Hanson v. Federal Land Bank

• Decision Date: 05 August 1935
• Docket Number: 7790
• Citation: 63 S.D. 622,262 N.W. 228
• Parties: HARRY N. HANSON, Trustee of the Estate of Van V. Reeves, Deceased, Appellant, v. FEDERAL LAND BANK OF OMAHA, et al, Respondents.
• Court: South Dakota Supreme Court

63 S.D. 622

262 N.W. 228

HARRY N. HANSON, Trustee of the Estate of Van V. Reeves, Deceased, Appellant,

v.

FEDERAL LAND BANK OF OMAHA, et al, Respondents. South Dakota Supreme Court Appeal from Circuit Court, Minnehaha County, SD Hon. John T. Medin, Judge #7790—Affirmed T. R. Johnson, Sioux Falls, SD Attorney for Appellant. Conway, Feyder & Conway, Sioux Falls, SD Attorneys for Respondents. Opinion filed August 5, 1935

WARREN, P. J.

An action was instituted by the trustee of the Reeves estate for the cancellation of the defendant bank’s mortgage foreclosure. It would appear that the mortgage in question became effective in 1925; that at that time there were in effect certain statutes relating to mortgage foreclosure by advertisement, namely, sections 2876 to 2886, 1919 South Dakota Revised Code, Section 2879 provided that the notice of foreclosure must be published once a week for six consecutive weeks. The Legislature by chapter 177 of the S.D. Session Laws for the year 1929 shortened the time of publication by stating that a notice must be published in a legal newspaper at least once a week for four consecutive weeks. At the conclusion of the trial in which the plaintiff attacked the validity of the foreclosure proceedings by advertisement, the court made findings of fact, conclusions of law, and a judgment finding that the proceedings of foreclosure by advertisement in the giving of the notice for four consecutive weeks was sufficient and that the sale was regularly conducted; that the plaintiff was in default and that the property was sold by the sheriff of Minnehaha county to the Federal Land Bank of Omaha, Omaha, Neb., for the sum of $17,459.53, it having been the highest bidder at said sale; that the sheriff gave the said purchaser a certificate of sale and that the report containing all the necessary papers was duly filed in the office of the register of deeds of Minnehaha county. The court further found that there was a sufficient power of sale in the mortgage to foreclose said mortgage by advertisement and that default existed at the time the foreclosure proceedings were instituted. The plaintiff has appealed, and alleges, first, that the mortgage did not contain a sufficient power of sale and could not be foreclosed by advertisement; second, that the notice was insufficiently published in that it was not published for six consecutive weeks; thirdly, that the defendant bank, by foreclosing said mortgage as it did, attempted to practice law against the public policy and contrary to the laws of this state.

The power of sale contained in the mortgage having been attacked as being insufficient for the purpose of foreclosure by advertisement, the following portion of the mortgage is set forth verbatim:

“And the said parties of the first part do further covenant and agree that in case of default in payment of said principal sum of money or of any amortization installment thereof, or of interest thereon, or in the performance of any of the covenants or agreements herein contained, then, or at any time thereafter, during the continuance of such default, the said party of the second part, or its successors or assigns, may, without notice, declare the entire debt hereby secured, immediately due and payable, and thereupon the said party of the second part, or its successors or assigns are hereby authorized and fully empowered to sell said premises at public vendue and convey the same to the purchaser in fee simple, agreeable to the statutes in such case made and provided, and out of the proceeds of such sale to pay all and singular the sums of money hereby secured, together with all legal costs and charges of such sale and lawful attorney’s fees, and to pay the surplus, if any, to the said parties of the first part, their legal representatives or assigns.”

Section 1566 of the 1919 S.D. Revised Code contains the standard form of real estate mortgage in this state, which section was in effect at the time of the giving of this mortgage. A portion of it reads as follows:

“In case of default in the payment of said principal sum of money or any part thereof or interest thereon at the time or times above specified for payment thereof, or in case of non-payment of any taxes, assessments, or insurance as aforesaid, or of breach of any covenant or agreement herein contained, then and in either case, the whole, principal and interest, of said note ... shall at the option of the holder thereof, immediately become due and payable, and this mortgage may be foreclosed by action, or by advertisement as provided in title 2, of the Revised Code, and this paragraph shall be deemed as authorizing and constituting a power of sale as provided in said title, and any acts amendatory thereof.” It will be observed, that the statutory form contained in section 1566 need not be followed, as section 1567 states that “the provisions of the preceding section do not preclude the use, affect the validity or control the interpretation of other forms of real estate mortgages.” It is therefore apparent that other forms may be used and that the so-called statutory form is not exclusive. Powers of sale in mortgages are undoubtedly intended to avoid the delay and expenses incident to foreclosure and seem to have obtained general favor. Blackshear et al v. First National Bank of Dothan (C. C. A.) 261 F. 601. The Circuit Court of Appeals in dealing with powers of sale upon default observed that the mortgages are given several modes of executing the power and that where there is a provision for public sale after published notice it is not open to legitimate attack. The record in that case, as in this, discloses that the property was enumerated and embraced in the mortgage and that it was sold at the public outcry to the highest bidder for cash during the legal hours of sale at the proper place after maturity of the debt; that it brought a fair and reasonable value; and the court further found that the power of sale was sufficient. An examination of the power of sale indicates that the language therein employed was not as explicit, concise, or specific as that in the mortgage now before us.

The Supreme Court of California in an early case, Fogarty v. Sawyer, 17 Cal. 589, in passing upon a mortgage in the usual form with a clause authorizing the mortgagee or his assigns to foreclose in case of default in the payment of the note and interest, and wherein the power of sale reads in part as follows: “To sell the premises above granted at public outcry, or so much thereof as will be necessary to satisfy said note,’ and all the interest due thereon, with all proper costs and expenses attending such sale,” dealt with the contention that there was no authority to convey the property, as it was not specifically enumerated, and that the power of sale was insufficient, and held that there was sufficient power, saying:

“The instrument does not, it is true, in express terms authorize the mortgagee to execute a conveyance to the purchaser, but such authority is necessarily incident to the authority to sell. The abject was to confer a power in a certain event to dispose of the real property and transfer the title to the purchaser, and not merely to contract for a conveyance. In Valentine v. Piper, 22 Pick. [Mass.] 85 , a similar objection was taken to a deed executed by an attorney, but the Court held the objection untenable, and said: ‘Where the term “sale” is used in its ordinary sense, and the general tenor and effect of the instrument is, to confer on the attorney a power to dispose of real estate,...