A party insisting upon the invalidity of a statute as violating
any constitutional provision must show that he may be injured by
the unconstitutional law before the courts will listen to his
complaint.
An independent purchaser at a foreclosure sale, who has no other
connection with the mortgage, cannot question the validity of
legislation existing at the time of his purchase on the ground that
it impaired a contract, even though the law complained of was
passed after the execution of the mortgage which was foreclosed.
Insurance Co. v. Cushman, 108 U. S.
51, followed, and
Barnitz v. Beverly,
163 U. S. 118,
distinguished.
Whether the requirements of a statute affecting foreclosure
sales and redemption and which does not conflict with the federal
Constitution have been complied with is not a federal question.
The plaintiff in error commenced this action in the proper state
court to procure a decree cancelling a deed of the premises
mentioned in the complaint, executed by the defendant Hammel to the
defendant Rhodes, and also directing that a deed should be executed
to the plaintiff by defendant Hammel
Page 194 U. S. 416
or Burr, or both, conveying the same property to the plaintiff,
which had been purchased by him under the sale in foreclosure
hereinafter mentioned. Defendant Burr was sheriff at the time of
that sale, and conducted the same, and executed the certificate of
sale June 13, 1898. His term of office expired in January, 1899,
and defendant Hammel became his successor, and, as such, executed
the deed to defendant Rhodes, which plaintiff in error asks to have
set aside. The two defendants, Burr and Hammel, were made parties
herein because it was not certain which one of them should be
decreed to execute the deed to plaintiff which he asks for in this
suit.
The defendants, by their answer, denied many of the material
allegations of the complaint, and the case went to trial before the
court, and, a judgment having been entered dismissing the complaint
on the merits, an appeal was taken to the Supreme Court of
California, which affirmed the judgment, 137 Cal. 663, and the
plaintiff has brought the case here. The material facts are as
follows:
On October 16, 1893, Anna P. and Ambrose H. Spencer, then being
the owners of the property, mortgaged the same to one Jacob
Swiggart to secure the payment of a promissory note of the same
date for $5,000. This note and mortgage were subsequently assigned
by Swiggart to Charles H. Bishop, who afterwards commenced a suit
upon the note and mortgage to recover the amount due on the former
and to foreclose the mortgage. On May 14, 1898, a judgment was
entered in the case whereby it was adjudged that there was due to
the plaintiff upon the note the sum of $6,782.49, and that the same
was a lien upon the mortgaged premises, and there was also a
judgment for the sale of the premises to obtain payment of the sum
found due on the note. On May 16, 1898, an execution upon the
judgment was issued to the sheriff (Burr) and on June 13, 1898, he
sold to the plaintiff in error, Hooker, the mortgaged premises for
the sum of $9,500, who thereupon paid the amount of his bid to
Burr, and Burr then gave a certificate of sale to the plaintiff as
the purchaser. Plaintiff alleges that he was
Page 194 U. S. 417
entitled to a deed from the sheriff of date December 13, 1898,
that being six months after his purchase at the foreclosure sale.
On December 12, 1898, Rhodes, one of the defendants (who was a
judgment creditor of Spencer, the mortgagor), issued an execution
on his judgment, and assumed to redeem the land from the
foreclosure sale by the payment of $10,070 to the sheriff, to be
paid to the purchaser, the plaintiff in error, being the amount of
the purchase price paid by the latter at the foreclosure sale,
together with interest thereon at the rate of one percent per
month. The sum was received by the sheriff as the full amount due
to the plaintiff in error on his bid, with interest. The plaintiff
in error declined to accept the money, and now contends that the
amount delivered to the sheriff for the redemption was not enough,
and he also makes the claim that there was never any legal payment
to the sheriff, even of the sum mentioned. The sheriff, after
receiving the redemption money, executed a deed to the judgment
creditor, Rhodes, and it is this deed which plaintiff seeks to have
set aside.
At the time when the above-mentioned mortgage was executed, on
October 16, 1893, the law in California provided that a judgment
debtor or redemptioner might redeem the property from the purchaser
at the foreclosure sale at any time, within six months after the
sale, on paying the purchaser the amount of his purchase money,
with interest at two percent a month thereon in addition, up to the
time of redemption. On March 27, 1895, the legislature altered this
statute, which was section 702 of the Code of Civil Procedure, by
providing that redemption might be made upon the payment of the
amount of the purchase money with one percent a month as interest
thereon, and on February 26, 1897, the same section was again
amended by the legislature by extending the time for redemption to
twelve instead of six months, while keeping the rate of interest at
one percent per month on the amount of the purchase price paid at
the sale.
It will be noticed that both these amendments had been
Page 194 U. S. 418
enacted, and existed as the law in regard to redemptions at the
time when the sale was made on June 13, 1898, upon the foreclosure
of the mortgage.
MR. JUSTICE PECKHAM, after making the above statement of facts,
delivered the opinion of the Court.
The plaintiff in error contends that the several alterations of
the law as it existed at the time when this mortgage was executed
regarding the time of redemption and the amount of interest payable
to the purchaser at the foreclosure sale in order to redeem the
land sold, impair the obligation of a contract as to all mortgages
in existence before the alterations were made.
The first inquiry is, whose contract was impaired by the
alteration of the law? It is seen that the amount due on the
mortgage in question at the time of the sale upon foreclosure was
$6,782.49, and that the property sold for $9,500. That amount was
paid by the purchaser to the sheriff, and it resulted in the
payment of the mortgage debt, principal and interest, and the
release of the land from the lien of the mortgage. Subsequently to
that payment, the mortgagee had no interest in further proceedings.
Neither the mortgagee nor his assignee was the purchaser at the
sale, and neither was in any manner injured by the alterations of
the law in the respects mentioned. If, therefore, there was by this
legislation an impairment of the obligation of a contract between
the mortgagor and the mortgagee which the latter could have taken
advantage of if injured thereby, it is perfectly clear that he is
not in the least injured when, by the sale under his mortgage, he
realizes the full amount of his debt, principal, interest, and
costs. What
Page 194 U. S. 419
can he complain of under such circumstances, even conceding an
abstract impairment of the obligation of his contract? Having
realized and been paid in full the entire amount of money called
for by his mortgage, he surely cannot be heard to complain that,
nevertheless, the obligation of his contract was impaired. If not
injured to the extent of a penny thereby, his abstract rights are
unimportant.
We have lately held (therein following a long line of
authorities) that a party insisting upon the invalidity of a
statute as violating any constitutional provision, must show that
he may be injured by the unconstitutional law before the courts
will listen to his complaint.
Tyler v. Judges,
179 U. S. 405;
Turpin v. Lemon, 187 U. S. 51,
187 U. S. 60.
If, instead of showing any injury, the plaintiff shows that he
cannot possibly be injured, he cannot, of course, ask the
interference of the court. Therefore, if the mortgagee or his
assignee were himself the plaintiff, and complaining that the
obligation of his contract had been impaired by subsequent
legislation, it is plain his complaint would be dismissed when it
appeared that, notwithstanding the alleged subsequent illegal
legislation, he suffered no injury, because he had proceeded with
the foreclosure of his mortgage and had been paid the full amount
of his contract debt, interest, and costs. Under such
circumstances, the question becomes a moot one, and courts do not
sit to decide that character of question.
American Book Company
v. Kansas, 193 U. S. 49;
Jones v. Montague, ante, p.
194 U. S. 147,
decided April 25, 1904.
The question of the impairment of the mortgage contract,
therefore, is not before us as between mortgagor and mortgagee.
We are of opinion that, as to the plaintiff in error, an
independent purchaser at the foreclosure sale, having no connection
whatever with the original contract between the mortgagor and
mortgagee, his rights are to be determined by the law as it existed
at the time he became a purchaser unless, upon action taken by the
mortgagee, the property had been sold
Page 194 U. S. 420
under a decree providing that it should be sold without regard
to the subsequent legislation which impaired his contract. The
purchaser bought at the time when the law, as altered, was in
operation, and, so far as he was concerned, it was a valid law; his
contract was made under that law, and it is no business of his
whether the original contract between the mortgagor and mortgagee
was impaired or not by the subsequent legislation. He cannot be
heard to contend that the original law applies to him, because a
subsequent statute might be void as to some one else. The someone
else might waive its illegality, or consent to its enforcement, or
the question might have no importance because the property sold for
enough to pay the debt, even though there was an abstract
impairment of the obligation of his contract.
The purchaser must found his rights upon the law as it existed
when he purchased. An alteration after he had purchased, to his
prejudice, would be a different thing. Cooley on Const.Limitations
(4th ed.) 356. We agree that the law existing when a mortgage is
made enters into and becomes a part of the contract, but that
contract has nothing to do, so far as this question is concerned,
with the contract of a purchaser at a foreclosure sale, having no
other connection with the mortgage than that of a purchaser at such
sale. His rights regarding matters of redemption are to be
determined as we have stated.
It has been so decided in the case of
Connecticut Mutual
Life Insurance Co. v. Cushman, 108 U. S.
51. There, the property was sold at foreclosure sale for
enough to pay the mortgage debt (page
108 U. S. 56),
and the reduction of the rate of interest which was payable to the
purchaser at the foreclosure sale, upon a redemption (which
reduction was made by the legislature prior to the sale, although
subsequently to the mortgage), was held valid. The company, as
purchaser at the foreclosure sale, bid enough to pay the principal
and interest of its debt, and after the purchase it contended that
the attempted redemption was insufficient because the interest upon
the amount it
Page 194 U. S. 421
had bid upon the sale had been computed at eight percent, the
rate of interest allowed by law at the time of the sale, instead of
ten percent, the rate existing at the time of the execution of the
mortgage. It was held that, as to the purchaser, the rate existing
at the time of the sale was the legal rate, and the redemption at
that rate was valid. The principle of that case decides the one at
bar.
It is asserted, however, on the part of the plaintiff in error,
that
Barnitz v. Beverly, 163 U. S. 118, has
in effect overruled the former case, and that, upon the principle
decided in the
Barnitz case, the plaintiff in error herein
is entitled to a reversal of the judgment. We are not of that
opinion.
In the first place, it was distinctly stated in
Barnitz v.
Beverly that it was not inconsistent with, and did not
overrule, the former case, and its facts show a clear distinction
between the two cases. The sum bid at the foreclosure sale did not
pay the amount due on the mortgage, and the whole case shows that,
although the mortgagee became purchaser, the debt of the mortgagor
was not thereby paid, and it was the mortgagee's rights under her
contract, as contained in the mortgage, and not her rights as a
purchaser at the foreclosure sale, that were in controversy.
In the
Cushman case, on the contrary, the amount bid at
the foreclosure sale paid the mortgage debt, and the subsequent
position of the mortgagee was as a purchaser only. The
Barnitz case was decided distinctly upon the ground that,
by the subsequent legislation, there was an impairment of the
obligation of the contract between the mortgagor and the mortgagee,
and it was her rights as mortgagee that were passed upon and
recognized by the court. This is plain from a perusal of the
opinion, especially at pages
163 U. S. 130
and 131.
Attention is also called by plaintiff in error to a portion of
the opinion in which it is stated that,
"Without pursuing the subject further, we hold that a statute
which authorizes the redemption of property sold upon foreclosure
of a mortgage, where no right of redemption previously existed, or
which
Page 194 U. S. 422
extends the period of redemption beyond the time formerly
allowed, cannot constitutionally apply to a sale under a mortgage
executed before its passage."
And it is asserted that such a case is now before the Court.
These remarks must be interpreted in the light of the facts of
that case, and must be limited in their application to the parties
to the mortgage contract whose rights are impaired by subsequent
legislation. If the mortgage had been foreclosed and the mortgagee
had thereby realized his debt, principal and interest in full upon
the sale, there can be no doubt that he would not have been heard
to assert the invalidity of the subsequent legislation, nor would
an independent purchaser at the sale have been heard to make the
same complaint. Of course, this does not include the case of a
mortgagee who purchases at the foreclosure sale and bids a price
sufficient to pay his mortgage debt in full with interest, and an
action thereafter commenced against him to set aside the sale
because it was made in violation of legislation subsequent to the
mortgage. In such case, we suppose there can be no doubt of the
right of the mortgagee to assert as a defense to the action the
unconstitutionality of the subsequent legislation as an impairment
of his contract contained in the mortgage. But it may be said that,
where the legal or equitable rights of a party are not in any way
touched and he is in no way injured, he cannot be heard to complain
of the impairment of the obligation of his contract as a mere
abstract proposition.
Many of the earlier cases declare the invalidity of subsequent
laws in regard to redemption of land sold under execution, which
altered the law existing when a mortgage was made, and some of
them, it would seem, have declared the laws unconstitutional, even
at the suit of a purchaser at the sale. The leading ease on the
subject of redemption decides nothing as to the rights of a
purchaser. It is that of
Bronson v.
Kinzie, 1 How. 311. In that case, the subsequent
legislation which was held to be invalid gave twelve months after
sale in which to redeem, and provided that the property should not
be sold
Page 194 U. S. 423
under the foreclosure decree unless two-thirds of the amount
which had previously been established by appraisers as the value of
the property should be bid at the sale. The case came before the
Court upon a division of opinion. Bronson, the mortgagee, filed his
bill to foreclose the mortgage, and asked for a decree that the
mortgaged premises should be sold to the highest bidder without
being subject to the rule established by the subsequent
legislation. The motion was resisted on the part of defendants, who
moved that the decree should direct the sale according to the
subsequent legislation, and the judges were opposed in opinion as
to the sale of the premises without regard to the subsequent law.
This Court held that the subsequent law was plainly one which
impaired the obligation of the contract between the mortgagor and
the mortgagee, and at the request of the mortgagee, and to prevent
the impairment of the obligation of his contract, the Court decreed
that the sale should be made without reference to the law passed
subsequently to the time of the execution of the mortgage
contract.
McCracken v.
Hayward, 2 How. 608, arose in the same way and was
decided substantially upon the authority of the last case. The
mortgagee made the same request, that the marshal should sell the
property without regard to the statute of Illinois passed
subsequently to the execution of the mortgage, and it was held that
his motion should be granted, because the subsequent legislation
impaired his contract as mortgagee with the mortgagor.
In
Gantly v.
Ewing, 3 How. 707, after the mortgage had been
executed, the legislature passed an act which required, on sales
upon execution issued upon a judgment, that the property should
first be appraised, and should not thereafter be sold on execution
for a sum less than one-half the appraised value. The mortgagee
foreclosed the mortgage, and upon the sale, the premises were sold
to the defendants for $76, not a tenth part of the mortgage debt.
The property had not been valued prior to the sale, as required by
the statute. An act
Page 194 U. S. 424
had, however, been passed prior to the execution of the mortgage
requiring the sheriff on such sales to first offer the rents and
profits of the real estate for a term of seven years, and if the
same did not bring enough to satisfy the execution, then the fee
simple was to be offered for sale, and sold. This offer to sell the
rents and profits was not in fact made. There were two questions
upon which the judges were opposed: the one as to the effect of the
failure to make the offer to sell the rents and profits and the
other regarding the effect of the failure to make the appraisal. A
certificate of division of opinion was sent to this Court. The
action was, as stated in the opinion, one of ejectment, the
defendants setting up and claiming under the sheriff's deed and the
plaintiff, the mortgagee, asking the court to instruct the jury
that the deed was void because the rents and profits had not been
offered for sale before the fee simple was sold, and also because
the land had not been valued, as required by the statute, before
the sale was made. The mortgagee was thus the party claiming that
the sale under his own foreclosure was void because of the failure
to comply with the subsequent legislation of Indiana, while the
defendants who bid at the sale and became the purchasers of the
land insisted that the act (existing when they purchased) was
unconstitutional, because it altered the law as it existed when the
mortgage was made, and required that the land should not be sold
until it had been appraised, and then only after at least one-half
of the value so appraised had been bid. This Court held that the
offer to sell the rents and profits for seven years, as provided
for by the statute existing prior to the execution of the mortgage,
should have been made, and that the sale, such offer not having
been made, was void; but it held that the condition provided for in
the later statute, of not selling unless the appraisal had taken
place and more than one-half such appraised value had thereafter
been bid, was void as an impairment of the obligation of the
contract between the mortgagor and the mortgagee, and the deed of
the sheriff could not, so far as that ground was concerned, be
avoided,
Page 194 U. S. 425
although no valuation of the property was made before the sale.
The case was decided, as the opinion shows, entirely upon the
authority of
Bronson v.
Kinzie, 1 How. 311, which, as we have seen, was not
a case of a purchaser, and was decided upon the prayer of the
mortgagee, who contended that his contract contained in his
mortgage would be impaired by the subsequent law if the court
should permit it to be enforced.
The question again arose in
Howard v.
Bugbee, 24 How. 461, and that case was also decided
upon the authority of
Bronson v.
Kinzie, 1 How. 311. In the statement of fact by Mr.
Justice Nelson, it appears that the mortgage by Parsons to Tait was
executed in 1836, and in a subsequent year (1842) the law regarding
redemption was altered, and a right was given to a judgment
creditor to redeem for two years after a sale under a mortgage. The
mortgage was foreclosed in 1848, and Howard, the appellant, became
the purchaser of the premises at the sale under the decree of
foreclosure, and obtained a deed of the same, duly executed by the
proper officer. Bugbee, the appellee, the plaintiff in the court
below, recovered judgment against the estate of the mortgagor in
1843, and thereafter, pursuant to the altered law, tendered the
purchase money, interest, and charges to Howard, the purchaser, and
asked for a deed of the land, which was refused. A bill was filed
in the court of chancery in Alabama by Bugbee to compel Howard to
receive the money in redemption of the sale, and execute a deed.
The defense was that the mortgage from Parsons, under which the
defendant derived title as purchaser at the foreclosure sale,
having been executed before the passage of the act providing for
the redemption, the act, as respects this debt, was inoperative and
void as impairing the obligation of a contract. Now here was a case
where the purchase was made at the foreclosure sale six years after
the law had been enacted providing for redemption, and the question
was raised not by the mortgagor or the mortgagee, but by the
purchaser at the sale. The Alabama court of chancery held that
complainant was not entitled to the relief asked, and dismissed the
bill; but
Page 194 U. S. 426
the Supreme Court of that state, upon appeal, reversed the
decree of the court of chancery and entered a decree for the
complainant. Upon writ of error from this Court, it was here
decided that the act of the legislature was invalid as an
impairment of the mortgage contract, upon the authority of
Bronson v. Kinzie, supra, which had never decided the
particular question.
Upon principle, we cannot see how an independent purchaser,
having no connection whatever with the mortgage excepting as he
becomes such purchaser at the foreclosure sale, can raise the
question in his own behalf in relation to the validity of
legislation as to redemption and rate of interest which existed at
the time he made his purchase, and this question, we think, has
been clearly determined against the purchaser in the case of
Insurance Company v. Cushman, supra.
We have no disposition to revise the decision in that case,
which we think was correct and stands upon a firm foundation. The
later case of
Barnitz v. Beverly, supra, when the facts
therein are regarded, does not militate against the soundness of
the views expressed in the
Cushman case, and in addition
to that it was distinctly so stated in the opinion of the Court. If
a sale be made under a decree directing that it be without regard
to the subsequent legislation, as in
Bronson v. Kinzie,
supra, then the purchaser, buying under the decree with those
specific directions, takes his rights thereunder. But in that case,
the decree is obtained in the interest, and at the request of, the
mortgagee, and to save the impairment of his contract.
In our view, this independent purchaser must, under the facts
herein, abide by the law as it stood at the time of his
purchase.
A further question is made by the plaintiff in error, that there
was no proper tender made.
Holding the views we do in regard to the main question, it
follows that the amount of the bid made by the purchaser carried
interest at the rate of one percent per month only. If that amount,
at that rate of interest, was tendered the sheriff,
Page 194 U. S. 427
it was sufficient. The state court has found that such amount
was paid to the sheriff by a check which was subsequently paid.
Whether the defendant Rhodes fully complied with the requirements
of the state statutes in order to make a complete tender is not a
federal question.
The judgment of the Supreme Court of California is
Affirmed.