McDonald v. Beatty

• Decision Date: 03 December 1901
• Citation: 10 N.D. 511,88 N.W. 281
• Parties: McDONALD v. BEATTY et ux.
• Court: North Dakota Supreme Court

10 N.D. 511

88 N.W. 281

McDONALD

v.BEATTY et ux.

Supreme Court of North Dakota.

Dec. 3, 1901.

Syllabus by the Court.

1. The plaintiff, in conformity with the statutes regulating redemptions of real estate sold at mortgage foreclosure sales, redeemed from certain foreclosures upon lands owned by the defendant. His right of redemption was based upon a subsequent mortgage on the premises, then in process of foreclosure, which mortgage the defendant claimed had prior thereto been rendered void by rescission. The holders of the sheriff's certificate received, and have since retained, the redemption money. No redemption having been made by defendant or by any other lienholder, sheriff's deeds were issued to plaintiff. It is held, in an action to recover possession of said premises, that the right to challenge plaintiff's right to redeem under the statute concerned the owners of the sheriff's certificates only, and that by receiving and retaining the redemption money they waived the right to object, and thereby validated plaintiff's redemption.

2. Held, further, that plaintiff by his redemption acquired all of the rights of the purchasers at the sale, which included the right to demand and receive sheriff's deeds.

3. Prior to the foreclosure sales from which plaintiff redeemed, the purchasers contracted orally with the defendant that they would purchase at the sales, and would hold the certificates merely as security for the amount of their bids and interest, and that they would not rely upon their legal rights thereunder. The plaintiff made his redemption in good faith, and with the belief that his mortgage was a valid lien, and in entire ignorance of the oral contracts. Defendant knew of plaintiff's redemption shortly after they were made, but made no objection thereto; neither did he disclose to plaintiff the oral agreements, or tender or cause to be tendered to plaintiff the money he had paid to redeem. Held, that the defendant is estopped by his conduct and acquiescence in the redemption from asserting any rights arising out of the oral contract, as against the plaintiff, who had no knowledge thereof.

Appeal from district court, Towner county; John F. Cowan, Judge.

Action by A. B. McDonald against George W. Beatty and wife to recover possession of land. From a judgment in favor of plaintiff, defendants appeal. Affirmed.

Cochrane & Corliss, for appellants. Morrill & Engerud, for respondent.

YOUNG, J.

This action was tried to the court without a jury. It involves the title and right of possession of two quarter sections of real estate situated in Towner county. The plaintiff prevailed in the district court, and the defendants appeal from the judgment, which adjudged that plaintiff was the owner in fee simple of the real estate in question, and that the defendants have no interest therein. The case is presented for trial de novo under section 5630, Rev. Code 1899.

The facts which we deem material to a determination of the questions involved are not in dispute. On January 16, 1896, the title to the real estate in question was in the defendant George W. Beatty. It was then incumbered by two mortgages. One was owned by Morgan & Davis, and covered one of the quarter sections. The other mortgage was on the other quarter section, and was owned by the Vermont Loan & Trust Company. On January 16, 1896, the defendant George W. Beatty and his wife, Alice L. Beatty, joined in a third mortgage upon all of said real estate, to plaintiff, to secure certain promissory notes given by the defendant George W. Beatty to plaintiff, amounting to $5,500. This mortgage was given as a part of a certain contract between plaintiff, McDonald, and defendant Beatty, which provided for the sale by plaintiff to defendant of a certain mill property in Cando, in said county. On April 15, 1897, defendant Beatty demanded the delivery of a deed to said mill property pursuant to the terms of said contract, and, upon plaintiff's refusal to comply with the same, rescinded the contract, and notified the plaintiff of such rescission, and that the same was made upon the ground of a total failure upon the part of the plaintiff to perform his covenants with respect to the delivery of a deed of the mill property, and demanded the return of his papers, including the notes secured by this mortgage. Later, and during the same month, plaintiff instituted an action in the district court of Towner county to foreclose this mortgage, which foreclosure was resisted by the defendant upon the ground that the contract of purchase of the mill property, which furnished the sole consideration for the note secured by the mortgage, had been rescinded by him. This defense was sustained by the trial court in a judgment entered on October 7, 1898, which judgment was thereafter affirmed by this court. See McDonald v. Beatty, 9 N. D. 293, 83 N. W. 224. Pending the controversy between plaintiff and defendant as to the rescission of the contract of April 15, 1896, for the purchase and sale of this property, the two mortgages first referred to, and to which plaintiff's mortgage was subordinate, were foreclosed. The sale under the Morgan & Davis' mortgage was made on March 13, 1897, and at such sale the premises covered thereby were sold to the mortgagees for the sum of $721.55; being the amount then due, with costs of foreclosure. The sale under the Vermont Loan & Trust Company mortgage was on December 12, 1896. At this sale Charles Studness was the purchaser for the sum of $725; that being the amount then due, including costs. In September, 1897, which was before the trial of the then pending foreclosure action on the $5,500 mortgage, plaintiff redeemed from both of said sales under the mortgage which he was then attempting to foreclose. It is conceded that both of the foreclosures from which plaintiff redeemed were strictly regular in form, and that a proper certificate was delivered to each of the purchasers at said sales, and, further, that plaintiff's redemptions were in compliance with the statutes as to all formal requisites, and that the amount paid by him to the sheriff on such redemptions covered the amount due upon each certificate. It is also a conceded fact that the money so paid to the sheriff by the plaintiff was paid over to the holders of the sheriff's certificates as and for redemptions from said sales, and that the money so paid has ever since been retained by them. No redemption from said sales was made or attempted by the defendant, or by any other redemptioner than plaintiff. After the statutory period for redemption had expired, sheriff's deeds were issued to plaintiff. All of the instruments herein referred to were recorded in the proper office at or about the date of their execution. The plaintiff rests his title to the real estate in controversy upon the sheriff's deeds. The defendants challenge plaintiff's title under these deeds for reasons which we will now consider:

It is urged by counsel for the defendants that plaintiff did not in fact redeem the property in question. This contention is not based upon any failure upon plaintiff's part to conform to the formal requirements of the statutes governing redemptions. No such claim is made. On the contrary, it rests upon plaintiff's alleged want of authority to redeem because of the prior rescission of the mortgage upon which his redemption was based. The acts of rescission occurred, as we have seen, on April 15, 1897. The judgment of the district court, which declared that the legal effects of the acts of rescission was to make plaintiff's mortgage null and void, was entered on October 7, 1898. Plaintiff's redemption under said mortgage occurred in September, 1897, which was more than a year before a judgment, and at a time when plaintiff was attempting to enforce the mortgage in the foreclosure action. Section 5540, Rev. Code, names the classes of persons who may redeem property sold subject to redemption. These include creditors having a lien by judgment or mortgage on the property sold subsequent to that on which the property was sold. It is claimed by counsel for the defendants that the acts of rescission referred to had the immediate effect of rendering plaintiff's mortgage void, and that therefore when he redeemed he did not have a lien upon the premises, and accordingly was not entitled to redeem under the statute. It is clear that plaintiff's mortgage was not void when executed, and it is equally clear that it was void after the judgment of the district court. But what its legal character was after the acts of rescission, and before the judgment, during which time redemption was made,-whether void or merely...