effect, nor relieve appellants of their duty imposed upon them by law of getting the proper notice published in the newspaper under which they might take his property away from him, they had no jurisdiction to make the sale.
Griffith Chancery, secs. 22 and 27; Joiner v. Delta Bank, 71 Miss. 382, 14 So. 464; Boutwell, Sheriff, v. Grayson, 79 So. 61; Industrial Inv. Co., Inc., v. Standard Life Ins. Co., 149 So. 883.
Nor does it matter that appellee rented the lands back as a subtenant one year and as a direct tenant another year. The fact remains that at the time of the filing of this law suit, he had surrendered the possession of said lands to the Metropolitan Life Insurance Company and was no longer its tenant. This being true, the relation of landlord and tenant did not exist at the time of the filing of this law suit and no estoppel arises against appellee.
24 Cyc. 946, 947, 948; 21 C.J. 1250, sec. 267; Meridian Land Industrial Co. v. Ball, 68 Miss. 135, 8 So. 316; 21 C.J. 1101, secs. 94 and 1103, sec. 98.
Estoppel will not extend to objects that the parties cannot reasonably be supposed to have had in view or to render effective a conveyance which is void as being contrary to a public statute.
21 C.J. 1125, sec. 128, and 1159, sec. 161.
No estoppel arises where the representation or conduct of the party sought to be estopped is due to ignorance founded upon an innocent mistake.
21 C.J. 1159, sec. 162, and 1160, sec. 162; Ezelle v. Parker, 41 Miss. 527.
Appellee's mere silence when appellants were making improvements on the property did not mislead them. They had the burden of showing it did. Nor could his silence in any event relate back to and validate the void deed under which they entered into possession. At most, his silence, if they had shown it misled them to their detriment, would have entitled them to recover their necessary improvements. For these the court allowed them recovery; and they have no just cause of complaint here.
Demourelle v. Piazza, 27 So. 623, 77 Miss. 433; Holmes v. McGee, 64 Miss. 129, 8 So. 169; Sparks v. Pittman, 51 Miss. 511, 518; Board of Supervisors of Simpson County v. Buckley et al., 38 So. 104; Jones v. George, 89 So. 231; Creegan v. Hyman, 93 Miss. 493, 46 So. 954.
The bill of complaint charges that appellee was without knowledge of the exact amount due by him to appellants, and that said information was wholly in the possession of defendants and he prayed a discovery, and offered to pay the amount found to be due. He asserted that he was ready, willing and able to pay this amount.
It is a well recognized principle of law that in situations of this kind no tender is necessary, but that an offer to pay is sufficient.
Griffith Chancery Practice, sec. 523; Byers et al. v. McDonald, 99 Miss. 42, 54 So. 664; 28 Am. Eng. Encyc. Law (2 Ed.) 6, 7; Wilbourn v. Bishop, 62 Miss. 341, 349; Hesdorffer et al. v. Welsh, 90 So. 3, 6.
The true test of the measure of our recovery for the use of the land is: what was a reasonable rental value of the land during the unlawful occupancy thereof by the appellant?
63 C.J. 1208, sec. 90, and 1210, sec. 95.
Argued orally by Arthar Bruce and H.C. Mounger, Jr., and Sylvanus W. Polk, for appellant, and by B.B. Allen, for appellee.
Appellee filed his bill against appellants in the chancery court of Sunflower county to cancel and set aside a conveyance to the Metropolitan Life Insurance Company to a section of land described in the bill, which conveyance was a trustee's deed made by appellant Kelso in his capacity as substituted trustee in a mortgage executed by Augustus Robinson, Sr., and wife, resulting from foreclosure in pais of such mortgage by the trustee. The life insurance company answered, and made its answer a cross-bill, denying the material allegations of the original bill, and, in addition, setting up certain facts as constituting an estoppel of appellee to question the legality of the conveyance. The material allegations of the cross-bill were denied by appellee. There were amendments to the pleadings on both sides unnecessary to mention. The result of the trial was a decree sustaining the prayer of the appellee's bill. From that decree the life insurance company and the trustee prosecute this appeal.
For the purposes of this decision, it will be assumed that every fact material to appellee's case was proven. So viewing the case, it was as follows: Augustus Robinson, Sr., is the father of the appellee, Augustus Robinson, Jr. In signing his name the father did not use the annex "Sr."; however, the son, in signing his, used the annex "Jr." On the 1st of March, 1921, Augustus Robinson, Sr., borrowed twenty thousand dollars from the Maxwell Investment Company, for the payment of which he and his wife executed a note, and mortgage to secure the same, on the section of land involved. The note was due ten years thereafter — the 1st of March, 1931. During the ten years payments were made on the note. On the 5th of December, 1924, the father and mother executed a conveyance to the son, Augustus Robinson, Jr.; the consideration mentioned in the deed was "$50.00 and other valuable considerations, the receipt of which is hereby acknowledged." Under this conveyance appellee went into possession and farmed the land until the early part of the year 1932. After the conveyance to appellee, the payments on the mortgage indebtedness, up to the time of foreclosure, were made by him. The life insurance company knew of this conveyance, and had been informed that a part of the consideration was the assumption by appellee of the mortgage indebtedness. The payments on the indebtedness being far in arrears, on the 7th of March, 1932, the mortgage was foreclosed by advertisement and sale by Kelso, the substituted trustee. At the sale the life insurance company bought the property for less than the mortgage indebtedness and received a deed thereto from the trustee. In the advertisement of the sale appellee was not named as a mortgagor; Augustus Robinson, Sr., and his wife alone were named as such.
This last-named fact is one of the grounds of attack on the conveyance by the trustee. To sustain that contention appellee relied on Wilkinson v. Federal Land Bank, 168 Miss. 645, 150 So. 218, 151 So. 761, and Castleman v. Canal Bank Trust Co. (Miss.), 156 So. 648. Another ground of attack was that appellee had an agreement with the life insurance company that foreclosure should not take place before the 1st of March, 1932; that although the actual foreclosure did not take place until the 7th of March, 1932, still the agreement was violated because the advertisement of the sale had begun some time before the 1st of March, and that that fact constituted a breach of the agreement.
The life insurance company contends that appellee was estopped to take advantage of either of those grounds of attack on the conveyance because of the following facts, which were undisputed in the evidence: Appellee had actual knowledge of the advertisement of the proposed foreclosure; the night before he and Kelso, the substituted trustee, occupied the same room at a hotel. When the sale took place the next day, appellee was present and made no objection. He raised no question as to its legality. After receiving the trustee's conveyance, the life insurance company immediately took possession of the land, and through negotiations with appellee and one Hazzard leased the entire place to Hazzard for the year 1932, and Hazzard subleased two hundred seventy-five acres of it to appellee, and in pursuance thereof each of them farmed his respective share of the place for 1932. For the year 1933 appellee alone leased the entire plantation and farmed it. There were something like twenty tenant houses on the place and barns and other buildings, all of which were badly in need of repair. During 1932 and 1933 the life insurance company, not only with the knowledge but without objection on the part of appellee, made extensive, necessary, and valuable repairs on the tenant houses and other buildings on the place. According to the evidence for the life insurance company, these repairs cost three thousand seven hundred seventy-one dollars and ninety-one cents. The chancellor found that their actual value was two thousand dollars. At no time during 1932 and 1933 did appellee give the life insurance company notice that he claimed title to the land on the ground that the foreclosure sale was void for the reasons upon which his bill was founded. At the end of his 1933 lease year appellee surrendered possession to the life insurance company and brought this suit. In other words, at the time the suit was brought, he was not a tenant; therefore he was not estopped under the law by the well-established doctrine that a tenant cannot dispute his landlord's title.
The question is whether his conduct at the foreclosure sale and the knowledge he had then and his silence at that time as to any illegality in the sale, in connection with the further facts that he leased part of the place for 1932 as a subtenant, and all of it for 1933 as primary tenant, during which time the life insurance company made the permanent and valuable improvements referred to, with his knowledge and tacit consent, and his failure at any time during those two years to give the insurance company notice that he claimed the foreclosure was illegal and as a result the land belonged to him, constitutes an equitable estoppel. We think it does. Although his former tenancy did not estop appellee, it is a very strong circumstance to be considered with the others in the case going to make up an equitable estoppel. His tenancy, while existing, was an express acknowledgment that he was not the owner of the land, but that his landlord, the life insurance company, was; it meant nothing less than that.
Estoppel may arise from misleading silence or passive conduct joined with a duty to speak. The doctrine lies at the foundation of morals; it is based on equity and good conscience. Under its application fraud is suppressed; honest and fair dealing is promoted. One of the merits of equitable estoppel is that it reaches the ends of justice by a direct route, and one of the established rules of the doctrine is that, if a person knowingly suffers another to expend money on land under an erroneous opinion of title, although he does it passively by looking on without making known his claim, he shall not afterwards be permitted to enforce his legal right against such other. While the life insurance company was making the improvements on the place, appellee, by virtue of his tenancy, was saying to it every day during such tenancy: This is your place, not mine, go ahead and make the improvements. This fact, taken in connection with appellee's silence before and at the foreclosure sale as to his claim of title, bars any right he has. After keeping his mouth closed as to his claim during all that period, in connection with the fact of the improvements made by the life insurance company on the faith that it had a good title, appellee will not now be permitted to speak. Bigelow on Estoppel (6 Ed.), p. 492; 10 R.C.L., sec. 97, pp. 782, 783; 11 Cyc. of Law (2 Ed.), p. 431; Dickerson v. Colgrove, 100 U.S. 578, 25 L.Ed. 618, 619; Staton v. Bryant, 55 Miss. 261; Kelly v. Skates, 117 Miss. 886, 78 So. 945; Eagle Lumber Supply Co. v. De Weese, 163 Miss. 602, 135 So. 490.
We pretermit the question whether appellee was a mortgagor and entitled to be named in the foreclosure notice. The other question disposes of that one; it is unnecessary, therefore, to decide it.
Reversed, and bill dismissed.