Brown v. Smith

• Decision Date: 14 December 1904
• Citation: 102 N.W. 171,13 N.D. 580
• Parties: BROWN v. SMITH et al.
• Court: North Dakota Supreme Court

13 N.D. 580

102 N.W. 171

BROWN

v.SMITH et al.

Supreme Court of North Dakota.

Dec. 14, 1904.

Syllabus by the Court.

1. A second mortgagee has the right to redeem, under section 5894, Rev. Codes 1899, from a chattel mortgage sale by advertisement.

2. The notice of intention to redeem required by section 5894, Rev. Codes 1899, is served in time if served as soon after the sale as by reasonably prompt and vigorous exertion the service can be effected.

3. In order to show a complete redemption from a chattel mortgage sale under section 5894, it is not sufficient to prove a tender of the amount required to redeem, and a refusal to accept; but it must also be proved that the tender was kept good by a deposit of the amount tendered, in accordance with the provisions of section 3814, Rev. Codes.

Appeal from District Court, Benson County; John F. Cowan, Judge.

Action by W. I. Brown against J. C. Smith and Russell & Co. Judgment for plaintiff. Defendants appeal. Reversed.J. F. Hilscher and W. H. Thomas, for appellants. McClory, Barnett & Adamson, for respondent.

ENGERUD, J.

This is an action to recover the possession of a threshing engine, of which the plaintiff claims to be the owner, and which it is alleged the defendants wrongfully withhold. The defendants deny plaintiff's ownership and right to possession, and allege title in the defendant Russell & Co. The issues were submitted to a jury for trial, and the only evidence offered was certain stipulated facts. Plaintiff's motion for a directed verdict in his favor was granted, and judgment was entered accordingly. The defendants have appealed from the judgment, and assign errors on a statement of the case.

It appears from the pleadings and stipulation of facts that one Michael Giedd was formerly the owner of the property in dispute. The defendant Russell & Co., a corporation, held a first mortgage on the engine for a debt of $1,000 and interest, which mortgage contained the usual power of sale in case of default in the payment of the debt when due. The plaintiff held a second mortgage on the same property for a debt of $400 and interest. Both mortgages were given by Michael Giedd, and both were duly filed. On April 28, 1901, the defendant J. C. Smith, acting as agent for Russell & Co., took possession of the engine for the purpose of foreclosing Russell & Co.'s mortgage thereon under the power of sale. The sale was made May 11, 1901, at 2 o'clock p. m., and the engine was bid in for and struck off to Russell & Co. for the sum of $150. J. C. Smith conducted the sale as agent for the mortgagee, and had possession of the engine for that purpose. When the sale was made, he retained possession of the engine as agent for the purchaser. The engine is worth $800. At 2:33 o'clock p. m. on the day of sale, the plaintiff served upon Smith a notice of his intention to redeem from the sale, pursuant to section 5894, Rev. Codes 1899. On May 15th the plaintiff inquired of Smith for the amount of costs incurred in the foreclosure, but the latter refused to furnish any information on that subject. Thereupon, on the same day, plaintiff tendered to Smith, to effect redemption, the sum of $170; $20 being the estimated costs. The tender was refused. This action followed.

The sole basis for the right of redemption asserted by plaintiff is section 5894, Rev. Codes 1899, which reads as follows: “Any mortgagor of personal property, or his assignee, may redeem the same from a sale upon foreclosure of any mortgage within five days after such sale, exclusive of the day of sale, by paying or tendering to the owner of the mortgage at the time of sale, his agent or attorney, or the person making the sale, the amount for which said property was sold with the costs of sale and interest at the rate of seven per cent. per annum from the date of sale. The mortgagor or his assignee, desiring to redeem such property shall at the time of sale give written notice to the person making the sale of his desire to make such redemption; otherwise he shall be deemed to have waived his right to do so. In case such notice is served, the person making such sale shall retain the possession of the property sold until the expiration of said five days, and shall be entitled to his reasonable expenses in caring for the same. In case a part only of the property sold is redeemed the redemptioner shall pay or tender in addition to the price for which such part was sold such a proportion of the costs of sale as said price bears to the entire price of all the property sold and also the reasonable expense of caring for the property redeemed and interest.”

The solution of the problem upon which the controversy hinges depends upon the answers to be given to two questions: (1) Is the plaintiff, by virtue of his chattel mortgage, an “assignee” of the mortgagor, within the meaning of the act? (2) Has the plaintiff complied with all the conditions prescribed by the act to effect a redemption? It is manifest that plaintiff's right is dependent upon an affirmative answer to both these questions. A negative answer to either question is fatal to plaintiff's claim.

The act in question is an innovation, and, so far as we can ascertain, is peculiar to this state. It is a very crude piece of legislation, but the main object is very clear. It was plainly designed to prevent the sacrifice of mortgaged personal property for less than its value at a sale under the power. It is a matter of common knowledge that the power of sale in a chattel mortgage has been often made the instrument of much wrong and oppression. It enables the mortgagor to seize the property and sell it on a notice of six days, without the restraints and safeguards of judicial supervision. The advantage which the mortgagee has over other bidders has a tendency to prevent competition in bidding. Where the debt equals or exceeds the value of the property, the mortgagee will, as a rule, outbid other bidders, so as to get the property, or its full value, for himself. The result is that the mortgagee seldom has any competition at the sale, and is at liberty to buy the property for any sum he sees fit, however insignificant the price may be. The facts of this case furnish a good example of the evils which the law was designed to remedy. The first mortgage exceeded the value of the property. The circumstances of the debtor were such that he either could not or would not redeem. The second mortgagee was effectually barred from redeeming before sale, because, in order to do so, he would have to pay the full amount due on the first mortgage, which was at least $200 more than the property was worth. The mortgagee sought to take advantage of the situation by bidding only $150 for property worth $800. There was no inducement for others to bid, because there was no probability that they could get the property for less than its full value. If the defendants' plan of operation shall succeed, the mortgagee will have obtained property worth $800, and the mortgagor's notes will still be almost wholly unpaid. The law was designed to enable...