143 N.W. 134 | N.D. | 1913
Lead Opinion
The trial court found that the sale was invalid, holding that the failure of defendant to record his assignment until the 6th day of March, 1908, the publication of the notice of sale in the Lansford Times, the purchase by the defendant for the sum of $113.32, in the absence of any bidders or bids at the sale, and permitting the tenant of the plaintiff to remain in possession after the sale, and to pay rent during the period for redemption to the plaintiff, without knowledge of the foreclosure on the part of either tenant or plaintiff, and in permitting plaintiff to pay interest on the first mortgage for the year 1908, after the commencement of foreclosure proceedings and without knowledge thereof, and permitting the tenant to remain in possession during the year 1909 and raise a crop thereon without any knowledge on the part of the tenant or plaintiff, — ^entitled plaintiff to a vacation of such salé and deed, on the ground that such acts constitute bad faith on the part of defendant; and it awarded the plaintiff judgment, and required the defendant to accept the sum of $170.20, which plaintiff had deposited with the clerk of the court for satisfaction of the mortgage foreclosed. We say here that there is no evidence in the record to sustain the finding of the trial court that there were no bidders at the sale. We shall separately examine the questions raised.
1. We need not determine whether a bid by the sheriff, when acting as auctioneer or salesman, under the power of sale and under the stat
2. Here inadequacy of price at a foreclosure sale is not a ground on which to set aside a foreclosure in the absence of fraud, undue advantage, or prejudice. Grove v. Great Northern Loan Co. 17 N. D. 352, 138 Am. St. Rep. 707, 116 N. W. 345. This is the rule which is established in this state, and we think it especially applicable where the purchaser at the sale is the holder of the mortgage. What might be an inadequate price at an ordinary auction sale may not be so at a foreclosure sale when the purchase is made by the mortgagee as the highest bidder. To illustrate, it is contended in this case that the actual value of the premises in question, relieved of the two mortgages, is, say $4,000, although there is not much, if any, proof to sustain this figure; but assume it to be $4,000. We have no statute providing for an appraisal of lands sold under any method of foreclosure, and no limitation is placed on the amount for which it may he sold. The mortgagee has a right to his security. It is his privilege, and the law recognizes it as such, to protect his security. To this end he is authorized to purchase at the foreclosure sale. If we were to hold that he is compelled, in order to render the sale valid and protect his debt, to pay the full value that the mortgagor places upon the land, he would, in the absence of higher bidders, be compelled to advance, in a case like this, several times the amount of his mortgagé to give him any protection. He must, in such case, not only be willing to take the land, but he must be willing to pay its actual value, and must have the means with which to do it. In this case, if the valuation placed upon the land is $4,000 he would have been required, in order to protect his $113.32 to advance nearly $3,900. This would be an unreasonable and oppressive requirement, and might destroy his mortgage security. We
“The reasoning is that there must be at least two bidders at the sale; otherwise, there is no highest bidder. We are clear that this is a too narrow construction of the statute, — one which was never contemplated by the legislature. It would defeat every sale, unless the plaintiff could induce someone to bid upon the property. What the ■statute clearly means is that, after the public have been fairly notified ■of the sale, the property shall be sold for the best price that can be obtained. It is not necessary that there should be more than one bidder to make a sale at public auction. It is sufficient if the public has been fully advised of the sale, by legal publication of notice, and have the right to attend and bid. Those who do not attend the sale assert by their conduct that they do not wish the property at any price. Must the plaintiff’s right to collect his judgment be forever stayed because he, alone, is willing to buy the property ? We have no doubt on this point on principle, and we are able to cite eminent authority to support our view that the absence of all other bidders did not of itself render the sale either void or voidable, Learned v. Geer, 139 Mass. 31, 29 N. E. 215 ; 2 Freeman, Executions, § 308, pp. 1046, 1047,”
3. The publication of the notice of sale in the Lansford Times was in compliance with the statute governing the publication of such notices. Section 2279, Rev. Codes of 1905, prescribes the qualifications that a newspaper must possess to enable it to publish legal notices ; and it is not for the court, in the absence of fraud, when the legislature has expressed its judgment as to such qualifications, to go back of such judgment and set it aside. In the case at bar testimony of a
4. The fact that Bailey had no actual knowledge of the foreclosure proceedings is not evidence of fraud. If it might be in any case under our statute, the record in this case, which shows that he was at Minot, at Towner, at Sherwood, at Bottineau, in Ohio and Indiana, and perhaps several other places, during the period involved, and that he did not see the mortgagee or the defendant, and that he left no notice to forward his mail from one place to another, almost precludes the possibility of his receiving notice had any attempt been made to give one, on which subject the record is silent. The statute prescribes the method of giving notice. The notice in this case was published, in accordance with law, in a newspaper qualified under the law, and for the length of time fixed by the law, and such notice has the same binding force that a foreclosure by action has when the defendants therein are personally served with process. Grove v. Great Northern Loan Co. 17 N. D. 352, 138 Am. St. Rep. 707, 116 N. W. 345. The plaintiff knew that he had given the mortgage; he knew that the last payment on it was due several years prior to the commencement of foreclosure proceedings; he also knew that it was unpaid. He was charged with notice of the sale, as the certificate was on record for a year, less a few days, before the deed issued. It was incumbent on him to protect himself. He knew that the mortgage provided for foreclosure by advertisement, and was charged with knowledge of the law on the subject. In the absence of fraud he cannot complain because he received no actual notice of the sale. The law charges him with such notice.
It is argued that the paper must be one of general circulation in the vicinity of the land to render the notice valid. The law does not so state, and even if this be correct the evidence fails to negative this as a fact. Plaintiff did not know of its having subscribers in that neighborhood; but his absence would preclude his knowing, and he is not shown to have made any effort to ascertain the fact. Can it be that a mortgagee, in addition to complying with the statute fully, must, before selecting the paper in which to publish, make an investigation to determine whether the neighbors of the mortgagor are subscribers to this or that paper ? The Code makes no such requirement.
6. The fact that 'plaintiff paid interest on the first mortgage after the institution of foreclosure proceedings, and that the defendant did not ascertain that fact and prevent his doing so, or that he paid taxes on the premises, under the circumstances of this case, is no badge of fraud, and does not show want of good faith or reason for vacating the sale either in whole or in part. There is no showing that the defendant knew of any such act; and had he known of it, he had a right to assume that the defendant, with full knowledge of the second mortgage, was intending to pay or redeem from it, and it is not even a suspicious circumstance.
7. It is contended that the fact that the plaintiff collected the rent during the year of redemption, and that the defendant did not himself collect it, when he was entitled to the rents during that period, is an element entering into the equities in favor of plaintiff. The statute gives the purchaser at a mortgage sale the right to receive the rents during the year for redemption, but it nowhere makes it obligatory upon him to claim or collect them. He may do so, but if he does not, unless it appears clearly that his purpose in not claiming them is to conceal, from the owner of the right to redeem, the fact of the sale, it cannot be held to prejudice his title acquired by the purchase. In many cases his collection of the rent during the year for redemption would only result in his getting the land for a smaller sum than he bid at the sale. It happens that it would not have resulted so in the instant case, but that does not change the rule of law.
In Folsom v. Norton, 19 N. D. 722, 125 N. W. 310, a crop sown and harvested by the tenant was ripe and severed when the year of redemption expired, and it amounted to more than enough to pay the mortgage debt. The purchaser took it after securing his deed, but that was not held to invalidate the sale. In that case he received the share of the
The record seems to indicate that defendant was a nonresident of the state; but be that as it may, he may have had no knowledge that the mortgaged land was cultivated or rented during the period allowed for redemption, and before the fact that he failed to collect rent for such period could become a badge of fraud it would, at least, have to appear that he was advised thereof. The record fails to show that he had any knowledge of the fact. It is said in Whithed v. St. Anthony & D. Elevator Co. 9 N. D. 224, 50 L.R.A. 254, 81 Am. St. Rep. 562, 83 N. W. 238, in effect, that the purchaser is required only to credit the amount of rent actually received. See also Pacific Mut. L. Ins. Co. v. Beck, — Cal. —, 35 Pac. 169.
8. But it is next contended that the delay of the defendant in recording the assignment of the mortgage by the Mohall State Bank to him is a badge of fraud or evidence of bad faith, and should be taken into consideration, in support of the judgment of the trial court. The purpose of recording an assignment of a mortgage is the protection of the mortgagee, and under our statute it does not constitute notice of the assignment to the mortgagor. There is no requirement that it be recorded except for the purpose of qualifying the assignee to foreclose by advertisement, and as it may affect a satisfaction. The purpose of this requirement has no bearing on the rights of the parties, but is to insure a continuity in the chain of title. The plaintiff never examined the records to ascertain whether there were assignments of the mortgage, and never made inquiry, as far as disclosed by the evidence. He never inquired of Grace, the original mortgagee, as to the mortgage being due, or made any attempt or took any steps to pay it. He proceeded in utter disregard of the mortgage. How, then, can it be said that he is prejudiced by the failure of defendant to promptly record the assignment ? Defendant recorded it some time prior to the commencement of the foreclosure proceeding. It was necessary for him to record it before instituting the foreclosure by advertisement, and we see no element of bad faith in this delay.
9. It is next contended that inasmuch as a less portion of the land than the whole would have paid the mortgage debt, the sale was invalid
It is contended that Hedlin v. Lee, 21 N. D. 495, 131 N. W. 390, fully sustains the trial court on the questions that we have thus far considered. In many respects that appeal involved proceedings conducted similarly to those in the case at bar, but one very important fact existed there which is not found here, and it was. the determining fact which branded the whole proceeding with bad faith. It was found that, prior to the commencement of the foreclosure proceedings, plaintiff, in good faith, offered to pay the sum due; that he deposited in a bank the amount then due, lacking 35 cents. The mortgagee refused to receive the money; that on the mortgagor’s attempting to pay the mortgage the mortgagee refused to furnish the information requested as to the amount due; that the mortgagor made known -to the mortgagee his desire and ability to pay whatever was then due, and that the acts of the mortgagee operated as a waiver of a formal tender; and the court there held that these facts had a direct hearing on the good faith of the mort
Many authorities are cited from other states, claimed to be applicable, but we find none of them in point, except possibly some from Massachusetts. Most of them are where a direct conspiracy or some similar act was found, intended to prevent a fair sale of the premises. In some the sales were in private offices, and not at the place for holding public sales, or where the public would be attracted. In Massachusetts the courts, undoubtedly owing to the better established price of real property and the greater possibility of securing bidders therefor, hold very strictly on the subject.. Then, again, we think that most of the authorities relied on were in the case of trust deeds, and the rule seems to be that less strictness is required in the case of a mortgagee purchasing at his own sale under a power of sale contained in a mortgage, than in the case of a trustee purchasing; and some authorities are from states where the sale is the final act to consummate the transaction and no period for redemption is provided, and a greater degree of care and strictness is then properly imposed upon the mortgagee or trustee. We are not quite able to understand how, when a multiplicity of acts is required on the part of a mortgagee in the foreclosure of his mortgage, and each act, taken separately, is done in full accordance with the law, when taken altogether they show bad faith or a want of good faith. To so hold would invalidate titles to thousands of farms in this state. It has always been construed by the profession as legal to advertise in any paper qualified under the provisions of the statute, whether located at the county seat or near the land or not; and that, in the absence of other badges of fraud, the location of the paper, when in the county as required by § 7459 and qualified as required by § 2279, is insufficient to invalidate a foreclosure sale. We also know that in but an infinitesimal percentage of such sales is there any competition in bidding, and to hold that there must be more than one bidder would make necessary one of two things, — either that the mortgagee should secure the attendance of by-bidders, or that his security would be rendered ineffective and valueless.
10. It is also urged that the fact that the notice of sale was not signed in the name of the assignee of the mortgage renders the sale invalid. The notice was signed by the sheriff and by “Bosard & Byerson, At
Summarizing briefly our views, we may say that to grant the contention of respondent and set aside this sale, in an action brought more
Without unduly extending this opinion, we call attention to a few of the authorities cited. In Clark v. Simmons, 150 Mass. 357, 23 N. E. 108, the sale was adjourned from time to time without any new publication or any notice of any adjournment except by oral proclamation by the auctioneer. The sale did not take place until three months after the time advertised, and then was for much less than its market value. A second mortgagee had requested to be notified when the sale would take place, but the notice was given him without stating the hour or place of sale; and the record shows that he had been unable, upon in
In Thompson v. Heywood, 129 Mass. 401, the circumstances surrounding the notice of sale were held to show a failure to comply with the law on that subject,'and the hour at which the sale was set was so early in the morning as to be unreasonable, and express fraud was shown in other respects. It was also shown that the purchaser was a participant in the fraud. It does not appear that the statute in that state defines the qualifications which must be possessed by a newspaper to make publication therein legal publication, but rather the contrary seems to appear.
In Montague v. Dawes, 14 Allen, 369, the notice was too meager to give the necessary information as to the place of sale and other particulars ; and the sale took place at a private office in a private building, a place at which the public would not think of looking for the sale of such premises. In the case at bar the sale took place at the place fixed by law, and where all such sales occur. There were other particulars in the last case cited, which went to the merits and good faith in the conduct of the sale. These citations are sufficient to illustrate the lack of value of the Massachusetts cases as authority, particularly in view of there being no redemption after sale.
We do not question the correctness of the principles announced regarding good faith on the part of the mortgagee; but in the case at bar the mortgagee was not present, either in 'person or by attorney, nor iras any agent appointed by him present. The auction was conducted by the sheriff, who is made, by statute, auctioneer. The mortgagee had no choice in the selection of the auctioneer, and is therefore not charged, to the same extent, with his acts or failure to act that he would be had
Illinois cases are also called to our attention, but in that state it appears that there is no redemption allowed after foreclosure sale; and, without referring directly to authorities from that state, we may say that they mostly relate to sales conducted by trustees named by the parties in trust deeds. Numerous cases are found and called to our attention which are inapplicable, because they relate to objections made to the confirmation of a sale on foreclosure by action. It is clear that when objection is made to the confirmation of a sale before the rights of parties have become established, the court will be justified in considering objections which are of less weight than would be sufficient to set aside a deed long after its execution and delivery, where all the proceedings were in conformity with the statute. A large number of authorities on the subject are cited in the notes to § 628, Wiltsie on Mortgage Foreclosure, 3d edition.
We regard Richards v. Holmes, 18 How. 143, 15 L. ed. 304, as a controlling authority in this case, and that the only distinction which can be drawn between the two cases is that in that case the auctioneer was in fact and law the bidder for the creditor, while in the case at bar, as we have held, he was not a bidder, but received a bid in writing. He was not instructed by the mortgagee or his attorneys, in the instant case, to get it for the least sum possible. He was instructed to bid a certain amount, and this carried the understanding that he should bid no more, and that if others offered more they would get it. Hence it conveyed no intimation that he was to act in contravention of the interests of the mortgagor, or to keep down or reduce the price. In the last case cited the Supreme Court of the United States says: “An agency simply to bid a particular sum for a purchaser, amounting'to no more than receiving from the purchaser, before the auction, a bid which is to be treated as if made there by the purchaser himself, is not necessarily inconsistent with any duty of the auctioneer, and does not enable anyone to avoid the sale.”
The instructions in the case at bar, given the sheriff, were given without regard to the presence or absence of other bidders, and with no knowledge as to whether others would be present. It is perfectly
It is held in Worley v. Naylor, 6 Minn. 192, Gil. 123, that a sale is legal when made on the same day as the last publication of the notice, under the rule regarding the computation of time. In the case at bar the sale did not occur until the next succeeding day, and whether or not there was time for bidders residing at a distance from the county seat to attend, after the last publication, is immaterial; there had been other publications, and to hold that every possible bidder must have actual notice of the time, place, and fact of sale would be absurd. The rule announced in Bichards v. Holmes, supra, is that it is only some practice to prevent bidding, or to procure a sale for less than the property would otherwise have brought, which can be relied upon by the complainants to avoid the sale.
It may be conceded that some of the grounds alleged for holding the sale invalid might have a tendency to show it so had they been supported by proof of the knowledge or purpose of the assignee of the mortgage, but unsupported they are without significance. The plaintiff had the protection the law afforded him. Legal notice was given him, and, as held by this court in prior decisions, he was charged with knowledge of the foreclosure proceedings. The statute does not make it incumbent upon the mortgagee to give the mortgagor personal notice. It does not charge him with the burden of seeking the debtor and demanding payment of the debt. The debt is payable at a specified place, and the debtor is charged with knowledge that he owes the obligation, when it will be due, where it is payable, and with the duty of making payment at such time and place. We cannot comprehend how the debtor may have grounds for complaint because he was permitted to collect two years’ rent, one during the year of redemption and the other the year following the issuance of the sheriff’s deed. He charges that this, particularly the rent for the last year, was permitted to be collected by him to conceal from him the fact of sale; but we are not advised as to how a concealment of the fact of sale after the sheriff’s deed had issued and was on record would have resulted to the advantage of the mortgagor. If the fact of his being permitted to receive the benefit of rent for two years might, under other circumstances, constitute evidence of bad faith on the part of the mortgagee, it certainly cannot, in the case
We regret that the mortgagor has not been able to realize his expectations regarding his property, but he is the party responsible for this failure, and we see no way, without violating the law ourselves, to relieve him from his own negligence. The judgment of the District Court is reversed, and it is directed to enter judgment in favor of the defendant.
Dissenting Opinion
(dissenting). I am compelled to dissent from the views of my associates as expressed in the opinion of the chief justice. The majority decision reverses the judgment of the district court, and confirms as valid a title obtained through a mortgage foreclosure by advertisement, and a sheriff’s deed to a quarter section of land concededly worth at least $4,000 for a paltry debt of about $50, and the costs of foreclosure. The purchaser at the sale and the person to whom the sheriff’s deed runs was the holder of the mortgage, and the rights, therefore, of an innocent purchaser are not involved. The principles announced in Hedlin v. Lee, 21 N. D. 495, 131 N. W. 390, are in the main analogous to the case at bar, and, in my opinion, should be controlling.
The only notice given in this case was by publication in a weekly newspaper published at Lansford, a small village some 22 miles distant from the land, and having no circulation in the vicinity thereof. It might just as well have not been published at all in so far as being of any actual benefit is concerned. It was not a paper nearest the land, nor the most likely nor reasonably likely to accomplish the purpose intended by the legislature. I do not contend that any hard and fast rule should be laid down in such cases, nor do I contend that the sale should, for this reason alone, be set aside; but I do assert that where, as in this case, no bidders were present and the land was struck off to the mortgagee pursuant to a letter of instruction containing his bid for the paltry sum due him with costs, that it will be presumed that the power of sale was not exercised fairly and in good faith as the law requires.
I shall not take the time nor the space required in order to review the authorities. I take it to be well settled that the powers of sales in mortgages must be exercised in the utmost good faith, and that under facts such as are here disclosed the court should and will diligently “scrutinize the conduct of the party placed by the law in a position where he possesses the power to sacrifice the interests of another in a manner which may defy detection,” and “should stand ready to afford relief on very slight evidences of unfair dealing, whether it be made necessary by moral turpitude or only by a mistaken estimate of others’ rights.” As very aptly said by the supreme court of South Dakota, “A court of equity in the exercise of its equitable powers will scrutinize with care sales made under powers of sale contained in a mortgage, and where there is great inadequacy of consideration it will be astute in extracting from the facts of the case sufficient to justify annulling the same.” Story v. Smith, 9 S. D. 137, 68 N. W. 198. See also Hedlin v. Lee, 21 N. D. 495, 131 N. W. 390.
In conclusion, I believe the trial court was fully justified in granting relief to plaintiff, and that its decision should be affirmed.
