HANEY
J.
Early
in 1886 the defendant Frances L. Tousley and R. C. Tousley
her husband, who resided in Turner county, Dakota Territory
now one of the counties of this state, and who owned certain
real property therein, executed and delivered to J. M. Dunn,
a loan broker of Le Mars, Iowa, a note for $1,000, payable to
the order of P. M. Dunn, the wife of J. M. Dunn, at Boston on
May 1, 1891, and the following instrument, which was duly
acknowledged and recorded in the proper county: "This
indenture, made this 15th day of March, 1886, by and between
Frances L. Tousley and R. C. Tousley, her husband, of the
county of Turner, territory of Dakota, party of the first
part, and J. M. Dunn, of Le Mars, and state of Iowa, trustee,
party of the second part, and P. M. Dunn, party of the third
part, witnesseth: That said party of the first part for and
in consideration of the sum of one thousand dollars, in hand
paid by the said party of the third part, the receipt whereof
is hereby acknowledged, have granted and sold, and do by
these presents, grant, bargain, sell, convey and confirm unto
the said party of the second part, or his successor in trust,
forever, a certain tract or parcel of land situated in the
county of Turner and territory of Dakota, described as
follows, to wit: *** Provided, always, and these presents are
upon the following express conditions, to wit: That said
party of the first part shall pay to the said party of the
third part, his heirs or assigns, the sum of one thousand
dollars, in gold coin of the United States, of present
standard weight, value, and fineness, on the first day of
May, A. D. 1891, with interest on said sum until paid, at the
rate of seven per cent. per annum, payable semiannually, on
the first days of November and May in each year, according to
the tenor and effect of the promissory note
and coupons attached, of the said first party, dated March
15, 1886, payable at Boston, Mass. *** It is further agreed,
that if the party of the first part shall fail to perform any
of the covenants in the note or in this instrument, or do, or
fail to do anything whereby the security for this loan of
money may be lessened, then this mortgage or trust deed shall
become due and collectible at once at the option of the
holder, and may be foreclosed for the full amount, together
with interests, costs, taxes, insurance, and any other sums
advanced for expenses incurred on account of the party of the
first part for whatsoever purpose and any advances so made
shall draw interest at twelve per cent. per annum. It is
further agreed, that this mortgage or trust deed may be
foreclosed by action, or by advertisement, as provided by
chapter 28, of the Code of Civil Procedure of the Revised
Code of Dakota, of 1877, and this paragraph shall be deemed
as authorizing and constituting the power of sale as provided
in said chapter; and it is agreed, should foreclosure be
commenced, an attorney's fee of one hundred dollars shall
be allowed for plaintiff's attorney and shall be
collected as part of the costs of foreclosure. *** Finally,
the said first party hereby expressly agrees to comply with
and perform all the foregoing conditions, and upon compliance
therewith these presents to be void, otherwise to be and
remain in full force and effect, and in case of the death,
absence, inability or refusal to act of said party of the
second part, then David W. Morris, of Grinnell, Iowa, shall
be and is hereby appointed and made successor in trust to the
trustee hereinbefore named, with like powers and authority. A
reconveyance of the premises is to be made at the expense of
the party of the first part on full payment of the
indebtedness."
On
December 9, 1887, the Tousleys paid J. M. Dunn $1,074.10 to
extinguish their obligation, receiving the following
instrument, which was duly acknowledged and recorded in the
proper county on December 12, 1887: "Release Deed. Know
all men by these presents, that I, J. M. Dunn, trustee, of
the county of Plymouth and state of Iowa, for and in
consideration of one dollar, and for other goods and valuable
considerations, the receipt whereof is confessed, do hereby
remise, convey, release and quitclaim, unto Frances L.
Tousley and husband, of the county of Turner and territory of
Dakota, all the right, title, interest, claim, or demand
whatsoever I may have acquired in, through, or by a certain
trust deed, bearing date the 15th day of March, A. D. 1886,
and recorded in the recorder's office of Turner county,
in the territory of Dakota, in Book K of Land Mortgages, page
23, to the premises herein described as follows, to wit: The
northwest quarter of section No. fifteen, in township
ninety-nine, north, of range No. fifty-four west, of the 5th
P. M., together with all the appurtenances and privileges
thereunto belonging or appertaining, witness my hand and seal
this ninth day of December, A. D. 1887. J. M. Dunn, Trustee.
[ Seal.]"
Prior
to the execution and recording of this instrument the note
and trust deed or mortgage had been transferred by the Dunns
to John Jeffries & Sons, by them to Michael O'Brien, and
by him to Timothy O'Brien, the plaintiff's testator;
all of such transferees being residents of Massachusetts.
Subsequent to the execution and recording of the
trustee's reconveyance or release--the instrument last
above set forth--no assignment of the trust deed or mortgage
having been recorded, the defendant Vander Wilt acquired
title to the mortgaged premises, and the defendant Brown
acquired title to a mortgage thereon for value, without
notice of Jeffries & Sons', Michael O'Brien's, or
Timothy O'Brien's rights, except as the same may have
been disclosed by the records of the county where the land
was situated. Thereafter this action was instituted to
foreclose the trust deed or mortgage, resulting in a judgment
in favor of the plaintiff, from which, and an order denying
their application for a new trial, the defendants Vander Wilt
and Brown appealed.
This
so-called trust deed is substantially the same in form as the
one in Langmaack v. Keith (S. D.) 103 N.W. 210,
concerning which this court said: "The writing signed by
the owner of the land is only evidence of what the parties
intended. It is immaterial what name may have been given such
writing. The parties made a contract. The contract was a
mortgage, and it must be governed by the rules of law
applicable to such a contract. The owner of the land was the
mortgagor, the payee of the bond or original owner of the
indebtedness was the mortgagee, and the transferee of the
indebtedness must be regarded as the assignee of the
mortgage." So in this case Mrs. Tousley must be regarded
as the mortgagor, Mrs. Dunn as the mortgagee, Jeffries & Sons, Michael O'Brien and Timothy O'Brien as
transferees in the order named, and J. M. Dunn as an
unnecessary and unfortunate party to the paper, upon the
extent of whose authority depends the solution of the
perplexing problems presented by this and other actions
resulting from his misconduct. When J. M. Dunn received the
mortgagor's money and executed the reconveyance or
release, the indebtedness was owned by the plaintiff's
testator, the note and mortgage were in his possession, and
he neither knew of that instrument's execution, nor did
he or his personal representative ever receive the money so
collected by the trustee. The Tousleys may have been
negligent in paying Dunn without insisting upon a surrender
of the note, but that is not material, if the appellants were
protected by the record upon which they relied when their
rights were acquired. "Where a mortgage is made, title
remains in the mortgagor, and the rights
of the creditors are to be enforced by foreclosure in one of
the methods prescribed by the statutes." Langmaack v.
Keith, supra. Had the mortgagor in this case made default,
her title could not have been extinguished otherwise than by
one of those methods. The trustee was not authorized to sell
and convey the premises upon the mortgagor's failure to
perform her obligations. A lien was created, the enforcement
of which was provided for by the law and no trustee was
needed.
But
what were his powers and duties in the event of payment? The
mortgage declares: "A reconveyance of the premises is to
be made at...
