D. S. B. Johnston Land Co. v. Whipple

• Decision Date: 16 January 1931
• Docket Number: No. 5826.,5826.
• Citation: 60 N.D. 334,234 N.W. 59
• Parties: D. S. B. JOHNSTON LAND CO. v. WHIPPLE.
• Court: North Dakota Supreme Court

60 N.D. 334

234 N.W. 59

D. S. B. JOHNSTON LAND CO.

v.WHIPPLE.

No. 5826.

Supreme Court of North Dakota.

Dec. 31, 1930.

Rehearing Denied Jan. 16, 1931.

Syllabus by the Court.

Where real estate is sold under a contract wherein the vendor retains title to the land until the purchase price is paid, the parties occupy substantially the position of mortgagor and mortgagee. When such contract contains a provision that, upon default in payments to be made by the vendee, the vendor may at its option cancel the contract, such vendor is not required to exercise the option. It may proceed against the vendee to recover the amount due and have the land sold to satisfy the judgment. In such case, if the land does not sell for enough to pay the amount due on the contract, the vendor is entitled to a judgment for the deficiency.

Syllabus by the Court.

Where such contract contains a provision that the terms thereof are binding upon the assignee of the vendee and one accepts an assignment of the contract by the vendee, takes possession of the land, and makes payment under the contract, he becomes an assignee, is bound by the terms of the contract, and, upon sale of the land and deficiency in the payment of the amount due, judgment for such deficiency may be rendered against him.

Appeal from District Court, Wells County; R. G. McFarland, Judge.

Suit by the D. S. B. Johnston Land Company against C. C. Whipple to foreclose a land contract. The trial court refused to enter an order for deficiency judgment, and plaintiff appeals.

Reversed and remanded, with directions.

Lawrence, Murphy, Fuller & Powers, of Fargo, for appellant.

B. F. Whipple, of Fessenden, for respondent.

BURR, J.

The plaintiff, as party of the first part, executed a land agreement with one Herrington as party of the second part, for 320 acres of land, principally upon what is known as crop payments, but all to be paid on or before November 1, 1926. Possession was given Herrington, and he made some payments.

This land agreement provides that, after the sum of $8,000 with interest and taxes has been paid, the plaintiff “will then sell said lands to second party, his heirs or assigns, and upon request at its office in St. Paul, Minnesota, and the surrender of this agreement will execute and deliver a deed for said land. * * *”

Further: “That time is of the essence of this agreement and of every part thereof, and that not only the payments of the sums herein provided to be paid at the times and in the manner herein provided * * * but also all and singular the other items, conditions * * * to be kept and performed by the second party are conditions precedent to the right of the second party, his heirs or assigns, to purchase said lands * * * and to the obligations of the first party to sell the same.”

Further: “It is also mutually understood and agreed that at any time when any default shall exist on account of which first party shall have the right, at its option as hereinbefore provided, to declare this contract null and void, the first party instead of exercising such option, may elect to treat the sums herein provided to be paid to be immediately due and payable, and in such event second party promises and agrees upon demand to pay the full amount thereof remaining unpaid and accrued interest, and first party may collect the same in a suit at law or otherwise.”

Also: “It is also mutually understood and agreed that this agreement and the terms thereof shall bind and inure to the benefit of the first party and its successors and assigns and the second party, his heirs, executors, administrators, and assigns, but no assignment of this contract or any interest therein shall be valid unless endorsed hereon and signed by second party. * * *”

Under the contract, title remains in the vendor, as no deed was to issue until all payments were made. The agreement contains the further provision that “title and possession of all grain and crops raised in each year shall be and remain in said first party the vendor.”

The vendee assigned his interest in this contract to the defendant; and plaintiff claims that by such assignment the defendant assumed and agreed to pay for the land in accordance with the terms of the contract.

The plaintiff decided not to exercise the option of declaring the “contract null and void,” but commenced this action to foreclose the contract in a manner similar to the foreclosure of a real estate mortgage, and asked judgment for the amount due under the contract, that this amount be declared a lien against said land, that an order for sale of the land issue, and, in case the land did not sell for the amount of the judgment, that he have judgment against the defendant for the deficiency. The trial court found that the sum of $7,356.83 with interest and some unpaid taxes was due under the contract; that the vendee, “with the consent of the plaintiff, assigned the said contract to the defendant and transferred all of said Geo. W. Herrington's right, title and interest in and to said real estate and premises and said contract to the said defendant, * * *” and “the said assignee defendant * * * has paid to the plaintiff the sum of about $3,490.27 and there has been paid upon said contract a total sum of $4,240.36 together with such compliances with the terms of said contract with reference to improvements as has been heretofore made.” The court, however, failed to find specifically that there was a written acceptance of the assignment executed by the defendant. The trial court determined “that said land contract is in default, and plaintiff is entitled to a decree of foreclosure thereof and termination and forfeiture of the equitable interest of said defendant,” but refused to enter an order for deficiency judgment in case the land did not sell for the sum due under the contract.

[1] The plaintiff appeals, asking for a trial de novo. As stated by the respondent, “the sole issue of law is whether the plaintiff as vendor is entitled to take a deficiency judgment against the vendee or his assignee after a sale of the land described in the contract.” There is practically no dispute in the evidence. The respondent points out that the record regarding the assignment to him and his assumption of liabilities under the contract is not as clear and precise as it might be, but he does not go to the extent of denying his acceptance of the assignment. In this respect testimony by deposition was given which might have been objected to as hearsay. However, such objection was not made, and therefore it is before us. Deponent testifies that the defendant did assume the liabilities. This acceptance, it appears, was on a printed form, and is substantiated by secondary evidence, to which there was no objection; nor was there any objection to the court making a finding to that effect. The defendant knew the contract contained a provision requiring vendor's approval of the assignment, and a provision making the terms binding on him; he acted under this contract, and paid practically all that was paid on it. Hence there is no real controversy on the facts.

“Where a sale of land is evidenced by a contract only, and the purchase price has not been paid, and the vendor retains the legal title, the parties occupy substantially the position of mortgagor and mortgagee. The vendor has a lien for his purchase money by virtue of his contract.” Roby v. Bismarck National Bank, 4 N. D. 156, 160, 59 N. W. 719, 720, 50 Am. St. Rep. 633. See, also, First National Bank v. Zook, 50 N. D. 423, 429, 196 N. W. 507, 509.

The general rule is that, where in a contract for sale the vendor reserves title, “the transaction creates in equity the relation of mortgagor and mortgagee” (see 11 Am. & Eng. Eq. of Law [2d Ed.] 131), and the general remedy of an equitable mortgagee is by bill in equity for a foreclosure of his mortgage (Id. 143). This lien has all the incidents of a mortgage. Birdsall v. Cropsey et al., 29 Neb. 672, 44 N. W. 857; Wolffe v. Nall et al., 62 Ala. 24; Janney et al. v. Habbeler, 101 Ala. 577, 14 So. 624; Falls City First Nat. Bank v. Edgar, 65 Neb. 340, 91 N. W. 404.

Our own statute, section 6861, Comp. Laws 1913, gives the vendor a lien upon the land sold independent of possession for the amount of the purchase price remaining unpaid and otherwise unsecured. This lien is of no value to him if it cannot be foreclosed. Under the provisions of sections 6720 and 6721, such a lien may be foreclosed. Being a lien with all the incidents of a mortgage, it may be foreclosed as a mortgage.

Where a foreclosure is had by action, it is governed by the law for foreclosure of mortgage by action. It is said that the court of equity in foreclosing the lien has no authority to order judgment for a deficiency. Under the provisions of section 8100, Comp. Laws 1913, where an action is brought for the foreclosure or satisfaction of a mortgage, “the court may direct the issuing of an execution for the balance that may remain unsatisfied after applying the proceeds of such sale.” Under the provisions of section 8102, such action may also be taken against one whose obligation also secures the mortgage debt when this other person is made a party to the action, as in this case.

Our attention has not been called by either side to any specific decision of this court involving the question herein; but each side cites decisions claimed to be in harmony with its theory of the...