Curtis v. Cutler

• Citation: 76 F. 16
• Decision Date: 14 September 1896
• Docket Number: 728
• Parties: CURTIS et al. v. CUTLER.
• Court: U.S. Court of Appeals — Eighth Circuit

76 F. 16

CURTIS et al. v. CUTLER.

No. 728

United States Court of Appeals, Eighth Circuit.

September 14, 1896

Harlan P. Roberts (J. C. Sweet was with him on the brief), for appellee.

Before CALDWELL, SANBORN, and THAYER, Circuit Judges.

SANBORN Circuit Judge.

This is an appeal from a decree of foreclosure. On December 20, 1889 Peter J. E. Clementson and his wife mortgaged a part of a city block in Minneapolis, in the state of Minnesota, to the Lombard Investment Company, a corporation of the state of Missouri, to secure the payment of two notes one for $8,000, payable January 1, 1895, and one for $400 payable January 1, 1891, with interest at the rate of 6 per cent. per annum, payable semiannually, according to the terms of coupons attached to the two principal notes. The Lombard Investment Company had its principal office at Kansas City, in the state of Massachusetts. This company wrote upon the back of the notes its assignment and guaranty of the payment thereof, and acknowledged and executed a formal assignment of the mortgage, in all of which the name of the assignee was left blank, and sent these writings, with the notes and the mortgage, to its Boston office. On February 10, 1890, Isaac M. Cutler, the appellee, bought the notes of the Lombard Company, and they and the assignment in blank were delivered to him a few days later. The mortgagors never paid anything upon the notes, but the Lombard Company paid to Cutler the $400 note and the coupons as they fell due, until January, 1894, when it became insolvent. On March 1, 1891, the Lombard Company took possession of the mortgaged property, under an agreement with the mortgagors to collect the rents from it, and to apply them to the payment of the mortgage debt. On July 15, 1891, the appellants, Eugene T. Curtis and Artemas H. Wheeler, obtained a judgment against the mortgagor, Clementson, which was from that time a lien on the mortgaged premises, subject to the mortgage. On September 8, 1892, the mortgage was foreclosed by advertisement, in the name of the Lombard Company, for the failure of the mortgagors to pay the note for $400 and the accrued interest upon both notes. The mortgaged premises were sold under this foreclosure for $1,732.13, and were conveyed by a proper sheriff's certificate to the Lombard Company, which was the bidder and purchaser at the sale. On September 19, 1893, the appellants, as subsequent lienholders, redeemed the mortgaged property from this sale, and the sheriff conveyed it to them by a proper certificate.

The legal effect of these proceedings, under the repeated decisions of the highest judicial tribunal of the state of Minnesota, was to vest the title to the mortgaged premises in the appellants, discharged of the lien of the mortgage. The sale of the mortgage debt, without a valid assignment of the mortgage, left the legal title to the latter in the mortgagee. In that state of facts, the mortgagee, the Lombard Company, was an indispensable party to a valid foreclosure of the mortgage by advertisement, and it was regularly and legally foreclosed in its name. That company held the legal title to the mortgage, and the power to foreclose it; and, if the owner of the mortgage debt authorized or permitted it to do so, the foreclosure was conclusive upon him. Bottineau v. Insurance Co., 31 Minn. 125, 127, 16 N.W. 849; Carpenter v. Bank, 44 Minn. 521, 523, 47 N.W. 150; Bausman v. Faue, 45 Minn. 412, 419, 48 N.W. 13; Solberg v. Wright, 33 Minn. 224, 226, 22 N.W. 381. A deed or an assignment of a mortgage, in which there was no name of a grantee inserted, is, until some name is therein written, as ineffective, as a conveyance or an assignment, as a piece of blank paper. Drury v. Foster, 2 Wall. 24, 33; Swartz v. Ballou, 47 Iowa, 188, 193; Burns v. Lynde, 6 Allen, 305, 311; 1 Devl. Deeds, § 456. The foreclosure and sale of mortgaged premises for a part of the mortgage debt exhausts the lien of the mortgage, and the purchaser at the foreclosure sale, and creditors holding liens, who redeem from him, take the property entirely discharged from the mortgage. Fowler v. Johnson, 26 Minn. 338, 3 N.W. 986, and 6 N.W. 486; Martin v. Sprague, 29 Minn. 53, 58, 11 N.W. 143.

In January, 1893, the appellee brought this suit to foreclose this mortgage again for the unpaid balance due on the $8,000 note, and he seeks to escape from the inevitable effects of the rules of law, to which we have adverted, on two grounds: First. He insists that the mortgage was assigned to him before the foreclosure sale of September 8, 1892, took place. Second. He claims that the Lombard Company had no authority or permission from him to foreclose the mortgage.

The maintenance of the first proposition depends entirely upon the answer which the evidence gives to the question: Had the name of the grantee been inserted in the assignment of the mortgage on or before September 8, 1892, when the foreclosure sale was made? If it had not been, the legal title to the mortgage was then still in the Lombard Company, and the foreclosure was right and regular. If it had been, the title had vested in Cutler, and the foreclosure should have been made in his name. The testimony on this issue is uncontradicted, and it permits but one conclusion. It is that when the assignment was sent from Kansas City, where it was executed by the Lombard Company, to Boston, where it was delivered to Cutler, the name of the grantee was blank. It is that the name was blank in it when it was delivered to Cutler, and that the invariable custom of the Boston office was to deliver the assignments of the mortgages, which the company sold, without inserting therein the names of the assignees, unless the purchasers expressly requested the insertion of their names, and that no such request was made in this case. It is that the Lombard Company wrote to Cutler on October 10, 1892, two months after the foreclosure sale, that it wished for the assignment; that on October 18, 1892, he delivered it back to the company at its Boston office; that the officers there sent it to the Kansas City office; that it was then delivered to D. H. Ettien and T. H. Hull, the attorneys of the Lombard Company, who, on December 24, 1892, caused it to be recorded in the register's office at Minneapolis. That is the day on which the name of a grantee first appears in this assignment, according to the evidence in this record. Cutler and all to whose possession the assignment was traced from the time when it was delivered by the Kansas City office to the Boston office, with the name of the assignee blank, until it was delivered to the attorneys of the Lombard Company, at some time after October 18, 1892, were carefully examined, and testified that they did not insert the name of the grantee in the assignment, and that they did not know the handwriting in which it was inserted. There is but one conclusion that can be justly drawn from this evidence. It is that the name of the grantee was not inserted in this instrument until after it came into the hands of the attorneys of the Lombard Company, in the latter part of October, 1892, more than two months after the foreclosure sale. This conclusion is irresistible, both as a matter of fact and as a matter of law. The inference is conclusive, as a matter of fact, because the testimony is uncontradicted that there was no name of any grantee in the assignment when it was delivered to Cutler, and that no one to whose hands it was traced inserted it, or knew of its insertion or existence in the instrument thereafter, before it was presented to the register, on December 24, 1892. It is conclusive as a matter of law, because the condition of an instrument once proved to exist is presumed to continue until a modification or addition is proved. As the name of the grantee was blank when the assignment was delivered to Cutler, it must be presumed that it continued blank until its insertion was proved by its appearance in the assignment when it was filed for record, on December 24, 1892. There was, therefore, no assignment of the mortgage before the foreclosure sale of September 8, 1892; and the foreclosure by advertisement was regularly and properly made in the name of the mortgagee, who appeared of record to hold, and in fact did hold, the legal title.

The second position of the appellee is that he held the beneficial interest in the mortgage by virtue of his ownership of the debt; that the Lombard Company held the legal title for his benefit; that it could not lawfully foreclose the mortgage without his authority or permission and that the foreclosure is void, because he never gave any such authority or permission. Let it be conceded that this mortgage could not be lawfully foreclosed without the authority or permission of the appellee; was not that permission and authority given? Cutler was a large investor with the Lombard Company, and owned a good many of its loans. To prove that he did not authorize or permit this foreclosure, he testified that he never knew of the default of the mortgagors in their payments in this case, or of the foreclosure of the mortgage by advertisement, or...