Berry v. Scott

• Decision Date: 23 March 1927
• Citation: 255 P. 305,43 Idaho 789
• Parties: RUSSELL F. BERRY, Appellant, v. ELZUMER SCOTT, Executor of the Last Will and Testament of AARON G. SCOTT, Deceased, Respondent
• Court: Idaho Supreme Court

255 P. 305

43 Idaho 789

RUSSELL F. BERRY, Appellant, v. ELZUMER SCOTT, Executor of the Last Will and Testament of AARON G. SCOTT, Deceased, Respondent

Supreme Court of Idaho

March 23, 1927

EXECUTORS AND ADMINISTRATORS-ACTION ON CLAIM SECURED BY MORTGAGE-FORM-FORECLOSURE-PRESENTATION OF SECURED CLAIM-EFFECT.

1. Under C. S., sec. 6949, providing that there shall be but one action for recovery of debt and enforcement of rights secured by mortgage, action by mortgagee within the time fixed by section 7586, to establish claim against estate after rejection in probate court is prohibited, his remedy being foreclosure of mortgage.

2. On death of mortgagor, mortgagee may either present claim against estate, and if it is rejected, foreclose without waiving recourse against other property of estate for deficiency or he may, without filing claim foreclose mortgage under C. S., sec. 7588, waiving all recourse to deficiency judgment and looking alone to security.

APPEAL from the District Court of the Third Judicial District, for Ada County. Hon. Dana E. Brinck, Judge.

Action to recover on notes covered by mortgage. Judgment for respondent. Affirmed.

Judgment affirmed, costs awarded to respondent.

Reddoch & Hunter, for Appellant.

An action upon the claim as presented, which could have no other effect than to establish its validity and direct its payment in due course of administration is not within the prohibition of C. S., sec. 6949. (C. S., secs. 7585, 7586, 7592, 7648 7649, 7710, 7711; Idaho Trust Co. v. Miller, 16 Idaho 308, 102 P. 360; Kendrick State Bank v Barnum, 31 Idaho 562, 2 A. L. R. 1129, 173 P. 1144; Dahlstrom v. Walker, 33 Idaho 374, 194 P. 847; Wilson v. Brannan, 27 Cal. 258; Ould v. Stoddard, 54 Cal. 613; Visalia Sav. Bank v. Curtis, 135 Cal. 350, 67 P. 329; Rein v. Callaway, 7 Idaho 634, 65 P. 63.)

Frank T. Wyman, for Respondent.

The action required to be brought upon a rejected claim is determined by the nature of the claim itself. (Idaho Trust Co. v. Miller, 16 Idaho 308, 102 P. 360; Flynn v. Driscoll, 38 Idaho 545, 34 A. L. R. 352, 223 P. 524; Tropico L. & I. Co. v. Lambourn, 170 Cal. 33, 148 P. 206.)

A holder of a note secured by mortgage upon property in Idaho may not maintain an action at law upon the notes alone, but must foreclose his mortgage. (Rein v. Callaway, 7 Idaho 634, 65 P. 63; Clark v. Paddock, 24 Idaho 142, 132 P. 795, 46 L. R. A., N. S., 475; Farmers' State Bank v. Gray, 36 Idaho 49, 210 P. 1006.)

GIVENS, J. Wm. E. Lee, C. J., and Taylor and T. Bailey Lee, JJ., concur.

OPINION

GIVENS, J.

Aaron G. Scott, deceased, gave appellant two notes secured by a mortgage upon real property. Both parties were residents of the state of Idaho at the time the notes and mortgage were given but appellant subsequently moved to California, where he has since resided.

After Aaron G. Scott's death June 11, 1922, letters testamentary were issued to the son, who, as executor, caused notice to creditors to be published, the first publication being July 21, 1922, wherein creditors were notified to present their claims within ten months. Berry did not see the notice and learned of the death of Scott some time in July, 1922.

In October, 1923, appellant came to the state and on January 11, 1924, after the time set forth in the published notice had expired, presented his claim to the probate court seeking permission to file his claim. The application was denied and the claim in effect thereby rejected and the action herein was brought for the purpose of establishing the claim and praying that the amount of the notes and accrued interest be adjudged a valid claim against the estate and that the same be paid in the due course of administration. Judgment was entered in favor of respondent and this appeal was taken from that judgment.

The main question involved and the only point necessary for determination is with respect to the conclusion of the trial court that this action in the form in which it was instituted and prosecuted is prohibited by C. S., sec. 6949, and that the plaintiff is entitled to no relief.

C. S., sec. 6949, reads in part as follows:

"There can be but one action for the recovery of any debt, or the enforcement of any right secured by mortgage upon real estate or personal property, which action must be in accordance with the provisions of this chapter. . . ."

It is appellant's contention that in view of the "Probate Act," "Civil Practice Act," and "Code of Civil Procedure," 1864, it was never intended that C. S., sec. 6949, was to apply to the foreclosure of a mortgage, where a claim against an estate secured by mortgage has been presented and rejected, and that the statutes contemplate that notes secured by mortgage may be presented to the executor or administrator and in the event of their rejection the claimant must bring suit in the proper court and within the time fixed by C. S., sec. 7586, and that the "proper court" referred to in this section means the court having jurisdiction of the subject matter of the claim. In other words, that an action at law may be brought on the notes and the claimant is not compelled to foreclose his mortgage.

This court in construing C. S., sec. 6949, has held that the intention of the legislature in enacting this section was to provide an exclusive remedy in such cases (Rein v. Callaway, 7 Idaho 634, 65 P. 63), and the holder of a note secured by mortgage cannot maintain an action for the collection of such note, without at the same time and in the same action proceeding to foreclose his mortgage, unless it be shown that the security is valueless. (No mention of the value of the security was made herein. ) (Clark v. Paddock, 24 Idaho 142, 132 P. 795, 46 L. R. A., N. S., 475; Farmers' State Bank v. Gray, 36 Idaho 49, 210 P. 1006.)

C. S., sec. 7588, is practically identical with Cal. Code Civ. Proc., sec. 1500, and in Hibernia Sav. & Loan Soc. v. Conlin, 67 Cal. 178, 7 P. 477, the California court points out the procedure in such cases as follows:

"It was manifestly the intention of the section last referred to, as it was first adopted and as it was re-enacted in 1876, to give the holder of the mortgage, where he held a claim against the estate secured by it, which, when allowed, would rank with the acknowledged debts of the estate, an election to present the claim for allowance, have it allowed, and proceed to foreclose for the whole amount due on the claim, including any deficiency arising on a sale of the mortgaged premises, or to present no claim and sue on the mortgage alone, and obtain whatever might be realized on a sale of the mortgaged premises under the decree of foreclosure."

In other words, the claimant has two lines which he may follow at his discretion: If he believes that the security, the real estate mortgaged, is sufficient to pay his mortgage, he may waive all recourse to a deficiency judgment and look alone to the security to pay the mortgage, that is, foreclose his mortgage. (C. S., sec. 7588; Anglo-Nevada Assur. Corp. v Nadeau's Exrs., 90 Cal. 393, 27 P. 302; Raggio v. Palmtag, 155 Cal. 797, 103 P. 312; Dreyfuss v. Giles, 79 Cal. 409, 21 P. 840; Security Savings Bank v. Connell, 65 Cal. 574, 4 P. 580.) If, on the other hand, the claimant does not believe the security to be sufficient to pay the amount of the mortgage, he may present his claim to the executor or administrator, and if it be rejected the mortgagee may bring action to foreclose without waiving recourse against other property of the estate for any deficiency. In rejecting the claim the administrator is but exercising the same right the deceased had in his lifetime, namely, that of...