Lowell v. North

• Decision Date: 01 January 1860
• Citation: 4 Minn. 15
• Parties: CHARLES L. LOWELL vs. NORTH & CARLL.
• Court: Minnesota Supreme Court

4 Minn. 15

(4 Minn. R. p. 32.)

CHARLES L. LOWELLvs.

NORTH & CARLL.

Supreme Court of Minnesota.

Appeal from judgment of district court, Dakota County.

Points and authorities for appellant: —

1. After foreclosure by advertisement, no action can be maintained to recover any balance of the debt secured. The creditors having foreclosed upon property exceeding in value the amount of the debt, and purchased and entered into possession of the property, the debt was thereby extinguished. Spencer v. Harford, 4 Wend. 384; Morgan v. Plumb, 9 Wend. 287; Case v. Boughton, 11 Wend. 107; 2 Greenl. Ev. § 524; Hedge v. Holmes, 10 Pick. 380.

2. As trustees, they were bound to use good faith and every reasonable degree of diligence in conducting the sale, so as to obtain the highest available value of the property, and apply the same to the payment of the note, and to that amount they must account to defendant. Burrill on Assignments, 498; Howard v. Ames, 3 Met. 308; Southard v. Wilson, 29 Maine, 56; Johnson v. Candaye, 31 Maine, 28.

3. Having contrived to procure a sale to themselves at a nominal price, when the property was worth more than the debt, this is a defense to an action for the balance. Howard v. Ames, 3 Met. 308; 1 Hill. on Mort. 131; id. 228 to 242; Burrill on Assignments, 553; Oliver v. Piatt, 3 How. 333; Hill on Trustees, (2 Am. Ed.) 756, 800.

4. They cannot claim that by reason of the abuse of their trust the foreclosure is incomplete, and their title liable to be defeated.

Points and authorities for respondents: —

1. If the foreclosure was illegal, and the premises sold for less than the value, defendant could not be prejudiced thereby, for he might redeem.

2. The debt was not extinguished by the sale. If it was illegal, no part of the debt was extinguished by it; if legal, the amount realized, less costs, applied to part payment of the note.

3. If there was no paper published in the county where the premises were situated, the notice should be published in some paper at the seat of government. Rev. Stat. ch. 85, § 4; Laws of 1858, pp. 293-4; Comp. Stat. ch. 3, § 2.

Charles L. Lowell, in person.

L. & S. Smith, for respondent.

ATWATER, J.

The plaintiffs below, North & Carll, bring their action to recover the sum of $633.77, claimed to be due from the defendant upon a promissory note. The complaint sets forth the making and delivery of the note by the defendant, &c., and also the execution and delivery by the defendant of a mortgage to secure the same, upon certain lots in the town of Wilton, Waseca County; that default had occurred in the condition of said mortgage, and the same had been foreclosed and the property sold for $300, which (with other payments) had been indorsed upon the note, leaving a balance due on the same of $633.77, for which, with interest at the rate of three per cent. per month, the plaintiff demanded judgment. The answer admits the execution and delivery of the note and mortgage, but sets up as a ground of defense, that the plaintiffs proceeded to foreclose the mortgage by advertisement, and that in so doing they did not comply with the requisitions of the statute in reference thereto; that the notice of sale was not published in a newspaper printed in the county where the mortgaged premises were situated, nor in the nearest paper in one of the adjoining counties; that the time and place of sale were unknown to the defendant, and were not publicly and generally known, whereby the sale was not generally attended by purchasers; that the plaintiffs procured a formal purchase by themselves for the sum of three hundred dollars, when in fact the premises were worth one thousand dollars, and would have brought at any sale duly published, and made fairly and in good faith, more than sufficient money to pay the balance due on the note. The cause was tried by the court, and judgment rendered for the plaintiffs for the amount demanded in the complaint. In the facts found by the court, no mention is made in regard to any of the allegations above stated in the answer, and it is presumed the court held them immaterial. If they are so in fact, no finding upon them would be required; but if otherwise, an omission to try those issues would be error, and if the allegations are admitted to be true, would form a good defense to the action. To determine their materiality, it will be necessary to consider the duties and liabilities of a mortgagee, in the management and disposal of the property conveyed to him, as security for the indebtedness of the mortgagor.

The relations of the mortgagor and mortgagee are in some respects identical with those of trustee and cestui que trust. Technically, they are not so termed, the rights and liabilities of each being defined and limited by statute more specifically than is done in the case of the trustee and cestui que trust. The mortgagee, however, is in one sense a trustee of an express trust. He has received a conditional conveyance of property from his debtor as security for his debt. He holds it for that purpose only, and can only dispose of it for the accomplishment and in...