Meehan v. First National Bank of Fairfield

• Citation: 62 N.W. 490,44 Neb. 213
• Decision Date: 05 March 1895
• Docket Number: 5954
• Parties: MARY MEEHAN v. FIRST NATIONAL BANK OF FAIRFIELD
• Court: Supreme Court of Nebraska

62 N.W. 490

44 Neb. 213

MARY MEEHAN v. FIRST NATIONAL BANK OF FAIRFIELD

No. 5954

Supreme Court of Nebraska

March 5, 1895

ERROR from the district court of Clay county. Tried below before HASTINGS, J.

REVERSED AND REMANDED.

J. L Epperson & Sons, for plaintiff in error.

S. W Christy and E. E. Hairgrove, contra.

OPINION

HARRISON, J.

The bank, defendant in error, commenced an action against plaintiff in error in the district court of Clay county to recover the sum of $ 614.47, alleged in the petition to be due it from her as indorser of two promissory notes executed and delivered to her by one Ralph J. Little and indorsed by her and transferred to Fowler and Cowles or order and by them regularly transferred to the bank. In her answer defendant in error admitted the execution and delivery of the notes by Ralph J. Little to her and that she indorsed and transferred them to the parties alleged in the petition and denied all other allegations of the petition, and further alleged that Ralph J. Little, at the time of making the notes in suit, also gave her a mortgage upon the west half of the northwest quarter and the north half of the southwest quarter of section 10, town 5 north, range 8 west, in Clay county, Nebraska, to secure the payment of them; that the land was ample security for their payment, being worth the sum of $ 4,000; that the bank had foreclosed the mortgage on the land, and under and by virtue of an order of the district court of Clay county sold the land September 24, 1888, and at the foreclosure sale purchased the land, but failed and neglected to credit the amount for which the land sold, or any part of it, on the notes secured by the mortgage sued upon in this action, and that the bank received in the land more than the amount of the debt evidenced by the notes; that the bank has not further proceeded against Ralph J. Little, either to avail itself of a deficiency judgment against him in the foreclosure suit or in any other manner, although he is fully able to pay the amount due upon the notes. There is the further allegation in the answer that these were the notes secured by the mortgage which had been foreclosed and no authority had been granted by the court to the bank to institute this action. The reply of the bank admitted that the notes had been secured by the mortgage on the land, that it had been foreclosed and the land appraised, advertised, and sold according to law under order of sale issued in the foreclosure suit, and stated that there was a prior mortgage on the land, in payment of which the proceeds were applied, there not being sufficient realized to pay the amount of the debt secured by the prior mortgage; that the land was worth not to exceed $ 1,200, and brought at foreclosure sale $ 800, being sold subject to taxes amounting to $ 72.40; that the amount of the debt secured by prior mortgage at the time of the sale was more than $ 1,300. It was admitted that the bank had instituted no further proceedings than the foreclosure against Ralph J. Little to collect the amount due on the notes, and further stated that Little was a non-resident of the state of Nebraska, and his residence unknown to the bank; that the only service had upon him in the foreclosure proceedings was constructive or service by publication, and that he had not made a personal appearance therein. There was also a general denial of all statements of the answer not admitted in the reply. To try the issues presented a jury was impaneled, and the bank introduced evidence to prove its ownership of the notes in suit by indorsement and transfer to it, confining its evidence solely to this purpose and rested. The record then states:

"The defendants now offer to prove that the mortgaged premises mortgaged to secure these notes were worth the sum of $ 3,000 and were at the time of the sale of the premises worth $ 3,000, and also offer to prove that the notes and mortgage which secured the payment thereof were put in the foreclosure suit of the first mortgage and that the total amount of the notes there foreclosed was less than the value of the land.

"Objected to, as incompetent, immaterial, and irrelevant. Sustained. Defendant excepts.

"Defendants further offer to prove that foreclosure proceedings were instituted as set forth in the defendants' answer by the plaintiff, and decree entered and the property sold and no credits placed upon these notes.

"Objected to, as incompetent, immaterial, and irrelevant. Sustained. Exception.

"Defendant further offers to prove that no especial authorization appears of record for the institution of this action and subsequent to the decree of foreclosure mentioned in defendants' answer.

"Objected to, as incompetent, immaterial, and irrelevant. Sustained. Exception taken.

"Defendant rests."

We presume from the record that the jury received no instructions. None appear therein, and there is a statement that "after hearing the evidence adduced" and arguments of counsel, they returned a verdict in favor of the bank in the sum of $ 704.25. Motion for new trial was filed for plaintiff in error, which was overruled and judgment rendered on the verdict.

One of the contentions made in behalf of plaintiff in error is that the court erred in excluding the evidence offered to prove that no authorization appears of record for the institution of this action, obtained from the court, in which the decree foreclosing the mortgage was entered. This was alleged in the answer as a defense and the offer to prove as herein quoted was made, and, upon objection, refused. The question raised by this assignment of error may be stated as follows: Was it necessary for the defendant in error to obtain leave of the court in which the foreclosure proceedings were prosecuted, before commencing this suit for any amount remaining due on the notes or the whole sum, if nothing was derived from the foreclosure decree to apply in their payment, it being a court of this state and in this particular instance the same court? The answer to this depends upon the meaning, scope, and effect to be given to the provisions of certain sections of our Code of Civil Procedure under the title "Foreclosure of Mortgages by Action." In sections 850 and 851 it is provided that in every petition filed to foreclose a mortgage it must be stated whether any proceedings at law have been had for the recovery of the debt secured by the mortgage or any part of it, and if it appear that a judgment at law has been obtained for such debt or any part of it, no proceedings shall be had in the foreclosure case unless it further appear that an execution has been issued and returned by the proper officer that the execution is unsatisfied in whole or in part, and that the defendant has no property whereof to satisfy such execution, except the mortgaged premises. From this it is clear that if the creditor first proceeds at law for the collection of a debt which is secured by mortgage, he must exhaust the remedy at law before he will be allowed to prosecute foreclosure proceedings. Sections 847 and 849 are as follows:

"Sec 847. When a petition shall be filed for the satisfaction of a mortgage, the court shall not only have the power to decree and compel the delivery of the possession of the premises to the purchaser thereof, but on the coming in of the report of sale, the court shall have power to decree and direct the payment by the mortgagor of any balance of the mortgage debt that may remain unsatisfied...