191 Ind. 75 | Ind. | 1921
This was an action by appellee against appellant to enforce payment of a certain promissory note executed by appellant and others as makers. Appellant’s co-makers were not residents of this state and were not made parties. The complaint, answer in five paragraphs, and reply, of general denial, formed the issues submitted to a jury for trial. Upon the conclusion of all the evidence, appellant’s .motion to submit the
After due consideration of this case as presented by the oral argument and briefs of counsel, we conclude that no good purpose will be subserved by a lengthy statement of the pleadings or of the evidence, although the court’s ruling in directing a verdict for appellee was grounded upon the evidence. However, to state the case generally, it appears that appellant and others interested in constructing a motor speedway near the cities of Minneapolis and St. Paul, Minnesota, contracted with appellee for a quantity of crushed stone for use in that work. The stone was furnished and used, and appellee took a materialman’s lien on the property of the speedway company,- a corporation of Minnesota known as the Twin City Motor Speedway Company. That company on November 1, 1915, created bonds of the aggregate face value of $350,000, and, to secure the payment thereof, it executed a mortgage or trust deed on all of its property, payable to and deposited the same together with the bonds with the Minneapolis Trust Company as trustee. On January 15, 1916, appellant and certain
“Know all men by these presents, that the undersigned hereby transfer, mortgage and pledge to St. Paul Crushed Stone Company bonds of the Twin City Motor Speedway Company, of .the par value of ...........................Dollars, ($9800.00), numbered............. as collateral security for the payment of a promissory note bearing date January 15th, 1916, made by James F. Sperry, Henry E. L. Habighorst, C. W. Van Orsdol and F. H. Wheeler, as makers, to St. Paul Crushed Stone Company, as payee, due July 1st, 1916, in the sum of $9,769.04. In the event of default in the payment of said promissory note, or the interest thereon, the pledgee hereunder may foreclose this pledge and sell the bonds herein described for the purpose of satisfying said indebtedness in the manner prescribed by the Statutes of the State of Minnesota relating to the foreclosure of chattel mortgages.
In the event of payment of said note, by the undersigned Pledgor, or Pledgors, either or any of them, said bonds shall be delivered to the Pledgor or Pledgors, so paying said note and the Pledgee herein is hereby authorized to deliver said bonds to the Pledgor or Pledgors so satisfying said promissory note.
James F. Sperry,.
F. H. Wheeler
By Seymour Avery, Attorney in Fact,
H. E. L. Habighorst,
C. W. Van Orsdol.
In presence of Milford E. Rumble H. M. Smith.”
The mortgage, among other things, stipulated that:
“If default shall be made in the principal or interest of said bonds, or any thereof, and such*79 default shall continue for a period of three (3) months * * * the Trustee may elect at its option, or upon the written request of at least twenty-five thousand dollars in amount, of the holders of said bonds then outstanding, that the principal sum of each of said bonds, together with the interest accrued thereon, shall be immediately due and payable, and may enforce payment thereof. * * * It is hereby declared and agreed that it shall be the duty of the Trustee * * * to take appropriate proceedings in equity or at law, to enforce the rights of the bondholders under these presents, in case of any default made in the terms or conditions of this mortgage, or of the bonds or interest secured hereby, which default shall have continued for a period of three months, upon the written request, however, upon said Trustee, of the holders of not less than twenty-five thousand dollars in amount of the bonds then outstanding. * * * ”
On August 16, 1916, appellant and others, holders of more than $25,000 in amount of the series of bonds pledged to appellee, filed with the trustee under the mortgage their written request for its foreclosure by reason of certain defaults of the mortgagor, and on September 12,1916, the trustee instituted a suit to foreclose the mortgage as to all the bonds of that issue. The complaint alleged various defaults of the conditions of the mortgage, request by the holders of more than $25,000 of the bonds outstanding, the election by the trustee to declare all the bonds outstanding due, and its election to foreclose the mortgage. A decree of foreclosure was entered December 29, 1916. The property covered by the mortgage was sold, bid in by the trustee for $250,000, and the sale confirmed by the court on March 5, 1917. 'There was a stipulation in the mortgage that in case of a foreclosure and sale and purchase by the trustee of the mortgaged property, the trustee, after the period of redemption, should take
Appellant’s various contentions in support of each assignment of error, when analyzed, all lead to the one question, namely: Was he entitled to a credit of $7,027 on the note? The decision of this question is largely controlled by the written instrument which each of the parties concede to be what its stipulations indicate — a pledge contract. Appellant is basing his defense upon the theory that this agreement and the delivery of the bonds to appellee entered into the consideration for the execution of the note, and the three acts constituted one entire indivisible contract with an inseparable consideration, whereby appellant became bound as surety only for the payment of the bonds which, upon the sale of the mortgaged property, were, as a matter of law, credited with their pro tanto part of the purchase price of the mortgaged property. Citing — Warren v. Fish (1862), 7 Minn. 432 (Gil 347) ; Sergeant v. Ruble (1885), 33 Minn. 354, 23 N. W. 535.
Several sections of the Minnesota statute relating to the procedure in the foreclosure of mortgages, sale of mortgaged property, and confirmation of such sale by the court, were introduced in evidence, but in so far as they are material here, we confine our attention to the sections of the statute which provide that the bidding in of the property by the creditor at the sale “shall have the same effect as a receipt for money paid upon a sale for cash,” and upon the confirmation of the report of sale “the clerk shall enter satisfaction of the judgment to the extent of the sum bid for the premises, less expenses and costs.” §§8156, 8159, 8160 Gen. Stat. Minn. 1913.
The note in this case matured on July 3, 1916, and this action was begun January 8, 1917. It is not claimed that appellee did anything in the way of a
If through the foreclosure proceedings the speedway property should vest in the trustee, then, under the law of Minnesota the speedway company would be entitled to a credit of $250,000 on its bonded indebtedness and the trustee, under the provisions of the mortgage, would hold the property so acquired for the benefit of the bondholders in the proportion that the bonds held by each of them bears to the entire issue outstanding. Or in other words, the bondholders must be regarded as having accepted the property bid in by the trustee as a credit on the bonds of that issue outstanding in the sum of $250,000. Clearly then, the foreclosure proceedings affected only the speedway company and the bondholders.
In the case last cited, it was said: “The fundamental rule pertaining to collateral .securities is that, where a debtor has pledged to his creditor a mortgage on real estate to secure» the payment of a note other than the mortgage debt, and the creditor or pledgee in the exercise of his equitable rights forecloses said mortgage, and thereby acquires title to the real estate in his own name, absolute as against the mortgagor, the pledgee holds such title as security for his debtor’s note in lieu of the original mortgage, and the pledgee’s interest in the land may be defeated by payment of the pledgor’s principal note. In other words, the pledgee holds the land to which he has thus acquired title in trust for the pledgor, and as security for the debt due from him.”
In the instant case we have no question arising on account of the activity of appellee in connection with the pledged property, as was the case in Plucker v. Teller (1896), 174 Pa. 529, 34 Atl. 208, 52 Am. St. 825, and Anderson v. Olin (1893), 145 Ill. 168, 34 N. E. 55.
As to the evidence admitted over appellant’s objection, it is sufficient to say that we have examined each item thereof, and, without taking the time and space to consider it in detail, we are well satisfied that the court committed no error in this regard for which the judgment herein should be reversed.
The death of appellant since the submission of this cause has been suggested. The judgment, therefore, is affirmed as of the date of submission.