198 N.W. 679 | N.D. | 1924
This is an action to set aside a sheriff's deed issued upon the foreclosure of a real estate mortgage, and to redeem the premises described in the mortgage from such foreclosure. The trial court rendered judgment in favor of the plaintiff cancelling the sheriff's deed and permitting such redemption. The defendant moved for a new trial. The principal ground of such motion was newly discovered evidence. The motion was denied, and the defendant has appealed from the judgment and from the order denying a new trial. On the appeal from the judgment a trial de novo in this court is demanded.
The material facts are as follows: The defendant Kramer was originally the owner of the lands in controversy. The lands contained certain lignite coal deposits. In January 1919, the defendant and his wife entered into a contract with a corporation known as the Consolidated Lignite Collieries Company, whereby they agreed to sell the lands in question to said Collieries Company for the sum of $35, per acre in money, and $15, per acre in stock in such company. In such contract it was provided that $10,000 of the purchase price should be paid in cash on or before January 2d 1920, and that the balance of the purchase price should be paid by notes to be executed by said company to the defendant, and secured by a first mortgage on the premises. In order to raise the $10,000 so stipulated to be paid to the defendant the said Consolidated Lignite Collieries Company, arranged with the *26 plaintiff bank for a loan. Said plaintiff bank agreed to loan said collieries company $10,000, and take a second mortgage on the premises as security therefor. That is, it was understood between said collieries company and the bank that the collieries company was to be permitted to execute a first mortgage to the defendant to secure the balance of the purchase price to him after the payment of the said $10,000. The undisputed evidence is to the effect that the plaintiff made the loan and turned the $10,000 over to the president and secretary of the collieries company, and that on or about January 2d 1920, the said collieries company paid such moneys to the said defendant and executed to him notes in the sum of $9,277, due in five years with interest at 6 per cent per annum, and a mortgage upon the premises to secure payment of said notes. At the same time the defendant and his wife executed and delivered a warranty deed conveying the premises to the collieries company, reserving, however, to the defendant and his wife the right to use the surface of the land, without in any manner conflicting with the mining operations, and the right to use and occupy the farm buildings on the premises for such time as the defendant might desire, but in no event for a period longer than the life of the defendant and his wife. The deed and the mortgages to the plaintiff bank and the mortgage to the defendant were all duly recorded in the office of the register of deeds of Morton county wherein the lands were situated. Default was made in the conditions of the mortgage owned by the defendant and he thereupon caused his mortgage to be foreclosed by advertisement and the premises were duly sold pursuant to said foreclosure sale on July 9th, 1921, at which time they were struck off and sold to the defendant for the aggregate sum of $10,079, and a sheriff's certificate of sale was issued to him in evidence of such sale, which certificate was filed for record in the office of the register of deeds of the county on July 23d 1921. On July 7th, 1922, one Henne, the cashier of the plaintiff bank and one Baumgartner, a director and president thereof and one Jacob Berreth came to defendant's premises and a certain conversation was then had between them. It appears that these three parties were also interested in the coal Collieries Company. It further appears that the defendant was interested in such company by reason of his stock holdings and at one time was a director therein and for a time had charge of the mining operations. The questions involved in *27 this law suit depend primarily upon what occurred and what was said on July 7th, 1922.
The trial court made the following findings, as regards what occurred during said conversation: — "That the said Ferdinand Kramer on the arrival of the said Henn, Baumgartner and Berreth at his home, greeted them first outside of his house; that Kramer stated to the parties that he was surprised that they had come out to New Salem so soon and that he did not expect them to be out there until the next week to attend to the business on which they had come.
"That on meeting Kramer outside of his house on the morning of July 7th, 1922, on the premises herein before described, the said J.P. Henn, cashier of the plaintiff bank, stated to Kramer that he had come there for the purpose of making redemption of the land which the Security State Bank of Strasburg held a mortgage on and which had been sold under foreclosure sale under the mortgage given on said land by the said Consolidated Lignite Collieries Company to Ferdinand Kramer; that there was talk between the parties in regard to redeeming the property from the foreclosure sale, and that the defendant, Kramer, then invited the said three men into the house; that there was further conversation in the house between the parties in regard to the redemption of the said premises from the said mortgage foreclosure sale.
"That the said J.P. Henn, J.J. Baumgartner and Jacob Berreth remained at the Kramer home on the morning of July 7th, 1922, for about two hours; that while there they had negotiations with the defendant, Ferdinand Kramer, pertaining to the purchase by Kramer of the mortgage on the premises held by the plaintiff bank; that during the conversation had on said day between Ferdinand Kramer and the said J.P. Henn, J.J. Baumgartner and Jacob Berreth, Kramer stated that they need be in no hurry to redeem and that he wished to make arrangements to purchase the mortgage held by the plaintiff, the Security State Bank of Strasburg on the premises, and that he thought the time for redemption did not expire until July 18, 1922; that neither the said J.P. Henn, J.J. Baumgartner nor Jacob Berreth knew exactly when the time for redemption from the Kramer mortgage expired, and that Henn and Baumgartner thought the time did not expire for at least a week after July 7th; that the said J.P. Henn, *28 J.J. Baumgartner, and Jacob Berreth believed and relied upon the statement of Kramer that the time for redemption did not expire until July 18, 1922.
"That an oral agreement was finally entered into between Jacob Berreth, J.J. Baumgartner and J.P. Henn and Ferdinand Kramer that Ferdinand Kramer was to purchase the second mortgage held on the premises by the Security State Bank of Strasburg, North Dakota, for the sum of $9,000; that said oral agreement was entered into by Ferdinand Kramer with J.J. Baumgartner and Jacob Berreth and J.P. Henn, representing the plaintiff bank, while all of said parties were at the home of the defendant on July 7th, 1922.
"That the defendant Ferdinand Kramer on Monday, July 10, or Tuesday July 11, would meet Messrs. Henn, Baumgartner and Berreth at Bismarck, North Dakota, and would at said time and place take up the second mortgage on said premises held by the plaintiff by making payment of $9,000, for said second mortgage and interest to the plaintiff bank, and would obtain the money therefor by borrowing the same from Jacob Berreth, who agreed to loan the money to the defendant for this purpose, and that the defendant to secure the payment of the said $9,000, to Jacob Berreth would execute and deliver at said time to Jacob Berreth his note for $9,000, bearing interest at six per cent per annum and payable in three or five years, and would secure the payment of said note by a first mortgage on all the premises hereinbefore described in paragraph 2 of these findings of fact.
"That pursuant to the foregoing agreement made with the defendant, Ferdinand Kramer, at New Salem, North Dakota, on July 7, 1922, the said Mr. Henn, Mr. Berreth and Mr. Baumgartner proceeded in their automobile to return to their homes in Emmons County, North Dakota; that before leaving the Kramer premises the defendant Kramer promised to telephone to one of the parties before the following Monday and advise them as to whether he would meet them at Bismarck, North Dakota, on the Monday following or on the Tuesday following; that the said Henn, Berreth and Baumgartner left the premises of the defendant Kramer on July 7, 1922, fully believing and relying upon his promise and agreement to purchase the mortgage held by the plaintiff bank, and fully believing and relying upon the statements and representations of the said Kramer that in any event the *29 plaintiff bank would have until July 18, 1922, to redeem from the said foreclosure sale.
"That on July 7, 1922, J.P. Henn, agent of the plaintiff, was misled by the statements and representations then and there made by the defendant Kramer and was deceived thereby into believing that the defendant Kramer would purchase the said second mortgage of the plaintiff, and that in any event the plaintiff would have the full right to make redemption of the premises described in paragraph 2 of these findings from the foreclosure of the said Kramer mortgage until July 18, 1922, and that had not the said agent of the plaintiff been so misled and deceived the plaintiff by its said agent, J.P. Henn, would have on July 7, 1922, made redemption of the said premises from said mortgage foreclosure sale."
The court further found, "that on Saturday, July 8, 1922, at about 3 o'clock P.M., Mr. Houser of New Salem, North Dakota, who was employed as a bookkeeper by the defendant Kramer, at the direction of the defendant Kramer telephoned to J.P. Henn at Strasburg, North Dakota, and stated to him that Kramer had changed his mind in regard to purchasing and taking over the second mortgage held by the Security State Bank of Strasburg, North Dakota, and that he would not carry out his agreement to purchase said mortgage; that thereafter, as soon as he could do so, the said J.P. Henn got in communication over the telephone with Jacob Berreth and with J.J. Baumgartner and informed them of the information he had received over the telephone from Mr. Houser."
Thereafter on July 12th, 1922, Henn, Baumgartner and Berreth again went to see the defendant in regard to the matter discussed in the first conversation. The defendant Kramer at this time refused to purchase the mortgage or accept the money due on his certificate of sale and referred them to his attorney. It is undisputed that at this time Henn, the cashier of the plaintiff bank, offered to redeem the property and pay defendant the full amount due on the certificate of sale, but that Kramer refused to accept. The evidence further shows that formal tender was made of the amount due and that subsequently a deposit was made thereof in the manner provided by law for making deposit.
The trial court found that the representations and promises made *30 by the defendant Kramer on July 7th, 1922 "were made by the defendant for the purpose of misleading the plaintiff, and without any intent of keeping the same, and for the purpose of inducing the plaintiff to defer its redemption of said premises from said mortgage foreclosure sale, and to alter its position and to put it out of its power to redeem said land from said mortgage foreclosure, to the end that the defendant might secure a sheriff's deed thereto; that the plaintiff relied in good faith upon said representations and promises made by the defendant and was deceived thereby, and permitted the period of redemption allowed by the statute to expire; that the plaintiff was ready, willing and able to pay the amount necessary to redeem the said premises from the said foreclosure proceedings on July 7, 1922, and would have redeemed said premises before the statutory period of one year for redemption had expired had it not relied in good faith upon the said representations and promises of the defendant and been misled and deceived thereby.
"That the statements, representations and promises made by the defendant, Ferdinand Kramer, to J.P. Henn, cashier of the plaintiff bank, and to J.J. Baumgartner, president of the plaintiff bank, and to Jacob Berreth, one of the directors of the Consolidated Lignite Collieries Company, on July 7, 1922, and the statements, representations, promises, conduct, acts and attitude of the defendant, Ferdinand Kramer, at said time towards the plaintiff and its agents caused the plaintiff and its agents to believe, and the plaintiff and its agents relying upon the statements, representations, promises, conduct, acts and attitude of the defendant at said time did believe and expect that the plaintiff had until the 13th day of July 1922, in which to redeem, and that the said defendant Kramer had knowledge that the agent of the plaintiff bank so expected and believed that the plaintiff had until the 18th day of July, 1922, in which to redeem, and that this knowledge of the defendant, Kramer, coupled with his conduct in notifying Mr. Henn, cashier of the plaintiff bank, at about three o'clock Central time, on Saturday afternoon, July 8th, 1922, that the deal which he made the previous day for the purchase of the second mortgage was off, and without notifying Mr. Henn that the plaintiff did not have until the 18th day of July in which to redeem, amounted to bad faith, and that he, the defendant, was then and there thereby trying to take advantage *31 of the forms and technicalities of the law in order to deprive the plaintiff bank of its right to redeem, and that his said conduct lulled the plaintiff bank into a false security and that the actions of the defendant Kramer in notifying Mr. Henn in the manner employed and under all the circumstances of the case at three o'clock on Saturday afternoon that the said deal was off, was an act of exceptionally bad faith."
In our opinion these findings are in accord with the weight of the evidence. It should, also, be noted that the findings are based upon the testimony of witnesses given orally before the court, and that the trial court in ascertaining and determining the facts had the benefit of seeing the witnesses and hearing their stories as the words fell from their lips. The findings are in accord with the testimony given by Henn, Baumgartner and Berreth, and largely opposed to the testimony of the defendant. Defendant was in part corroborated by his wife. It is undisputed, however, that Henn, Baumgartner and Berreth came to defendant's home near New Salem on July 7th, 1922, and that certain discussion then took place as regards the mortgage held by the plaintiff bank. The plaintiff's witnesses testified that the defendant told them that the time of redemption expired July 18th, or rather that the bank had until that time to redeem; and that, after certain negotiations had on that day, the defendant agreed to purchase plaintiff's mortgage. The defendant admits that he had the certificates of sale in the house at the time he talked with plaintiff's officers. He also admits that they talked to him about the mortgage the plaintiff bank held, and sought to induce him to purchase it, but asserts that he refused to do so. He also claims that nothing was said by him to the effect that the bank had until July 18th in which to redeem. Defendant, however, admits that he caused a telephone message to be sent to the plaintiff bank in the afternoon of July 8th to the effect that he would not purchase plaintiff's mortgage. As already stated, we are agreed that the findings of the trial court are supported by the weight of the evidence.
The trial court made no findings as to the value of the land but the evidence clearly shows that such value was greatly in excess of the amount due on defendant's certificate of foreclosure sale.
That a court vested with equity jurisdiction has power to grant relief in cases where the owner of the equity of redemption has been prevented from exercising his right to redeem within the statutory *32 period by the fraud of one who, as a result of the failure to redeem, obtains title to the premises, is well settled.
In Prondzinski v. Garbutt,
"The power of courts of equity to give relief in this class of cases has not only been generally recognized, but has also been unhesitatingly exercised when a proper state of facts required it. See Combs v. Little,
Defendant's counsel, however, contends that the facts in this case distinguish it from Prondzinski v. Garbutt, supra, and that the findings of fact in this case do not justify the conclusions drawn and the judgment entered by the trial court. The specific contention is that in any event the defendant merely promised to purchase plaintiff's mortgage, and expressed the opinion that the period of redemption did not expire until about July 18th and that there was no agreement between the parties, as existed in Prondzinski v. Garbutt that additional time in which to redeem would be allowed after the period for redemption had expired. In our opinion this contention is devoid of merit. The right to equitable relief against fraud, and the power of a court exercising equitable jurisdiction to award such relief, do not rest upon any such narrow foundation. It is axiomatic that "when the reason is the same the rule should be the same" (Comp. Laws 1913, § 7245); and that "the law respects form less than substance." (Comp. Laws 1913, § 7262). The important question in a case like this is whether the sheriff's deed, which it is sought to have vacated, was obtained as a result of fraud or deception practiced upon the owner of the equity of redemption by the grantee in such deed. If under the facts that question must be answered in the affirmative, then the means by which the fraud was perpetrated is of no particular moment. Laing v. McKee,
The facts in this case, as established by the evidence and found by *34 the trial court, are that on July 7th, 1922, the officers of the plaintiff came to the defendant's home for the purpose of making redemption and paying him the amount due on his certificate of sale; that the defendant first informed these persons that the period of redemption did not expire until about July 18th and subsequently made an unqualified promise to purchase plaintiff's mortgage; that plaintiff's officers relied both on defendant's statement as to the date of expiration of the redemption period and his promise to purchase the mortgage, and because of such reliance refrained from making redemption; that if defendant had not made such statement and promise plaintiff would have made redemption on that day; that the statement and promise so made by the defendant were both made in bad faith; that he had no intention of keeping his promise, and either knew that his statement, as to the date of the expiration of the period of redemption, was false or made it recklessly and without regard to its truth or falsity, although the means for ascertaining the correctness of such statement was right at hand. It is manifest that the right of redemption was a valuable right to the plaintiff and that the defendant will greatly benefit if plaintiff is precluded from exercising this right. The plaintiff acted promptly on the discovery of the fraud and there is no contention that the rights of any innocent third party have intervened.
Defendant further contends that his statement to the effect that the redemption period did not expire until about July 18th, in any event, merely operated to extend the redemption period to that date, and that consequently it was incumbent upon the plaintiff to proceed to redeem within that time in a manner provided by §§ 7756-7760, Comp. Laws 1913. In our opinion this contention is not well founded. These statutory provisions prescribe the procedure to be employed in cases where redemption is made within the statutory period. In such cases a redemption is fully accomplished by a compliance with the statute regardless of whether the owner of the certificate of sale is willing to permit a redemption to be made. That is, when the redemptioner has complied with the provisions of the statute relating to redemption no further action is necessary on his part. But in a case like this, where the owner of the equity of redemption is prevented from exercising his right to redeem in the statutory manner, the mode prescribed by statute for the exercise of the right is neither available nor effective. In *35 such case it becomes necessary to invoke the aid of a court vested with equity jurisdiction to obviate the consequences of failure to redeem within the time and in the manner prescribed by the statute. The very basis for the invoking of equity jurisdiction is that the redemptioner was prevented from exercising his statutory right of redemption in the manner prescribed by the statute by the fraud or deception of the adverse party.
In this case it is undisputed that on the 12th day of July, 1922, plaintiff offered to redeem and stood ready and willing to pay to the defendant the full amount due on the certificate of sale and actually offered to pay the defendant the full amount so due, but that the defendant refused to accept such moneys solely on the ground that the period allowed by law for making redemption had expired. At this time the statutory period for redemption had expired and the statutory mode of redemption was no longer available to the plaintiff, as the defendant, by the fraud he had practiced on the plaintiff, had effectively prevented plaintiff from exercising this right and plaintiff was compelled to invoke the aid of equity to be relieved from the consequences resulting from such fraud.
It is further contended that plaintiff's mortgage was invalid, and did not confer upon plaintiff the right to redeem. This contention is based upon certain alleged defects in the signature of the mortgagee and in the acknowledgment of the mortgage. In our opinion the contention is not well founded. Our statute (Comp. Laws 1913, § 7753) provides:
"Property sold subject to redemption, or any part sold separately, may be redeemed in the manner hereinafter provided by the following persons or their successors:
1. The judgment debtor or his successors in interest.
2. A creditor having a lien by judgment, mortgage or otherwise on the property sold or on some share or part thereof, subsequent to that on which the property was sold.
The persons mentioned in the second subdivision of this section are in this chapter termed redemptioners."
There can, we think, be no doubt but that the plaintiff is a redemptioner, as defined by this statute. See also Jones, Mortg. 7th ed. §§ 1055 et seq. The mortgage was clearly valid as between the mortgagor and mortgagee. As already stated, it is undisputed that the Consolidated *36 Lignite Collieries Company received from the plaintiff bank the full amount which the mortgage was given to secure. It is also undisputed that the bank made the loan with the express understanding that the proceeds thereof were to be used to pay part of the purchase price of the premises on which the mortgage was given. It is further undisputed that the officers of the collieries company did so use the money, and that every cent thereof was paid over to the defendant as part payment of the purchase price, and that it was such payment which enabled the collieries company to obtain the deed to the premises.
It is further contended that plaintiff failed to comply with the provisions of the judgment in this that it failed to pay the amount necessary to effect a redemption within the time specified in the judgment. Manifestly this does not affect the validity or correctness of the judgment, and constitutes no ground for disturbing it. From the record transmitted to this court it appears, however, that shortly after the trial court made its findings of fact and order for judgment, it made an order, upon the application of defendant, to the effect that "all proceedings" in the action with the sole exception of the entry of judgment be stayed for a period of sixty days. If the period included within such stay is excluded, plaintiff did comply with the judgment as regards the payment of the moneys required to be paid to effect a redemption.
The evidence shows and the trial court found that shortly after the sheriff's deed was executed and delivered to the defendant herein, he executed a mortgage upon the premises to secure the payment of the sum of $1,600. The trial court found that there was due to the defendant upon his sheriff's certificate of sale a total sum of $10,904.70, and it directed that this amount be paid to the defendant or to the sheriff of Morton County within sixty days; provided however that the defendant should cause the said $1,600, mortgage to be satisfied and released, and in the event of the defendant's failure to do this that then the sum of $1,728, being the amount of the principal and accrued interest on said $1,600, mortgage, be deposited with the clerk of the district court and the balance of the said $10,904.70 paid to the defendant. Defendant asserts that this provision is erroneous. Apparently the contention is that the defendant should be permitted to receive the full *37 amount due on his certificate and yet leave the premises incumbered by a mortgage which he placed thereon after he had obtained title in violation of the rights of the plaintiff by means of fraud perpetrated upon it. The fallacy of this contention is so apparent that to state the contention is to answer it. The provision made by the district court is eminently just and fair and safeguards the rights of both parties.
It is further contended that the defendant placed valuable improvements in the mine and that in any event he is entitled to be compensated therefor. On this feature of the case the trial court found:
"That the defendant has operated for his own use and benefit the coal mine on said premises from the time of the foreclosure of the said Kramer mortgage on July 9, 1921, and that since July 9, 1921, the defendant has mined and taken out of the coal mine on said premises approximately six thousand tons of coal, and that the use and operation for his own benefit of said coal mine by the defendant has justly and equitably compensated the defendant for any and all expenditures the said defendant has made on or about said premises during the time the defendant has been in possession and control of said premises under and by virtue of the said sheriff's certificate and said sheriff's deed executed to him for said premises."
This finding is sustained by a preponderance of the evidence and is decisive of the question.
The defendant, also, predicates error upon the denial of his motion for a new trial. It is asserted that the defendant was entitled to a new trial on the ground of newly discovered evidence. The requisites of a motion for a new trial on such ground are: — (1) The evidence must be newly discovered; (2) It must be material; (3) It must be such that the moving party could not with reasonable diligence have discovered and produced the same at the trial of the action. Comp. Laws 1913, § 7660, subd. 4. In order to be entitled to a new trial on this ground, the moving party must present to the trial court a showing sufficient to satisfy that court that the evidence has the three qualifications prescribed by the statute. Whether the moving party has sustained the burden placed upon him is primarily a question to be determined by the trial court by the exercise of sound judgment, in the light of the facts and circumstances, and the appellate court will interfere only when the decision of the trial court is so clearly wrong that it *38
must be said that it has abused the discretion with which it is vested in determining motions of this kind. Aylmer v. Adams,
The affidavit presented by the defendant for the purpose of showing that the evidence was newly discovered was made by defendant's counsel and not by the defendant. In fact there is no affidavit on the part of the defendant himself on any feature of the motion for a new trial. So far as the showing made is concerned it is entirely possible that the defendant might have known of the evidence which it is asserted is newly discovered and been able to produce the same at the trial. This proposition alone is sufficient to preclude this court from interfering with the decision of the trial court. Aylmer v. Adams,
BRONSON, Ch. J., and NUESSLE and JOHNSON, JJ., concur.
Mr. Justice BIRDZELL did not participate.
