Backus v. Burke
51 N.W. 284
Minn.
1892
Check Treatment
Collins, J.

When Tiseher, as the mortgagee, proceeded to foreclose under the power of sale contained in the Hoffman mortgage, and on November 23, 1874, the day on which the sheriff, in conformity with the published notice, sold the mortgaged premises to Bier-man, through whom the plaintiffs claim title, the reassignment made by the bank to Tiseher had not been recorded, although duly executed and in his possession. It was not put upon record until December 7th. So that when the foreclosure proceedings by advertisement were commenced, and completed by the execution of the sheriff’s certificate of sale, the record disclosed an assignment of the mortgage, absolute in form, from the mortgagee, Tiseher, to the bank; and there was nothing of record to indicate that the assignee bank had parted with its title by assignment, or -in any other manner; both assignments being unnoticed and ignored. The mortgagor died prior to March 27, 1887, and defendants are grantees named in a deed of the premises executed and delivered by the heirs of the deceased on that day. From testimony produced by the plaintiffs and received by the trial court against the defendants’ objections, it was made to appear conclusively that in the year 1873 Tiseher had borrowed a sum of money from the bank, for which he gave his note, and that, solely as security for the payment of his debt, he transferred and assigned the Hoffman mortgage with the note thereby secured. Upon payment of the debt, some time before the foreclosure, he received from the bank the note and mortgage, with the unrecorded assignment before spoken of. The bank, therefore, had no claim upon the Hoffman note or mortgage; and as Tiseher was the owner, and unquestionably the proper party to foreclose, the inquiry is as to the validity of the proceedings had, in which the assignments were wholly disregarded. The authority conferred upon a mortgagee to foreclose a mortgage by advertisement is that found in the power of sale, as that power appears in the instrument itself, which was in this instance in the common form. It was therein provided that the authority to sell was to be exercised in case of default, and the mortgaged premises were to be disposed of “agreeably to the statute in such case made and provided.” An examination of the adjudicated cases in this state, as well as in other jurisdictions in which *268this method of foreclosure has been permitted, will demonstrate that the courts have very properly and uniformly held that the power and authority to sell must be exercised substantially in accordance with the statute, or a sale will be invalid. This statute (1878 G-. S. ch. 81, tit. 1) has become very familiar to the profession, and has frequently been commented upon by this court. By section two (2) it is enacted that, to entitle any party to give the notice of sale and to make foreclosure, several things are made essential and requisite; among them, that the mortgage in which the power of sale can be found shall have been duly recorded, and also, if it has been assigned, that all of the assignments shall have been recorded. As to when and under what circumstances a foreclosure may be had, this section seems exceedingly plain. In section six (6) the essentials and requisites of the notice of sale are imperatively stated. Each notice shall specify the names of the mortgagor and of the mortgagee, and of the assignee, if any. Other matters must be specified with certainty and particularity; all tending to indicate that, from the record and the notice, it must appear that the party proceeding to exercise authority to sell has the legal right so to do. The statute prescribing what must appear of record, and also what must be stated in the notice of sale, as published, makes no exception, and is not susceptible of the construction placed upon it by the learned court below,— a construction, in effect, that an assignment absolute in form, recorded or unrecorded, can be shown by parol not to be so, in fact, in proceedings to test the validity of mortgage foreclosures under a power, and that when the assignment is but nominal the statute in reference to the record and the notice has no application. An exception of this nature cannot be thrust into the statute-upon any well-founded reasoning, or which would not lead to the most disastrous results. The facts in the case at bar are illustrative and full of suggestion. When the sale took place at which bidders were solicited, the legal title to the mortgage, as shown by the record, was not in the person who, as mortgagee, was assuming the right to foreclose it, but was in the bank instead. This fact would necessarily deter bidders and stifle competition at the sale. More than this, and possibly of greater practical moment, it would render the right of re*269clemption of little value. The validity of the foreclosure in a case like this, and consequently the validity of a redemption therefrom, ■would be made to depend on the determination of a judicial tribunal upon parol testimony as to the real nature of the written assignment, —whether recorded or not.

We think that the decisions heretofore made in this court very clearly indicate that, in order to properly foreclose under the statute, there must be of record a valid mortgage, and that the record must be so complete as to satisfactorily establish and show the right of the party who is proceeding under it to invoke its aid. If the record is defective, or if, as was the case at bar, it shows affirmatively that the legal right to foreclose is not in the hands of the party who is attempting to exercise the right, the proceedings are invalid. It follows from this that the notice of sale should, as was evidently the intent of the statute, disclose the true state of the record. As was said in Morrison v. Mendenhall, 18 Minn. 232, (Gil. 212,) the manifest purpose of this requirement of the statute section two (2) was to make the contents of the mortgage, and, so far as, the statute goes, to make the title to the mortgage, matters of record; and for obvious reasons it was important, not only to the parties to the mortgage itself and to assignees, but to subsequent incumbrancers, creditors, and contemplating purchasers, that some permanent and accessible evidence of the existence and contents of the mortgage, and of the title to the same, should be provided. In this case the court upheld a foreclosure where an assignment of the mortgage had been made — in behalf of one of three mortgagees — by an attorney in fact, whose authority, however, did not appear of record. The assignment was recorded, and the conclusion of the court was based upon the fact that the statute required nothing more to be recorded. In other words, it expressly authorized foreclosure if the mortgage and the assignments were of record. Although the precise point now presented has not been before this court heretofore, the expressions found in its decisions upon the subject are significant, and almost conclusive. See Ross v. Worthington, 11 Minn. 438, (Gil. 323;) Thorp v. Merrill, 21 Minn. 336; Johnson v. Sandhoff, 30 Minn. 197, (14 N. W. Rep. 889;) Martin v. Baldwin, 30 Minn. 537, (16 N. W. *270Rep. 449;) Van Meter v. Knight, 32 Minn. 205, (20 N. W. Rep. 142;) Benson v. Markoe, 41 Minn. 112, (42 N. W. Rep. 787;) Lowry v. Mayo, 41 Minn. 388, (43 N. W. Rep. 78.) And as to the views of courts of other states having a similar statute, see Lee v. Clary, 38 Mich. 223; Miller v. Clark, 56 Mich. 337, (23 N. W. Rep. 35;) Morris v. McKnight, 1 N. D. 266, (47 N W. Rep. 375.) Our conclusion is that, before Tischer was entitled to foreclose the mortgage, his assignment from the bank should have been placed upon record. To state this proposition in a different form, we are of the-opinion that a person cannot legally foreclose a mortgage on real property by advertisement when the record title to the instrument is-in another, save in exceptional cases; such, for instance, as Baldwin v. Allison, 4 Minn. 25, (Gil. 11,) in which it was held that an administrator was not an assignee, within the meaning of the statute. The-court below (citing and quoting from the Michigan case of Miller v. Clark, supra, which was inline with the Baldwin Case) seems to have-rested its decision on the same ground, — that the title to the mortgage-did not pass from the bank to Tischer by its voluntary act, as found in* the assignment, but that it was transferred by operation of law upon-the payment of the debt for which it had been hypothecated, and hence written evidence of the transfer, being unnecessary, need not-be of record. The distinction between a transfer to an administrator or executor by operation of law and a transfer from one living person to another growing out of a contract, express or implied, is-obvious. But while the statute does not include a transfer which, in the nature of things, could not be evidenced by a formal assignment, it certainly does not consider or attempt to distinguish between the-many purposes or the various circumstances under which formal assignments are made. The statute requiring a record governs wherein form it is an assignment, and entirely disregards the fact that in> some cases and for some purposes, such as a foreclosure by action, a written assignment may be unnecessary. We have not overlooked White v. McClellan, 62 Md. 347, cited by counsel for respondents-We cannot adopt the views very briefly expressed therein.

Judgment reversed.

(Opinion published 51 N. W. Rep. 284.)