Erickson v. Todd

• Decision Date: 15 February 1934
• Docket Number: 7576.
• Parties: ERICKSON v. TODD et al. [a1]
• Court: South Dakota Supreme Court

252 N.W. 879

62 S.D. 280

ERICKSON v. TODD et al. ^[a1]

No. 7576.

Supreme Court of South Dakota

February 15, 1934

Appeal from Circuit Court, Minnehaha County; John T. Medin, Judge.

Action by T. M. Erickson against Cornelia L. Todd and another. From a judgment in favor of the defendants, and from an order denying his motion for a new trial, the plaintiff appeals.

Judgment and order reversed.

L. E Waggoner, of Sioux Falls, for appellant.

Danforth & Davenport, of Sioux Falls, for respondents.

RUDOLPH Judge.

Edwin J. Todd purchased a farm from the plaintiff Erickson, and paid Erickson thereon the sum of $10,000. To secure the balance of the purchase price of $19,200, Edwin J. Todd and his wife signed and delivered to Erickson a note in that amount and secured the same by a mortgage upon the land. Later Todd sold this land to one Bisson, and by the terms of the deed conveying the land, Bisson assumed and agreed to pay the mortgage indebtedness thereon. Thereafter E. J. Todd died, and the defendants, his widow, Cornelia L. Todd, his son, Howard J. Todd, and his daughter, Gladys O. Lambert were appointed administrators of his estate. The note in the sum of $19,200, executed by the deceased Todd and his wife was filed as a claim against the estate. Bisson was an old neighbor of the plaintiff Erickson, and, after the conveyance of the land to Bisson, Erickson accepted payments of interest from Bisson. A default occurring in the payment of interest due in 1929, Erickson commenced foreclosure proceedings, but on the payment by Bisson of the interest due these proceedings were abandoned. The note was due on March 1, 1932.

At the time the mortgage was given, Erickson received an abstract of title, and he kept this abstract in a safety deposit box with the mortgage. Some time prior to March 8, 1932, Mr. Stordahl, the attorney representing Erickson, asked Erickson for the abstract; but he could not locate it. Thereafter and on March 8, 1932, one Dewitt Lambert called upon Mr. Erickson and delivered to him the abstract (where he obtained the abstract does not appear), and at that time there was signed the following instrument, which was identified and received in evidence as Exhibit 2:

"March 8, 1932.

"I acknowledge receipt of abstract on land owned by S. O. Bisson and mortgaged to me, and give him until March 19th, 1932, to pay off this mortgage.

"T. M. Erickson."

In what capacity Dewitt Lambert was acting does not appear. It does appear that he was the husband of Gladys O. Lambert, one of the defendants; but she and the other defendants testified that they knew nothing about Exhibit 2 being executed or the abstract being delivered, and that Mr. Lambert did not have anything to do with the Todd estate. Dewitt Lambert did not take the stand, and it is impossible to ascertain from this record his connection with the transactions involved, except that he was the husband of one of the defendants, and on March 8th delivered the abstract to this land to Mr. Erickson, and Mr. Erickson at that time executed and delivered to him Exhibit 2.

The mortgage was not paid and was, some time subsequent to March 8th, foreclosed by Erickson, and the land bid in by him for the sum of $12,056.96. The county court of Minnehaha county made its order rejecting and disallowing the claim of Erickson for the deficiency remaining after applying upon the note the amount for which the land was sold.

This action, based upon the note and seeking to recover the deficiency, was thereafter started in the circuit court, and the trial judge made findings of fact, conclusions of law, and entered judgment in favor of the defendants. This is an appeal from the judgment and order denying the motion for a new trial.

The theory, upon which judgment was entered against the plaintiff, was that the mortgagee, Erickson, knew that Bisson was an assuming grantee, and with this knowledge extended the time of payment to Bisson by a valid and binding agreement without the knowledge of the defendants. If the findings of the court are sustained by the evidence, the result reached by the trial court is correct under the rule announced in Zastrow v. Knight, 56 S.D. 554, 229 N.W. 925, 930, 72 A. L. R. 379.

The trial court found that Erickson knew that Bisson was an assuming grantee. The appellant challenges this finding. We are satisfied that, in order to discharge the mortgagor, the knowledge of the mortgagee, as to the relationship arising between the mortgagor and assuming grantee by virtue of the assumption clause contained in the deed, must be actual knowledge as distinguished from any inferred knowledge of the relationship merely by reason of the fact that it was embodied in the recorded deed from the mortgagor to the assuming grantee. To hold otherwise would, in effect, charge the mortgagee with notice of a document affecting the title to the land filed subsequent to the time of his mortgage whereby he acquired an interest in the property. Blumenthal v. Serota, 129 Me. 187, 151 A. 138; Wolfe v. Murphy, 47 App. D. C. 296; Newby v Harbison (Tex. Civ. App.) 185 S.W. 642. There is no direct evidence in this record that Erickson knew that Bisson had assumed the payment of the mortgage. The question presented, therefore, is whether the evidence is sufficient to justify the trial court in inferring knowledge of the relationship on behalf of Erickson, and basing his finding upon such inference. The only facts which would justify such inference are as follows: Bisson was an old neighbor of Erickson. After the transfer to Bisson, Erickson accepted from him the payment of interest. In 1929, the interest being in default, Erickson commenced foreclosure proceedings which were abandoned upon payment of interest by Bisson. On January 5, 1932, after considerable correspondence with the defendants and their attorney, the attorney for Erickson wrote to Bisson as...