140 Minn. 404 | Minn. | 1918
Plaintiff appeals from an order sustaining a demurrer to the complaint. The material facts pleaded and held by the trial court not to constitute a cause of action are as follows:
May 22, 1916, defendants executed to plaintiff six promissory notes, one for $125, due August 1, 1916, one for $520, due August 1, 1917, and four others each for the same amount, due respectively August 1, 1918, August 1, 1919, August 1, 1920, and August 1, 1921. Each note bore interest at 6 per cent payable semiannually. A mortgage to secure the notes was executed on the same (date. It contained the usual power of sale, and a clause making if lawful for the mortgagee, in case of default in any of the provisions of the mortgage, to “declare the whole sum above specified to be due.” The mortgage also contained a clause by which the mortgagors convenanted and agreed “to pay or cause to be paid the sum of money above specified, at the time and in the manner above mentioned.” The “sum of money above specified” was the aggregate amount of the notes, $2,725, and the “time and manner above mentioned” are found in the descriptions of the several notes as to due dates and amounts.
Defendants failed to pay the note for $520, due August 1, 1917, or the interest thereon. November 20, 1917, the mortgagee declared the “whole sum of all of the said notes secured by the said mortgage to be due and payable at once.” He then proceeded to foreclose the mortgage by advertisement. At the sale January 12, 1918, the mortgaged premises were sold to plaintiff for the sum of $1,500. It is alleged that “the sum remaining unpaid on said notes after said sale was $1,466.12,” that no part of this sum has been paid, and judgment is demanded for said sum with interest from the date of sale.
The trial court was of the opinion that under the rule of White v. Miller, 52 Minn. 367, 54 N. W. 736, 19 L.R.A. 673, no part of the
“The stipulation in the mortgage should be construed as providing a remedy in the mortgage, and that, so far as foreclosure proceedings are concerned, the notes for that purpose are due, but for general purposes the obligations on the notes are to be determined by their own expressed terms.”
We see no valid distinction between the case at bar and White v. Miller, based upon the fact that here there has been a foreclosure and the action is to recover the deficiency. Counsel for plaintiff mainly relies on three cases in this state: Northwestern Mut. Life Ins. Co. v. Allis, 23 Minn. 337; St. Paul Title Ins. & T. Co. v. Thomas, 60 Minn. 140, 61 N. W. 1134; Grant v. Winona & S. W. Ry. Co. 85 Minn. 422, 89 N. W. 60.
In the Grant case the facts were these: The railway company had issued its bonds secured by a mortgage made to a trustee. The mortgage contained a clause that in default of payment of interest on the bonds the trustee might elect to declare the- bonds due and payable. There was a default in the payment of interest and the trustee brought a suit in equity in the Federal court to foreclose the mortgage, having declared the entire debt due and payable. There was a decree of foreclosure for the full amount of the bonds, and provision for a deficiency judgment in case the proceeds of the sale were insufficient. There was a deficiency and formal judgment was entered for the amount thereof. The action in this court was to recover upon certain of the bonds and coupons owned by plaintiff, and the question was whether plaintiff’s bonds and coupons were merged in the deficiency judgment. After disposing of the contention of plaintiff that the judgment was void because the United States court had no jurisdiction to render a personal judgment for a deficiency in a foreclosure action, this court decided the main question in the ease, namely, that the terms of the mortgage authorized the trustee to represent the bondholders and bind them by the deficiency judgment. The case is not an adjudication that there may be a deficiency judgment based on an election to declare the debt due pursuant to a clause in the mortgage. The Federal court had decided that and the correctness of its decision was not before this court, but only the question as to the power of the trustee to bind the bondholders. Neither do we see that the case is authority on the question whether the rule of White v. Miller applies when the action is based upon a covenant in the mortgage, rather than on the notes or bonds.
Even if the complaint can fairly be construed as based on the covenant in the mortgage to pay the debt, rather than on the notes, and conceding that such an action can be maintained in spite of the fact
The point is made that in any event the note due August 1, 1917, was not wholly paid by the foreclosure sale and therefore that the complaint at least states a cause of action for the recovery of something like $200. This point is based upon the claim that the proceeds of the foreclosure sale should be applied pro rata towards the payment of all the notes, and not applied to those first due in point of time. Counsel relies upon the rule that obtains where the notes representing the debt are owned by different persons, as in Wilson v. Eigenbrodt, 30 Minn. 4, 13 N. W. 907, and Hall v. McCormick, 31 Minn. 280, 17 N. W. 620, or where the mortgage secures two debts, as in Borup v. Nininger, 5 Minn. 417 (523). In the present case there was but one debt, and the notes were all owned by plaintiff. In such a case the pro rata rule does not apply, but rather the usual rule that payments are to be applied to the notes first due. We think the note due August 1, 1917, was wholly paid. G. S. 1913, § 8130.
Order affirmed-