Geo. B. Clifford & Co. v. Henry

• Decision Date: 02 November 1918
• Citation: 169 N.W. 508,40 N.D. 604
• Court: North Dakota Supreme Court
• Parties: GEO. B. CLIFFORD & CO. v. HENRY.

40 N.D. 604

169 N.W. 508

GEO. B. CLIFFORD & CO.

v.HENRY.

Supreme Court of North Dakota.

Nov. 2, 1918.

Syllabus by the Court.

In an action brought by the holder of a sheriff's certificate of sale to recover rents, or the value of the use and occupation, under section 7762 of the Compiled Laws of 1913, where a purchase price mortgage had been legally foreclosed, it is held:

Following Clement v. Shipley, 2 N. D. 430, 51 N. W. 414, section 7762 of the Compiled Laws of 1913 gives to a purchaser at foreclosure sale, under a foreclosure by advertisement, the same right to rents or the value of the use and occupation as though the foreclosure had been conducted by action.

Section 7762 of the Compiled Laws of 1913, which provides that the purchaser, from the time of sale until redemption, is entitled to receive from “the tenant in possession the rents and profits of the property sold. or the value of the use and occupation thereof,” is construed, and held to give to the certificate holder the right referred to, whether the premises are in the possession of the mortgagor or of a tenant of the mortgagor.

Section 6740 of the Compiled Laws of 1913, which gives to the mortgagor the right to remain in possession during the year for redemption, does not fix the terms or conditions of occupancy.

Where, in an action to recover rents and profits, the defendant interposes an answer which constitutes an equitable attack upon the foreclosure proceedings, and where the plaintiff moves for a trial of the equitable issues before the court, the trial judge reserving his ruling and indicating that the admissibility of testimony in support of the equitable allegations would be determined as presented, no testimony being offered in support of the allegations, the equitable defense to the foreclosure must be considered as abandoned.

Where the right to the value of the use and occupation is shown to have arisen in April, and where the testimony shows that the value to the owner of the farm property is that which he derives from a share of the crop, and that it is generally considered advantageous to him to have the buildings occupied during the portion of the year when the crops are not growing, it is not error to receive testimony going to establish the rental value of the land for the entire season.

Where there is a reference, under section 7864 of the Compiled Laws of 1913, for the purpose of examining a party to the suit, costs may properly be taxed under section 7793 of the Compiled Laws of 1913.

Appeal from District Court, Nelson County; C. M. Cooley, Judge.

Action by Geo. B. Clifford & Co. against Jesse Henry. Judgment for plaintiff, and defendant appeals. Affirmed.

Grace and Robinson, JJ., dissenting.

Frich & Kelly, of Lakota, for appellant.

Murphy & Toner, of Grand Forks, for respondent.

BIRDZELL, J.

This is an appeal from a judgment entered in the district court of Nelson county in an action brought to recover the value of the use and occupation of certain lands. The plaintiff had judgment for $960 damages and for costs. The case arose upon the following facts:

On August 6, 1912, the defendant and appellant purchased from T. C. and W. W. Smith of Springfield, Ill., the east half of section 20 and the west half of section 21, township 153 north, range 59 west, of the P. M., Nelson county. The agreed price was $22,400, $5,000 of which was paid in cash, and the remainder was to be paid in installments of $1,000 a year, commencing December 1, 1913, and terminating December 1, 1929. Notes drawing 6 per cent. interest were given for the deferred payments and were secured by a first mortgage on the land. On November 25, 1916, Smith Bros., the vendors, assigned the notes and mortgages to the plaintiff and respondent, George B. Clifford & Co., and on March 7, 1917, foreclosure proceedings were started in an attempt to realize the sum of $18,855.80; this representing the principal and interest due to the date of sale. On April 23, 1917, the land was sold at a sheriff's sale for $19,297.28 and a certificate of sale issued to George B. Clifford & Co. In 1917 the defendant and appellant planted a crop upon the land embraced in the foreclosure proceedings, consisting of 380 acres of wheat, 100 acres of barley, 80 acres of oats, and 10 acres of flax. While the crop was being threshed, the plaintiff and respondent made a demand for it, which demand was refused. This action was then brought and, to support the recovery, reliance is had upon section 7762 of the Compiled Laws of 1913. In fact, the action is based on the statute. The section referred to provides that-

“The purchaser from the time of the sale until a redemption * * * is entitled to receive from the tenant in possession the rents of the property sold, or the value of the use and occupation thereof.”

[1][2] The principal questions raised upon this appeal arise upon the interpretation of that portion of the statute quoted above. Two main propositions are advanced by the appellant. It is contended: First, that the statute does not apply in favor of a purchaser at a sheriff's sale held in pursuance of a foreclosure by advertisement; and, second, that if the statute is held applicable to such a purchaser, a recovery thereunder cannot be had against a mortgagor who remains in possession during the period of redemption.

It is conceded by the appellant that the exact proposition first contended for was decided contrary to his contention in the early history of this court in the case of Clement v. Shipley, 2 N. D. 430, 51 N. W. 414. But it is urged that this decision should be overruled and that the rule adopted in Rudolph v. Herman, 4 S. D. 283, 56 N. W. 901, should be accepted as a correct interpretation of the statute in question.

The case of Clement v. Shipley, supra, was well considered, and the interpretation adopted therein has both reason and authority to commend it. Furthermore, the rule therein laid down has so long been settled in this state, with the apparent sanction of the Legislature, that we are in no wise disposed to disturb it at this date. If the judicial interpretation of the statute made thus early in the history of the court did not conform to the true intention of the Legislature, it would seem that the statute would have been amended.

The next contention is predicated upon the wording of the statute. It is argued that, where the mortgagor remains in possession after the sale, he is entitled to all the benefits accruing from such possession; that, in fact, these benefits are secured to him by section 6740 of the Compiled Laws of 1913; also, that in no event can he be considered as the “tenant in possession” within the statute quoted. It is conceded that the purchaser or a redemptioner would be entitled to receive the rents or the value of the use and occupation accruing during the period of redemption if the premises, during such time, were in the possession of a tenant of the mortgagor, and the correctness of the previous decisions of this court to that effect is admitted. But it is claimed that the statute does not warrant an action in favor of a purchaser or redemptioner against the mortgagor in possession.

The effect of the sale is merely to continue the lien of the mortgage and to cut off the equity of redemption at the expiration of the statutory period allowed for redemption. See State ex rel. Forest Lake State Bank v. Herman, 36 N. D. 177, 161 N. W. 1017; also Jones on Mortgages, § 1661. As the holder of a lien evidenced both by the mortgage and by the sheriff's certificate of sale, the purchaser or redemptioner is not entitled to rents and profits save as such right is given by statute. Jones on Mortgages, § 1659. Since such a right is clearly given in this state under section 7762 of the Compiled Laws of 1913, where the premises are in possession of some one other than the mortgagor, there is no apparent reason why any distinction should be made based upon the circumstance as to whether or not the premises are leased. Neither is there any satisfactory evidence that such a distinction was in the mind of the Legislature. Had it been intended to give to the purchaser the benefit of the rents and profits or the value of the use and occupation only in case the premises were leased, it would seem that the Legislature would have clearly manifested its intention to that effect. To use the language of the Supreme Court of California, in the case of Harris v. Reynolds, 13 Cal. 514-515, 73 Am. Dec. 600, 601, in interpreting a statute identical with ours:

“It is not very easy to see the reason for such a distinction as that contended for. It would give but little help to the purchaser, since the debtor, on the eve of judgment might change a possession by tenancy, * * * so as to make of little or no value the purchaser's right; and why should a debtor be any more inhibited from getting profit from rent than getting profit from use. * * *”

The appellant's counsel severely criticizes the above expression of the Supreme Court of California, and particularly the last clause thereof; but the expression seems to us logically correct. We are not concerned with the reasons why a debtor should be “inhibited from getting profit” either from rent or from use. That is not a judicial question, but a legislative one. But it would seem that if the Legislature determines that a purchaser or a redemptioner is entitled, during the year of redemption, to the rents and profits or to the value of the use and occupation which ordinarily accrues to the owner, it would not be concerned in making a distinction based upon the consideration as to whether or not the premises are in the actual physical possession of the mortgagor or of his tenant. The only basis for a contention that such a distinction was intended is in the statutory designation of the one from whom the purchaser is entitled to receive the rents, etc., the language of the statute being “from the tenant in...