A husband and wife join in a mortgage of the wife's real estate
to secure a debt of the husband contracted simultaneously with the
execution of the mortgage. The wife dies before maturity of the
debt, leaving a will devising all her estate to her husband in
trust to enjoy the income during his life, with remainder to her
children at his decease, but provided that said Cyrenius Beers may
encumber the same by way of mortgage or trust deed or otherwise,
and renew the same for the purpose of raising money to pay off any
and all encumbrances now on said property, and which trust deed or
mortgage so made shall be as valid as though he held an absolute
estate in said property. The will appointed the husband as sole
executor, and waived all security.
Held that the executor
was empowered by the will to extend the mortgage debt at maturity
without notice to the devisees of the remainder and without
affecting the mortgage security.
The husband, on the maturity of the debt secured by the
mortgage, extended it by an instrument which did not refer to the
will or to the power which it conferred.
Held that under
the circumstances, it was to be construed as an execution of the
power.
Bill to foreclose a mortgage and cross-bill to have that
mortgage set aside. The appellees filed the bill as plaintiffs in
the court below, against the appellants and one Charles G. Beers,
their brother, and against other parties to foreclose a mortgage on
real estate in Chicago. The appellants filed in that suit their
cross-bill, setting forth their title to the mortgaged property,
alleging that the mortgage was a cloud upon it, and praying a
decree for the discharge of the mortgage. The controversy arose on
the following facts:
On the 24th February, 1869, one Cyrenius Beers borrowed of the
insurance company, appellees, $20,000, and executed and delivered
to them his bond conditioned for the payment of that sum, with
interest, payable semiannually at the rate of eight percent per
annum. On the same day Beers and Mary Beers, his wife, duly
executed and delivered the mortgage in controversy,
Page 109 U. S. 358
to secure the payment of that debt. The title to the mortgaged
estate was in the wife, and was so described in the will, which was
duly admitted to probate in March, 1872, and of which the following
is a copy:
"I, Mary Beers, wife of Cyrenius Beers, of Chicago, of lawful
age and sound mind, in view of the uncertainty of human life, do
make, publish, and declare this my last will and testament."
"First. I order all of my debts to be paid, including the
expenses of my funeral and last illness."
"Second. I give and bequeath to my husband, Cyrenius Beers, all
the estate, both real, personal, and mixed, of which I die seized
or possessed, to be held by him in trust for the following uses,
purposes, and trusts, and none other, that is to say, to receive
the rents, income, and profits thereof during his life, with the
remainder to my children, Mary C. Foster, wife of Orrington C.
Foster, Rissa J. Beers, and Charles G. Beers, share and share
alike, to them, their heirs and assigns, forever. But provided that
said Cyrenius Beers may encumber the same by way of mortgage or
trust deed or otherwise, and renew the same, for the purpose of
raising money to pay off any and all encumbrances now on said
property, and which trust deed or mortgage so made shall be as
valid as though he held an absolute estate in said property."
"But provided further that the said Cyrenius Beers may, in his
discretion during his life, sell and dispose of any or all the real
estate of which I may die seized or possessed, as though he held an
absolute estate in the same, and out of the proceeds pay any of the
encumbrances upon any of the property of which I may die seized and
possessed, and the remainder, over and above what may be required
to pay the indebtedness upon said property, the same being now
encumbered, to rein vest in such way as he may see proper, and from
time to time sell and reinvest, such reinvestment to continue to be
held in trust the same as the estate of which I may die possessed
-- that is to say, the said Cyrenius Beers only to have the use
during his life of said estate, with the right of sale and to
encumber and reinvest, the remainder after his death to go to my
children and their heirs forever. "
Page 109 U. S. 359
"Third. I hereby appoint said Cyrenius Beers executor of this my
last will and testament, hereby waiving from him all bail and
security, as I have a right to do under the statute in such cases
made and provided, as such executor."
"In witness whereof I have hereunto set my hand and seal this
fourteenth day of September, in the year of our Lord one thousand
eight hundred and sixty-nine."
"MARY BEERS [Seal]"
"The above instrument, consisting of three pages, was, at the
date thereof, declared to us by Mary Beers, the testator therein
mentioned, to be her last will and testament, and she at the same
time acknowledged to us, and each of us, that she had signed and
sealed the same, and we thereupon, at her request, and in her
presence and in the presence of each other, signed our names
thereto as attesting witnesses."
"SAMUEL BEERS [SEAL]"
"GEORGE T. BEERS [SEAL]"
"
Witnesses"
Cyrenius Beers, the husband, accepted the trust and duly
qualified as executor and administered upon the estate, and was
discharged on the 20th September, 1877.
When the debt secured by the mortgage matured on the 24th
February, 1874, it was not paid, but instead thereof Beers on that
day entered into a written agreement with the company in which,
after reciting the execution of the bond and that it was wholly
unpaid, and the execution and delivery of the mortgage "by the said
Cyrenius Beers and Mary his wife" "to secure the payment thereof,"
it was agreed as follows:
"Now this memorandum witnesseth that the said The Connecticut
Mutual Life Insurance Company, in consideration of the covenants
and agreements on the part of the said Cyrenius Beers hereinafter
contained, the prompt and faithful performance whereof is a
condition precedent hereto, and time being the essence of this
contract, doth hereby extend and postpone the time of payment of
said principal sum of twenty thousand ($20,000) dollars in the
condition of said bond mentioned until
Page 109 U. S. 360
the twenty-fourth day of February, which will be in the year of
our Lord one thousand eight hundred and seventy-nine, interest to
be paid thereon at and after the rate of nine per centum per annum,
half yearly, in the same manner and at the place or places in the
condition of said bond mentioned."
"And the said Cyrenius Beers, in consideration of such extension
of the time of payment of said principal sum, doth hereby covenant,
promise, and agree to and with the said The Connecticut Mutual Life
Insurance Company, its successors and assigns, that he will well
and truly pay the said The Connecticut Mutual Life Insurance
Company, its successors and assigns, said principal sum of twenty
thousand ($20,000) dollars, on the twenty-fourth day of February
which will be in the year of our Lord one thousand eight hundred
and seventy-nine, at the place in the condition of said bond
mentioned, and also interest thereon at the rate of nine per centum
per annum half yearly, to wit, on the twenty-fourth day of each of
the months of August and February, which will be in each and every
year during such extended time of payment, according to the tenor
and effect of the ten (l0) coupons or due-bills signed by said
Cyrenius Beers, bearing even date and given herewith, it being
expressly understood and agreed by and between the parties hereto
that in the event of a failure to pay either or any of said coupons
at maturity, then, at the election of said The Connecticut Mutual
Life Insurance Company, its successors or assigns, the whole of
said principal sum of twenty thousand ($20,000) dollars in the
condition of said bond mentioned shall thereupon at once become due
and payable, and may be collected without notice, together with all
arrearages of interest thereon, in the same manner as if said
extension had never been granted."
"It is further expressly understood by and between the parties
hereto that nothing herein contained shall operate to discharge or
release the said Cyrenius Beers, his heirs, executors, or
administrators, from their liabilities upon said bond, but it is
expressly understood that this instrument is to be taken as
collateral and additional security for the payment of said
bond."
"It is also expressly understood and agreed by and between the
parties hereto that in the event of a failure on the part of the
said Cyrenius Beers, his heirs, legal representatives, and assigns,
to fulfill, keep, and promptly perform, as well in spirit
Page 109 U. S. 361
as in letter, the covenants in the said mortgage contained given
by said Cyrenius Beers to said company, then, at the election of
said The Connecticut Mutual Life Insurance Company, its successors
or assigns, the whole of said principal sum in the condition of
said bond mentioned shall thereupon at once become due and payable,
and may be collected without notice, together with all accrued
interest thereon at said rate of nine per centum per annum,
anything hereinbefore contained to the contrary
notwithstanding."
Cyrenius Beers died intestate in February, 1878, leaving the
mortgage debt still due and unpaid.
The appellants and Charles G. Beers, one of the defendants in
the original suit, were his heirs. They were also the children and
devisees of the said Mary Beers. Charles G. conveyed his interest
in the property to the appellants before the date of the
cross-bill.
The extension of the mortgage debt in 1874 was made without the
knowledge or consent of the appellants or of the said Charles G.
Beers. The contention of the appellees was that under the
circumstances it operated as a discharge of the mortgage lien.
The court below decreed the foreclosure of the mortgage and sale
of the mortgaged estate. From this decree the defendants below
appealed.
Page 109 U. S. 362
MR. JUSTICE MATTHEWS delivered the opinion of the Court. After
reviewing the principal facts, he said:
This extension of the time of payment of the mortgage debt was
made without any consent thereto on the part of the appellants.
It is claimed on their behalf that, as owners of the estate
mortgaged by the testatrix to secure the debt of her husband, they
are in the position of sureties, and that the extension of time for
the payment of the debt, without authority from them, is, in
equity, a discharge of the lien of the mortgage.
The appellee insists, in reply to this claim, that the agreement
by which further time was given for the payment of the debt, during
which the mortgage was continued in force, was
Page 109 U. S. 363
authorized by the will of Mary Beers and binds her devisees.
Whether this be so is the precise question we are required to
decide.
We are reminded at the outset of the argument, by the counsel
for the appellants, that, being sureties, they are favorites of the
law; that their contract is
strictissimi juris, and that
nothing is to be taken against them by intendment or construction.
It is quite true that "the extent of the liability to be incurred
must be expressed by the surety, or necessarily comprised in the
terms used in the obligation or contract" -- that is, "the
obligation is not to be extended to any other subject, to any other
person, or to any other period of time than is expressed or
necessarily included in it." "In this sense only," continues Mr.
Burge, Law or Suretyship, 1st Am. ed. 40,
"must be understood the expression that the contract of the
surety is to be construed strictly. It is subject to the same rules
of construction and interpretation as every other contract."
Besides, the rule of construction applies only to the contract
itself, and not to matters collateral and incidental, or which
arise in execution of it, which are to be governed by the same
rules that apply in like circumstances, whatever the relation of
the parties. So that the fact that the appellants occupy the
relation of sureties cannot control the determination of the
question whether the agreement extending the time of payment of the
mortgage, debt, and the continuance of the mortgage as an
encumbrance upon the estate, was a valid execution of the powers
conferred by the will of the testatrix. That question must be
answered according to its own rules.
It is further said, however, on the part of the appellants, that
the agreement of February 24, 1874, cannot be sustained in support
of a continuation of the mortgage lien as an execution of the
powers conferred by the will of Mary Beers, because it does not
appear that it was so intended by Cyrenius Beers, the donee of
those powers. It is argued that the agreement of extension makes no
reference either to the power or to the property of the testatrix,
which is the subject of the power; that every provision contained
in it can have its full operation and effect -- that is, all that
it professes to do or provide for can
Page 109 U. S. 364
be done, according to its full tenor, without referring the act
to the power and by referring it solely to the individual interest
of Cyrenius Beers, as the debtor of the appellee. This, however, on
an examination of its terms, will appear to be an erroneous view of
the true meaning and legal effect of the agreement of extension. It
recites the indebtedness of Cyrenius Beers to the appellee as then
due and unpaid; that he had applied to them to extend the time for
the payment of the principal sum; that Cyrenius Beers and Mary, his
wife, had executed and delivered their deed of mortgage to secure
the payment thereof. It is thereupon witnessed that the Connecticut
Mutual Life Insurance Company doth thereby extend and postpone the
time of payment of the principal sum until February 24, 1879,
interest to be paid thereon at the rate of nine percent per annum,
and in consideration thereof Cyrenius Beers agrees to pay the
principal sum on the day named therefor, and the interest thereon
as stipulated; it being understood that, upon a failure to pay any
installment of interest, the whole of the principal sum shall
thereupon become due, and may be collected without notice, together
with all arrearages of interest. It is also understood and agreed
between the parties that nothing in the agreement shall operate to
discharge or release Cyrenius Beers from his liability upon the
bond originally given for the payment of the debt, "but it is
expressly understood that this instrument is to be taken as
collateral and additional security for the payment of said bond."
It is also expressly understood and agreed between the parties that
in the event of failure on the part of Cyrenius Beers
"to fulfill, keep, and promptly perform, as well in spirit as in
letter, the covenants in said mortgage contained, given by said
Cyrenius Beers to said company, then at the election of the said
company, the whole of said principal sum in the condition of said
bond mentioned shall thereupon at once become due and payable, and
may be collected without notice, together with all accrued interest
thereon at said rate of nine percent per annum, anything herein
before contained to the contrary not withstanding."
Taking the instrument in all its parts, and looking at its
entire
Page 109 U. S. 365
scope and purpose, it must be admitted that notwithstanding its
omission of any direct and express stipulation of that character,
its meaning and legal effect are to continue in force, so far as
the parties to it had lawful authority to do so, the covenants and
lien of the mortgage as security for the payment of the original
debt, with the interest reserved at the increased rate until the
expiration of the extended time of payment. This effect was
undoubtedly intended by the parties, and this intention could not
take effect except by virtue of the powers contained in the will of
Mary Beers. Cyrenius Beers, as debtor, had no power to continue the
mortgage in force, nor as tenant for life to renew it as a mortgage
in fee. This is a demonstration, therefore, that the instrument
must be treated as an execution of those powers, because, if it
cannot otherwise operate according to the intention of the parties,
it must be referred to the power which alone can make it effectual
in all its provisions.
The rule applicable in such cases, it is claimed, is that
deduced as the doctrine of Sir Edward Clere's Case, 6 Rep. 17b, as
stated by 1 Sugden on Powers, 7th London ed. 417, that
"where the disposition, however general it may be, will be
absolutely void if it do not inure as an execution of the power,
effect will be given to it by that construction."
Mr. Chance, however, says:
"There are indeed in the case
dicta apparently to this
effect: that if the instrument refer not to the power, and can have
some effect by means of the interest of the party, though not all
the effect which the words seem to import, still the instrument
shall not operate as an execution of the power, the intention being
thus contravened. It appears quite clear, however at this day, and
a reference to the authorities will, it is apprehended, show that
it has been considered clear for nearly two centuries, that the
rule is not thus confined indeed, it may well be asked why,
admitting that the intention can be discovered to pass all, the
intention should not prevail in the one case as well as in the
other? What rule of law or construction would be thereby
violated?"
2 Chance on Powers 72, § 1597, London Ed. 1831.
Page 109 U. S. 366
And Sir Edward Sugden said:
"And notwithstanding Sir Edward Clere's case, an intent,
apparent upon the face of the instrument, to dispose of all the
estate, would be deemed a sufficient reference to the power to make
the instrument operate as an execution of it, inasmuch as the words
of the instrument could not otherwise be satisfied."
2 Sugden on Powers 412, c. VI, sec. VIII, 7th London ed.
In the present case, as we have seen, the legal effect and
meaning of the instrument cannot be satisfied without treating it
as an execution of the powers under the will, for Cyrenius Beers,
merely as debtor, as mortgagor, and as owner of the life estate
under the will of his wife, could not lawfully agree to keep in
force and renew a mortgage upon the estate of which the appellants
were devisees in remainder in fee.
The Supreme Court of Illinois in the case of
Funk v.
Eggleston, 92 Ill. 515, had the question under consideration,
and in a learned opinion, in which a large number of authorities,
both English and American, is reviewed, discarded even the modified
English rule of later date, and adopted that formulated by Mr.
Justice Story, in
Blagge v. Miles, 1 Story 427, as
follows:
"The main point is to arrive at the intention and object of the
donee of the power in the instrument of execution, and, that being
once ascertained, effect is given to it accordingly. If the donee
of the power intends to execute, and the mode be in other respects
unexceptionable, that intention, however manifested, whether
directly or indirectly, positively or by just implication, will
make the execution valid and operative. I agree that the intention
to execute the power must be apparent and clear, so that the
transaction is not fairly susceptible of any other interpretation.
If it be doubtful, under all the circumstances, then that doubt
will prevent it from being deemed an execution of the power. All
the authorities agree that it is not necessary that the intention
to execute the power should appear by express terms or recitals in
the instrument. It is sufficient that it should appear by words,
acts, or deeds demonstrating the intention."
The rule as adopted by this Court was tersely stated by Mr.
Page 109 U. S. 367
Justice Strong in delivering its opinion in
Blake v.
Hawkins, 98 U. S. 315,
98 U. S. 326,
in this form:
"If the will contains no expressed intent to exert the power,
yet if it may reasonably be gathered from the gifts and directions
made that their purpose and object were to execute it, the will
must be regarded as an execution. After all, an appointment under a
power is an intent to appoint carried out, and if made by will the
intent and its execution are to be sought for through the whole
instrument."
In the case of
Munson v. Berdan, 35 N.J.Eq. 376, it is
said:
"It is sufficient if the act shows that the donee had in view
the subject of the power."
And in
White v. Hicks, 33 N.Y. 383, 392, Denio, C.J.,
said:
"This doctrine proceeds upon the argument that by doing a thing
which, independently of the power, would be nugatory, she (the
donee of the power) conclusively evinced her intention to execute
the power."
And in
Sewall v. Wilmer, 132 Mass. 131, 134, the
Supreme Judicial Court of Massachusetts, in reference to a will
made in Maryland, which was the domicile of the testatrix, but the
provisions of which related to both real and personal estate
situated in Massachusetts, held it to be a valid execution of a
power contained in the will of her father, whose domicile was in
that state, although it would have been otherwise held in Maryland.
Gray, C.J., said:
"But in this commonwealth, the decisions in England since our
revolution, and before the Stat. of 7 Will. IV and 1 Vict. c. 26, §
27, have not been followed; the court has leaned toward the
adoption of the rule enacted by that statute as to wills thereafter
made in England, namely, that a general devise or bequest should be
construed to include any real or personal estate of which the
testator has a general power of appointment, unless a contrary
Page 109 U. S. 368
intention should appear by his will, and it has been adjudged
that the mere facts that the will relied on as an execution of the
power does not refer to the power, nor designate the property
subject to it, and that the donee of the power has other property
of his own upon which his will may operate, are not conclusive
against the validity of the execution of the power; but that the
question is in every case a question of the intention of the donee
of the power, taking into consideration not only the terms of his
will, but the circumstances surrounding him at the time of its
execution, such as the source of the power, the terms of the
instrument creating it, and the extent of his present or past
interest in the property subject to it."
We cannot doubt that Cyrenius Beers, in the agreement of
February 24, 1874, intended to exert whatever power had been
conferred upon him by the will of his wife to continue in force the
mortgage to the appellee as an encumbrance upon her estate, for the
reason that it is upon that supposition alone that it can have its
due legal effect,
ut res magis valeat quam pereat; and, by
force of the rules which we have seen ought to govern in such
cases, we hold that if the agreement as made is within the scope of
the power, it must be regarded as a valid execution of it.
The question next to be considered therefore is whether Cyrenius
Beers was empowered by the will of his wife to consent to an
extension of the time of payment of the mortgage debt, and a
continuance thereby of the lien on the mortgaged estate.
It is to be observed, in the first place, that he is made
executor of the will, tenant for life for his own use of all the
property of the testatrix, and trustee of the legal title. Whether
his title as trustee is to be considered as a fee simple or for
life, or a chattel interest only, it is not necessary to decide.
Its duration is to be measured by the nature of the purposes for
which it was created, and they include the power to mortgage, to
sell, and to reinvest in his own name as trustee. And it is not
without significance, although of how much importance is not
material, that the remainder in fee limited to the children of the
testatrix, and which is described as a limitation of all the
Page 109 U. S. 369
estate of which the testatrix should die seized or possessed, is
subsequently referred to as what shall remain after the death of
the tenant for life, and after the exercise by him of the power of
mortgaging or selling and reinvesting has been exercised for the
purpose of paying the indebtedness upon the property. It is further
to be noticed that the powers to mortgage and to sell are
authorized to be exercised by him for the purpose specified, "as
though he held an absolute estate in said property." The specific
power given is to
"encumber the same by way of mortgage or trust deed or
otherwise, and renew the same, for the purpose of raising money to
pay off any and all encumbrances now on said property,"
and the additional power to
"sell and dispose of any or all the real estate of which I may
die seized or possessed, as though he held an absolute estate to
the same, and out of the proceeds pay any of the encumbrances upon
any of the property of which I may die seized and possessed,"
and
"the remainder over and above what may be required to pay the
indebtedness upon said property, the same now being encumbered, to
reinvest in such way as he may see proper, and from time to time
sell and reinvest, such reinvestment to continue to be held in
trust the same as the estate of which I may die possessed."
It is too plain to admit of dispute, that under these ample
powers Cyrenius Beers might have secured, by a new mortgage, a loan
of the sum of money at the stipulated rate of interest, necessary
to pay his indebtedness to the appellee, and that he might by a new
loan from the appellee itself, secured by a new mortgage, upon the
same terms and for the same time as granted by the agreement of
extension, have raised the money and discharged the mortgage now in
suit. Such a transaction would have been strictly within the letter
of the authority. And yet it would in fact have been nothing but
what was accomplished by the agreement of extension -- namely a
continuance of the old loan, secured by the old mortgage for a new
term, and at a higher rate of interest. The two transactions,
though not the same in form, are so in substance, and a substantial
execution of the power is all that is required. In the case of
Bullock v. Fladgate, 1 Ves. & Beames 471, where
Page 109 U. S. 370
the power was to convert an estate into money and to purchase
other lands, which were the subject of the appointment, the Master
of the Rolls, Sir William Grant, no conversion having taken place,
but the original estate having been appointed, said:
"I apprehend that equity will uphold an appointment of the
estate itself as amounting substantially to the same thing; on
which principle it is that appointments deviating considerably from
the letter of the powers under which they were made, have
frequently been supported."
The power to encumber the estate "by way of mortgage or trust
deed or otherwise, and renew the same," is broad enough to include
the renewal and extension of an existing encumbrance as well as the
creation of a new one, and this is not inconsistent with the
declaration that it is to be "for the purpose of raising money to
pay off any and all encumbrances now on said property." The object
clearly was to meet the demand of the existing mortgagee for
punctual payment of the debt secured, and to prevent the possible
sacrifice of a forced sale to satisfy the demand, if not complied
with -- an object which could as well be accomplished by extending
the existing mortgage as by substituting a new one in its place.
The power to renew a mortgage given for the purpose of raising
money to pay off an existing encumbrance is expressly given; to
renew an existing one, to avoid the necessity of creating a new
encumbrance, is, we think, reasonably and fairly to be implied, as
equally within the intention of the testatrix, and within the scope
of the powers created by the will. The extension of a mortgage debt
and continuance of a mortgage lien is one mode of encumbering the
property, and may be a step, and possibly, under some
circumstances, a very important and necessary one, in preparing for
its payment and extinguishment. Indeed it might well be, as the
transaction shows the parties to it so understood, that Cyrenius
Beers, uniting in himself the various characters of principal
debtor and joint mortgagor, and of executor of his wife's will,
tenant for life of the estate devised, and trustee with the ample
powers conferred upon him of dealing with the encumbrance, was in
reality
Page 109 U. S. 371
constituted by the testatrix as the representative of all the
interests created by the will, fully authorized, as if he were
absolute owner of the estate, even as she could have done in her
lifetime, to consent to the extension of the time of payment of the
mortgage debt without prejudice to the mortgage security.
There is no error in the record, and
The decree of the circuit court is affirmed.
