1. Growing timber constitutes a portion of the realty, and is
embraced by a mortgage of the land. When it is severed from the
freehold without the consent of the mortgagee, his right to hold it
as a portion of his security is not impaired.
2. when the amount due according to the stipulation of the
mortgage is paid, the lien of the mortgage upon the timber thus
severed is discharged, and the property reverts to the mortgagor or
any vendee of the mortgagor. Any sale of the timber by the
mortgagee or assignee of the mortgage after such payment is a
conversion for which an action will lie by the mortgagor or his
vendee.
3. By the law of New Hampshire, the interest of a mortgagee is
treated as real estate only so far as it may be necessary for his
protection, and to
Page 68 U. S. 54
give him the full benefit of his security; he holds the timber
growing on the land as a portion of the security only, and does not
become its absolute owner when it is severed from the land.
In September, 1853, Dunn and his partner having bought timber
land in New Hampshire, of Goodall, mortgaged it back to him, as
security for the payment of the purchase money. the purchasers
having given their notes for the money and the mortgage being
intended to secure their payment. One of the notes was payable
September 1, 1854, another September 1, 1855, and a third,
September 1, 1856, all of them with interest from an anterior date,
to-wit, from June, 1853. The first note was paid at maturity, but
the second was not paid until five months after maturity, while
neither on it nor on the third note was any interest paid until two
years after it became due. It was then collected by process of
law.
The mortgage contained a stipulation that the mortgagors might
enter and cut timber to the value of ten hundred dollars, and
afterwards as fast as they made the several payments designated in
the mortgage, but if they failed to make any one of the payments
designated, they were "to cease cutting, and to yield possession"
until the amount was paid; "we to cut timber" -- was the language
of one part of the mortgage -- "as fast as we pay the notes, and no
faster." During the time that the mortgagors were thus in default
by nonpayment of the second note and of interest on both it and the
third, they entered and cut timber, and in June, 1856, sold it to
one King. In September, 1856, two persons, named Hutchins and
Woods, who had succeeded by assignment to the rights of Goodall,
the mortgagee, took possession of the timber thus cut, sold it, and
appropriated to themselves the proceeds, the sale of the timber by
them being, as it appeared, after the unpaid interest had been
collected.
In 1859, King, who had purchased from the mortgagors, brought an
action on the case against Hutchins and Woods to recover the value
of the timber which they had thus taken
Page 68 U. S. 55
possession of and sold. And among several questions raised on
the trial was this -- the only one considered by this Court --
whether the assignees of the mortgage, Hutchins and Woods, were
liable to King, the vendee of the mortgagors, for the value of the
timber which they had sold after they had received the principal
and interest due to them.
The court below ruled that they were not; and the correctness of
this ruling was the chief point now in issue here.
The record had no proper bill of exceptions. The bill, so
called, gave the rulings of the court, but did not show that
exceptions to these rulings were taken by either party. No
objection was, however, made to the record on this ground by
counsel on the argument, and the Associate Justice of this Court
who presided at the circuit where the cause was tried informed the
court that an exception to the ruling on the material point
considered had been in truth taken, and that the omission of the
bill to state the fact was a clerical error.
Page 68 U. S. 56
MR. JUSTICE FIELD delivered the opinion of the Court:
The stipulations in the mortgage to Goodall provided, as we
construe them, that the mortgagors should have the right to enter
upon the mortgaged premises and cut timber, at first to the value
of ten hundred dollars and subsequently as they made the several
payments designated, to the value of the sums paid, but that in
case they failed to make any one of the payments designated, they
were to cease cutting and to surrender possession until the amount
due was paid. The timber for the conversion of which the present
action is brought was cut after the interest on some of the notes
secured had become due and whilst it remained unpaid, and the
greater portion of it was cut after the principal of one of the
notes had matured and was also unpaid.
In June, 1856, after the note which had matured was paid
Page 68 U. S. 57
but whilst a suit for the interest on the other notes was
pending, the mortgagors sold the timber cut to King, the plaintiff
below, the defendant in error in this Court. The defendants below,
Hutchins and Woods, who had succeeded by assignment of the notes
and delivery of the mortgage to the rights of the mortgagee, in
September, 1856, took possession of the timber cut, and
subsequently disposed of it, and appropriated the proceeds. In
November following, the interest due on the unpaid notes was
collected. It does not appear from the record at what precise
period the defendants disposed of the timber, but we assume from
the argument of counsel that this was done after their collection
of the interest. In 1859, the present action was brought to recover
the value of the timber alleged to have been thus converted.
The defense rested mainly upon a claim of ownership in the
property by the defendants. The position taken by their counsel in
the court below and urged in this Court was substantially this:
that between the parties to the mortgage, the mortgagee was the
owner of the land, and as such was clothed with all the rights and
privileges of ownership; that the license to cut timber contained
in the stipulations of the mortgage ceased upon the first failure
to meet one of the payments designated; and that after default the
defendants succeeding to the interests of the mortgagee had the
absolute right to all the timber cut from the land, without
liability to account to anyone. We do not state the position of the
defendants in the precise language of their counsel, but we state
it substantially.
A mortgage is in form a conveyance vesting in the mortgagee upon
its execution a conditional estate which becomes absolute upon
breach of the condition. At law it was originally held to carry
with it all the rights and incidents of ownership. The right of the
mortgagee to be treated as owner of the mortgaged premises could
only be defeated upon the performance of the conditions annexed by
the day designated. Subsequent performance only gave a right to the
mortgagor to resort to a court of equity for relief from the
forfeiture arising upon breach of the conditions. Such is
Page 68 U. S. 58
the law at this day in some of the states of the Union. But in a
majority of the states, the law in this respect has been greatly
modified by considerations drawn from the object and intention of
the parties in executing and receiving instruments of this
character. The doctrine established by courts of equity, looking
through the form to the real character of the transaction, that a
mortgage is a mere security for a debt, and creates only a lien or
encumbrance, and that the equity of redemption is the real and
beneficial estate in the land, and may be sold and conveyed in any
of the ordinary modes of transfer, subject only to the lien of the
mortgage, has to a great extent, "by a gradual and almost
insensible progress," as Kent observes, been adopted by the courts
of law. [
Footnote 1] To such a
degree has this equitable view prevailed that the interest of the
mortgagee is now generally treated by the courts of law as real
estate only so far as it may be necessary for the protection of the
mortgagee and to give him the full benefit of his security.
Although, in the absence of stipulations as to the possession, he
may enter upon the premises, his interest is widely different from
that of owner. He cannot by conveyance transfer any interest in the
premises without a transfer of the debt secured; [
Footnote 2] his interest is not subject to
attachment or seizure on execution; [
Footnote 3] he cannot remove the buildings on the
premises, nor the fixtures attached; nor can he subject the
premises to any uses but such as may furnish the means for the
payment of the debt secured without impairing the value of the
estate.
In few states is the equitable doctrine respecting mortgages
more clearly asserted than in New Hampshire, where the mortgage was
executed upon which the rights of the parties to the present action
arise. Thus, in
Southerin v. Mendum, [
Footnote 4] the supreme court of that state, in
considering the nature of the interest which a mortgagee possesses,
said:
"In order to give him the full benefit of the security, and
appropriate remedies for any violation of his rights, he is treated
as the owner
Page 68 U. S. 59
of the land. But for other purposes, the law looks beyond the
mere form of the conveyance to the real nature of his interest, and
treats his estate in the land as a thing widely different from an
estate in fee simple."
In that case, it was held that the interest of the mortgagee in
the land was a mere chattel, and passed by a simple delivery of the
note secured as an incident of the debt. And in
Ellison v.
Daniels, [
Footnote 5] the
same court said:
"The right of the mortgagee to have his interest treated as real
estate extends to and ceases at the point where it ceases to be
necessary to enable him to avail himself of his just rights,
intended to be secured to him by the mortgage."
In that case, the demandant in a writ of entry was mortgagor,
and the tenant claimed under the mortgagee through various mesne
conveyances executed after the law day, and it was held that
nothing passed to the tenant, the court observing that to enable
the mortgagee to sell and convey his estate was not one of the
purposes for which his interest is to be thus treated; that there
was no necessity that it should be so treated, as the sale could be
equally well effected by the transfer of the note secured by the
mortgage.
With these views of the nature of the interest of the mortgagee,
under the law of New Hampshire, the question presented in the case
at bar becomes one of easy solution. The timber growing upon the
land mortgaged constituted a portion of the realty. It was embraced
in the pledge of the land as security. As the assignees of the
mortgage held the land, so they held the timber upon it both before
and after it was cut, as a portion of their security. They could
not sell it any more than they could pass, by their conveyance, the
fee of the land.
The mortgagors had, it is true, no right to cut the timber after
default made in any of the payments designated in the mortgage.
They could do nothing to diminish the value of the estate. The
right to cut the timber rested upon the license contained in the
stipulations of the mortgage. Their cutting, except in pursuance of
such license, might have been
Page 68 U. S. 60
restrained, upon proper application, by a court of equity.
[
Footnote 6] The sale by them
after it was cut did not divest the lien of the assignees of the
mortgage; the purchaser took the timber subject to their paramount
rights. The assignees could follow it and take possession of it,
and hold it until the designated amounts due at the time were paid.
When these were paid, their rights over it ceased and the vendee of
the mortgagors became invested with a complete title. The
subsequent detention of the timber by the assignees was wrongful,
and the sale of it a conversion, for which they were liable to the
purchaser.
Some other positions were pressed by the plaintiffs in error
upon the attention of the Court on the argument, but we do not
notice them, because what is termed in the transcript "a bill of
exceptions" does not show that any exception was taken to the
rulings of the court. The bill simply shows that certain positions
were urged by the parties and that certain rulings were made. We
have, however, considered the material question argued, because no
objection was taken to the record on the argument and because the
Associate Justice of this Court who presided at the circuit where
the cause was tried informs us that an exception was in truth taken
and that the omission of the bill to state the fact is a mere
clerical error. We do not intend, however, to allow this case to be
drawn into a precedent. To authorize any objection to the admission
or exclusion of evidence, or to the giving or refusal of any
instructions to the jury, to be heard in this Court, the record
must disclose not merely the fact that the objection was taken in
the court below, but that the parties excepted at the time to the
action of the court thereon.
Judgment affirmed.
[
Footnote 1]
4 Kent 160.
[
Footnote 2]
Jackson v. Bronson, 19 Johnson 325.
[
Footnote 3]
Jackson v. Willard, 4
id. 41.
[
Footnote 4]
5 N.H. 429.
[
Footnote 5]
11 N.H 274.
[
Footnote 6]
Brady v. Waldron, 2 Johnson's Ch. 148.
