Decano v. Hutchinson Sugar Co.

• Decision Date: 02 May 1962
• Docket Number: No. 4122,4122
• Citation: 45 Haw. 505,371 P.2d 217
• Court: Hawaii Supreme Court
• Parties: Sadie M. DECANO and Esther K. Vierra, Plaintiffs-Appellants, v. HUTCHINSON SUGAR CO., Ltd., Defendant-Appellee.

Page 217

371 P.2d 217

45 Haw. 505

Sadie M. DECANO and Esther K. Vierra, Plaintiffs-Appellants, v. HUTCHINSON SUGAR CO., Ltd., Defendant-Appellee.

No. 4122.

Supreme Court of Hawai'i.

May 2, 1962.

Syllabus by the Court.

1. Foreclosure by entry and possession is as completely binding against minors' interests as against those of adults, subject to the redemption period which is afforded to the mortgagor or those claiming under him, and is the same whether they be adults or minors.

2. Upon expiration of the period of redemption, the redemption right of the mortgagor and all persons claiming under him, including minor heirs, is forever barred.

3. There is no saving exemption or exclusion in the statute creating the right of redemption in favor of persons under disability. R.L.H.1955, § 336-12.

4. Disability exceptions extending the operation of statutes of limitation for real actions cannot be engrafted on the statute creating the right of redemption so as to extend the period for the exercise of such right beyond that prescribed.

5. Recordation of the certificate of entry required by statute without additional notice of foreclosure is not violative of due process.

N. W. Y. Char, Honolulu, for appellants.

Howard H. Moore, Pratt & Tavares, Honolulu, for appellee.

Before TSUKIYAMA, C. J., WIRTZ, LEWIS and MIZUHA, JJ., and R. B. JAMIESON, Circuit Judge, in place of CASSIDY, J., disqualified.

WIRTZ, Justice.

On February 14, 1957, plaintiffs-appellants filed a civil action to redeem lands which had been mortgaged by their grandfather to defendant-appellee and some years later had been foreclosed by entry and possession by the latter. Following a hearing judgment was entered in favor of defendant on March 25, 1959, dismissing the action on the merits. From this judgment plaintiffs have taken this appeal.

The facts are undisputed. They are contained in a stipulation as to the facts filed in the trial court and in the testimony of the lone witness, a surveyor employed by defendant. On October 18, 1929, Robert Iana Reid, grandfather of the plaintiffs, mortgaged the land in question at Kau, Hawaii, for the purpose of securing a promissory note for $300.00. This mortgage was duly recorded. It provided for foreclosure by 'entry and possession.' Nothing was ever paid on account of the note. Mr. Reid died in March 1934 and a formal claim was filed in June 1934 against his estate with the administrator thereof. There were four children of the decedent: Joshua Keomailani the administrator and an adult), Eugenia Reid Ferreira (an adult and the mother of the plaintiffs), Elizabeth (a minor) and Peter (a minor).

By letter dated October 20, 1934, the administrator requested the defendant not to press for payment of the mortgage indebtedness but to allow the estate to be closed without settlement of the claim and to await future arrangements for payments. Defendant acquiesced in this request by letter dated October 23, 1934, saying in substance that it would rely upon its mortgage as a protection for the repayment of the indebtedness.

Almost two years then went by. The estate was closed in March 1935. Eugenia Reid Ferreira died in November 1935, leaving two minor daughters who are the plaintiffs herein and her husband, John Ferreira, the father of the minor daughters. In July 1936, defendant foreclosed its mortgage by entry and possession in the usual and proper manner required by law. There is no dispute concerning the mechanics of this foreclosure of the mortgage. There apparently was no probate of the estate of said Eugenia Reid Ferreira. Guardianship proceedings as to plaintiffs instituted in 1940, being Probate No. 11539 of the First Circuit Court, disclose that Sadie Decano attained her majority on May 26, 1947, and Esther Vierra on August 17, 1949. As a result of the prior deaths of Elizabeth and Peter, both unmarried, it was agreed that if the foreclosure and subsequent possession by defendant were inoperative to effectively vest title in the defendant, plaintiffs would have an undivided one-half interest in the land in question.

From these basic facts it is seen that at the time of the waiver of settlement in the probate administration of the mortgagor's estate all four of his children were alive, two being then adults. At the time of foreclosure by entry three of these children were alive (Joshua Keomailani, an adult, and Elizabeth and Peter, minors) while Eugenia's one-fourth share had passed to plaintiffs, who were then minors. More than 20 years had passed from the time of foreclosure by entry until the filing of the present suit.

Plaintiffs specified three errors in connection with the judgment entered by the trial court. At the argument they waived the third specification of error leaving two to be considered.

The first specification of error advanced is that 'the Court erred in holding that as against the appellants who were then minors, and of whose minority the appellee had knowledge, the foreclosure by right of entry of the mortgagee on the 52.2 acres was a lawful and complete foreclosure of a valid mortgage which was in default on the date of entry.' Defendant challenges the portion of this specification which states that it had knowledge of the minority of plaintiffs at the time of foreclosure and that they were heirs of the mortgagor. Plaintiffs rely on Exhibit 'D' attached to the answer in support of their contention. However, an examination of that exhibit reveals that the minors therein referred to were the aunt and uncle of plaintiffs, namely, Elizabeth and Peter, and not the plaintiffs themselves. In any event, the point is immaterial.

The question raised under this specification of error is whether or not the foreclosure by entry under the provisions of what is now R.L.H.1955, § 336-10, ¹ is valid against plaintiffs, who were minors at the time and, as heirs of their mother, an heir of the mortgagor, had inherited an interest in the land. ²

Understandably there is very little law on this exact question as only four other states, Maine, New Hampshire, Massachusetts and Rhode Island have statutes providing for foreclosure by right of entry. See 10 Thompson, Real Property, p. 23. However, such law as has been uncovered indicates that foreclosure by entry and possession is as completely binding against minors' interests as against those of adults, subject of course, to the redemption period which is afforded to the mortgagor or those claiming under him, whether or not they be adults or minors. Thompson v. Paris, 63 N.H. 421; 59 C.J.S. Mortgages § 532. Hawaii provides for a one-year redemption period, R.L.H.1955, § 336-12. It has been held that after the expiration of such redemption period, the redemption right of the mortgagor and all persons claiming under him, including minor heirs, is forever barred. Thompson v. Paris, supra; Cf. Walker v. Chessman, 75 N.H. 20, 70 A. 248. In the instant case, the redemption period had long since expired when the suit was filed.

The court in the Thompson case agreed with the proposition that minors are favored at common law and that their interests must be carefully guarded, but went on to say:

'* * * It is not what their rights are at common law or in chancery, but what they are now, as modified and controlled by the statute; what the intention of the legislature was in enacting it, and how it should be construed. It is plain that it was not the design of the statute to reenact the chancery method of foreclosing mortgages, but to go aside from it and establish a new and substantially independent system. * * * The statute makes the entry of the mortgagee for condition broken, peaceable possession, and the time it is to continue, the essential things for him to do to foreclose, while the only thing for the mortgagor, his heirs, etc., to do to prevent a foreclosure is to redeem; and this they must do within one year from the entry. No exception is made of minor heirs or any other party holding under the mortgagor. The language of the statute is general, and includes all the heirs of the mortgagor, unless good reasons can be found for an exception or limitation.' 63 N.H. 424, 425.

The court then concluded by saying:

'It is true that it is the policy of the law to guard the rights of minors, and this is entitled to its weight in the construction of this statute; but it is also true that it is the policy of the law in this state that our public land records shall state completely and truthfully out land titles. This is also entitled to its weight. It may be that the construction that would enable the plaintiffs to recover would not harm the usefulness of the statute, or the confidence that is and should be placed in the reliability of our land records as a protection against latent rights, if they exist, but do not appear of record, and in no way are made known to the public, but it is to be feared that it would.

'The case at bar is a marked instance of the wrong, if not the fraud, that may be practised upon innocent purchasers arising from such a result; and to what extent the titles to other lands may be affected in like manner is not known.' 63 N.H. 426, 427.

The case of Maile v. Carter, 17 Haw. 49, is of considerable interest in this connection. In that case the mortgagee made an entry and filed a certificate, apparently intending to proceed under the provisions of what is now R.L.H.1955, § 336-10, but thereafter proceeded to sell the property under power of sale, thus following what is now R.H.L.1955, § 336-5. It should be noted that no statutory right to redeem is given the mortgagor, or any one claiming under him, under foreclosure through power of sale (R.L.H.1955, §§ 336-5 through 9).

Thereafter, the executrix of the mortgagor's estate, on behalf of herself and her minor children brought suit to set aside the foreclosure. As indicated in the court's opinion in that case and in the opinion on the motion for rehearing in 17 Haw. 643,...