The opinion
The precise question to be determined in this case is whether a mortgagor, after having surrendered possession to his mortgagee, has such an interest in the mortgaged premises as may be sold on execution. The circumstance that Mrs. Marsh took possession as purchaser under a decree of foreclosure, the sale having been subsequently vacated, does not, perhaps, place her in any better *Page 608
position than that of a mortgagee in possession; and in that aspect only the case will be considered. So long as a mortgagor remains in possession, it is entirely clear that he has such an estate or interest in the mortgaged premises as may be the subject of sale under an execution. He has, unquestionably, in our law a legal estate, and yet it is usually called an equity of redemption merely; but this is to be said only in respect of his relation to the mortgagee; as to all the world he is the owner. The mortgagee has a mere lien for the payment of his debt, and it is a chattel interest. He has no legal estate in the land which enables him to exercise dominion as owner. He may take all needful measures to protect his security, but nothing more. He has not the land, nor can dower or curtesy result from the mortgagor's interest. Lord MANSFIELD said, in The King v. St. Michael's (Douglas, 602), "A mortgagor in possession gains a settlement because the mortgagee, notwithstanding the form, has but a chattel, and the mortgage is only a security. It is an affront to common sense to say the mortgagor is not the real owner." It has often been held in this State that the interest of a mortgagor is attended with all the incidents of absolute ownership. He may maintain trespass even against the mortgagee, and his widow is entitled to dower. ( Coles v. Coles, 15 Johns. R., 319; 3 Johns. Ca., 329; 1 Johns. R., 590; 4 id., 42.) The question then is, what effect has the actual possession of the mortgagee upon the legal estate of the mortgagor?
Ordinarily, the mere change of the actual possession of real estate would not divest the legal title of the owner, and I can see nothing in the fact of actual possession by a mortgagee that should work such a result. Legal estates in land cannot be transferred by the mere act of taking possession, whether with or without the consent of the owner, unless the possession be held adversely for a sufficient time to ripen into a legal title. The possession of a mortgagee is, apparently, attended with more incidents of legal ownership than any other mere possession. It is sanctioned by a right which *Page 609
defends the possession against the true owner of the fee until the mortgage debt is fully discharged. In such case the creditor, instead of leaving his debtor in possession and relying upon his intangible legal lien for his security, takes the thing pledged in his own possession and enjoys its use until his debt is paid. He must account for profits and waste to his debtor, and when his debt is paid by the receipt of rents and profits, or in any other manner, his lien is extinguished and his possession is no longer justified by law. Calling the interest of a mortgagor a mere right of redemption in equity proves nothing as to the location of the legal estate in the land. The right of redemption supposes a mere remedy to enforce the legal or equitable rights of the plaintiff, and is not essentially different from the action of ejectment to recover possession wrongfully withheld from the true owner. In the one case, it is true, the remedy is incumbered with the obligation to discharge the lien, and in the other it is not; but I am unable to see that this circumstance can have any effect upon the legal title.
We are referred by counsel for the appellant to the case of Hubbell v. Sibley (50 N.Y.R., 468, 472) in support of his position. That case involved simply a question as to the operation of the statute of limitations, and although the question as to the rights of a mortgagee in possession was incidentally alluded to in the opinion of Judge GROVER, nothing was decided by the court other than that the action was barred by the statute. The action was for an accounting to ascertain the amount due upon certain mortgages upon lands in which the plaintiff claimed to have a title to one undivided half, and for leave to redeem on paying the amount due. The defendant had foreclosed the mortgages by advertisement, had purchased at the sale and was in possession. The plaintiff claimed that the foreclosure was void, and hence his demand for an accounting and for leave to redeem. The only defence considered was the statute of limitations, and it was held to be a purely equitable action and barred by the ten years' statute. The defendant was, in *Page 610
the only aspect of the case considered by the court, regarded as a mortgagee in possession, and it was truly said that he might defend his possession until his debt was paid. ( Phyfe v. Riley, 15 Wend., 248 ; Chace v. Peck, 21 N.Y.R., 581.) But, as has been suggested, all this does not show that the mortgagor is divested of the fee; but of course it is subject to the incumbrance. Before the Revised Statutes, a mortgagee, after forfeiture by non-payment, might recover the possession of the mortgaged premises, and it was said, in such case, the mortgagee had the legal title, for it prevailed over that of the mortgagor. The Revised Statutes provided that thereafter no action of ejectment should be maintained by a mortgagee, or his representatives or assigns, for the recovery of the possession of the mortgaged premises. (2 Rev. Stat., 312, § 58.) Since that enactment it has been universally assumed that the forfeiture by non-payment does not, per se, change the legal title, and it remains precisely as before. If, then, it was changed in the present case, that change resulted from the mere fact of possession; and that, as before said, I think does not follow.
It may be added that if the mortgagor tenders the mortgagee in possession the amount of money due on the mortgage, there appears to be no reason why he may not recover the possession of the premises in an ordinary action of ejectment. A tender of the amount due upon a mortgage extinguishes the lien, whether accepted or not. ( Farmers' Fire Ins. Co . v. Edwards, 26 Wend., 541 .)
I therefore, with considerable hesitation, incline to the opinion that the possession of a mortgagee does not divest the technical legal fee of the mortgagor.
Actual possession, while good enough as against a stranger or a trespasser, does not in very many (and in most) cases prove title. It was held in Huntington v. Smith (4 Conn. R., 235) that the interest of a mortgagee before foreclosure could not be taken in execution. The legal estate must vest somewhere, and if not in the mortgagee it must remain in the mortgagor. Regarding, therefore, as we must, the interest *Page 611
of the mortgagee as a mere lien for the security of a debt, actual possession by the mortgagee does not impair the relation of debtor and creditor; it still exists and must continue until actual foreclosure. While it is true that the mortgagor may not dispossess the mortgagee without discharging the lien, this circumstance proves nothing as to the actual residence of the legal title. The fact that the interest of the mortgagee and the lien of the mortgage is extinguished on payment or tender of the amount due, shows the nature of the interest, and it is not a legal estate. That was in the mortgagor, and the sale under the execution divested his title.
The order should be affirmed and judgment absolute given against the plaintiff, with costs.