Scottish American Mortgage Co. v. Butler

Anderson, J.,

delivered the opinion of the court.

This is a bill by the appellant, Scottish American Mortgage Company, Limited, against the appellees, Ralph P. Butler et al., to enjoin an ejectment suit pending in the •circuit court of Franklin county, brought by appellees •against appellant for the lands in- controversy in this *62 cause. A demurrer was interposed to the hill and overruled in. the court below, from which decree an appeal was granted to this court. The question raised by the demurrer was whether the chancery court had jurisdiction. The jurisdiction of the chancery court was by this court upheld. The case as here then will be found reported under the style of Ralph P. Butler et al. v. Scottish American Mortgage Company, 90 Miss. 215 , 46 South. 829 . On being remanded, the bill was answered by appellees, testimony was taken and the cause heard on bill, answer and proofs, and a decree rendered from which this appeal is prosecuted.

The bill sets out substantially these facts: That the appellant is a corporation under the laws of Great Britain, domiciled in Edinburgh,' Scotland. That on April 26, 1888, Nathan Bunckley, ancestor of appellees, owned the land in controversy, and borrowed from appellant the sum of five thousand dollars, for the payment of which he executed his promissory notes and a deed of trust on the lands involved to secure the same to A. S. Caldwell as trustee. That said indebtedness fell due, and Nathan Bunckley made default in payment thereof, and, the trustee named in the deed of trust failing to execute the trust, one Boscoe Stinson was by John M. Judah, attorney in fact for appellant, appointed substituted trustee, who in accordance with the provisions of the trust deed advertised and sold the lands therein conveyed on December 30, 1892, which were purchased by said John M. Judah as trustee for appellant, to whom, as such trustee, a conveyance was duly executed by such substituted trustee on January 6, 1898. That from the date of appellant’s purchase on January 6, 1898, to the time of bringing of said ejectment suit by appellees on April 7, 1907, appellant had been in the open, notorious, ádverse possession of said lands under its said deed of purchase, cláiming title thereto against the world. That appellant got a good title to said lands by' said foreclos *63 ure sale and its deed from the substituted trustee. That appellant has a good title to said lands by adverse possession. That appellees have no title because held out of possession for more than ten years. That, if appellant is mistaken in its claim of title by virtue of said foreclosure sale, and also its claim of title by adverse possession, then it is a mortgagee in possession and entitled to enforce a lien against the lands for the payment of its indebtedness, taxes, etc.

The answer denies many of the material allegations of the bill, and sets up that the foreclosure sale under which appellant claims title was’ void,- because the substituted trustee making it had no right to act as such on account of having been substituted by an attorney in fact for the appellant in violation of the terms in the deed of trust, and that appellant is a non-resident alien corporation, and therefore incápable of acquiring title to land by adverse possession. A decree was rendered declaring that appellant had no title to the lands, either by virtue of its purchase at the substituted trustee’s sale or by adverse possession, but that it was a mortgagee in possession and entitled to have the lands charged with a lien for the payment of its mortgage indebtedness, taxes, etc., the appellees to be credited with the rents and profits, and directing an accounting to be taken by a master to ascertain the amount due appellant, and decreeing that the injunction against the ejectment suit be made perpetual. The provision in the deed of trust for the appointment of a substituted trustee is in this language: “In case of refusal, neglect, or incompetency to act as said trustee, or his absence from the state, or his decease, then said party of the third part (appellant) or any holder of said note or notes or their legal representatives can at any time they desire, appoint a trustee in place of the said party of the second part, or any succeeding trustee,” etc. The fact is Stinson, the substituted trustee, was appointed by John M. Judah,, *64 attorney in fact for appellant. The court’s finding of fact in the decree in reference to the adverse possession of appellant is in this language: ‘ ‘ That the complainant (appellant) is not entitled to the relief it seeks based upon the adverse possession of the' premises in controversy, because that while it is shown to the satisfaction of the court that it, the said complainant, has been in the uninterrupted, undisputed, open, notorious, and continuous adverse possession of the premises in controversy for a period of more than ten years next before file filing of the ejectment suit by the defendants (appellees) in this cause-, yet the court adjudges in this regard that the complainant, being a non-resident alien corporation, cannot acquire title by adverse possession, and •cannot therefore set up the statute of limitations of ten years. ’ ’

The questions involved in this case are as follows: (1) "Whether the appellant got a good title to the land in controversy by its purchase and deed under the foreclosure sale by the substituted trustee.. (2) "Whether appellant. had been for at least ten years next before the institution of the ejectment suit by the appellees in the actual adverse possession of the land, claiming for that time to be the owner thereof. (3) Whether, if appellant had such possession, so claiming title, its absence from the state prevented the bar of the statute in its favor. (4) Whether appellant, being a non-resident alien corporation, could hold the lands adversely to appellees so as to thereby bar them of their right of recovery. c We will consider these propositions in the order set out.

(1) The power conferred by the deed of trust in this case to substitute a trustee is in substantially the same language as that in the deed of trust under consideration in the case of Allen v. Alliance Trust Company, 84 Miss. 319 , 36 South. 285 . It was held in that case that the •attorney, in fact, of the beneficiary could not appoint ■a’ substituted trustee. Under the authority of that de *65 cisión, the substitution of Stinson, by the attorney in fact for appellant, was void, the sale by such substituted trustee was likewise void, and appellant therefore got no title by virtue of its purchase at such sale and conveyance by the substituted trustee.

(2) The finding of the chancellor that the appellant had been in the actual adverse possession of the lands, claiming title thereto and receiving the rents from the date of its purchase at the foreclosure sale in 1893 to the time of the institution of the ejectment suit by the appellees,in 1907, will not be disturbed; in fact, there is little testimony to the contrary.

(3) The appellant has always been a non-resident alien corporation. It has never become domesticated in this state. At the time of its purchase of the land under the foreclosure sale by the substituted trustee, .and continuously since, the appellant has been “absent from the state.” Did such absence from the state prevent its pleading the bar of the statute of limitations? Section 3108, Code 1906, provides: “If, after any cause of action have accrued .in this state, the person against whom it has accrued be absent from and reside out of the state, the time of his absence shall not be taken as any part of the time limited for the commencement of the action, after his return.” It is settled by French v. Davis, 38 Miss. 218 , Dent v. Jones, 50 Miss. 265 , and Lindenmayer v. Gunst, 70 Miss. 693 , 13 South. 252 , 35 Am. St. Rep. 685 , that the statute has no application to a case like this. As said in Lindenmayer v. Gunst, supra, referring to section 2478, Code of 1892, of which section 3108> Code 1906, is a rescript, “it applies only where a cause of action accrues in this state, and the person against whom it has accrued goes from and resides out of the state. A non-resident may acquire title to land by adverse possession held for him by others. The action against the tenant would give the possession to the true owner, and prevent the ripening of the possession into *66 title.”" It appears from the-record in this case that, covering the period of appellant’s adverse possession, there never was' a time when appellees could not have instituted ejectment against appellant’s tenants to recover the land. Its absence from the state did not prevent such a suit.

(4)' The common law, unmodified by statute or treaty, excluded an alien from inheriting lands from a citizen. An alien had no inheritable blood through which title could be transmitted. He could take title by grant or devise, but not by descent. He could take by .an act of a party, but not by operation of law. By purchase he got a good title against all persons except the sovereign. Such title 'was subject to be divested by the sovereign upon an inquest of office found. By operation of law, he could' get .no title whatever either against other persons or the sovereign. The law alone refused to confer title on an alien, because in so doing the public policy was violated. It would not do the vain thing of casting-title on him, and then turn around, at the instance of the state, and forfeit such title. His title acquired by grant or devise he could convey to another, who also could hold it subject to the right of the state to divest it. An alien could take a mortgage on realty to secure a debt, but could not purchase at a foreclosure sale of such mortgage and hold the property as against the state. 2 Kent’s Commentaries (14th Ed.) §§ 53-64.

Section' 2768, Code 1906 (section 2439', Code 1892), is as follows: “Resident aliens may acquire and hold land, and may' dispose of it and transmit it by descent, as citizens of the state may; but non-resident aliens shall not hereafter acquire or hold land, although a non-resident alien may have or take a lien on land to secure a debt, and at any sale thereof to enforce payment of the debt, may purchase the same, and thereafter hold it, not longer than twenty years, with full power during said time to sell the same in fee to a citizen; or he may retain *67 it by becoming a citizen within that time. All land held or acquired contrary to this section shall escheat to the state; but a title to real estate in the name of a citizen of the United States, or a person who has declared his intention of becoming a citizen, whether resident or nonresident, if he be a bona fide purchaser or holder, shall not be forfeited or escheated by reason of the alienage of any former owner or other person.” By this statute it will be readily seen that certain features of the common law are modified. So far as it prohibits non-resident aliens from acquiring or holding lands in this state, and in some other respects, it is merely declaratory of the common law. It is evident from a view of the whole statute that it was not the purpose of the legislature to render absolutely void titles acquired and held by nonresident aliens in violation of its terms, but, as at common law, only voidable at the instance of the state. The last clause provides that land held by a citizen or person who has declared his intention to become a citizen, if he be a bona fide purchaser, shall not be escheated by reason of the alienage of any former owner. In other words, an alien gets a title defeasible only at the instance of the state. If he got no title at all, a bona fide purchaser from him would get no. title. His title being merely voidable, under the statute he conveys a good title.

May the owner of land be barred of his right of recovery by the adverse possession of an alien under claim of title for a period of ten years'? Or, putting the same question differently, may an alien acquire title by adverse possession against the owner who is a citizen? Is such a title one conferred by operation of law, and prohibited by the principle above stated? It was held in Piper v. Richardson, 9 Metc. (Mass.) 155, that an alien may acquire an indefeasible title to land by adverse possession sufficiently long (twenty years) to bar a suit by the commonwealth to recover the land. In Overing v . Russell, *68 32 Barb. (N. Y.) 263, it was held that, although an. alien could not acquire title to real estate as against the true owner by adverse possession of twenty years, yet the statute of limitations would furnish a perfect defense to an action of ejectment by such owner. And in Price v. Greer, 89 Ark. 300 , 116 S. W. 676 , 118 S. W. 1009 , it was held: “It seems that at common law an alien could take lands only by purchase, and not by operation of law. 4 Moore’s International Law, p. 34. The statutes of this state provide that aliens may take lands either by purchase, by will, or by descent. Kirby’s Dig., § 264. But it is urged that the investiture of title by limitations is by operation of law, and that the statute does not enlarge the rights of aliens so as to enable them to take title by this method. It is not correct to say that title by limitation is taken by operation of law. The statute of limitations is one of peace and repose, and the effect of the statute bar is to raise a conclusive presumption in favor of the possessor of land. ‘The title acquired in such cases,’ says a learned author on this subject, ‘is predicated upon the presumption that the party in possession is the real owner, or that the real owner has surrendered or abandoned his claim to the premises, or he would have asserted his claim thereto within the requisite period, to save his right.’ Wood on Limitations, § 254.” In 1 Cyc. p. 1122, the principle is thus stated: “Although not capable of holding real property, an alien may successfully set up the defense of adverse possession against the true owner.” In Oregon Mortgage Company v. Carstens, 16 Wash. 165 , 47 Pac. 421 , 35 L. R. A. 841, it was held that an alien corporation, holding a mortgage on land to secure an indebtedness due it by the mortgagor, could take a deed direct from the latter in satisfaction of his debt, and such conveyance was not violative of the Constitution and statute of Washington, which provided that: “The ownership of lands by aliens is prohibited in this state except where ac *69 quired by inheritance, under mortgage or in good faith in the ordinary course of justice in the collection of debts,” etc. Without referring to the case of Overing v. Russell, supra, the supreme court of New York held in Leary v. Leary, 50 How. Prac. 122 , that adverse possession for the period of twenty years, where the occupant had been an alien for five years of that time, did not confer title.

Sections 2730, 2731, 2732, 2734, and 2755, Code of 1892, which are brought forward in the Code of 1906 into sections 3000, 3001, 3092, 3004, and 3115, respectively, provide as follows:

“3090. A person may not make an entry or commence an action to recover land but within ten years next after the time at which the right to make the entry or to bring the action shall have first accrued to some person through whom he claims; or, if the right shall not have accrued to any person through whom he claims, then within ten years next after the time at which the right to make the entry or bring the action shall'have first accrued to the person making-or bringing the same,” etc.

“3091. A person claiming land in equity may not bring suit to recover the same but within the period during which, by virtue of the provisions hereinbefore contained, he might have made an entry or brought an action to recover the same, if he had been entitled at law to such estate interest, or right in or to the same as he shall claim therein in equity,” etc.

“3092. When a mortgagee after condition broken, shall obtain the actual possession or receipt of the profits or rent of land embraced in his mortgage, the mortgagor, or any person claiming through him, may not brjng a suit to redeem the mortgage but within ten years next after the time at which the mortgagee obtained such possession or receipt,” etc.

*70 “3094. Ten years’ actual adverse possession'by any person claiming to be the owner for that time of any land, uninterruptedly continued for.ten years by occupancy; descent, conveyance, or otherwise, in whatever way - such occupancy may have commenced or continued, shall vest in every actual occupant • or possessor of such land a full and complete title,” etc.

“3115. The completion of the period of limitation herein prescribed to bar any action, shall defeat and extinguish- the right as well as the remedy; but the former legal obligation shall be a sufficient consideration to uphold a new promise based thereon.”

In construing section 3092, Code 1906, this court held, in Little v. Teague, 60 Miss. 115 , and in Tuteur v. Brown, 74 Miss. 774 , 21 South. 748 , that a. mortgagee in possession, receiving the rents and profits, - for ten years or more, acquired a perfect title. Our judgment is that under the facts of this case the appellees are barred from recovery, by the statute above referred to, and appellant’s title is good. Title by adverse possession may be used as a weapon of offense as well as of defense. It is a perfect title. It is as available to the holder for all purposes whatever as a perfect record title. The limitation of the statute bars the right, as well as the remedy. The “true owner” is conclusively presumed to have conveyed his title to the holder of the title by adverse possession. The holder of the title by adverse possession is presumed to be the purchaser, and all inquiry as to whether he is or not is cut off by the statute. As -against his adversary, he is presumed to have -a perfect record title, from the patent by the government down. Title by adverse possession is not title ‘ - by operation of law. ’ ’■ It is title by purchase. In order to acquire such a title, the active agency of the- claim■ant is necessary. He must have held the land adversely, claiming title thereto for the statutory period. The title is not cast on him “by operation of law” alone. It is a *71 title given by law by virtue of a certain state of facts, brought about by the person on whom it is conferred. That is not true of title.by descent, which is title by operation of law aloné. The appellant, as mortgagee of the land, had the right under, the. statute- to purchase at the mortgage sale and’ become owner. It had the right to receive a deed from the grantor in satisfaction, of the mortgage debt. • F’ailing to get a good title- at the foreclosure' sale, its possession-under the.mortgage-and receipt of the rents-and profits was legal. -Such'possession and receipt of the rents and' profits,- having been continued for more than ten years, adversely, .under claim of title, ripened into, a-perfect title as against appellees. The appellant’s purchase at the foreclosure sale is conclusively presumed to have been legal. Since preparing the above opinion, the Circuit Court of Appeals -for the Fifth Circuit, in A. N. Bunckley et al. v. Scottish American Mortgage Company, Ltd. (No. 2,070), 185 Fed. —, which is another branch of this same' litigátion, has reached the same conclusion as to the last proposition this court did. The court said in that case: ‘ ‘ The only debatable proposition is in regard to the appellee’s rights as an alien owner of title to the lands in controversy, as to which we conclude that, under section 2768, Code of Mississippi (1906), and other sections cognate thereto, the appellee, having acquired the lands by purchase at a sale to enforce the payment of a lien debt legally held by it, is- the legal owner and holder, subject only to the right of the state to escheat the same after twenty years ’ holding, and that, as such owner and holder, it is entitled to all the protection and defenses available to other legal owners of land, and therefore that, when its title is attacked or questioned, it may benefit by showing adverse possession, under title for a period of ten years. ’ ’

Reversed and decree Sere for appellant