Hedlin v. Lee

• Decision Date: 18 May 1911
• Citation: 131 N.W. 390,21 N.D. 495
• Parties: HEDLIN v. LEE, Sheriff et al.
• Court: North Dakota Supreme Court

21 N.D. 495

131 N.W. 390

HEDLIN

v.LEE, Sheriff et al.

Supreme Court of North Dakota.

March 25, 1911.

Rehearing Denied May 18, 1911.

Syllabus by the Court.

In an action to quiet title to a quarter section of land in Ward county, defendants assert rights based on certain foreclosure proceedings by advertisement and a sheriff's deed issued pursuant thereto. The mortgage was given to secure the payment of the sum of only $25. Prior to the commencement of the foreclosure proceedings, plaintiff, in good faith, offered to pay the sum due, which was refused; but he failed to technically comply with the statute in making a tender, or in keeping such tender good by subsequently depositing the amount in a bank in conformity to the statute, and by giving the creditor notice thereof, although he, in fact, deposited in a bank the amount then due, lacking 35 cents. With knowledge of plaintiff's willingness and desire to pay whatever was owing, the holder of such mortgage caused foreclosure proceedings to be commenced by the publication of notice of sale in a newspaper published about 70 miles from the land, when there were newspapers in the immediate vicinity thereof, for the evident purpose of keeping plaintiff in ignorance of such foreclosure proceedings. On the day appointed for sale, the premises were struck off to the holder of the mortgage for the paltry sum due, with costs; she evidently being the sole bidder at the sale. Plaintiff acquired no actual knowledge thereof until after such sheriff's deed was issued. In the light of the above and other facts stated in the opinion, held, that the power of sale contained in such mortgage was not exercised in good faith, and the foreclosure sale and the sheriff's deed are null and void.

The person having the right to exercise a power of sale in a mortgage is bound to the exercise of the utmost good faith and fair dealing towards the mortgagor or owner of the premises, and a mere technical or literal compliance with the statute by him is not alone sufficient.

The fact of the apparent gross inadequacy of price, coupled with the other facts, not only fully justify, but require, a court of equity to find that the power of sale was exercised in bad faith, and to adjudge to be invalid all proceedings under such attempted foreclosure.

Additional Syllabus by Editorial Staff.

Where the owner of premises was in actual possession after a void foreclosure sale was had and sheriff's deed issued, persons who took mortgages on such premises from those buying from the purchaser at the sheriff's sale, who was the holder of the mortgage foreclosed, took the mortgages with full knowledge of the rights of the owner in possession, and were not innocent mortgagees, entitled to liens on the premises under their mortgages.

Appeal from District Court, Ward County; Charles F. Templeton, Judge.

Action by Albin Hedlin against John J. Lee, Sheriff of Ward county, and others. Judgment for defendants, and plaintiff appeals. Reversed, with directions.

Murphy & Wooledge, for appellant. John E. Greene, W. H. Campbell, and Palda, Aaker, Greene & Kelso, for respondents.

FISK, J.

The facts necessary to a correct understanding of the questions involved on this appeal are as follows:

In January, 1903, one Peter Rosenlund made final proof for the land in dispute, and thereafter patent was issued to him by the United States government. On January 17, 1903, Rosenlund executed to defendant Nathan M. Barnes two mortgages covering such land, one to secure the payment of the sum of $500, due in five years, with interest at 8 per cent., and one to secure the payment of $25, payable in equal annual installments of $5 each, representing the additional interest of 1 per cent. on such loan. The validity of these mortgages is not questioned, and they were duly satisfied of record prior to the commencement of this action.

Defendant George H. Gjertsen acted as attorney or agent for Rosenlund in making such final proof and in procuring such loan. On January 26, 1903, plaintiff, Hedlin, purchased the land in controversy from Rosenlund for the stipulated consideration of $1,600, payable as follows: $150 cash, $475 November 1, 1903, $475 November 1, 1904, and the assumption by plaintiff of the Barnes mortgage aforesaid. Such purchase price was paid, and the land deeded to Hedlin by Rosenlund in October, 1904. Prior to entering into the written contract for such purchase, Hedlin acquired knowledge of the $25 mortgage, and the vendor Rosenlund, thereupon agreed to pay the same, and finally it was agreed that Hedlin should also assume such mortgage and deduct the amount thereof from the cash payment to be made by him.

These parties thereafter employed defendant Gjertsen to draw the contract of sale, and either immediately prior or subsequent to the execution of such contract, Gjertsen demanded of Hedlin the settlement of a further claim of $25, which he asserted was due Barnes Bros. for additional interest on the mortgage given by Rosenlund, and he offered to take a third mortgage for such amount, or in lieu thereof $20 in cash, stating that if not settled the mortgagees would foreclose. Hedlin did not at that time agree to pay this claim, but, on or about April 1, 1903, Gjertsen induced him to execute a mortgage for $25 to Barnes, which mortgage he forwarded to Barnes Bros., who subsequently assigned the same to Mrs. Gjertsen, and such assignment was recorded in January, 1904.

Subsequently Gjertsen, acting for his wife, the assignee thereof, foreclosed such mortgage by advertisement, causing the notice of sale to be published at Minot, and plaintiff did not learn of the foreclosure proceedings until after a sheriff's deed had issued. Immediately upon learning such facts, plaintiff instituted this action to cancel such mortgage and the sheriff's deed, and to quiet title, and such sheriff's deed is the basis of the adverse claims of the defendants herein. The power of attorney authorizing the foreclosure was executed on December 2, 1904, and the first publication of notice of sale was made on December 8, 1904. The sheriff's deed was issued to Mrs. Gjertsen soon after the expiration of the year of redemption and very soon thereafter she deeded the land to her father, defendant Charles A. Lind, who soon thereafter executed and delivered to defendant Henry A. Barnes mortgages under which Barnes Bros. now claim a lien on the land.

It is appellant's contention (1) that there was no consideration for the $25 note and mortgage; (2) that there was a valid and legal tender made by plaintiff to Gjertsen, prior to the commencement of the foreclosure proceedings, of the amount apparently due thereon, which tender operated in law to divest the lien of such mortgage; (3) that the notice of sale, as published, is vitally defective in not stating that the assignment of the mortgage to Mrs. Gjertsen had been recorded; (4) that in taking the mortgages from defendant Lind defendant Henry A. Barnes had full knowledge of the facts, and is not an innocent incumbrancer; and (5) that the foreclosure sale was for a sum in excess of the amount due, and that the notice of sale is void, because the amount therein claimed to be due was in excess of the amount apparently due.

The conclusion reached by us renders it unnecessary to notice all of appellant's contentions. We are agreed that the judgment must be reversed, and will, as briefly as possible, state our reasons for such conclusion. Whether there was any consideration for the $25 note and mortgage which was foreclosed, or whether plaintiff's alleged tender was technically sufficient, is not very material, as a determination of these questions adversely to appellant's contention would in no manner be controlling. We shall decide the case on the assumption, which we think is correct, that the trial court correctly decided both of these questions.

[1] The testimony fairly discloses that some time in the fall of 1904, and prior to the commencement of the foreclosure proceedings, plaintiff called upon Gjertsen for the express purpose of paying the installments due on such mortgage indebtedness, and requested of him information as to the amount due; that Gjertsen, representing his wife, refused to furnish such information and declined to accept any sum, unless certain alleged costs of foreclosure...