Grove v. Great N. Loan Co.

• Decision Date: 22 April 1908
• Citation: 116 N.W. 345,17 N.D. 352
• Parties: GROVE et al. v. GREAT NORTHERN LOAN CO.
• Court: North Dakota Supreme Court

17 N.D. 352

116 N.W. 345

GROVE et al.

v.GREAT NORTHERN LOAN CO.

Supreme Court of North Dakota.

April 22, 1908.

Syllabus by the Court.

A mortgage given for interest partly in excess of 12 per cent. per annum is not void in this state.

A purchaser of real estate subject to a mortgage thereon for interest partly in excess of 12 per cent. per annum is entitled to defend against the foreclosure of such mortgage so far as the entire interest is concerned, unless the amount of the usurious mortgage was deducted from the purchase price.

The purchaser in such cases is permitted to defend as against usury, on the ground that he stands in privity of contract and estate with the mortgagor.

The mere fact that the purchaser of real estate did not have actual notice of a mortgage on the land does not entitle him to set aside the sheriff's deed under a foreclosure regular in all respects where the mortgage was duly recorded, and the only ground on which relief is asked is that the mortgage was usurious.

A foreclosure by advertisement has the same binding force as foreclosures by action in which the parties are personally served with process.

No personal notice to the mortgagor or his grantees is required to render a foreclosure by advertisement effectual.

Mere inadequacy of the price at a foreclosure sale is not ground to set aside the foreclosure in the absence of fraud, undue advantage, or prejudice.

The statutory provision that a certificate of sale shall be filed 30 days after the sale is not mandatory.

The absence of a date in the mortgage as recorded will not vitiate a foreclosure thereof.

A purchaser of real estate on which there is a mortgage given for interest, partly usurious, is not entitled to have a sheriff's deed given on the foreclosure of the mortgage, regular in all particulars, set aside on account of such usury and on the ground that the had no actual notice of the mortgage or of the foreclosure, when the mortgage was duly recorded and the notice of foreclosure duly published, where the application is not made until about three months after the redemption period has expired.

Appeal from District Court, McHenry County; E. B. Goss, Judge.

Action by Lehman M. Grove and J. Fultz against the Great Northern Loan Company. Judgment for defendant, and plaintiffs appeal. Affirmed.Butler Lamb, for appellants. Christianson & Weber, for respondent.

MORGAN, C. J.

This is an action to set aside a sheriff's deed issued pursuant to a foreclosure of a real estate mortgage by advertisement under a power of sale.

The complaint states the following facts: The plaintiff Grove was the owner of the land involved in said mortgage from September, 1903, until May, 1904, and in the latter month conveyed the same by a warranty deed to Fultz, his coplaintiff in this case. In September, 1903, and while said land was owned by Grove, he entered into negotiations with the defendant, under which it was agreed between them that the defendant would furnish said Grove with $500, and said Grove was to mortgage said real estate to the defendant or to any one to whom the defendant should direct said mortgage to be given. Pursuant to this contract, a mortgage was executed and delivered by Grove to one Laton to secure $500 at 7 per cent. annual interest from its date, September 3, 1903, which mortgage was to become due in December, 1908. Two other mortgages were given at the same time pursuant to that contract, one to E. P. Gates for $82.50, of which $41.25 was due December 1, 1903, and $41.25, December 1, 1904, and the other to the defendant for $60, of which $10 was to be paid annually on November 1st until fully paid. All of these mortgages were duly recorded in the proper office. This $60 mortgage was foreclosed by the defendant by advertisement on February 25, 1905, and the land was bid in by it for the sum of $129.06, and on February 27, 1906, the sheriff issued a deed of the premises to the defendant. The complaint also alleges that this mortgage was wholly and entirely usurious and void, and that the foreclosure proceedings were for that reason void. It is further alleged that the plaintiff Fultz did not have any actual knowledge of the existence of the $60 mortgage, and had no actual notice of the foreclosure proceedings until in May, 1906, which was after the sheriff's deed had been delivered. it is claimed that this foreclosure was invalid for the following additional reasons: (1) That the mortgage was not dated as shown by the records of McHenry county, where the same is recorded. (2) That the affidavit of publication is dated March 11, 1905, and the sheriff's certificate is dated on February 25, 1905. (3) That the amount due on the mortgage is incorrectly stated in the notice of foreclosure; that the amount due is stated to be $81.96, whereas the amount due is only $67.50, conceding that the mortgage was not usurious. That in June, 1904, the plaintiff Grove conveyed the premises involved in this suit to said Fultz by a warranty deed for a valuable consideration. That said land was conveyed free of all incumbrances except the mortgage for $500, and said Grove expressly warranted that said mortgage did not draw interest in excess of 12 per cent. per annum. That the defendant was informed of the conveyance of said premises to said Fultz and knew his post-office address and did not notify said Fultz of said foreclosure nor of the default in the payment of the 1904 installment. That he has tendered to the defendant the full amount for which the defendant did purchase said premises at said sale and subsequent costs, but defendant refused to accept said tender. The relief demanded is that said $60 mortgage be declared canceled as well as the deed issued on the foreclosure thereof, and, if such relief be denied, that said defendant Fultz be permitted to redeem from said foreclosure sale. The defendant demurred to the complaint on the ground that it fails to state a cause of action, and the trial court sustained the demurrer, and plaintiffs have appealed to this court.

The appellant's contention is that the foreclosure sale, as well as the deed issued pursuant thereto, was absolutely void for the reason that it was wholly usurious. Conceding that the transaction was usurious, it nevertheless appears that the foreclosed mortgage did not represent interest wholly in excess of 12 per cent. per annum on $500 for five years. It was usurious, however, and, being a mortgage for interest only, the interest would be subject to forfeiture in a proper case. The question is therefore presented whether a foreclosure of a mortgage representing in part a usurious transaction is void, and, if void, whether the plaintiffs are permitted to set up that fact as a ground for affirmative relief against a foreclosure sale after the redemption period has expired. Conceding that the $60 mortgage represented some interest in excess of 12 per cent., the highest legal rate allowed, we are agreed that the plaintiff Grove is clearly not entitled to the relief demanded. There is no allegation or claim that he did not have actual notice of the foreclosure and permitted it to go on until the deed was issued without asserting his defense. If he has a right to be heard now in defense of his covenant of warranty, he had the same right while the foreclosure was pending. Conceding that he had a legal right to prevent the foreclosure jointly with Fultz, he did not invoke that right, and now demands equitable relief without attempting to excuse this default. He has lost all right to equitable relief. He should have made his defense seasonably.

The plaintiff Fultz seeks equitable relief upon different grounds. He alleges that he had no knowledge of the $60 mortgage, and no actual notice of the foreclosure thereof. The regular notice prescribed by statute for a foreclosure of mortgages by advertisement was given by publication. This notice was conclusively binding on Fultz, and had the same legal effect on him as if a personal notice had been served on him. He cannot now be heard to assert that he did not know of the foreclosure. He is presumed to have had notice thereof, and will not be heard to assert that he did not know what the law imputes to him as notice. Barney v. Little, 15 Iowa, 527;Ensign v. Batterson, 68 Conn. 298, 36 Atl. 51;Smith v. Boyd, 162 Mo. 146, 62 S. W. 439;Beach v. Osborne, 74 Conn. 405, 50 Atl. 1019, 1118;Curtis v. Moore, 152 N. Y. 159, 46 N. E. 168, 57 Am. St. Rep. 506;Chadwick v. Russell, 117 Ala. 290, 23 South. 524. Whether Fultz is entitled under any conditions to raise the question of usury is a question of serious contest between the parties. The defendant claims that a purchaser of land, subject to an existing mortgage, can never raise the question of usury in such mortgage. Under many circumstances the contention is true, as that right is generally personal to the borrower....