Julien v. Model Bldg., Loan & Inv. Co.

• Decision Date: 16 December 1902
• Citation: 116 Wis. 79,92 N.W. 561
• Parties: JULIEN v. MODEL BUILDING, LOAN & INVESTMENT CO.
• Court: Wisconsin Supreme Court

116 Wis. 79

92 N.W. 561

JULIEN

v.MODEL BUILDING, LOAN & INVESTMENT CO.

Supreme Court of Wisconsin.

Dec. 16, 1902.

Appeal from circuit court, Milwaukee county; Eugene S. Elliott, Judge.

Action by Fred J. Julien against the Model Building, Loan & Investment Company and by the investment company against said Julien. From judgments in favor of the investment company in both actions, said Julien appeals. Affirmed.

Action to enforce a lien on real estate under section 3314, Rev. St. 1898, as to the owner of two mortgages on the property, and other persons; and an action by the mortgagee against the lien claimant and such others to foreclose the mortgages. The actions were tried together on the issue raised by the answer of the mortgagee to the complaint in the lien action, and the answer of the lien claimant in the suit to foreclose the mortgages, as to whether such mortgages were encumbrances upon the property, affected by both claims, superior to the lien.

The following points were decided by the trial court, omitting formal matters as to which there is no dispute: May 25, 1899, defendants Mary Siebert and Frank Siebert her husband, for value gave the Model Building, Loan & Investment Company, a corporation organized under the laws of this state and of the character its name indicates, their bond to secure the payment of $3,000 with interest, and as collateral security thereto gave the association a mortgage in the ordinary form, dated on such day, on the premises described in the complaint, which said mortgage, on the day of the date thereof, was duly recorded. It was provided in the bond, among other things, that in case of any default in the conditions thereof existing for the space of six months, or the obligor suffering a mechanic's lien to accrue or be filed against the mortgaged property, the entire indebtedness should, at the option of such association, become due. The provisions of the bond in addition to the one particularly mentioned, are in harmony with the usual methods of dealing between a building and loan association and its borrowing members. The amount due upon the bond and mortgage is $3,542.38, with interest from the date of the findings, which sum the association is entitled to recover. On January 2, 1901, the conditions precedent to the right of the association to declare due the entire amount secured by the bond and mortgage existed, and it exercised its option in that regard by mailing copies of a notice of election in the matter to each of the debtors at their respective postoffice addresses in the city of Milwaukee, with the postage prepaid thereon. Facts similar to those mentioned exist as to the second bond and mortgage declared on in the foreclosure complaint and in the answer of the association in the lien action, for $1,000. Such mortgage was given by the Sieberts to the association December 16, 1899, and was duly recorded December 19, 1899. The amount the association is entitled to recover on such bond and mortgage is $365.21, with interest thereon from the date of the findings. Facts exist, alleged in the complaint in the lien action, entitling the plaintiff therein to a lien under section 3314, Rev. St. 1898, for $199.67. The lien petition was filed July 19, 1900. The lien dates from September 15, 1899, subject to whatever right of priority the association has under section 2014--5, Rev. St. 1898, which provides that mortgages upon real estate, taken by such associations, shall take precedence over all liens upon the mortgaged premises filed subsequent to the recording of such mortgages. The court decided as a matter of law that by force of such statute the plaintiff's lien was subordinate to the two mortgages, and ordered judgment of foreclosure of the mortgages, with suitable provisions for the protection of the lien claimant and other defendants interested in the property. The lien claimant appealed.M. N. Lando, for appellant.

Winkler, Flanders, Smith, Bottum & Vilas, for respondent.

MARSHALL, J. (after stating the facts).

The necessity of notice of election, by a creditor to his debtor, to exercise an agreed option to treat an entire indebtedness as due before the date specifically named in the papers evidencing the same and securing its payment, for non-performance of some stipulation of the contract, as a condition precedent to the use of judicial remedies for collection of the whole debt, is merely a rule of equity. In most jurisdictions no such notice is necessary. It is held that if the debtor makes default he is neither legally nor equitably entitled to notice that by reason thereof the creditor will consider the debt all due, before judicial remedies are resorted to to collect the same, unless such a notice is specifically provided for in the contract; that it is not the business of the courts to supply an element in the contract, by an arbitrary rule of construction, which the parties see fit to omit, because, without it, the contract would seem to be a harsh one. This court stands alone, or nearly so, in holding that notice of election should be given the debtor as a condition of treating the contract as fully matured; but its decision in that regard is not based upon a construction of the contract. Ping. Chat. Mortg. § 1539; Jones, Mortg. § 1182a, and cases cited. Pingrey is in error in classing California with this state on the subject. He cites Monroe v. Fohl, 72 Cal. 568, 14 Pac. 514, where the subject of necessity of notice before suit brought was not considered, the sole question being, what are the essentials of notice where one is required? In subsequent cases that court distinctly held that no notice is necessary unless specially required by the terms of the contract. Hewitt v. Dean, 91 Cal. 5, 27 Pac. 423;Sichler v. Look, 93 Cal. 600, 29 Pac. 220. In Hewitt v. Dean this language was used:

“It was competent for them to include in their note or mortgage a provision requiring notice of such election as a condition precedent to instituting the suit; but instead thereof they have agreed that upon the mere fact of the default the plaintiff may, at his option, treat the whole amount as due, and foreclose the mortgage. To add to this agreement the requirement that the plaintiff shall give notice of the election would be for the court to add to the agreement of the parties a condition which they have not themselves chosen to make.”

The rule here was first distinctly stated in Basse v. Gallegger, 7 Wis. 422, 76 Am. Dec. 225. It was not based upon judicial of other authority. The decision is not in conflict with those we have cited and many other cases that might be mentioned, as regards reading a requirement for notice out of the contract by construction. The rule was declared, as before indicated, as a rule of equity, to be applied where a person seeks its jurisdiction to enforce his mortgage to the full extent, under an option so to do, by reason of some default in the terms thereof. This language was used:

“It seems to us but just and proper to require the mortgagee, in cases like the present, to exercise his election, and give notice thereof to the mortgagor, before bringing suit.”

There is no disposition to recede from a doctrine so long established, or even to criticize it. The state of the law in general has been referred to merely to show that decisions as to what is sufficient notice of election to exercise the option, in a case where notice thereof is required by the contract either expressly or by implication, are not controlling where the requirement for such notice is not a matter of contract but a mere condition of the use of the equity jurisdiction to enforce the security. No doubt the rule that he who asks equity must do equity led to the adoption of the judicial policy of this state. If a person who, under ordinary conditions, is entitled to the benefit of the rule, is guilty of conduct toward his creditor rendering compliance by the latter unnecessarily burdensome, as by secreting himself, so notice of the election to treat the whole debt due cannot be served upon him, or by leaving his usual place of abode without acquainting his creditor where he can be reached by mail or otherwise, or making any provision for obtaining mail addressed to him at his last known place of residence,--he cannot be heard to complain that injustice was done him by his creditor's noncompliance with the rule. He will be deemed to have waived such compliance, or forfeited it. The equitable considerations which led the court to adopt the policy appellant invokes, justify, if they do not demand, the countervailing rule we have suggested, protecting the creditor against danger of having the value of his contract unnecessarily diminished by negligence or wilful misconduct on the part of the debtor, rendering it unreasonably difficult for the former to comply with the judicial rule designed for the latter's protection.

The claim here made is that proper notice of election to treat the entire indebtedness due was not given to the debtors, wholly on the theory that, prior to the time notices were mailed to them at Milwaukee, Wis.,--their post-office address when the indebtedness was contracted and for a considerable period of time thereafter,--they had changed their place of abode to some unknown point outside the state. Assuming in appellant's favor, for the purposes of the point under discussion, that the evidence shows all that is claimed for it, we think the debtors, by their conduct, waived the giving of any better notice to them than the one given. If they made no arrangement, upon departing from the state, to have mail addressed to them at Milwaukee, Wis., forwarded to them, and gave their creditor no information as to where they could be reached in some better way than by letter addressed to them at their old post-office address, they have no standing in equity to complain that they were brought into court to defend against a claim that the whole...