THE

AMERICAN LAW REGISTER.

SEPTEMBER, 1863.

SALES AND TITLES UNDER DEEDS OF TRUST.

Sec. 1. Subject stated, viz., conveyances in trust to secure debts.

Sec. 2. Importance of the subject-By whom and how treated.

Sec. 3. Origin and history of powers of sale-Validity-Extensive adoption and use in England and America.

Sec. 4. Deeds of trust and mortgages with power of sale, substantially identical. Sec. 5. Who may grant powers of sale-Infants-Married Women.

Sec. 6. Who should join in executing the instrument and mode.

Sec. 7. Consideration-Debts of grantor-Contingent liabilities.

Sec. 8. Nature and extent of powers of trustees-Deed the source and limit of the power-How the power may arise.

Sec. 9. Irrevocable nature of powers of sale-Effect of death, &c.

Sec. 10. What title or interest the trustee takes in the land.

Sec. 11. What right remains in the grantor after the execution of a deed of trustHow vendible, &c.

Sec. 12. Powers appendant-Effect of alienation by the trustee, &c.

Sec. 13. Nature of the trust, and of the cestui que trust's interest.

SEC. 1. Subject stated, viz., conveyances in trust to secure debts.Conveyances of real and personal property to trustees in trust for the payment of the debts of the grantor, are of frequent occurrence both in England (Hill on Trustees 336), and in this country. Where the trust is for the benefit of creditors generally, it is usually (641)

VOL. XI.-41

denominated an Assignment. The subject of Voluntary or General Assignments does not fall within the scope of this article. We propose to treat of those more limited or partial trusts in which a conveyance of real estate is made to trustees to secure the payment of some specified debt or debts, or to the mortgagee or creditor himself, who, for this purpose, is invested with the power of sale on default of the grantor to pay.1

When we use the term deed of trust we do not mean a case where the grantor parts wholly with his title, giving it to a trustee absolutely for the purpose of raising a fund to pay debts, though this is, properly speaking, a deed of trust. But we mean cases where the conveyance is to secure a debt in case of default, thus assimilating the transaction to a mortgage, and where the intention of the grantor, instead of parting with his estate, is to retain it in case he performs his legal obligation according to its terms. Instruments of this latter class are also, but less accurately, called deeds of trust, and are those which it is our design to consider. In substance they are mortgages with specific provisions for foreclosing or barring the equity of redemption. (See Woodruff vs. Robb, 19 Ohio 212, where the distinction between the two classes of cases is very plainly set forth.)

SEC. 2. Importance of the subject-By whom and how treated.— How important this subject is, will readily occur when it is remembered how extensively in this country as well as in England this mode of security is resorted to. An examination of it seems to be necessary in order to exhibit the present state of the law relating to it. The cases lie uncollected and scattered through the numerous volumes of the reports. Such an examination appeared to be the more necessary because the subject in its every-day practical bearings is not considered at any great length, or with any aim at completeness, in the usual elementary works. Thus Willard omits

1 When partial conveyances in trust have or have not been held under special statutes to amount to assignments, see, generally, Burrill on Assignments 32; Burrows vs. Lehndorf, 8 Iowa 96; 11 Id. 151; 13 Id. 551; Merchants' Manufacturing Company vs. Smith, 8 N. H. 347; Low vs. Wyman, Id. 536; Manufacturers' Bank vs. Bank of Pennsylvania, 7 W. & S. 335; 12 Penna. Rep. 164; Baker vs. Hall, 13 N. H. 298; Davis vs. Anderson, 1 Kelly (Geo.) 176; Wilson vs. Russell, 13 Md. 495.

Story's ComEq. Com. sec.

to consider it on the ground that it belongs to treatises on the practice of the law: Willard's Eq. 430, 450. mentaries contain but one brief allusion to it: 1027. Even Kent, though he made, both as a Judge and Chancellor, many important decisions on the subject, devotes less than three pages,—but those are characteristically terse and valuableof his Commentaries to its consideration : 4 Kent, p. 146, et seq.

The notes of Mr. Wharton to Hill on Trustees contain the most satisfactory citation of the authorities bearing on this subject that I have met with, but they are intermixed with cases relating to cognate and even unconnected matters. The short chapter of Mr. Hilliard (Mortg. vol. 1, ch. vii.), though useful, by no means presents the subject in all of its aspects and details. Omitting merely speculative views and avoiding theoretical discussions, it shall be our humble aim to give the subject a practical treatment, with the sole design of facilitating the labors of the actively engaged practitioner.

SEC. 3. Origin and history of powers of sale-Validity-And extensive adoption and use in England and America.-In the civil law, a power of sale in the mortgagee is implied, and even an express agreement will not deprive him of it: 1 Dom. 360.

In the common law, mortgages with a sale clause or conveyances in trust, with power to sell and convey an irredeemable estate on default, are comparatively of modern origin" (Coventry's Note, 1 Pow. on Mortg., 9 a, n. 1). Mr. Powell, in giving (Vol. 3, p. 1123) a form for such instruments, declares them to be then "in their infancy." Lord ELDON, in 1825, asserts that powers of this kind were unknown in his early practice. Yet nearly a century before, these powers were occasionally resorted to, and their validity was brought into discussion in Croft vs. Powell, decided in 11 Geo. 2 (A. D. 1729), and reported by Comyn, p. 603.1 This case," says Coote (Mortg. 129), "was considered as raising considerable ground for doubt, but, so far from it, it will, on consideration, seem

1 The syllabus to Croft vs. Powell is as follows: "Mortgagee with power to sell, sells with notice of mortgage, without mortgagor, his estate is redeemable." The case was decided on grounds other than that the power was invalid: 4 Kent 146 n.

to be rather an authority in favor of these powers:" 1 Hilliard on Mortg., ch. 7.

Such powers were declared by KENT, C. J. (10 Johns. 196, A. D. 1813), "not to be in use in Great Britain." Yet a few years afterwards, he tells us, in his Commentaries, that they are found in England to be so convenient as to become of quite frequent use: 4 Kent 146. Their growth seems, indeed, to have been very rapid after their validity was established. Nor, considering the delays and difficulties incident to proceedings in Chancery to foreclose, and the prompt and efficacious remedy these powers afforded, is this remarkable.

Courts of equity have always held invalid, or viewed with great suspicion, all special agreements to impair or abridge the equity of redemption. And powers of the character under consideration were at first seriously doubted, and by Lord ELDON and others strenuously opposed, as tending to destroy the value of the equity of redemption; as putting the debtor in the power of the creditor, who was thus enabled harshly to take advantage of his necessities; and as investing the mortgagee, where the power was confided to him, with the character of a trustee, in a case where he is not free to act for the exclusive benefit of his cestui que trust, for he is, first, a trustee for himself, and, second, as to the residue for the mortgagor.1

But whatever doubt may have formerly existed, powers of sale inserted in mortgages or conferred upon a third person, are of frequent use in England, and the practice and validity of sales thereunder firmly established: 2 Cruise's Dig. 94; Clay vs. Sharpe (A. D. 1802), apud Sugd. on Vend. and Pur., App., 21; followed in 1811 by Corder vs. Morgan, 18 Ves. 344; Powell 9, et seq., and notes; 4 Kent 146; 1 Hill. on Mortg. 124; Coote on Mortg. 10, 14, 124, 174; 2 Coll. R. 465, 568; 6 Bing. 121; Adams's Eq. 120; 11 Jur. 504; 15 Q. B. 155; 1 B. & C. 364; Sugd. on Vend. 326.

1 Chancellor Kent (4 Kent's Com. 146 n.) considers Lord Eldon's aversion to this innovation as one of his errors. But where the power of the creditor is not regulated by statute, the grounds of Eldon's sturdy and persistent opposition seem not to be unreasonable, or his fears ungrounded.

Affording to the creditor an easy, cheap, and speedy remedy, and enabling him to avoid the vexatious delay, expense, and inconvenience of a foreclosure in Court and a sale under a decree, these powers have, in many of the States of the Union, become a favorite mode of security.

The validity of such powers, where conferred upon a trustee, is nowhere longer doubted; and, with the exception of two or three States, their validity is conceded even where they are given to, and are to be exercised by, the creditor himself:1 2 Story Eq., §

1 NEW YORK.-Such powers are valid and usual. Their exercise was early regulated by statute: 2 Comst. 360; 7 Wend. 458; 7 Johns. Ch. 45; Id. 25; 1 Caines C. E. 1; 2 Cowen 195; 4 Kent 147; Id. 190 n., where the substance of New York statute is given.

MASSACHUSETTS.-These powers are valid: 2 Met. 29; 8 [d. 423; 3 Pick. 491. But they are not so common in this State as to raise a presumption that a mortgage contains them: Platt vs. McClure, 3 Wood. & Min. 151. Conditions of power must be strictly complied with or no title passes by the sale: Smith vs. Provin, cited Am. Law Register, April, 1863, p. 378.

INDIANA.-Sales under powers to secure debts were formerly authorized, but by the Revised Statute of 1852 it is different: Wheeler vs. Hart, 7 Port. 583.

DISTRICT OF COLUMBIA.-Valid and in use: Newman vs. Jackson, 12 Wheat. 570. MISSISSIPPI. These powers were decided valid in 1838 in Sims vs. Huntley, 2 How. (Miss.) 896. Since then they have been in familiar use, and the reports of that State abound with cases arising under them: 1 Freem. Ch. R. 105. Grantor's interest not subject to sale on execution, unless the debt is fully paid: 13 Sm. & M. 103; 26 Miss. 291.

NORTH CAROLINA.-Trust deeds are in common use as a mode of security. It would seem from a remark of HENDERSON, C. J., 1 Dev. Eq. 546, that in that State "the law will not trust the creditor to be both his own agent and that of the debtor" for the purpose of making a sale. In such a case the foreclosure must be in equity. But otherwise if the parties have agreed on a trustee : Id. ; 4 Ired. Eq. 288; 5 Id., App. Grantor's interest subject to sale on execution: 1 Dev. (Eq.) 1541; Post, sec. 11.

MISSOURI.-Powers valid and sales irredeemable: Carson vs. Blakely, 6 Mo. 278; 21 Id. 313.

IOWA. Same in Iowa. But by recent statute mortgages with sale clause and deeds of trust must be foreclosed in Court: 7 Iowa 450; 8 Id. 404; 10 Id. 238. As to validity of powers of sale, see 4 Iowa 482; 7 Id. 462; 11 Id. 598. equity subject to execution sale.

Grantor's

WISCONSIN.-Powers of sale to mortgagee "are usual." The mode of foreclosure