Kremer v. Rule

• Decision Date: 06 November 1934
• Citation: 216 Wis. 331,257 N.W. 166
• Parties: KREMER ET AL. v. RULE ET AL.
• Court: Wisconsin Supreme Court

216 Wis. 331

257 N.W. 166

KREMER ET AL.

v.RULE ET AL.

Supreme Court of Wisconsin.

Nov. 6, 1934.

Appeals from four orders of the Circuit Court for Iowa County; S. E. Smalley, Circuit Judge. Reversed.

This action was commenced on September 26, 1931, by the plaintiffs Joseph Kremer, Ida Tesch, Peter Treiber, Dennis Sullivan, and Charles A. Weingartner, against the defendants Howard Rule and Mary Rule, his wife, Minnie Crase and Walter Crase, her husband, Lillie Haines and Dan Haines, her husband, Badger Zinc Company, a Wisconsin corporation, Mrs. Harry Hodge, Curtis Faull, Clyde Faull, and Farmers' Savings Bank of Edmund, Wis., a Wisconsin banking corporation, to foreclose a real estate mortgage which secured several notes separately owned by the plaintiffs. Judgment of foreclosure and sale was entered on December 29, 1931. From three separate orders denying confirmation of three separate sales and from an order directing the clerk of said court to pay to Minnie Crase, one of the defendants, a part of certain moneys impounded, the plaintiffs appealed. By stipulation the appeals are heard together.Kopp & Brunkchorst, of Platteville, for appellants.

George J. Larkin and J. Charles Pile, both of Dodgeville, for respondents.

NELSON, Justice.

This is the second appeal to arise in this action. The first appeal was from that part of the judgment which appointed a receiver. That judgment was affirmed. Kremer v. Crase, 209 Wis. 183, 244 N. W. 596, 87 A. L. R. 1004. After the expiration of the one-year period of redemption, pursuant to due notice of sale, the premises were struck off to the plaintiffs for $10,000. Upon the application of the plaintiffs to confirm that sale, a hearing purporting to comply with the rules approved in Suring State Bank v. Giese, 210 Wis. 489, 246 N. W. 556, 557, 85 A. L. R. 1477, was held for the purpose of determining whether the plaintiffs' bid was inadequate and for the further purpose of permitting the court, in case it deemed the bid sustantially inadequate, (1) to fix a “minimum or upset price” of the premises on a resale thereof, and (2) to determine the fair value of the premises which the plaintiffs might at their option credit on their foreclosure judgment, as a condition precedent to immediate confirmation of the sale. After hearing had, the court was of the opinion that the plaintiffs' bid of $10,000 was substantially inadequate. It thereupon fixed an upset price of $13,325 on the lands in question. The court also concluded that the fair value of the premises was exactly the same as the “upset price” fixed, and therefore gave to the plaintiffs the option to credit on their foreclosure judgment the sum of $13,325 as a condition precedent to confirmation. The plaintiffs refused to so credit. The court thereupon entered a formal order in which it refused to confirm the sale, fixed the upset price of the land at $13,325 ($65 per acre), and ordered a resale of the premises. Upon the second sale which was duly held, the premises were again struck off to the plaintiffs for $10,000. Upon the application of the plaintiffs to confirm that sale, the court again refused to confirm it, ordered a resale of the premises, and entered a second order in all respects similar to the first one. Thereafter a third sale was duly held and the premises were again struck off to the plaintiffs for $10,000. Upon application to confirm that sale, the court refused to confirm it unless the plaintiffs would credit on the foreclosure judgment the amount of the upset price or fair value theretofore fixed. Plaintiffs declined to credit that sum on their judgment, and thereupon specifically offered to prove by a number of witnesses named that the value of the lands had declined since the court had fixed the upset price or fair value thereof. The court declined to receive the proof offered, and entered a third order in which confirmation was denied and another sale of the premises ordered. Some time thereafter, upon the petition of the defendant Minnie Crase that she be paid out of the funds impounded with the clerk of the court the sum of $2,069.20 (the amount which would have remained in the hands of the clerk had the plaintiffs elected to accept the option given them to credit the sum of $13,325 on their judgment and had they satisfied their deficiency out of the funds in the clerk's hands), the court ordered that said sum be paid to her.

It appears that the mortgage herein was given in the year 1926 to secure a loan of $12,000; that the loan was evidenced by several notes, so that the mortgagee might sell them to such of its customers as desired relatively small but secure investments. All of the notes were separately sold to the plaintiffs and indorsed without recourse. In 1931, the mortgagor defendants being in default, this action was commenced. On December 29, 1931, judgment of foreclosure was duly entered. The judgment, which is in the usual form, adjudged that there was due to the plaintiffs for principal and insurance, with interest thereon, the sum of $12,769 for solicitor's fees $238.85, and for the costs and disbursements of the action $197.64; that the mortgaged premises, or so much thereof as might be necessary to raise the amount due the plaintiffs for principal, etc., be sold at public auction by the sheriff of Iowa county, after one year from the date thereof; that if, upon the sale of said premises, there should be a deficiency, the plaintiffs should have judgment for the amount of the deficiency against certain of the named defendants who were personally liable therefor, and that, if there should be a deficiency judgment rendered, then certain moneys deposited with the clerk of the court, or so much thereof as should be necessary, should be applied toward the payment of such deficiency judgment, and any part thereof remaining should be paid to the defendant Minnie Crase.

[1] It further appears that, some time after the original mortgage was given, defendant Minnie Crase, unbeknown to the plaintiffs, leased some of the lands covered by the mortgage to the Badger Zinc Company, which company thereafter entered into the premises by means of a drift from adjoining property, conducted extensive mining operations therein, removed large quantities of ore therefrom, and thereby impaired the value of the mortgage security. Before the plaintiffs learned of the mining operations, royalties amounting to about $3,000 had already been paid to the defendant Minnie Crase, for which sum she did not account to the plaintiffs, but converted the same to her own use. Upon learning of the mining operations, the plaintiffs notified the mining company not to pay any further royalties to her. Thereafter it was agreed between the parties that all unpaid royalties should be deposited in escrow with the Central Wisconsin Trust Company of Madison, subject to the future determination of the question as to who was entitled thereto. In Kremer v. Crase, supra, it was held that the royalties first deposited with the said trust company and later transferred to the custody of the clerk of the court by the judgment of foreclosure herein were impressed with the lien of the mortgage and took the place of the ore removed as security for the mortgage debt. At the time of the three sales hereinbefore mentioned, the fund in the hands of the clerk amounted to $3,642.97, which obviously, and under the decision in Kremer v. Crase, supra, was subject to the lien of the plaintiffs' judgment.

It further appears that the buildings upon the premises were about forty years old, and that some of them were so run down and dilapidated as to be useless for ordinary farm purposes. Several witnesses testified, and their testimony was not disputed, that a purchaser of the lands necessarily would have to replace some of the buildings because they were beyond repair.

It further appears that several of the plaintiffs were aged and in necessitous circumstances. Ida Tesch, a widow 63 years of age, living in town, was in financial distress, and particularly in need of money with which to pay her deceased husband's funeral expenses. She had no income to live on. Peter Treiber, another plaintiff, was about 70 years old, a cripple, and suffering from a stroke. He was greatly in need of funds. Joseph Kremer, a farmer, was about 75 years of age and had no income. Charles Weingartner was about 56 years of age and in fairly comfortable circumstances. Dennis Sullivan, the remaining plaintiff, was 84...