142 N.W. 854 | S.D. | 1913
On January 9, 1888, respondent, Thomas Brown, borrowed $500 from the Western Loan & Trust Co., giving his note for that amount, secured by a mortgage on a quarter section of land in Butte county. The note was made payable to W. W. IMcDonald, trustee, and bore interest at the rate of 7 per cent, per annum, payable semi-annually, evidenced by 10 interest coupons, In the mortgage respondent was named as the party of the first part, W. W. McDonald, trustee, as party of the second part, and the Western Loan & Trust Co., cestui que trust, as party of the' third part. The mortgage provided that the note should be paid at maturity to the Western Loan & Trust Company. It contained the further provision that in case of default it might be foreclosed by action or advertisement, as provided by statute. It contained a power of sale, and named and authorized the said W. W. McDonald, trustee, or his successor in trust, or their duly appointed attorney, to sell the premises described in the mortgage, and to convey the same to the purchaser in fee simple, and further provided that one H. M. McDonald should be successor in trust in case of the death, absence, inability, or refusal to act of the party of the second part. On February 6, 1888, the said W. W. McDonald, trustee, indorsed said note in blank and delivered it to J. Emory Hoar,' and on the following day executed, acknowledged, and delivered to said J. Emory Hoar an assignment of said mortgage, for which assignment of.the said note and mortgage the
Appellant’s assignments of error are voluminous. We are of the opinion that no question of estoppel or of laches by either party to the controversy is presented by the record, nor any question under statutes of limitation. We do not agree with appellant that there is any question of mistake in that the mortgage was to be paid to the party of the third part instead of the party of the second. We are of the opinion that the one important matter for determination in this case is whether or not the foreclosure of the mortgage was valid. It having been foreclosed by advertisement under notice of foreclosure sale given by direction of the assignee of the mortgage, was -there a valid recorded assignment of the mortgage at the time of the foreclosure proceedings? If there was, the plaintiff has no standing in this court; if there was nor, the decree of the -trial -court was right.
We are of the opinion that the judgment of the trial should be reversed, and a new trial had in accordance with the views herein expressed.
I am unable to agree with the majority opinion in this case. I believe that some of the important facts have been lost sig'ht of, and that the conclusions reached are not supported by ■sound reason, and are not in harmony with the former decisions of this court.
The note and mortgage involved were executed by the respondent on the 9th day of January, 1888. In the mortgage, the
On the 6th day of February, 1888, the said W. W. McDonald, trustee, indorsed the said note in blank and turned it over to J. Emory Hoar, and, on the following day, executed, acknowledged, and delivered to the said J. Emory Hoar an assignment of the said mortgage, for which assignment of the said note and mortgage the said J. Emory Hoar paid the Western Loan & Trust Company the full face value of the said note. No part of the principal, nor any interest after the ist day of June, 1890, was ever paid; and, on or about the. ist day of August, 1894, the said J. Emory Hoar undertook to foreclose said mortgage by advertisement. The published notice of foreclosure sale contained the names of Thomas Brown, mortgagor, W. W. McDonald, trustee, mortgagee, and J. Emory Hoar, as assignee, but contained no reference to or any mention of the Western Loan & Trust Company, the real mortgagee. At the foreclosur esale, the mortgaged premises were bid in in the name of J. Emory Hoar, to whom a sheriff’s certificate of sale issued, and later on, on the 19th day of October, 1895, a sheriff’s deed issued. This deed was regularly executed,
Plaintiff acquired his title to the mortgaged premises under the Homestead Law of the United States, having first settled thereon on the 8th. of April, 1880. During all the time from that date until the time of the trial, he occupied the' premises — lived there nearly all the time — but was in possession, either by himself or his tenant, and exercised absolute dominion over, the same, all the time, and during all this time the land was assessed against him for purposes of taxation, tie paid no attention whatever to the foreclosure proceedings, or ever recognized that appellant, or any one claiming thereunder, had any rights in the premises, nor did appellant, or any of his predecessors in interest under the foreclosure proceedings, ever molest plaintiff in his possession or assert any rights whatever in the premises, except that in 1895 J. Emory Hoar paid the taxes that had accrued since 1889, and thereafter he or the appellant paid all taxes assessed against the property down to and including 1909.
This suit was commenced in May, 1910. Plaintiff, in his complaint, alleged ownership in himself and possession of the mortgaged premises, and, in his prayer for relief, asked the court to adjudge him to be the owner thereof, and that defendants be permanently enjoined from asserting any further claim thereto. Appellant, D. Blakely Hoar, answering alone, denied plaintiffs title, set up a counterclaim in which the note and mortgage, and the facts relative to the assignment and foreclosure thereof, and the chain of title through which appellant claimed thereunder were properly pleaded. He also alleged payment of the taxes on the mortgaged premises since and including the year 1889, amounting to $210.70, and that at the time of the alleged foreclosure the said' premises were, and until the trial of this action continued to be, vacant, unoccupied, and uninclosed land. He then pleaded the xo year statute of limitations and an estoppel against plaintiff, by reason of plaintiff's alleged laches in having failed for so many years to assail appellant’s title under the foreclosure proceedings. Plaintiff, in a reply, admitted the execution and delivery of the note and mortgage, but denied generally the other matters set up in appellant’s counterclaim, and pleaded section 66 of the Code
Upon the foregoing 'facts, the court held, as a matter of law, that the attempted assignment of the note and mortgage by W. W. McDonald, trustee, was in contravention of the power conferred upon him by the terms of the mortgage, and was therefore void; that .the attempted foreclosure of the mortgage' was irregular and void, and vested no title in him, and that likewise all the attempted conveyances of the mortgaged premises thereunder were void; that all the equities in the case were with the plaintiff, but that the appellant, D. Blakely Hoar, had become subrogated to the rights of the Western Loan & Trust Company in and to the said note and mortgage, and that plaintiff should repay to appellant all moneys he had advanced for the said note and mortgage and the foreclosure thereof, and all sums paid by him as taxes, together with interest thereon from the date of payment, amounting in all to the sum of $2,249.95; that appellant have a lien on the mortgaged premises for that amount; and that, unless the same were paid by plaintiff within 60 days, said premises might be sold under execution in satisfaction thereof — holding in effect that the attempted assignment of the note and mortgage by W. W. McDonald, trustee, to J. Emory Hoar, and the receipt and appropriation of the proceeds thereof by the Western Loan & Trust Company, amounting to an equitable assignment of the note and mortgage to him, and that the subsequent conveyances under the foreclosure proceeding conveyed to appellant the rights of the said mortgagee under the said mortgage.
In their brief, counsel argue the case under foui' propositions : First, that the assignment and transfer of the. note and mortgage by W. W. McDonald was authorized and valid, and conveyed the title thereto to J. Emory Hoar; second, that the proceedings to foreclose the mortgage were regular and valid; third, that plaintiff had been guilty of laches in asserting his title;
At the outset, counsel for appellant contend that there is a mistake in the wording of the mortgage; that the defeasance clause therein, which requires that the $500 mentioned in the note be paid to the Western Loan & Trust Company, “party of the third part,” should have required it to be paid to W. W. McDonald, trustee, “party of-the second part”; that the note secured by the mortgage was made payable to W. W. McDonald, trustee, party of the second part; and that the note and mortgage should be read and construed together. Inasmuch as the mortgage is only collateral to the note, there is much force to this argument, but on the other hand, there is nothing in the entire record to support counsels’ theory that any mistake exists. The original mortgage is before us; it is made out on a special printed form, with the names of the parties of the second and third part and all the conditions thereof printed, and has every appearance of having been carefully prepared, and to state the conditions of the transaction just as the parties intended them to be. It is true that in the granting clause of the mortgage the grant runs to the party of the second part, but, when we remember that it was the party of the third part (Western Loan & Trust Company) who furnished the money and made the loan, it is not at all extraordinary that the mortgage should require that the money be repaid to it. Indeed it would be just as reasonable, or even more reasonable, to suppose there is a mistake in the granting clause, and that it was the intention of the parties that the grant should run to the Western Loan & Trust Company instead of to the trustee. But there is nothing to indicate that either clause in the mortgage is other than just as the parties intended' it should be.
It is true, as said in the majority opinion, ‘'that the one important matter for determination in this case is whether or not the foreclosure, of the mortgage was valid,” but this, in turn, depends upon the validity of the attempted assignment of the mortgage, so that .the determination of the real controversy depends wholly upon the effect of the assignment of the note and mortgage by W. W. McDonald, the trustee, to .J. Emory Hioar, or rather, what, if anything, passed by the assignment from McDonald, trustee, to J. Emory Hoar; and this, in turn, depends upon the ex
Section 317, Rev. Civ. Code, provides that: “AVhere a trust in relation to real property is expressed in the instrument creating the estate, every transfer or other act of the trustees, in contravention of the trust is absolutely void.” In view of this statute, the attempted assignment of the mortgage by the trustee was void1; and while, by reason of - the fact that the consideration for the assignment was paid over to the Western Loan & Trust Company, the owner of the mortgage, the transaction amounted to an equitable assignment of the mortgage as a security, it did not confer upon the assignee, J. Emory Hoar, the right to exercise the power
Counsel for appellant cite and rely upon the authority of Male v. Longstaff, 9 S. D. 389, 69 N. W. 577, in support of the foreclosure of the mortgage by J. Emory Hoar; and that case is also cited in support of the majority opinion in this case. But the cases are not analogous. In Male v. Dongstaff, the question involved was whether or not the power of sale contained in the mortgage under chapter 28, Code Civ. Proc., could be exercised, and a valid foreclosure had by the trustee named in the mortgage for that purpose. The court held that it could, but in that case there had been no assignment, nor attempted assignment, of the mortgage, and the power of sale was exercised by the party named for that very purpose in the mortgage itself. In the case at bar there could have been no question as to the authorty of W. W. McDonald to exercise the power of sale contained in the mortgage, had he not assigned the same and undertaken to clothe some other party with the power that had been conferred upon him.
Appellant strenuously contends, and the majority opinion so holds, that because -the mortgage contained a power of sale, it could be foreclosed by advertisement, and the power of sale exercised by any one who happened at the time to be the owner of the mortgage. Or, in other words, that, so long as the debt secured by the mortgage remained unpaid, it was immaterial to the mortgagor who exercised the power of sale. But there are two answers to this argument:
In the first place, the power of sale was specifically limited to McDonald, trustee; or, in case of his failure, for any reason, to act, then to his successor in trust, named in the mortgage. The relation of trustor and trustee existed between the mortgagor and the trustee, and this relation, in turn, implies special confidence and trust placed in the trustee by his trustor, and it is presumed that it was because of this confidence placed in the trustee by the
In the second place, the power conferred upon the trustee is specifically limited to the making of the foreclosure sale, and his act in attempting to sell and assign the mortgage itself was not only in excess of the power conferred upon him, but was clearly in contravention of his trust, and, under the provisions of section 317, Code Civ. Proc., was absolutely void, and, being void, the assignment conveyed nothing. Therefore J. Emory Hjoar was not the owner of the mortgage at the time of the attempted foreclosure, and the reasoning employed in the majority opinion, if sound, would not apply to the facts in this case. The rule established will lead to endless confusion, and in many cases open the door to fraud. In this case, it is true, McDonald, trustee, after his attempted assignment of the mortgage, properly accounted for the proceeds, and paid the same over to the Western Loan & Trust Company, the owner of the debt and mortgage, and no fraud was practiced or harm clone. But, supposing he had misappropriated or converted the proceeds of the assignment, his acts in making the assignment, being in excess of his authority given in the mortgage, -would not be binding on either of the other parties to the mortgage, and the Western Loan & Trust Company would still have the right of foreclosure if the mortgage debt were not paid when due. This would have left the assignee without recourse, except as against the trustee. He would not be in the ■position of an innocent purchaser for value. The mortgage was of record. It showed the extent of McDonald’s power, and knowledge thereof was imputed to the assignee at the time of the attempted assignment. Therefore he is in the position of having
The indorsement and sale of the note by the trustee and the guaranty of the payment thereof, made by the Western Loan & Trust Company on the back of the note, are of no materiality whatever. The trustee was the payee and legal holder of the note, and, as such, had authority to indorse and transfer the same This, as a matter of law, was sufficient to carry with it the security, and the right to realize on the security, and there never was a time, after the first default in the payment of interest, that J. Emory Hoar could not have maintained a suit in equity to foreclose the mortgage. But there is a vast difference between the right to foreclose a mortgage by action and the right to foreclose it by advertisement. The'right to foreclose by action may be enforced in a court of equity, by any person owning the debt secured by the mortgage; while the right to foreclose by advertisement is a mere statutory right that can be exercised only by the party named as mortgagee in the mortgage, or his assignee named in an assignment in writing, acknowledged by the assignor, and duly recorded before the beginning of the foreclosure proceedings. Code Civ. Proc. § 637. The right of J. Emory Hoar to foreclose the mortgage by advertisement did not depend upon the sufficiency or validity of the indorsement and transfer of the note, but upon the right of W. W. McDonald, trustee, to execute the written assignment of the mortgage.
Merrill v. Hurley, 6 S. D. 592, 62 N. W. 958, 55 Am. St. Rep. 859, cited in the majority opinion, is not in point in this case. In that case the trustee was the grantee in the mortgage, while the cestui que trust was the payee in the note. Whether the defeasance clause in the mortgage required the payment of the money to be made to the cestui que .trust, as does the mortgage under consideration, dees not appear; but the indorsement on the note was executed by the cestui que trust, a corporation, by its president, and was not signed by the trustee at all.
The cases of Pickford v. Peebles, 7 S. D. 166, 63 N. W. 779; Robeson v. Dunn, 17 S. D. 310, 96 N. W. 104; McVay v. Tousley, 20 S. D. 258, 105 N. W. 932, 129 Am. St. Rep. 927; Barry v. Stover, 20 S. D. 459, 107 N. W. 672, 129 Am. St. Rep. 941; McVay v. Bridgman, 21 S. D. 374, 112 N. W. 1138—cited in the
I concur with what is said relative to estoppel and laches, and the statute of limitations. Plaintiff contended that appellant’s cause of action set up in his counterclaim was barred by section 66, Code Civ. Proc., and the defendant claimed that, under color of title, he had paid the taxes assessed against the mortgaged property for more than io years prior to the commencement of the action, and that therefore plaintiff’s cause of action was barred by sections 54 and 55, Code Civ. Proc. But neither party is in position to avail himself of the" statute of limitations. Section 66, Code Civ. Proc., reads as follows: “An action for relief not hereinbefore provided for must be commenced within ten years after the cause of action shall have accrued.” This does not apply to an action of this character. This is an action to determine the right of .possession of real property, and therefore the time within which it may be maintained is provided for in a different sec
Appellant contends that plaintiff was guilty of laches in his failure to question the validity of appellant’s title for so long a period of time — a period extending from the date of the sheriff’s deed to appellant’s grantor, on the 19th day of October, A. D. 1895, until the commencement of this action. On this proposition, appellant cites and relies upon the opinion of this court in the case of Kenny et al. v. McKenzie, 25 S. D. 485, 127 N. W. 597. If the position of appellant and respondent, relative to the possession of the disputed premises, were reversed, the decision in Kenney v. McKenzie might be decisive in this case, but the facts and circumstances of the two cases are so different that the conclusion reached in the one case would not be warranted by the facts in the other. The controversy in both cases involved the validity of the assignment and foreclosure of a real estate mortgage; but in that case the plaintiff, who stood in the position,' as mortgagor, of the plaintiff in this case, had recognized the validity of the assignment and the foreclosure proceedings, and had surrendered the possession of the disputed premises to the holder of the sheriff’s deed. He then stood idly by for a period of more than seven -years, during which time the premises passed into
Neither is there anything inconsistent in the position of the respondent when he denies the validity of the assignment and foreclosure of the mortgage, and, at the same time, offers to pay the amount of the mortgage debt, together with all the interest and taxes that have accrued and been paid by the appellant. He still owes the debt as much as he ever did, and, while the assignment of the mortgage was void, and did not authorize the assignee to exercise the power of sale contained therein, the acceptance and appropriation of the mortgage debt by the Western Loan & Trust Company amounted to an equitable assignment of the same to the assignee, and, by the application of the same equitable principles, the rights of the assignee were transferred to the_ appellant by the subsequent conveyances, and he therefore became subrogated to all of the rights of the original mortgagee, as held by the trial court.
The decision of the trial court requires the plaintiff to pay to the defendant the full amount of the original loan, with costs, expenses, and interest thereon, together with all the taxes paid -by-the appellant, and interest thereon, amounting to more than three times the whole amount ever advanced by appellant and his gran
