The assignment to Ross being a mortgage, and not a simple pledge, vested the title to the Turner note and mortgage in Ross. The note of Buckelew to Ross, to secure which that assignment, by way of mortgage, was made, fell due on the 27th of November, 1857. It not being paid on that day, the title of Ross to the Turner note and mortgage became absolute. " A mortgage is a pledge, and more; for it is an absolute pledge, to become an absolute interest if not redeemed at a certain time." (Jones v. Smith, 2 Vesey, Jr. 378; 2 Story's Eq. Jur., Sec. 1,030; Edwards on Bailments, 192; Ferguson v. Lee, 9 Wend. 259.)
Stress is laid uponthe circumstance that when Ross proceeded to foreclose the mortgage against Turner, he did not make either Buckelew or Stephen A. Wright or Attmore R. Wright parties to the foreclosure suit, and it is claimed by the appellant that his position or right, as now asserted here, is different and better than it would have been if Buckelew or his assignee for the time being had been made a party to the foreclosure proceedings. We submit that if Buckelew or Wright had, either of them, been a party to the foreclosure suit, the right to redeem from the transfer of the mortgage to Ross would have been wholly unaffected by such foreclosure suit, and the relative position of Ross and Wright, after the proceedings to foreclosure had terminated in a decree, would have been wholly unaffected by the decree. Buckelew or his assignee had a right originally to redeem from the assignment of the Turner note to Ross. After a decree foreclosing that mortgage, Buckelew, or his assignee, though made a party to the decree, would have neither gained nor lost any right thereby. In the case of Hoyt v. Martense, 16 N.Y. 233, this proposition was distinctly presented and decided by the Court of Appeals of NewYork. Upon this point the Court say:
" But I do not understand how or upon what principle the rights of Hoyt, the plaintiff in this action, are affected by his being a party to the foreclosure suit. The assignment to Martense was in effect a mortgage of the mortgage. The object of the action in favor of Hoyt and Martense was solely to foreclose the equity of redemption of Corbitt, the original mortgagor, in the mortgaged premises, and has no reference whatever to the right of Hoyt to redeem the mortgage by payment of his debt to Martense. Hoyt's right of redemption was wholly unaffected by the foreclosure and sale."
The title of Buckelew, and of his assignee, Stephen A. Wright, therefore, was, irrespective of any foreclosure proceedings, divested on the 27th of November, 1857, and turned into a mere right to redeem, " which may be asserted by the mortgagor, if he brings his bill to redeem within a reasonable time." (2 Story's Eq. Jur., Sec. 1,031.)
On the 27th of November, 1861, the note of Buckelew to Ross became barred by lapse of time; on that day the right of Buckelew or his assignee to redeem from the mortgage to Ross became likewise barred. The remedies were mutualand concurrent, and they ceased at the same time. (Waterman v. Brown, 31 Penn. State, 163.) " The right to foreclose and the right to redeem are reciprocal and commensurable." (Cauffman v. Sayre, 2 B. Monroe, Ky. 206.) And this language of Mr. Chief Justice Robertson is quoted approvingly by Mr. Hilliard in his work on mortgages. (2 Hill. on Morts. 1.) In Koch v. Briggs, 14 Cal. 262, this necessary mutuality and reciprocity are recognized by Mr. Chief Justice Field. (See, also, Lord v. Morris, 18 Cal. 482; McCarthy v. White, 21 Cal. 495; Grattan v. Wiggins, 23 Cal. 34, 35; Cunningham v. Hawkins, 24 Cal. 403.)
But let us, for the purpose of the argument merely, concede that the transaction between Buckelew and Ross was a pledge pure. It was a pledge to be controlled in its disposition by the express written agreement made on the 22d of November, 1856, in which it was stipulated that the pledgor might redeem by the 27th of November, 1857. On that day Ross' right of action against Buckelew to collect the debt accrued, and on the 28th of November, 1861, that right became barred by lapse of time. The corresponding right of Buckelew to maintain an action toredeem the pledge became in like manner barred on the 28th day of November, 1861, and we are not able to see why the principle announced in Cunningham v. Hawkins, supra , that remedies as between mortgagor and mortgagee are mutual, should not apply as well to pledgor and pledgee, for the pledgor, like the mortgagor, has a " mere right of redemption." (Hart v. Burton, 7 J. J. Marsh. 323; Thornhill v. Gilmer, 4 S. & M. 163.)
JUDGES: At the October Term, 1867, Mr. Chief Justice Currey delivered the following opinion, in which Mr. Justice Rhodes and Mr. Justice Sanderson concurred, Mr. Justice Sawyer and Mr. Justice Shafter dissenting.
OPINION
CURREY, Judge
A rehearing was asked and granted after Mr. Chief Justice Currey and Mr. Justice Shafter had left the Bench, which came on to be heard at the October Term, 1868, when the following opinion was delivered by Mr. Justice Crockett:
The principal question in this case is, whether the instrument from Buckelew to Ross and Phelan was a pledge or a chattel mortgage, or a mere assignment in trust, as contradistinguished from either. The line of distinction between a pledge and chattel mortgage, whilst well defined in theory, is sometimes difficult in application to the facts of the transaction. This case presents a striking illustration of the difficulty.
The chief distinctions between the two at common law were, that in a pledge the title did not pass to the pledgee, who held only a lien on the property, and in all cases the possession must accompany the pledge; whilst by a chattel mortgage the title of the mortgagee became absolute at law, on the default of the mortgagor, and it was not essential to the validity of the instrument that possession of the mortgaged property should be delivered. Nevertheless, when the transaction is evidenced by a written instrument, as in this case, it often becomes difficult to decide, on the face of the paper, whether it was intended as a pledge or a mortgage. Whether it be the one or the other, the object and design of it, in all cases, is to secure the payment of money, or the performance of some act by the maker of the instrument, or some one else, for whom he undertakes. But whilst the general office to be performed by each is the same, to wit: to secure the payment of money or the performance of some other act, the consequences resulting from a failure to perform are widely different in the two cases. In the case of a pledge the title remains in the pledgor, after condition broken, with a right to redeem at any time before a sale of the property; and if the property be sold by the pledgee, in satisfaction of his demand, he cannot become the purchaser at his own sale. But in the case of a chattel mortgage, the title of the mortgagee became absolute at law, on the default of the mortgagor; and on the foreclosure of the mortgage, the mortgagee was at liberty to become the purchaser. In this and similar cases the difficulty lies in determining, on the face of the instrument, whether the parties intended it to be a pledge or a mortgage. There is no set form of words for either, and the intent is to be deduced from the whole instrument, and all its provisions taken together.
The subject matter of the transaction in this case was a note and mortgage on real estate made by D. S. Turner, and which were placed by Buckelew in the hands of Ross and Phelan, to secure the payment to them of Buckelew's note for thirty thousand dollars, with interest.
There is no room for doubt that a note and mortgage of that character may become the subject of either a pledge or mortgage. They are but choses in action, and it is well settled that choses in action may be pledged. (Story on Bailments, Secs. 290-297; Edw. on Bailments, 197; Wilson v. Little, 2 Comst. 443.)
To make such a pledge available to the pledgee, there must necessarily accompany the pledge a power to assign the note and mortgage, in case of a sale of them, and to release the mortgage on satisfaction of it, otherwise it would not be possible for the pledgee, on a sale, to convey the legal title to the purchaser, or on a satisfaction of the mortgage to release it of record. But the instrument in question contains more than a mere authority from Buckelew to assign the note and mortgage to a purchaser, and to discharge the mortgage on satisfaction. It contains also a formal assignment to Ross and Phelan, by which they were invested with the legal title, and with full authority to take all proper steps for collection of the debt, and the release of the mortgage on the satisfaction thereof.
So far the instrument partakes of the character of a chattel mortgage, which, in granting part, conveys the legal title to the mortgage, and which is followed by a defeasance declaring the conditions on which the conveyance is to become void. This instrument contains both the absolute grant or assignment and a defeasance in the usual form. But the defeasance is followed by a provision to the effect that the instrument is " made for the purpose of securing the payment of the said sum of thirty thousand dollars, with interest as aforesaid, and for no other purpose whatever; " and it is insisted by counsel that these words repel the idea that the instrument was intended as a mortgage, and go strongly to fortify the proposition that it was only a pledge, or at most an assignment in trust. But we are unable to perceive the significance of these words in that light. Whether it be construed to be a pledge, a mortgage, or an assignment in trust, these words would have equal significance, and would be equally true as applied to the transaction. Whatever we may term the instrument, and however we may classify it, it is obvious that it was " made for the purpose of securing the payment of the said sum of thirty thousand dollars, with interest as aforesaid, and for no other purpose whatever." The whole instrument, even without the aid of these words, establishes clearly that it was intended only as a security, and for " no other purpose whatever." This provision, therefore, can have no significance in determining the character of the instrument. It is the common practice to recite in mortgages that the instrument is intended only as a security, though these words are superfluous when the intent sufficiently appears from other portions of the instrument.
There is also a provision to the effect that on the collection by Ross and Phelan of the note and mortgage made by Turner, they are to account to Buckelew for the excess, after retaining the thirty thousand dollars and interest due from Buckelew, together with the costs of collection; and counsel maintain that this provision proves that Buckelew was to retain an interest in the note and mortgage, even after default made in the payment of his own note; and hence that the transaction was a pledge and not a mortgage. This argument is founded on the fact that, in case of a pledge, the title remains in the pledgor, even after default made; whereas, in the case of a chattel mortgage, the title of the mortgage becomes absolute at law on the default of the mortgagor. Hence the argument that, inasmuch as the instrument provides for a payment of the surplus to Buckelew, it follows, as it is claimed that he retained an interest in the property after default made, and that for this reason it was a pledge, and not a mortgage.
This argument, however, is more specious than sound. If it had been in strict form a chattel mortgage, with a provision for the payment of the surplus to the mortgagor, would this of itself have converted it into a pledge? We think not. For whilst the title of the mortgagee would become absolute at law on default made, it is not controverted that the mortgagor could still redeem in equity. The provision for payment of the surplus is only expressing in words a right secured to the mortgagor by a Court of equity, if the instrument had been silent in that respect. It is none the less a mortgage because the parties have expressed in terms what a Court of equity would otherwise have implied, to wit: that the mortgagor was entitled to the surplus, after payment of the mortgaged debt, interest, and costs.
We are fortified in the opinion that the instrument was intended as a mortgage, by the fact that it is so denominated by the parties to it. One of the provisions is that it shall be lawful for Ross and Phelan to effect insurance on the buildings included in the mortgage from Turner, and that the premium paid therefor " shall be a lien upon the said mortgaged premises, added to the amount of the said notes hereinbefore mentioned and secured by these presents." The " mortgaged premises" referred to must of necessity be the note and mortgage of Turner, and not the real estate included in the Turner mortgage, on which it was not in the power of Buckelew to impose a new lien in favor of Ross and Phelan.
On the whole, we conclude that the instrument in question has all the distinguishing characteristics of a chattel mortgage, and was so intended by the parties to it. It follows that Ross had the lawful right to purchase, for his own account, at the foreclosure sale, and in the absence of fraud, the purchase inured to his own benefit.
But if the instrument be not, strictly speaking, a chattel mortgage, we are, nevertheless, of opinion, that on a fair construction of it, under whatsoever classification it may fall, Ross had the right to purchase and hold, for his own account, the property in the Turner mortgage, at a fair judicial sale, under the decree of foreclosure.
The legal title to the note and mortgage was not only conveyed to him, but he was expressly authorized " to have, use, and take all lawful ways and means for the recovery of said money and interest." This included the power to collect it by legal process, and to do whatever was proper and necessary to make the mortgaged property available for the payment of the debt. It was clearly within the contemplation of the parties that the foreclosure of the mortgage and a sale of the mortgaged property might become necessary, and Ross was clothed with full authority to accomplish that result. Was it contemplated by the parties, in the event of a foreclosure of the Turner mortgage, that Ross should not have the right to purchase the property for his own account, at a fair judicial sale? Was it within the scope of the contract, that in case of a purchase by him, at such sale, he was to hold the title only as a security for his debt, and subject to redemption by Buckelew in case Buckelew saw fit to redeem; but if he elected not to redeem, then that Ross should be forced to hold the property as his own at the price paid for it? Was it understood between them that if Ross should purchase at the foreclosure sale, Buckelew was to have the right to claim the benefit of the purchase, if it turned out to be an advantageous one, or reject it if he elected to do so? There is nothing in the contract to justify the belief that the parties contemplated anything of the kind. On the contrary, it is evident that Ross and Phelan, in their capacity of creditors, retained the right to do whatever was necessary and proper to procure satisfaction of the debt due to them from Buckelew; and, as a means to that end, it was obviously within the contemplation of the parties that they should have the right to foreclose the Turner mortgage; and if they should elect to do so, to purchase for their own account the mortgaged property, holding the surplus, if any, in trust for Buckelew. This, in our opinion, was the only trust created by the instrument, except in so far as they were bound to the use of due diligence for the collection of the Turner note and mortgage. It has not been claimed, and could not be maintained, that under the contract it was imperative on Ross to purchase at the foreclosure sale, whether he deemed it to his advantage to do so or not. If he had failed to purchase at any price, Buckelew could not have complained in the absence of fraud.
On the other hand, having elected to purchase at that sale, as a legitimate method of procuring payment pro tanto, of the debt due to him from Buckelew, he is entitled to the exclusive benefit of the purchase, unless by the terms of the contract a trust is created, which denies to Ross the usual right of a creditor to purchase the property of his debtor at a fair judicial sale. We think the contract not only fails to create such a trust, but, on the contrary, tends strongly to the conclusion that Ross was not thereby intended to be deprived of any of his rights as a creditor, including the right to purchase for his exclusive benefit the mortgaged property at the foreclosure sale.
The view we have taken of the case renders it unnecessary to consider the other questions presented in the record.
Judgment affirmed.