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Turner vs. Watkins et al.
both estates cannot be united in the same party, the effect of which would be to extinguish the trust. This is expressly held to be its effect by Perry, in his work on Trusts, vol. —, p. 10, paragraph 13, in wbich he says: “No person can be trustee and -cestui que trust at the same time, for no one can sue out a subpoena against himself; therefore, if an equitable estate and legal estate meet in the same person, the trust or confidence is extinguished, for the equitable estate merges in the legal estate.” " The act of making the trust is,” says Mr. Washburn, “the source or origin of two estates, which flow on afterwards independent of each other in point of ownership, until they merge again by being united in the same person.”
If, as in the case before us, the trust is coupled with a power of sale upon failure to pay a sum of money, when the money is paid, the purposes for which the power to sell were conferred having been accomplished, or rendered unnecessary, the legal estate vested in the trustee is, by operation of law, merged and and reunited with the equitable estate in the party who executed the deed of trust. But if the money is not paid when due, and the sale takes place, then the legal title passes from the trustee to the purchaser, and draws with it the equitable estate which remained with the vendor after the execution of the trust.
Such being the law as we understand it, we must hold that Watkins, after executing the deed of trust, held an equitable estate, the right of redemption before foreclosure, which was at the time subject to levy and sale under Greenwood's execution ; but it by no means follows from this that all equitable interests in every form and purpose of trust are liable to be levied on and sold under execution. To do so would, in many instances, defeat the purposes of the trust.
At the common law, lands were not subject to sale under execution, but by statute (sec. 2630 Gantt's Digest) all real estate,
· Turner vs. Watkins et al.
whether patented or not, whereof the defendant, or any one for his use, was seized in law or equity, shall be subject to execution.
It is not our purpose on the present occasion to attempt drawing the distinction (if, indeed, such can clearly be done) between such equitable estates as may, or may not, be taken in execution, or what restrictions should be placed on the terms, “all real estate," etc., but will limit our inquiry as to whether the particular estate held in the case before us was or not subject to sale under execution.
If the payment of these debts had been secured by a deed of mortgage on the lands, there would be no question of the right to levy upon and sell the mortgagor's equity of redemption, the effect of which would be, as we have repeatedly held, to subrogate the purchaser to the equitable rights of the mortgagor, which would be to pay off the mortgage debt, and hold the estate just as the mortgagor would, if redeemed by him. Rice v. Wilburn et al., ante.
But instead of securing the payment of these debts by a deed of mortgage, the same end has been substantially accomplished by deed of trust securing the payment of the debt; the legal effect of a mortgage is to convey the legal estate with a defeasance, that if the debt is paid, the deed shall be void, and, if not paid, to remain in force.
If no power of sale is conferred by the deed, the equity of redemption is foreclosed by the court, and the property decreed to be sold. If a trustee is appointed in the deed to sell upon failure to pay, the sale effects substantially that which is effected by a decree of the court, a foreclosure of the equity of redemp
tion. · A deed of trust executed with power of sale upon failure to
pay the debt, is in legal effect the same as a mortgage in which
Turner vs. Watkins et al.
is appointed a trustee to sell upon the same contingency. In each form of convevance the legal title passes to the party empowered to sell, the equities of the grantor are the same, upon the happening of a like contingency (the failure to pay in either); the same equitable right to redeem before sale or foreclosure exists.
This equity of redemption is an estate in the land. So held by Coote on Mortgages, Ch. 14, p. 256; 4th Kent Com., 158; Burr v. Robinson, adm'r., 25 Ark., 277; Rice et. al. v. Wilburn et. al., ante.
No matter by what technical name the instrument may be caļled, whether a mortgage coupled with a power of sale, or deed of trust, the power to sell placed in a third person, is in substance the same: Law Register, 1863, vol. 2, p. 640, in which the subject of trusts is fully discussed, and references made to the text books, and American decisions, and after a careful review of them, the conclusion reached is, that where the grantor parts with his title, giving it to the trustee absolutely, for the purpose of raising a fund to pay debts, this is properly speaking a deed of trust, but where the conveyance is to secure a debt in case of default, thus assimilating the transaction to a mortgage, and where the intent of the grantor, instead of parting with his estate, is to retain it, in case he performs his obligations according to its terms, instruments of this class are also, but less technically, called deeds of trust, but in substance they are mortgages, with specific powers of foreclosing, or barring the equity of redemption, the effect of which is to afford a creditor an easy, cheap and speedy remedy, and to enable him to avoid delay, expense and the inconvenience of foreclosing in a court, and sale under a decree.
The attributes of a deed of trust for such purpose, and a mortgage with power of sale are. the same, both are intended as securities, and, in a legal sense, are mortgages; in both the legal title . Turner vs. Watkins et al.
passes from the grantor, but in equity he is, before foreclosure, considered the actual owner in both, and as broadly in one as the other; the grantor has the right to redeem, in other words, the equity of redemption, which can only be barred by a valid execution of the power.
Every instrument intended to secure the payment of money, whatever may be its form, and whatever name the party may choose to give it, is, in equity, a mortgage. 2 Sumner, 533; Story's Eq., sec. 1017; 20 Ohio, 469; id., 572; 2 Devason, 555; Eaton v. Whiting, 3 Pick., 484; Bloom v. Rensalaer, 15 Ill., 505.
In strict accordance with the authorities above cited, this court held, State use Ashley & Watkins v. Lawson et al., 6 Ark., 269, that if in attempting to create a trust for the use of a third person, all of the rights and estate be reserved to the grantor, that are reserved in a mortgage power, the fee in the land will remain with the grantor to the same extent that it would if by mortgage, which we must understand to be the right of redemption, and it was in that case held that such right was subject to levy and sale under execution.
The same question was presented in the case of Crittenden v. Johnson, 11 Ark., 94, and as we must suppose from inattention to the difference between the facts presented in the two cases, the case of the State, use of Ashley & Watkins v. Lawson was overruled, without reference to authority, and without reasoning, and evidently without observing the difference between the character of the trust then under consideration, and that decided in State, use, etc. v. Lawson.
The deed in Crittenden v. Johnson was executed to a trustee, empowering him to sell real estate, and pay debts; there was no defeasance, no condition for the payment of the money, or the redemption of the lands; no contingency whatever upon which the legal estate was to revert to the grantor; in fact, the very
Turner vs. Watkins et al.
reverse of the purposes and conditions of the State, use, etc., v. Lawson. Both cases may stand upon sound principles of law.
In Pettit v. Johnson, 15 Ark., 55, like that of Crittenden v. Johnson, the deed was executed, with power in the trustee to sell certain lands and pay debts. The provisions of the deed are not fully reported, but it seems, from a brief statement of the case, that Thomas Ware owned several tracts of land, and was indebted to William H. Sutton and others, to provide for the payment of which, he executed to his creditors a deed of trust, absolutely to sell the lands, pay the debts, and the excess, if any, to Ware. The sale was to be made absolutely, and without condition ; there was no contingency upon which the land was to revert ; no right of redemption; no equitable estate was left in Ware. Under this state of case, it was held that although in some respects this interest was much like that of a mortgagor's equity of redemption, it certainly differed in this, that the equity of redemption, as well as the legal estate, was conveyed by the deed; or, if reserved, was dependent upon a contingency, not to happen until after the sale.
The only possible contingency which could arise in this case, was that there might be an excess of money after the payment of the debts—this and nothing more, omitting an inadvertent expression in the opinion, in which it is said that “the equity of redemption, as well as the legal estate, passed.”
There was nothing in this opinion conflicting with that of Crittenden v. Johnson, or State use, etc., v. Lawson ; there was no equity of redemption ; the whole estate was conveyed to be absolutely sold, so that the court, under the state of case presented, was right in holding that there was no estate, legal or equitable, in Ware, upon which to levy the execution.
It has not escaped our observation that the judge who deliyered the opinion of the court in this case reviewed the legislative