155 Minn. 307 | Minn. | 1923
Appeal from an order granting defendants’ motion for an amendment of tbe judgment in an action for tbe foreclosure of a mortgage.
On March 1, 1920, defendants executed their note to plaintiffs for $10,400, payable March 1, 1925, accompanied by a mortgage on a quarter section of land, securing tbe payment of tbe note and containing a covenant that if defendants failed to pay tbe principal or interest when due, according to tbe terms of a first mortgage of $7,000 on tbe land, or made default in tbe conditions of either mortgage, or failed to pay taxes on the land before they became delinquent, tbe plaintiffs, at their option, might declare tbe whole principal sum of tbe $10,400 note to be due and payable. Defendants failed to pay two instalments of interest on tbe first mortgage, two on tbe second, and tbe taxes for 1921, and plaintiffs commenced this action to foreclose their mortgage. After setting forth defendants’ several defaults, tbe complaint alleged that plaintiffs elected to declare tbe whole sum secured by their mortgage to be due and payable immediately. They asked that the land be sold 'and the proceeds applied upon tbe mortgage debt, and for judgment against defendants for tbe remainder of tbe debt, if any. Defendants were personally served with tbe summons, but did not appear or answer. On August 19, 1922, a default judgment was entered in accordance with an order made by tbe court. It was adjudged that tbe sum of $12,491.26 was due on defendants’ note and mortgage, together with $241.50 costs and attorney’s fees in tbe action; that tbe land be sold by tbe sheriff and tbe purchase money applied to tbe payment of tbe expenses of tbe sale and tbe amount which bad been adjudged due to plaintiffs, and, if it was not sufficient to pay tbe same in full, that the sheriff specify tbe deficiency in bis report of sale, and that, upon confirmation of tbe report, defendants pay tbe amount of such deficiency, plaintiffs to have execution therefor.
The order is attacked on the ground that the demand for a deficiency judgment could not be successfully resisted even though defendants had appeared and answered, and on the further ground that no good excuse was shown for their failure to answer.
It is familiar doctrine that instruments executed at the same time and for one purpose are but one instrument in the eye of the law and are to be read and construed together as parts of the same transaction. But this does not mean that where a note and mortgage are executed contemporaneously, the provisions of the mortgage are thereby incorporated into and become part of the note. White v. Miller, 52 Minn. 367, 54 N. W. 736, 19 L. R. A. 673; Thorp v. Mindeman, 123 Wis. 149, 101 N. W. 417, 68 L. R. A. 146, 107 Am. St. 1003; Des Moines Sav. Bank v. Arthur, 163 Iowa 205, 143 N. W. 556, Ann. Cas. 1916C, 498.
This court has consistently adhered to the doctrine that the note and the mortgage are separate and distinct instruments, so different in their nature and purpose that the negotiable character of the note does not affect the character of the mortgage, which always is a mere chose in action. 2 Dunnell, Minn. Dig. § 6284. -It has held that the mortgagee has two distinct remedies if the mortgagor defaults in the payment of the mortgage debt. He may sue on the note and recover an ordinary personal judgment, or he may resort to the security of the mortgage and have the mortgaged property sold
A limitation on the right of the mortgagee to avail himself of both remedies at the same time is found in subdivision 2, § 8108, C. S. 1913. The remedy on the mortgage as a security is exhausted by a foreclosure. Fowler v. Johnson, 26 Minn. 338, 3 N. W. 986, 6 N. W. 486; Pioneer S. & L. Co. v. Farnham, 50 Minn. 315, 52 N. W. 897; Hage v. Drake M. & F. Co. 145 Minn. 113, 176 N. W. 192. But, if the debt was not thereby fully satisfied, an action on the note will lie, and the mortgagee may recover a personal judgment for the remainder. Blake v. McKusick, 10 Minn. 195 (251); 2 Jones, Mortgages, § 1227; 19 R. C. L. 665. Such an action will not lie if the note is not due, and the note cannot be brought to maturity by declaring the whole sum due by virtue of a provision in the mortgage authorizing the mortgagee to do so if there is a failure to pay interest or taxes. White v. Miller, supra; Burnside v. Craig, 140 Minn. 404, 168 N. W. 175. Unless this case can be differentiated from Burnside v. Craig, plaintiffs were not entitled to a personal judgment against defendants.
It is earnestly contended that the doctrine of White v. Miller, approved and extended as it was in Burnside v. Craig, is not controlling because plaintiffs foreclosed by action and not by advertisement. It has been held that the purpose of a foreclosure proceeding is to have the mortgaged property applied to the satisfaction of the debt, Sprague v. Martin, 2, 9 Minn. 226, 13 N. W. 34; that, although an action to foreclose is one in personam, in a sense it is in the nature of a proceeding in rem, because it has for its object the enforcement of the lien of the mortgage on specific property, Bardwell v. Collins, 44 Minn. 97, 46 N. W. 315, 9 L. R. A. 152, 20 Am. St. 547; that there must be a judgment in order that the amount of the mortgage debt may be determined, but it is not a personal judgment which may be
The statute directs that judgment be entered adjudging the amount due and the sale of the property to satisfy that amount. Section 8154, G-. S. 1913. Upon the confirmation of the sale, the clerk must enter satisfaction of the judgment to the extent of the sum bid at the sale, and execution may then be issued for the balance of the judgment. Section 8160, Gf. S. 1913. The statute does not expressly declare that the judgment may not be enforced against those who are personally liable for the payment of the debt, unless the debt was due when the mortgage was foreclosed. But, if that is not the proper construction to place upon it, all this court has said about the nature and object of foreclosure proceedings and the remedies available to the mortgagee is fundamentally wrong. It is true that some courts hold that an acceleration clause in a mortgage extends to the note and entitles the mortgagee to take a personal deficiency judgment in an action to foreclose, although the note contains no such clause. If the question were an open one in this state, we might be inclined to adopt that doctrine. But it cannot be done without ignoring the reasoning of the cases.
If plaintiffs had sued on the note, they could not have taken judgment for the principal. What plaintiffs have done is to avail themselves of the double remedy to which they were entitled. They combined in one action what, under the old system of pleading and practice, would have been denominated a suit in equity to foreclose and an action of debt founded on the note. By so doing, they neither changed nor added to their right of action on the note. The note was not merged in the mortgage. From the beginning the debt of which it was the evidence continued to be the principal thing. The mortgage was an incident and followed the note, for a transfer of the
We bold that plaintiffs were not entitled to a personal deficiency judgment and that tbe order in question was properly entered unless plaintiffs’ second point is well taken.
Tbe inherent power of tbe district court to modify its judgments is defined and regulated' b.y sections 7746 and 7786, G-. S. 1913, and extends to all judgments. Troska v. Brecht, 140 Minn. 233, 167 N. W. 1042. There is no exception in tbe case of judgments for tbe foreclosure of mortgages. Tbe power shonld be cautiously exercised and tbe court’s discretion controlled by tbe facts of tbe particular case; tbe time of tbe application; tbe nature of tbe modification, and tbe probability of interference with the rights of persons not parties to tbe action. 2 Bunnell, Minn. Dig. § 5091. Here the application was made promptly. Tbe modification was in tbe nature o'f a correction which would make tbe judgment conform to tbe legal rights
We hold that the court properly exercised its discretion in granting the application.
Order affirmed.