Badger State Agri-Credit & Realty, Inc. v. Lubahn, AGRI-CREDIT
| Citation | 365 N.W.2d 616,122 Wis.2d 718 |
| Decision Date | 23 January 1985 |
| Docket Number | No. 84-369,AGRI-CREDIT,84-369 |
| Parties | BADGER STATE& REALTY, INC., a Wisconsin corporation, Plaintiff-Respondent and Cross-Appellant, v. Ronald J. LUBAHN, a/k/a Ronald Lubahn, Patricia Lubahn and Cloverbelt Cooperative Services, a Wisconsin cooperative, Defendants, Elva Marks, Defendant and Cross-Respondent, First National Bank of West Bend, a Wisconsin banking institution, Defendant, Athens Cooperative, a Wisconsin cooperative, Defendant and Co-Appellant. |
| Court | Court of Appeals of Wisconsin |
Raymond F. Thums and Sandra J. Marcus of Krueger, Thums, Tlusty, Hittner & Kennedy, S.C., Schofield, for defendant and co-appellant.
Tuchscherer, Bradley & Kurth, S.C., Steven D. Robinson and Konrad T. Tuchscherer, Wausau, on brief for plaintiff-respondent and cross-appellant.
Samuel Murray, argued, Milwaukee, Stanley L. Lind, Milwaukee, on brief, for defendant and cross-respondent.
Before SCOTT, C.J., BROWN, P.J., and NETTESHEIM, J.
Athens Cooperative (Athens) appeals from that portion of a judgment ordering that the sum of $265,516.12 is due to Badger State Agri-Credit & Realty, Inc. (Badger) and ordering that any interest or lien that Athens claims in and to certain real estate is subsequent, subordinate and junior to the lien of Badger's mortgage. Badger cross-appeals from that portion of the judgment holding that Elva Marks has a right of possession to a certain portion of a land parcel which is prior and senior to Badger's mortgage and that such right of possession cannot be defeated by a pending foreclosure sale.
The issue on appeal is whether the mortgage containing a dragnet clause for antecedent debts is enforceable. We conclude that because the amount of debt was stated in the mortgage and is identifiable from the mortgage documents, the mortgage is enforceable. Accordingly, we affirm.
The issue on cross-appeal is whether the foreclosure judgment in favor of Badger defeats Elva Marks' interest in the land parcel. Because we conclude that Elva Marks' right of possession constitutes a "claim or interest" within the meaning of sec. 706.09(2), Stats., which was of record at the time the mortgage was taken, we hold that the foreclosure judgment in favor of Badger does not defeat Elva Marks' interest. Accordingly, we affirm.
Badger brought this action to foreclose on certain parcels of land located in Washington county which secured several notes. Ronald and Patricia Lubahn (Lubahns) were the signers of the notes.
The Lubahns were owners of land parcels known as the 9.14 acre parcel and the 9.9 acre parcel in Washington county. On March 26, 1980, they obtained land known as the 4.4 acre parcel. The 4.4 acre parcel was improved by a farmhouse and barn and was formerly the homestead of James Marks. The Lubahns obtained the 4.4 acre parcel pursuant to a trustee's deed which conveyed the parcel to them "SUBJECT TO the right of possession to the upper flat of the dwelling house granted to Elva Marks described in the Estate of James Marks, Deceased, Court File No. 28757." Elva is James Marks' daughter.
On November 23, 1981, in order to secure four notes of indebtedness and in consideration of the reduction of a certain milk assignment, the Lubahns executed and delivered to Mid-State Sales Company and Kenneth Shong a mortgage for $239,000. This mortgage was secured by the 4.4, 9.14 and 9.9 acre parcels. The mortgage listed the amount secured as $239,000 and stated on its face that it was given "to further secure present indebtedness." Elva Marks was listed as a mortgagee, but she did not sign the mortgage. Mid-State Sales Company assigned the notes and mortgage to Badger.
Athens obtained a judgment (on an unrelated claim) against all three parcels for $46,396.91 entered on January 26, 1982. On February 28, 1983, Badger filed this foreclosure action.
The trial court found that the $239,000 mortgage was enforceable. It found that the mortgage was supported by adequate consideration and that the amount of indebtedness was supported by a series of mortgage notes and the reduction of a Lubahn milk assignment. The trial court further determined that Athens' interest or lien in the real estate, by virtue of its judgment, was subsequent, subordinate and junior to the lien of Badger's mortgage.
The trial court also found that Elva Marks has an interest in the 4.4 acre parcel described as a "right to possession." The trial court took judicial notice of Washington county circuit court file no. 28757, Estate of James Marks, containing the will of James Marks, the final probate judgment and a copy of the trustee's deed. The trial court determined that Elva Marks did not join in the mortgage and that her right of possession could not be defeated by the pending foreclosure sale.
An appellate court must separate the factual findings of the trial court from the conclusions of law and apply the appropriate standard of review to each. Department of Revenue v. Exxon Corp., 90 Wis.2d 700, 713, 281 N.W.2d 94, 101 (1979), aff'd, 447 U.S. 207, 100 S.Ct. 2109, 65 L.Ed.2d 66 (1980). The determination as to whether the underlying debt in the mortgage is sufficiently identifiable is one of fact which shall not be set aside on appeal unless clearly erroneous. Sec. 805.17(2), Stats. Whether a mortgage containing a dragnet clause is enforceable in Wisconsin is a question of law which we shall decide independently without deference to the decision of the trial court. See Ball v. District No. 4, Area Board of Vocational, Technical & Adult Education, 117 Wis.2d 529, 537, 345 N.W.2d 389, 394 (1984).
Dragnet clauses are generally looked upon with disfavor and are carefully scrutinized. Capocasa v. First National Bank, 36 Wis.2d 714, 721-22, 154 N.W.2d 271, 275 (1967). The burden of specifically proving the indebtedness secured by the mortgage is upon the mortgagee. Id. at 720, 154 N.W.2d at 274. Extrinsic evidence may be used to ascertain and prove the debt. See Mortgage Associates, Inc. v. Hendricks, 51 Wis.2d 579, 585, 187 N.W.2d 313, 315 (1971); Security National Bank v. Cohen, 41 Wis.2d 710, 715-16, 165 N.W.2d 140, 142-43 (1969).
Athens claims that a mortgage containing a dragnet clause for antecedent debts which does not specifically identify the underlying debt is not enforceable in Wisconsin. The trial court found, however, that the mortgage was supported by adequate consideration and that the indebtedness was supported by a series of mortgage notes and the reduction of a certain milk assignment at the time the mortgage was granted. These findings are not clearly erroneous and will not be disturbed on appeal. Additionally, in Capocasa the supreme court held that a dragnet clause in a mortgage may secure "any existing or future individual indebtedness to the mortgagee...." Capocasa 36 Wis.2d at 727, 154 N.W.2d at 278. Therefore, a dragnet clause may cover any specifically named debt and any existing debt.
In this case, the amount of indebtedness--$239,000--is plainly stated on the face of the mortgage. The trial court found that the extrinsic evidence presented was sufficient to ascertain the components underlying the debt. We conclude, therefore, that Badger's mortgage is enforceable. The trial court correctly determined that Badger's mortgage was valid and superior to Athens' judgment.
Again, the question on cross-appeal involves the nature of the property interest conveyed to Elva Marks in a trustee's deed to the Lubahns. The issue is whether the foreclosure judgment in favor of Badger defeats Elva Marks' interest under the trustee's deed. The determination of this issue involves a question of law which we shall review independently without deference to the decision of the trial court. Ball 117 Wis.2d at 537, 345 N.W.2d at 394.
The trustee's deed, dated March 26, 1980, states that pursuant to the Last Will and Testament of James Marks, the trustee of the trust created under the Last Will and Testament of James Marks conveys to Ronald and Patricia Lubahn all right, title, estate and interest to the 4.4 acre parcel "SUBJECT TO the right of possession to the upper flat of the dwelling house granted to Elva Marks described in the Estate of James Marks, Deceased, Court File No. 28757."
The trial court found that the language of the trustee's deed did not create a life estate but did create a property interest in favor of Elva Marks which could not be foreclosed upon. The trial court concluded that Elva Marks has an interest in the 4.4 acre parcel, described as a "right to possession," which cannot be made subordinate to Badger's mortgage unless she joined in the execution of the mortgage. The trial court found that Elva Marks had not joined in the execution of the mortgage.
Badger contends that the interest conveyed to Elva Marks in the trustee's deed was nothing more than a month-to-month tenancy or a personal privilege which was terminated by the foreclosure proceedings. We disagree.
First, we reject Badger's contention that reservations in deeds to third parties are per se void. 1 Section 700.16, Stats., permits restrictions on alienation of property within specified limits. Section 700.16(1)(a) states:
A future interest or trust is void if it suspends the power of alienation for longer than the permissible period. The permissible period is a life or lives in being plus a period of 30 years.
We hold that the reservation to Elva Marks in the trustee's deed is permitted under sec. 700.16(1)(a), Stats., because it does not suspend the power of alienation for a period in excess of a life in being plus thirty years. We conclude that the reservation to Elva Marks contained in the trustee's deed was valid.
Second, we reject Badger's contention that even if reservations in deeds to third parties are not void per se,...
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