Holmquist v. Gilbert

Citation41 Colo. 113,92 P. 232
Decision Date07 October 1907
CourtSupreme Court of Colorado

Appeal from District Court, Phillips County; E. E. Armour, Judge.

Action by E. Gilbert against John Holmquist. Judgment for plaintiff and defendant appeals. Reversed.

Campbell Gabbert, and Maxwell, JJ., dissenting in part.

J. H. Painter and Allen & Webster, for appellant.

Wm. T Rogers and J. S. Bennett, for appellee.


This was an action in the district court of Phillips county to recover the sum of $700 claimed to be due upon a promissory note executed by the appellant, who was defendant below, and owned at the time of the suit by the appellee, who was plaintiff below. The case comes to this court by appeal, and upon an agreed statement of facts setting forth in substance that the appellant in 1887 executed to Henry J. Aldrich as trustee, for the use and benefit of one Stillman, a certain trust deed conveying certain lands in Phillips county to said Aldrich in trust to secure the payment of the promissory note for $500 and interest thereon; that the note was thereafter transferred to the plaintiff below, together with the trust deed; that on the 6th day of December, 1902, the same was foreclosed by notice and sale, according to the terms of the trust deed, by Alex Sederberg, the substitute trustee; that the property was purchased by the plaintiff for the sum of $200, which amount was indorsed upon the note of appellant by trustee; that in December, 1902, this action was begun in the county court of Phillips county for the balance of the principal and the interest on said note, amounting to $700; that within the time allowed the defendant answered the statute of limitations. It was agreed that no payments whatever were made upon this note, which was due October 1, 1892, until the said payment of $200 by the substitute trustee on December 6 1902. It was further stipulated that the trust deed, signed and delivered by the defendant to the plaintiff's grantor, authorized the trustee named therein, or his substitute, to sell the land given as security for the payment of the note of the defendant at public auction, after proper advertisement, and to apply the proceeds of said sale to the payment of the indebtedness evidenced by the note, and that the substituted trustee did apply the entire amount of the proceeds of the said sale upon the said promissory note, and it was stipulated that the said Sederberg was chosen as substitute trustee and that he made the indorsement upon said note as substitute trustee December 6, 1902; that the holder of the trust deed was empowered to substitute any person as trustee, and that the acts of the substituted trustee should have the same force and effect as acts of the original trustee; that there was no legal or equitable defense to the cause of action, except the statute of limitations. The trust deed itself appears in the record, and supports the agreement and stipulation as above set forth.

The real question presented in this case is whether the indorsement by the trustee of the proceeds of the sale of the property described in the trust deed upon the note of the maker in such an acknowledgment of the indebtedness that a promise to pay the balance is inferred, and that the debt is taken out of the bar of the statute of limitations. It is claimed by the appellee that the trust deed itself is not affected by the statute of limitations, although the note might have been, without the part payment; that the application of the proceeds by the trustee was directed by the maker of the note and trust deed at the time of its execution, and this is one of the conditions of the trust which is not affected by the statute of limitations; that such direction constituted the trustee such an agent of the maker of the note that the application of the proceeds became the act of the maker and that the part payment was sufficient to acknowledge the debt, and that the promise to pay the balance of the debt should be inferred therefrom. We agree with the contention of counsel for the appellee that the foreclosure of the trust deed was not affected by the statute of limitations. The statute goes to the remedy, not to the cause of action, and does not extinguish the debt. It is a means of defense, to be pleaded by the defendant as a personal privilege. Grant v. Burr, 54 Cal. 300; Farmers' Loan & Trust Co. v. Denver L. & G. Co., 126 F. 46, 60 C.C.A. 588; Fievel v. Zuber, 67 Tex. 275-279, 3 S.W. 273; Henry v. Mining Co., 1 Nev. 620, 623; Menzel v. Hinton, 132 N.C. 665, 44 S.E. 385, 95 Am.St.Rep. 647; Jones on Mortgages (6th Ed.) § 1203, and cases cited. Our statute (section 2900, Mills' Ann. St.) reads: 'The following actions shall be commenced within six years next after the cause of action shall accrue and not afterwards.'

Without attempting to discuss the question as to whether our statute under any circumstances applies to an express trust, it is clear that the sale in this case does not come under the bar of the statute. In no sense is the foreclosure proceeding by the trustee by notice and sale under the terms of the trust to be considered an action such as is barred by the statute. Menzel v. Hinton, 132 N.C. 660, 44 S.E. 386, 388, 95 Am.St.Rep. 647; Hall v. Bartlett, 9 Barb. (N.Y.) 297, 302; Goldfrank v. Young, 64 Tex. 432; Hayes v. Frey, 54 Wis. 503, 11 N.W. 695; Stevens v. Osgood, 18 S.D. 247, 100 N.W. 161, and cases cited. It has been held in this state that 'an action is a proceeding on the part of one person as actor against another, for the infringement of some right of the first, before a court of justice in the manner prescribed by the court or the law.' Jones v. Bank of Leadville, 10 Colo. 479, 17 P. 272. And it is further provided by our Code that actions shall be prosecuted and defended as prescribed in the act. 'Where the plaintiff ths several remedies for the same cause of action, the fact that one or more of his remedies have become barred will not affect his right to any of the others which are not barred.' 19 Am. & Eng. Enc. Law, p. 152, and cases cited; 25 Cyc. 999, and cases cited; Hayes v. Frey, supra; Stevens v. Osgood, supra; Menzel v. Hinton, 132 N.C. 660, 44 S.E. 386, 95 Am.St.Rep. 647; Goldfrank v. Young, 64 Tex. 432; Fievel v. Zuber, supra.

This right of foreclosure by the trustee is not seriously disputed by the appellant, although our attention is called to the ruling in McGovney v. Gwillim, 16 Colo.App. 284, 65 P. 346. It is sufficient to say that in the latter case the court holds that in the case before it 'by the bringing of this suit the holder of the note and of the indebtedness has elected to waive the right of sale by the trustee,' and treats the deed of trust as a mortgage. The question involved here was not presented in that case. The trustee undoubtedly had the right to sell the property described in the trust deed whenever requested by the holder of the note, and under the terms and conditions of the deed itself, and had the right, and it was his duty, to apply the proceeds of such sale to the payment of the note. It does not follow, however that he was such an agent of the maker that the payment became the voluntary act of the maker himself, nor that the payment was such an acknowledgment of the existing indebtedness that the law implies a promise to pay the balance. Trust deeds and mortgages with the power of sale convey the legal title of the property described therein to the trustee or mortgagee. Belmont Mining Co. v. Costigan, 21 Colo. 479, 42 P. 647, and cases cited. The rules of construction for the one apply to the other. In Campbell v. Baldwin, 130 Mass. 200, the court, having under consideration this question in connection with a power of sale mortgage, says: 'The ground upon which a part payment is held to take the case out of the statute is that such payment is a voluntary admission by the debtor that the debt is then due, which raises a new promise by implication to pay it or the balance. To have this...

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    ......Benedict, 41 Colo. 16, 92 P. 238, the. supreme court of Colorado reiterated the rules announced by. it in two of its prior decisions-- Holmquist vs. Gilbert, 41 Colo. 113, 92 P. 232, and Foot vs. Burr, 41 Colo. 192, 92 P. 236--thus: "In the above. cases it was held: (1) That our statute ......
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