Merchants National Bank of Fargo, a Corp. v. Miller
| Decision Date | 18 February 1930 |
| Citation | 229 N.W. 357,59 N.D. 273 |
| Court | North Dakota Supreme Court |
Appeal from the District Court of Ward County, Jansonius J.
Affirmed.
L J. Palda, Jr., C. E. Brace, and Robert W Palda, for appellant.
The terms of the written instrument should control, unless the prima facie case thus made is overcome by evidence both clear and convincing. Re Stoddard, 169 F. 190.
Courts take judicial notice of the well-established customs of business and trade. McDonald v. Finseth, 32 N.D. 400, 155 N.W. 863.
After-acquired title does not inure to the benefit of the holder of a purchase money mortgage. Florida Land Invest. Co. v. Williams (Fla.) 92 So. 876, 26 A.L.R. 171, note.
Liens do not inhere in mere naked legal titles, they attach to the substantial interests of the owners of property. State ex rel. Forest Lake State Bank v. Herman, 36 N.D. 177, 161 N.W. 1017.
A redemption by the judgment debtor terminates the sale and restores the estate. Flanders v. Aumack, 32 Or. 19, 51 P. 447, 67 Am. St. Rep. 504; N. Dak. Horse & Cattle Co. v. Serumgard, 17 N.D. 466, 29 L.R.A.(N.S.) 508, 117 N.W. 453.
Contracts for liens, if in no form they could be proved as "debts," demands or claims in the bankruptcy proceedings, would not be discharged, bankruptcy discharging only such obligations as could be framed into provable debts. Remington, Bankr. 3d ed. § 3451.
Property subject to a lien to secure a liability still contingent at the time of the bankruptcy is not discharged from the lien by the adjudication. Security Mtg. Co. v. Powers (U.S.) 73 L. ed. 94.
Holt, Frame & Nilles, for respondent.
The covenant of warranty is not limited by the preceding restricted covenant against encumbrances. Howell v. Richards, 11 East, 633.
A limited covenant for good title and good right to convey are connected covenants generally of the same import and effect. Howell v. Richards, 11 East, 633; Estabrook v. Smith, 6 Gray, 572; Welbon v. Welbon (Mich.) 67 N.W. 338; Rooney v. Koenig (Minn.) 83 N.W. 399; Weeks v. Grace (Mass.) 80 N.E. 220; Bennett v. Keehn (Wis.) 29 N.W. 207; Duvall v. Craig, 2 Wheat. 45, 4 L. ed. 180.
The statute only intends to provide that the subsequently acquired estate shall be as completely covered by the instrument, whether conveyance or mortgage, as if originally possessed by the grantor or mortgagor. Clark v. Baker, 14 Cal. 612.
If a mortgagor desires merely to create a lien on his estate, he may warrant the title to the estate upon which he proposes to create the lien. Yerkes v. Hadley, 40 N.W. 340; Adam v. McClintock, 21 N.D. 483, 131 N.W. 394; Sommers v. Wagner (N.D.) 131 N.W. 797.
A person who has made a conveyance, either by deed or mortgage, with covenants of warranty, and thereafter acquires an outstanding hostile prior title, will be conclusively presumed to have bought that title for the benefit of his grantee, and in performance of the obligation imposed upon him by his warranty. Sommers v. Wagner (N.D.) 131 N.W. 797; Thompson Yards v. Richardson, 51 N.D. 241; Fargo Loan Agency v. Larson, 53 N.D. 621, 207 N.W. 1003; First Guaranty Bank v. Theatre Co. 50 N.D. 322, 195 N.W. 564.
The second grantee is estopped to aver that his grantor was not seized at the time of his conveyance to a third party. White v. Patten, 24 Pick. 324; Somes v. Skinner, 3 Pick. 60; Sandwich Mfg. Co. v. Zellner, 51 N.W. 379.
A discharge to be operative must be pleaded and proved by the bankrupt when sued upon the discharged debt. Dimock v. Revere Copper Co. 117 U.S. 559, 29 L. ed. 994; Mack Mfg. Co. v. Van Dusen, 138 F. 951.
The rights arising from the discharge are personal to the bankrupt, and must be asserted by him individually or by some one holding under or in privity with him. Moyer v. Dewey, 103 U.S. 301, 26 L. ed. 394.
No part of the bankruptcy proceedings but the discharge itself can be pleaded or proved to bar the debt. 2 Lovell, Bankr. § 802; Whitney v. Crafts, 10 Mass. 23.
It is settled that a discharge in bankruptcy has no effect on this operation of the covenant of warranty in an ordinary deed, when the warranty is coextensive with the grant. Ayer v. Phil. etc., Brick Co. 34 N.E. 177.
Bankruptcy simply affects the remedy for the collection of the debt and bars such remedy. Adam v. McClintock, 21 N.D. 483, 131 N.W. 394; Union Nat. Bank v. Lenton, 54 N.D. 262, 209 N.W. 350; Thompson Yards v. Richardson, 51 N.D. 241, 199 N.W. 862.
The trial found that prior to October 19, 1922, the defendant Miller known as the son, owned a half interest in the land involved -- the other half being owned by one F. Boesch; that Miller gave a mortgage to the plaintiff, on this interest subject to a first mortgage, both mortgages being recorded; that the first mortgage was assigned to Miller's father, who foreclosed it and bid in the land at the sale; that no redemption was made and sheriff's deed was issued to the father; that the son "went through bankruptcy" by filing his schedules, listing his indebtedness to plaintiff and receiving a discharge; that thereafter about April 16, 1922, the son organized the appellant corporation under the laws of the state of Delaware; that the appellant corporation "was what is commonly termed a 'one-man corporation;'" that the father then sold the land to the son, giving him a deed, with the name of the grantee omitted, and with authority to insert the name of any grantee he saw fit; F. Boesch joined in this deed and conveyed all of his interest in the land involved, the deed being given for the use and benefit of the son; that the son thereafter had one of the directors of the company insert the name of the appellant in the deed as grantee and then delivered the deed to the grantee.
Plaintiff brings this action to foreclose its mortgage, and the Bankers Discount Acceptance Corporation says the mortgage is extinguished. The defendant Miller defaulted and the trial court entered findings of fact, conclusions of law, order of judgment and judgment in favor of the plaintiff and decreed the foreclosure of this mortgage. The Bankers Discount Acceptance Corporation appeals, demanding a trial de novo.
There are fourteen specifications of error, all centering around four of the findings of the trial court and the conclusions of law drawn therefrom.
The appellant says the court was in error in finding; that the father sold the land to the son; that the father gave the son a deed for the use and benefit of the son, with the name of the grantee in blank; that the grantee's name was inserted by an officer of the appellant; and finding that the appellant had notice of any interest of the plaintiff in the land subsequent to the foreclosure of the first mortgage.
Without setting forth the testimony it is sufficient to say the findings of the trial court are fully sustained by the evidence. It is true the son denies that he received such a deed. He says the father and Boesch issued the deed to the appellant, but the testimony of a director of the appellant corporation is full and complete showing that when the deed was presented by the son there was no grantee named therein, that the son said he bought the land from his father and received this deed for his own use and benefit with the name of the grantee omitted, and that at the direction of Miller the director inserted the name of the appellant as grantee and thereafter the deed was delivered. The testimony also shows, almost without dispute, that at the time the deed was delivered by Miller it was agreed he was to receive five hundred shares of stock in the corporation for this land and other lands which he was selling to the corporation; that these lands were all the assets of the corporation at that time; that the stock issued was all of the stock of the company issued at that time, and that four hundred eighty-nine shares of stock were issued to Miller and eleven shares issued to others whom he named for the purpose of enabling him to carry on the corporation. It is clear that the son had the company organized in Delaware, that the resident directors of Delaware immediately thereafterwards resigned and Miller and two others were elected in their place; -- in fact that the defendant corporation was merely Miller operating under another name, and the other shares were issued at that time merely to allow him to operate.
Appellant says that in any event plaintiff cannot recover; that there was no redemption from the foreclosure of the first mortgage; that before the defendant went through bankruptcy the lien of the second mortgage was extinguished; that by going through bankruptcy the defendant Miller was discharged from his indebtedness and any liability on his covenants and warranties contained in the mortgage.
The mortgage given to the plaintiff contains the following covenants:
"The said party of the first part (P. W. Miller) does covenant with the said party of the second part, (the plaintiff) its successors and assigns, that he is lawfully seized of said premises; that he has good right to convey the same; that the same are free from all incumbrances, except incumbrances of record, and that he will warrant and defend the title to the same against all lawful claims, hereby relinquishing and conveying all rights in and to the said premises."
The covenants and warranties in this mortgage are independent of each other. They are of "materially different import and directed to different objects." See Bush v Cooper, 26 Miss. 599, 59 Am. Dec. 270, 273. While the mortgagor did not warrant...
To continue reading
Request your trial