Following the decisions of the Supreme Court of Georgia, this
Court holds that the act of the Legislature of Georgia, of March
l6, 1869, which provided that actions upon contracts or debts
"which accrued prior to the
Page 122 U. S. 177
1st of June, 1865, and are now barred, shall be brought by 1st
January, 1870, or both the right and right of action to enforce it
shall be forever barred"
is an ordinary statute of limitations; that it was a personal
privilege of the debtor to plead it, and that to avail himself of
it he must plead it.
The proposition that a purchaser with the legal title, whose
right accrued subsequent to a mortgage debt barred by the statute
of limitations, can avail himself of the statute when sued to
foreclose the equity of redemption has been sustained in Georgia
only in cases where the party setting it up has become the owner of
the title, or of the entire equity of redemption, or has been found
in possession of the mortgaged property.
The Court finds no fraud or irregularity in the transactions
assailed in the bill to warrant a reversal of the decree.
This was an appeal from the Circuit Court of the United States
for the Southern District of Georgia.
The decree from which this appeal was taken dismissed a bill
brought by William H. M. Sanger, the appellant, to foreclose a
mortgage. The bill was brought against William Nightingale, as
executor of Phineas M. Nightingale, his father, Mrs. Ellen D.
Nightingale, the widow, and John K. Nightingale and others,
children, of Phineas, deceased, the maker of the original
mortgage.
Sanger, the plaintiff below, was a citizen of New York, and the
other parties were mainly citizens of the State of Georgia.
This mortgage was made in the City of New York, on December 6,
1869, by Phineas M. Nightingale, who was a resident of Georgia. It
conveyed to Sanger, the appellant, certain property in the State of
Georgia, known as "Camber's Island," in the Altamaha River. Three
notes of $10,000 each accompanied the mortgage, payable
respectively in one, two, and three years, with semiannual interest
at the of rate seven percent per annum. It was to secure the
payment of these notes that the mortgage was made, and it was duly
recorded January 28, 1870, after having been properly
acknowledged.
No money was ever paid upon this mortgage, either by way of
principal or interest. Nightingale, the mortgagor, died in April,
1873, and William Nightingale became the executor of his will.
There were several mortgages on this property prior to the one
to the plaintiff, which were properly recorded so as to
constitute
Page 122 U. S. 178
notice to Sanger, as well as to all other subsequent purchasers
or encumbrancers. When Sanger came to file his bill to foreclose
his mortgage, which he did April 8, 1883, it became necessary for
him to bring these mortgages to the attention of the court. The
principal and only one of them, as the case presents itself to us,
which is necessary to be considered was one made by Nightingale on
January 30, 1855, to Charles Spalding, which included Camber's
Island, and a very large amount of landed estate besides, as well
as some 120 slaves residing upon the estate so mortgaged. This
mortgage had been assigned, for the consideration of $100,000, by
Spalding to Edmund Molyneux, who afterwards died, and his widow and
heirs had removed to England. The executor of the estate of
Molyneux had taken judgment against Nightingale before his death
for the sum due on the bonds secured by the mortgage to Spalding,
and he had also foreclosed the mortgage of Nightingale to Spalding,
the property had been sold, and a deed made by the sheriff under
that sale to William Nightingale, son of Phineas.
All this occurred in the lifetime of the latter.
The bill of complaint of Sanger assails this proceeding by which
the mortgage to Spalding was foreclosed, and the title of the
property came into the hands of William, as the result of a
fraudulent combination on the part of Phineas M. Nightingale, his
debtor, and William Nightingale, as representing the children of
Phineas M. Nightingale, Mrs. Molyneux, and the executor of
Molyneux, to defraud him of his just claims under the mortgage of
December, 1869. In reciting the means by which this fraud was
carried out, he says that Phineas M. Nightingale, the mortgagor in
both mortgages, conveyed on July 21, 1870, to Mrs. Molyneux, the
widow and real party in interest as heir or devisee of Molyneux,
then dead, a tract of land known as "Dunginess," which was received
by Mrs. Molyneux and intended by Nightingale to be a complete
satisfaction of the Spalding mortgage. He further asserts that the
Spalding bonds and mortgage were then turned over to P. M.
Nightingale, either by a written assignment, or accompanied with an
endorsement showing that they
Page 122 U. S. 179
were satisfied; that P. M. Nightingale afterwards procured this
mortgage to be foreclosed, and Camber's Island sold under it, and
bought in by his son William without any consideration being paid
for it, and solely for the purpose of cutting off the right of
Sanger under his mortgage.
The answer of the Nightingales denies this combination and
fraud, and by way of explanation says that Dunginess was received
by Mrs. Molyneux at the sum of $25,000, credited on the Spalding
mortgage; that a question at that time existed as to how far the
loss of the slaves who had been emancipated, which were included in
the mortgage of Nightingale to Spalding, and the consideration of
which was the land and negroes mortgaged, would be treated as a
failure of consideration; that this question was also settled at
the time that Dunginess was conveyed to Mrs. Molyneux, and that an
adjustment of that matter was made by which, after the receipt of
the deed of conveyance of Dunginess, it was agreed that the sum of
$51,250 remained due upon that mortgage. They denied all
combination to defeat the plaintiff in his mortgage. They asserted
that the foreclosure of the mortgage was a
bona fide
attempt to enforce the collection of the remaining sum of $51,250,
and that William Nightingale gave his note for the sum of $30,000
for which the property was sold.
The plaintiff afterwards filed an amended bill in which he
adopted the version of the settlement between Mrs. Molyneux and
Phineas M. Nightingale, by which Dunginess was received as part
payment only, and the mortgage was foreclosed for the remaining
sum, after deduction for the loss of the slaves, the balance of the
bonds remaining unpaid. But in regard to the foreclosure
proceedings on that mortgage, he says that at the time they were
instituted, the debt was barred by the limitation law of March 16,
1869, of the General Assembly of Georgia, and that at the time the
bonds and mortgage on which that proceeding was instituted were
taken by the children of said Phineas M. Nightingale by the
assignment and transfer of the executor of the Molyneux estate, the
said bonds and mortgage were all past due, and barred by said
act
Page 122 U. S. 180
of 1869. He further avers that the failure of said Phineas to
plead the statute of limitation in bar of the foreclosure does not
and cannot affect the right of the complainant to now avail himself
of said statute of limitation. He then requests the court to decree
the said foreclosure void by virtue of said limitation law against
the claim and right of complainant. 4 Woods 483.
Page 122 U. S. 182
MR. JUSTICE MILLER delivered the opinion of the Court.
Two questions are thus presented for consideration on the
pleadings in the case. The first of these may be said to be
this
Page 122 U. S. 183
plea of the statute of limitation, the second the question of
actual fraud in the foreclosure of the Spalding mortgage and the
transfer of title thereby to the children of Phineas M.
Nightingale.
As regards the statute of limitations, it is observable that the
foreclosure suit was brought in the name of Spalding, the original
mortgagee, for the use of Johnston, administrator of the estate of
Molyneux, for reasons explained by the attorneys who brought it.
The suit was against Phineas M. Nightingale himself, who lived
until the whole proceeding was ended and the property sold, and who
died a few months afterwards. The proper, if not the only, time and
place that this statute of limitations could have been pleaded was
in that suit. Nightingale himself, who was the debtor and was in
possession, had no equitable defense against the debt for which a
judgment at law had been already obtained against him in one of the
courts of Georgia, did not plead the statute of limitation. It
would hardly be insisted by anybody that he was under any personal,
legal, or moral obligation to plead that statute. He had obtained
from Mrs. Molyneux a very favorable settlement of a debt of over
$100,000. Dunginess, which was accepted at the price of $25,000, is
stated in the oral testimony to have been sold not long afterwards
for $15,000. The value of the slaves was adjusted on some fair
basis, and corresponding deduction was made on that account, so
that the sum of $51,250, which was yet due on the mortgage, was in
every sense an honorable and just debt which Nightingale owed to
the estate of Molyneux, and a plea of the statute of limitation to
that debt, if it could have been sustained after the payments made
upon it within the period of limitation, would have been an unjust
exercise of his right to make such a plea, which could only result
in favor of the plaintiff, Nightingale.
The right to plead the statute of limitations has been always
held to be a personal privilege, of which the debtor could avail
himself or not as he might choose.
See Pittman's Administratrix
v. Elder in the Supreme Court of Georgia, March term,
1886.
Page 122 U. S. 184
It is true there are some authorities which go to show that a
purchaser with the legal title whose right accrued subsequent to
the debt which may be barred by the statute can also avail himself
of the statute when he is sued to foreclose this equity of
redemption. While this proposition is not undisputed, the cases in
which this privilege has been sustained by the courts of Georgia
are those in which the party setting it up has become the owner of
the title or the entire equity of redemption, or has been found in
possession of the mortgaged property.
And in the case of
Ewell v. Daggs, 108 U.
S. 143, this Court said that though the subsequent
purchaser might set up the plea of the statute, the plea must show
that the action is barred as
between the parties to the
debt, because, as the owner of the equity of redemption, it is
that debt he has to pay.
The statute of limitation applicable to this case is ยง 6 of the
Act of March 16, 1869, Pamph.Laws Ga. 1869, p. 133, which reads as
follows:
"That all other actions upon contracts, express or implied, or
upon any debt or liability whatsoever to the public, or a
corporation, or a private individual or individuals, which accrued
prior to first June, 1865, and are not now barred, shall be brought
by first January, 1870, or both the right and right of action to
enforce it shall be forever barred."
This being a law of the State of Georgia, we must follow its
construction by the courts of that state, so far as it has been
construed. It is said in the argument in this case, but not much
insisted upon by the plaintiffs, that this is a peremptory
discharge of the debt, and is not a mere statute of limitations,
which, to be available, must be pleaded, as is the case with other
limitation acts. The proposition is that the statute in effect
destroys the right of action, but this doctrine has been overruled
repeatedly by the Supreme Court of Georgia, in which it has been
held to be an ordinary statue of limitations.
See George v.
Gardner, 49 Ga. 441, 449;
Harris v. Gray, 49 Ga. 585.
In
Parker v. Irwin, 47 Ga. 405, it was decided that the
pleading of the statute was only a personal privilege of the
debtor, and that to avail himself of the statute,
Page 122 U. S. 185
he must plead it.
See also Baker v. Bush, 25 Ga.
594.
The mortgagee of real estate in Georgia does not take the title
to the property. The mortgage is only a security for the debt for
which it is made. The title remains in the mortgagor. The cases in
that state, as already intimated, go no further than to hold that a
purchaser of the legal title, or possibly a mortgagee in
possession, may, when sued, plead the statute of limitation as a
defense to a prior debt or mortgage or encumbrance made by the
holder of the legal title.
In the case before us, Sanger never had the possession, never
had the legal title, and, as he was no party to the foreclosure
proceedings, which he now contests, he simply stands upon such
rights as his mortgage lien gives him against Nightingale. It is
difficult to see from what standpoint he, in this suit, in which he
is complainant, seeking to foreclose his own mortgage, can set up
the statute of limitation not as a defense -- for he is not sued,
and nobody is troubling him about his claim -- but as a positive
weapon to set aside and annul in this collateral proceeding the
decree of a court of competent jurisdiction, with proper parties
before it, which foreclosed a mortgage prior in time and equal in
equity to his, under which the property was sold and passed into
other hands. Certainly the court which rendered that decree had
jurisdiction of the property and of Nightingale, the defendant, who
was in possession and who had the legal title. It is equally as
certain that whether Nightingale ought to have pleaded the statute
or not, he did not do so, and it is now too late to set it up as a
defense to that suit. If Nightingale himself had made that plea, it
is difficult to perceive how he could have avoided the effect of
part payment by the transfer of Dunginess and an acknowledgment of
the debt by the settlement under which it was adjusted at $51,250,
as a sufficient answer to the plea of the statute of limitations.
We suppose, though no authorities are cited on the subject, that
the law of Georgia, like that of other states, admits of such
evidence as payment, acknowledgment of the debt, and agreement to
pay, as being a sufficient reply to the statute of limitations. How
Nightingale
Page 122 U. S. 186
could have pleaded the statute successfully under such
circumstances we do not see. In short, we see no way, in accordance
with any known principles of dealing with the statute of
limitations, that the plaintiff can, in this collateral proceeding,
make use of the statute as a positive weapon of attack to set aside
a decree rendered by a court of competent jurisdiction, with proper
parties before it, under which the title has passed by a judicial
sale of third persons.
In regard to the other proposition, that the whole proceeding
was the result of a fraudulent combination to cut off and defeat
the claim of the plaintiff, we have a little more difficulty.
There are many circumstances of suspicion in the transaction.
There is no very satisfactory account of anything's being paid by
the Nightingales for the purchase of Camber's Island under that
decree of foreclosure. There is no very clear account of how the
bonds and mortgage, under which that decree was made, came into the
possession of William Nightingale and his brothers and sisters.
When the purchase was made, William Nightingale gave his note for
$30,000, payable to the order of the attorneys who foreclosed the
mortgage. It is nowhere shown that this note was ever paid. It is
not claimed that it was ever paid in fact; nor is it shown what
became of it. It is stated by the attorneys that the mortgage was
foreclosed in the name of Spalding, for the use of George H.
Johnston, administrator of Edward Molyneux, and that the note for
the purchase money was taken to the solicitors as a means of
distributing it to those who might be entitled to it. The attorneys
seem to have been satisfied that the transfer of the original
mortgage and bonds to the Nightingales, the children of Phineas M.
Nightingale, extinguished this note, and, if there were any clear
and satisfactory account of how the junior Nightingales became
possessed of the bonds and mortgage, this might explain the whole
matter.
The attempt to do this is rather a lame affair. It is said that
the title of Phineas M. Nightingale to Dunginess was brought into
doubt by an examination of some papers under which he held it,
which raised a question whether he had anything
Page 122 U. S. 187
more than a life estate in that property, the title of which
after his death descended to his children, and therefore Mrs.
Molyneux would have no title to Dunginess when he died. A paper is
produced which professes to be a quitclaim conveyance by the
children of Nightingale to Mrs. Molyneux. This conveyance is set up
as the consideration on which Mrs. Molyneux, or the administrator
of her husband's estate, transferred the remaining part of the debt
due on the original mortgage to the children of Phineas M.
Nightingale.
But it must be confessed that the whole of this proposition is
involved in obscurity. Where this paper came from, whether it was
ever delivered to anybody, or how it came to be executed, are
questions which are wholly unexplained by any part of the paper, or
by anybody who seems to know anything about it. If the other
defenses to the charges of fraud and conspiracy in the foreclosure
of the Spalding mortgage and the purchase of the estate were not
better sustained than this, we should be very much inclined to
reverse the decree on that branch of the subject. But it is very
clear that the settlement and adjustment by which the elder
Nightingale conveyed Dunginess at a consideration of $25,000, to
Mrs. Molyneux, and by which an adjustment was at the same time made
of the claim for the failure of consideration by reason of the
emancipation of the slaves, and the sum of $51,250 found to be due
and unpaid on the mortgage, was a fair and honest transaction; nor
is anything to be found which impeaches the proceedings for the
foreclosure of the mortgage for the remainder of the debt. The
proceedings in this case were fair and open, and according to the
laws of the State of Georgia. Nothing hindered the attorneys who
conducted these proceedings from accepting William's note for
$30,000 as a proper consideration for the purchase money and for
the sheriff's deed, which was made to him. It is nowhere asserted
that the property was worth more than this $30,000. Up to this
point, there is no reason to complain of any improper exercise of
power on the part of the owners of the mortgage, or of the conduct
and proceedings for its foreclosure in the courts of Georgia.
Now whatever arrangement may have afterwards been
Page 122 U. S. 188
made between Mrs. Molyneux, or the administrator of the Molyneux
estate, and the Nightingales, by which this note was either
satisfied by the quitclaim conveyances referred to of Dunginess, or
was absolutely remitted as a gratuity to the children of the senior
Nightingale, is a matter of which Sanger had no right to complain.
The debt was a just debt. The decree was an honest decree, and the
proceeds of it belonged to the estate of Molyneux, either to the
widow, the administrator, or devisees, if there was a will.
It is stated here, and it seems the most probable solution of
the matter, that in addition to this quitclaim of the heirs of
Nightingale of Dunginess, that Mrs. Molyneux, who was the principal
if not the sole devisee under her husband's will, had become
attached to the family of the Nightingales while they resided in
this country, and was willing that the debt due to her should be
used as a means of securing to the children the family homestead.
She had a right to do this. It was her property. She had the right
to select whether she would give it to Sanger or to these children.
In no event that we can see was Sanger injured by the transaction.
If, however, he had any right to complain, if there was any wrong
done him, it was not in the proceedings by which the decree was
obtained, and that decree must be held to remain valid under all
circumstances.
If Sanger had brought his bill to merely set aside the sale
under that decree, and proposed to redeem or pay the amount of the
decree, there might be some reason to consider his claim, because
up to the rendition of the decree everything was fair and right. If
the sale were set aside, the decree would remain, and he could not
under such a bill do anything but pay the money due on that decree,
and then proceed to sell for his own debt. This he does not seem to
have contemplated, perhaps for the reason that the property is not
worth the debt, or half the debt, for which that decree was
rendered.
On the whole case, we are of opinion that
The decree of the circuit court must be affirmed.
