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The decree of the lower court is affirmed.

Cook, J., dissents in part.

Ethridge, J., dissenting in part:

I dissent from that part of the opinion which holds that § 2296, Hemingway's Code (§ 2795, Code 1906), is not applicable to deeds of trust securing negotiable instruments. Section 2296, Hemingway's Code (§ 2795, Code of 1906), is set out in the majority opinion, but it ought to be construed in connection with § 2295, Hemingway's Code (§ 2794, Code of 1906), and with § 2306, Hemingway's Code (§ 2805, Code 1906), and chapter 196, Laws of 1910, amending § 2805, Code of 1906, and the meaning and purpose of the legislative scheme determined from a reading of all these sections together. In other words, § 2296, Hemingway's Code (§ 2795, Code 1906), does not stand alone, and a construction which might be reasonable if it stood alone may not be reasonable when considered with other sections in pari materia.

Section 2295, Hemingway's Code (§ 2794, Code 1906), reads as follows: "When the indebtedness, or any part thereof, secured by a mortgage, deed of trust, or other lien of record shall be assigned by the person appearing by the record to be the creditor, he shall be required by the assignee to enter the fact of the assignment on the margin of the record of the lien; and in default of making such entry, any satisfaction or cancelation of the lien or instrument evidencing it entered by the original creditor shall release the

same as to subsequent creditors and purchasers for value without notice, unless the assignment be by writing duly acknowledged and filed for record; and every assignment by an assignee of any such lien shall be entered in like manner and with like effect in case of failure."

Section 2306, Hemingway's Code (chap. 196, Laws 1910), among other things, provides: "But the clerk shall not record any mortgage or deed of trust in which the name of the beneficiary is not disclosed therein; and if such instrument is recorded, it shall not impart notice to anyone; provided, the failure to disclose the name of the beneficiary shall not apply to mortgages and deeds of trust given by corporations either foreign or domestic, to secure the payment of serial bonds payable to bearer; and the assignment or of trust or bonds secured by the transfer of such mortgages or deeds same need not be entered on the margin of the record. But it shall securities covered by this proviso to be the duty of the holder of such list and assess the same for taxation, if liable for taxation, in the hands of the holder, such list or assessment to show the amount, date, date due and value of such securities of such corporation so made payable to bearer, and on failure of the holder to so assess the same, all interest thereon shall be forfeited in his hands and as against him, and he shall be denied the right to recover such interest in the courts of the state."

The original section of the Code of 1906 (2805) ended as follows: "But said clerk shall not record any mortgage or deed of trust in which the name of the beneficiary is not disclosed therein, and if such instrument is recorded it shall not impart notice to anyone."

The legislative policy is clearly indicated in the last sections, and especially by chapter 196, Laws of 1910 ( 2306, Hemingway's Code), which makes its own exceptions by providing that the failure to disclose the name of the beneficiary shall not apply to mortgages and deeds of

(Miss. - 97 So. 465.)

trust given by corporations, either foreign or domestic, to secure the payment of serial bonds payable to bearer. This is plainly a legislative declaration that the section shall apply to all deeds of trust and mortgages not excepted from the operation of the section, under the rule that, where the legislature enumerated the things to be excepted, the enumeration embraces all that is intended to be excepted, and all other classes are included. These sections deal with the record of instruments, and have no bearing on the negotiability or non-negotiability of instruments.

The statutes probably intend to serve several purposes, one of which was to enable the debtor to know who his creditor was, so that he might deal with his obligation in the light of such information, and the suit before us demonstrates the benefit of having such knowledge, because the maturity of all the debt is attempted to be accelerated in the case before us, without any notice to the debtor, in advance, of the acceleration. The sections also intend to give information to the taxing authorities as to who is the owner of the recorded debt, so that the state, counties. and municipalities may

have such debt listed for taxation. It may be that the instrument which is secured by the mortgage is a negotiable instrument, and under our law the security passes with the transfer of the debt; but people are supposed to make their contracts in view of the law, and, if it is desired that a note should be negotiable and pass from hand to hand by delivery, that purpose could be carried out by either not taking the security, or not placing it of record, taking the consequences, in either case, that would follow such action. The state has full power to deal with the record of instruments, and to provide such conditions as it may deem best for the public interest. In my humble opinion, the decision in the present case emasculates the statute, and defeats the purpose indicated by the legislature. The statute may not be a wise one, and may be in fact subversive of the public welfare, but that is a question with which the court has no kind of concern, because the shaping of public policy and the making of laws is for the legislative department.

Suggestion of error overruled September 24, 1923.

ANNOTATION.

Time within which taxes may be paid to prevent operation of acceleration clause in mortgage.

Time at which taxes are delinquent. Decisions on the question under annotation involve cases where a clause in the mortgage provides that, upon default in the payment by the mortgagor of legally assessed taxes or assessments on the mortgaged property, the debt secured by the mortgage shall immediately become due and payable, if the mortgagee so elects.

The courts in general hold that where there is a provision for the acceleration of the mortgage for failure of the mortgagor to pay taxes on the mortgaged premises, the mortgagee's right to declare the entire debt due matures as soon as the taxes become delinquent, and a foreclosure action

thereafter instituted is not commenced prematurely. Parker v. Olliver (1894) 106 Ala. 549, 18 So. 40; Hume v. Indiana Nat. L. Ins. Co. (1922) 155 Ark. 466, 245 S. W. 19; Buffalo Center Land & Invest. Co. v. Swigart (1916) 176 Iowa, 422, 156 N. W. 422; Elwood v. Wolcott (1884) 32 Kan. 526, 4 Pac. 1056; Condon v. Maynard (1889) 71 Md. 601, 18 Atl. 951; National L. Ins. Co. v. Butler (1901) 61 Neb. 449, 87 Am. St. Rep. 462, 85 N. W. 437; Farmers Security Bank V. Martin (1915) 29 N. D. 269, L.R.A.1916D, 432, 150 N. W. 572.

But in the reported case (HUGHES v. KAW INVEST. Co. ante, 727) it is held that, since the mortgagor has the

right to pay the taxes at any time before the lands are sold, a forfeiture under the acceleration clause could not be declared, at least, until the day of the sale for nonpayment of the tax. See Gray v. Robertson (1898) 174 III. 242, 51 N. E. 248.

An allegation of a custom in delaying payment of taxes is no defense. Parker v. Olliver (Ala.) supra.

It has been held that, where a mortgage contains a covenant by the mortgagor to pay the taxes when due, and gives the mortgagee the power of sale in case of the mortgagor's failure to pay the principal or interest when due, or in case of the nonpayment of any taxes, a mere naked breach of the covenant to pay the taxes gives the mortgagee no right to foreclose. Heller v. Neeves (1896) 93 Wis. 637, 67 N. W. 923, 68 N. W. 412. There was no other covenant in this case touching the payment of taxes or the effect of nonpayment, nor any stipulation that the mortgagee could pay the tax and recover the amount as part of the debt, or that the debt should become due in default of payment, and it appears that the plaintiff was the second mortgagee, and that the amount which he had paid out on account of the delinquent taxes had been repaid to him by the first mortgagee, so that, at the time the action was tried, nothing was due the plaintiff on account of taxes.

And in Newark Trunk Co. v. Clark (1922) N. J. Eq. -, 118 Atl. 263, it was said that the failure to pay taxes within the time specified by the acceleration clause matured the mortgage, unless it could be shown that the default was in some way attributable to the fault of the mortgagee. And see Arkenburgh v. Lakeside Residence Asso. (1897) 56 N. J. Eq. 102, 38 Atl. 297.

Where taxes for the preceding year are due and in arrear on the 1st day of January, and from that date bear interest, if unpaid, there has been a default in the payment of taxes within the meaning of the acceleration clause in a mortgage by which the mortgagee covenanted to pay taxes, "when legally demandable," though no notice had

been given the mortgagor by the collector, as required by the Code in order to enforce collection, for they are none the less due and in arrear in the absence of such notice, as taxes must be necessarily due before payment can be enforced, and when due are legally demandable, though summary proceedings to compel payment may not be at once resorted to. Condon v. Maynard (1889) 71 Md. 601, 18 Atl. 957.

It has been said that an agreement to pay taxes before they become delinquent is not fulfilled by paying such taxes on the day they become delinquent. National L. Ins. Co. v. Butler (1901) 61 Neb. 449, 87 Am. St. Rep. 462, 85 N. W. 437, where it was held that, as the mortgage was conditioned on the mortgagor's default in that respect and the mortgagee could pay the delinquent taxes and add such payment to the original debt, a payment of taxes by the mortgagee on the 1st day of December was not premature and unauthorized, where the statute provided, "on the 1st day of December next succeeding the levy thereof, all unpaid taxes shall become delinquent," and the mortgagee could not only make the payment which the debtor had failed to make, but could also at its option declare the whole debt due, and immediately proceed to collect it by suit.

And it has been held that where the mortgagee has exercised his option to declare the mortgage debt due for failure of the mortgagor to pay taxes by filing a bill to foreclose, alleging that the taxes have become delinquent, it is no defense to allege that the failure of the mortgagor to pay taxes when they become due was in accordance with a long-established custom to pay taxes for the preceding year before a certain date of the following year, and that the mortgagee had, after the filing of the bill, paid the taxes and offered to pay the complainant all costs which had accrued, for the contingency of the stipulation for the acceleration of the mortgage was the delinquency in payment of the taxes, and the plea does not contradict the happening of the contingency. Parker

v. Olliver (1894) 106 Ala. 549, 18 So. 40.

In Brockway v. McClun (1909) 148 Ill. App. 465, affirmed in (1909) 243 Ill. 196, 90 N. E. 374, where it was contended that an action to foreclose a mortgage for default in payment of taxes under an acceleration clause was prematurely brought, inasmuch as the mortgage had been extended for five years, it was said that the mortgagee had the power to declare the whole debt due and file a bill with that object in view, without any further notice of his intention to do so than is to be implied from the commencement of the foreclosure proceedings.

In Buffalo Center Land Invest. Co. v. Swigart (1916) 176 Iowa, 422, 156 N. W. 701, it was held that, where taxes are due on the 1st of January, and are delinquent unless paid before the 1st of April, the mortgagee is in default within the meaning of the acceleration clause in the mortgage, where he did nothing toward paying the taxes until the 1st of September, after the foreclosure action was instituted for default in payment.

In Gray v. Robertson (1898) 174 III. 242, 51 N. E. 248, it was said that the right of the creditor to foreclose a trust deed which contained an acceleration clause for the nonpayment of taxes accrued upon the failure of the debtor to keep and observe the covenant in relation to the payment of taxes and the protection of the property from sale for delinquent taxes and assessments.

In Farmers Security Bank v. Martin (1915) 29 N. D. 269, L.R.A.1916D, 432, 150 N. W. 572, the court stated that any time after the taxes became delinquent, in the absence of equitable reasons preventing it, the mortgagors were in default under the terms of the acceleration clause, and the mortgage could be foreclosed under the power granted on account of the default, such power being valid and enforceable in equity.

Tender or payment after taxes are delinquent.

A majority of the courts hold that, after having failed to pay the taxes on property when they became due,

the mortgagor may thereafter pay the taxes and thus bar the mortgagee's right to foreclose for such default, where such payment, or a tender thereof, is made before the foreclosure suit is commenced. Shaw v. Wellman (1891) 59 Hun, 447, 13 N. Y. Supp. 527; Noyes v. Anderson (1891) 124 N. Y. 175, 26 N. E. 316; Ver Planck v. Godfrey (1899) 42 App. Div. 16, 58 N. Y. Supp. 784; Germania L. Ins. Co. v. Potter (1908) 124 App. Div. 814, 109 N. Y. Supp. 435; Fleming v. Franing (1908) 22 Okla. 644, 22 L.R.A. (N.S.) 360, 132 Am. St. Rep. 658, 98 Pac. 961; Smalley v. Renken (1892) 85 Iowa, 612, 52 N. W. 507; HUGHES v. KAW INVEST. Co. (reported herewith) ante, 727; Swon v. Stevens (1898) 143 Mo. 384, 45 S. W. 270.

Some of the courts base their decisions on the ground that as the acceleration clause is put in for the purpose of protecting the mortgagee from loss or impairment of his security, a payment before actual sale of the premises fulfils that purpose. Smalley v. Renken (1892) 85 Iowa, 612, 52 N. W. 507; Ver Planck v. Godfrey (1899) 42 App. Div. 16, 58 N. Y. Supp. 784; Shaw v. Wellman (N. Y.) supra.

And it has been said that the failure to pay taxes is a mere technical default, which is cured by prompt payment by the mortgagor when his attention is called thereto. Germania L. Ins. Co. v. Potter (1908) 124 App. Div. 814, 109 N. Y. Supp. 435, supra.

And it has been held that the mortgagee's right to take advantage of the acceleration clause is devested by the mortgagor paying the delinquent taxes after the foreclosure suit is commenced. Shaw v. Wellman and Germania L. Ins. Co. v. Potter (N. Y.) supra.

But the better view seems to be that a payment, or tender of payment, of the delinquent taxes after the foreclosure suit is commenced under an acceleration clause, is too late to bar the mortgagee's right to foreclose for default in payment of taxes. Stanclift v. Norton (1873) 11 Kan. 218; Lotterer v. Leon (1921) 138 Md. 318, 113 Atl. 887; Plummer v. Park (1901)

62 Neb. 665, 87 N. W. 534; Hockett v. Burns (1911) 90 Neb. 1, 132 N. W. 718; Arkenburgh v. Lakeside Residence Asso. (1897) 56 N. J. Eq. 102, 38 Atl. 297.

Some courts have held that a tender or payment after the mortgagee has given notice of his intention to foreclose is too late. Thompson v. Hirt (1923) 195 Iowa, 582, 191 N. W. 365; Stewart v. McCaddin (1908) 107 Md. 314, 68 Atl. 577.

And it has been held that the failure of the mortgagor to pay the taxes absolutely accelerates the mortgage. Newark Trunk Co. v. Clark (1922) N. J. Eq. 118 Atl. 263.

In Smalley v. Renken (1892) 85 Iowa, 612, 52 N. W. 507, the mortgage stipulated that if default should be made in the payment of the principal or interest secured thereby, or of the taxes assessed on the premises, and the same should remain unpaid for a space of thirty days, the whole indebtedness should become due; under this clause the mortgagee commenced an action to foreclose, based on the nonpayment of interest at a time when taxes were in default within the meaning of the acceleration clause, but such default was not stated as a ground for foreclosure; the mortgagor later paid the taxes and thereafter the plaintiff amended his foreclosure petition by alleging that the debt had matured on the failure to pay taxes, and the court held that as the stipulation for the payment of taxes was intended to protect the mortgagee from loss or impairment of his security, that purpose was fulfilled by the payment of taxes before the amendment of the petition, and the mortgagee was not thereafter entitled to foreclosure on that ground. The court stated: "At the filing of the amendment every right of the plaintiff in this respect was fully protected. The object of the condition of the mortgage was to enable the plaintiff to treat the debt as due, and save himself from loss because of the default. After the payment of the taxes, all such liability for loss was at an end. His situation was exactly as if there had been no default as far as the conditions for forfeiture were

concerned. To justify a forfeiture. under such circumstances would work an injustice that the court ought not to permit. We think the payment of the taxes, after a breach of the condition for their payment, and in a way that no prejudice could result because of the default, and before suit brought to declare the debt due because of the default in payment, is a bar to such a proceeding."

Under a mortgage clause providing that the whole amount of the mortgage debt shall become due at the option of the mortgagee, for default in payment of taxes before the same become delinquent, a default and subsequent sale of the mortgaged property does not entitle the mortgagee to foreclose, where all taxes, penalties, and interest lawfully assessed against the said property have been fully paid off and discharged by the mortgagor and notice thereof given to the mortgagee before the foreclosure suit was instituted. Fleming v. Franing (1908) 22 Okla. 644, 22 L.R.A. (N.S.) 360, 132 Am. St. Rep. 658, 98 Pac. 961.

In Ver Planck v. Godfrey (1899) 42 App. Div. 16, 58 N. Y. Supp. 784, the mortgagee notified the mortgagor by letter of an election to consider the whole amount of the debt due and payable on the ground that the mortgagor had failed to pay the taxes; the mortgagor immediately tendered the amount of the taxes to the mortgagee's attorney, and, upon his refusal to accept the same, paid the taxes to the proper tax officer and exhibited the tax receipts to the mortgagee's attorney. In reversing a decree of foreclosure and order of sale of the mortgaged premises, where the summons had not been served on the defendant until after the plaintiff had actual knowledge that the taxes had been paid, the court stated that it was at a loss to understand upon what equitable principle a judgment of foreclosure could be decreed, for, at most, there was but a technical default in the payment of the taxes, and since they had been paid by the mortgagor before the commencement of the action, the plaintiff was not injured by the default, nor had her security been

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