Marshall & Ilsley Bank v. Greene

• Decision Date: 15 March 1938
• Citation: 278 N.W. 425,227 Wis. 155
• Court: Wisconsin Supreme Court
• Parties: MARSHALL & ILSLEY BANK v. GREENE et al.

227 Wis. 155

278 N.W. 425

MARSHALL & ILSLEY BANK

v.GREENE et al.

Supreme Court of Wisconsin.

March 15, 1938.

Appeal from a part of a judgment of the Circuit Court for Milwaukee County; Otto H. Breidenbach, Judge.

Reversed.

FAIRCHILD, J., and ROSENBERRY, C. J., dissenting.

The action was commenced on August 25, 1936, by the plaintiff, Marshall & Ilsley Bank, as trustee, against the defendants, Nathanael Greene, Harriet Greene, his wife, Residence Realty Corporation, and others, to foreclose a real estate mortgage made, executed, and delivered by the defendants Nathanael Green and wife, on April 10, 1934, to secure two promissory notes for $160,499.21 and $108,963.26, made by Nathanael Greene and payable to the plaintiff, on or before two years after date, together with interest at the rate of 6 per cent. per annum after date. The notes respectively were indorsed without recourse to Marshall & Ilsley Bank and First Wisconsin National Bank of Milwaukee. The mortgage covers twenty-two separate pieces of land situated in Milwaukee county. The mortgage is in the usual form, except that it is provided therein that “non-payment of taxes for the years 1928, 1929 and 1930, assessed against any of the property described herein, shall not be deemed a default hereunder by the mortgagors,” and that “non-payment of taxes on said property for the year 1931 and subsequent years on any property described herein shall not be deemed a default hereunder by the mortgagor until such time as by non-payment of taxes any of said properties shall become subject to the issuance of a tax deed to the holder of tax certificates on any of said property.” The mortgage also contained the following provisions:

“The trustee shall from time to time during the lien of this indenture release any of the herein mortgaged property upon the payment to it of 100% of the 1932 assessed valuation thereof or the pro rata part of said assessed valuation, together with any taxes paid by the trustee or the holder or holders of the notes secured hereby, upon any property so to be released. The trustee shall apply any amount so received on the indebtedness secured by this mortgage. ***

“In the event that it shall become advisable to dedicate any street or alley or right-of-way, or to plat any of the property described herein, the trustee shall execute an instrument evidencing its consent to the dedication of such street, alley or railway rights-of-way or to the platting of said property. In the event that the mortgagor shall receive compensation for the dedication of any street or alley or right-of-way of any of the lands described herein, the mortgagor shall pay to the trustee the net proceeds received for such dedication, said amount where so received by the trustee to be applied on the notes received hereby in the manner hereinbefore provided.”

Some time after the giving of the notes and mortgage, the defendant Nathanael Greene organized the defendant Residence Realty Corporation, to which he conveyed all of the lands covered by the mortgage. All of the stock of said corporation was issued to Mr. Greene except qualifying shares. At the time of the commencement of the action, the defendant Greene and Residence Realty Corporation were in default as to the payment of the principal, interest, and certain taxes, which the plaintiff had had to redeem in order to prevent the issuance of tax deeds on certain outstanding tax certificates. The answer of the defendants Greene and Residence Realty Corporation admitted the material allegations of the complaint, but specifically pleaded the two provisions of the mortgage just hereinbefore recited, and prayed that the judgment to be entered, provide for the release of real estate from the lien of said mortgage, and also for the dedication of streets, alleys, or right of way or for the platting of any of said real estate, in accordance with the terms and provisions of said mortgage. Trial was had to the court. From the facts alleged in the complaint and admitted by the answer, and the testimony adduced, it appears that Nathanael Greene was and is a real estate broker; that Residence Realty Corporation is engaged in the general real estate business; that the twenty-two parcels of land were unimproved; that on and before April 10, 1934, Mr. Greene was indebted to Marshall & Ilsley Bank in the sum of $160,499.21 and to the First Wisconsin National Bank of Milwaukee in the sum of $108,963.26, which indebtedness was evidenced by notes given to said banks without security or collateral; that the banks demanded security, with the result that Mr. Greene gave to the plaintiff Marshall & Ilsley Bank, as trustee, the two notes secured by the said mortgage. The court found the amount due the plaintiff as principal, interest, and for taxes redeemed together with interest thereon. The court concluded “that the judgment herein should not contain a provision for partial release of any of the parcels of real estate described in the mortgage by payment pursuant to the provisions in said mortgage for partial release; that the judgment herein should not contain a provision giving to the defendants the right to dedicate any street, alley or right-of-way or to plat any property described in said mortgage as provided therein.” Judgment was thereafter duly entered on December 21, 1936, in accordance with the findings of fact and conclusions of law. From so much of the judgment as provides: “It is further ordered and adjudged that the defendants shall not be entitled to partial release of any of the parcels of real estate described in the mortgage by payment pursuant to the provisions of said mortgage for partial release, nor have the right to dedicate any street, alley or right of way, or to plat any property described in said mortgage as provided therein,” the defendants Nathanael Greene, Harriet Greene, and Residence Realty Corporation appealed.

Rix, Barney & Kuelthau, of Milwaukee (G. Carl Kuelthau, of Milwaukee, of counsel), for appellants.

Miller, Mack & Fairchild, Churchill, Bennett, Churchill & Davis, and Claude J. Hendricks, all of Milwaukee, for respondent.

NELSON, Justice.

The decision of this controversy hinges upon the construction which should be given to the release of lands, dedicating of streets, and platting provisions heretofore recited in the statement of facts.

The precise questions for decision are: (1) Are those provisions, properly construed, personal to Mr. Greene, or are they covenants running with the land and thereforeavailable to Residence Realty Corporation?; (2) if those provisions, properly construed, are covenants running with the land, did they continue to have force and effect only so long as the mortgagor or his assign was not in default, or up to the time that the action was commenced, or up to the time that judgment was entered, or until the sale on foreclosure is confirmed?

The defendants first contend that the release clause is a covenant running with the land, the benefits of which inure to Residence Realty Corporation, especially since it appears that such grantee is a corporation wholly owned by Mr. Greene except as to the qualifying shares.

The only case found in our reports which involves a similar question is that of Pierce v. Kneeland, 16 Wis. 672, 84 Am.Dec. 726. The particular provision there construed was quite different from the present release provision as will clearly appear from a reading of it. It was as follows: “That whereas the said Wilder Pierce has, by deed, bearing even date herewith, sold and conveyed to the said Allison Lewis and Jonathan Taylor, certain real estate, in the schedule hereunto attached more particularly described, for the consideration of twelve thousand dollars, two thousand dollars of which has been paid down and the remaining sum of ten thousand dollars being secured to be paid by the joint and several bond of the said Allison Lewis and Jonathan Taylor, secured by a mortgage of the said property; and, whereas, the said Allison Lewis and Jonathan Taylor are desirous of selling and conveying portions of the said real estate, and giving a title free and discharged from the said mortgage so far as the same can be done without impairing the security of the said Wilder Pierce; Now, therefore, in consideration of the premises, and of one dollar to him paid by the said Jonathan Taylor and Allison Lewis, the said Wilder Pierce covenants and agrees to, and with the said Allison, Lewis and Jonathan Taylor, that he will, at any time on receiving any of the amounts in the schedule marked opposite to one or more of said lots, so far as he can, without releasing the balance that may be due on the said bond and mortgage, without releasing other portions of said real estate specified in said mortgage, release the lot or lots marked opposite such amounts so paid, provided, all and singular the covenants and conditions in said bond and mortgage specified shall have been faithfully kept and performed by them, the said Allison Lewis and Jonathan Taylor.” Briefs and Cases, vol. 59, January term, 1863.

That agreement was considered by the court to be personal in its character and one that did not inure to the benefit of subsequent purchasers; and it was held that the mortgagors could insist upon the release only upon strictly performing the conditions of the bond and mortgage, by making all payments of principal and interest as they became due; and that even if the stipulation was one running to subsequent purchasers and not personal, as intimated, yet the conditions were not performed upon which the release was to be made.

It is quite apparent that the court did not ground its decision upon its conclusion that that particular stipulation did not run with the land, but rather upon the conclusion that the covenants and conditions of the mortgage were not faithfully kept and performed by the mortgagors or their assigns. The provision here, according to its terms,...