Nash v. Nw. Land Co.

• Decision Date: 25 July 1906
• Parties: NASH v. NORTHWEST LAND CO. et al.
• Court: North Dakota Supreme Court

15 N.D. 566

108 N.W. 792

NASH

v.NORTHWEST LAND CO. et al.

Supreme Court of North Dakota.

June 25, 1906.

Rehearing Denied July 25, 1906.

Syllabus by the Court.

A sale under a void foreclosure of a real estate mortgage, where the premises have been bid in for the full amount of the debt, operates as an equitable assignment of the mortgage.

All subsequent deeds by such purchaser or his grantees, purporting to convey the supposed title derived from such sale, have the same effect.

One who purchases the note and mortgage after maturity from the original mortgagee after a void foreclosure acquires no right thereto as against one in possession of the premises, who by virtue of conveyances from the purchaser at the sale is an equitable assignee of such mortgage.

Where such equitable assignee takes possession of the mortgaged premises with the express or implied consent of the mortgagor, he is to be deemed a mortgagee in possession.

A mortgagee in possession may hold adversely to the mortgagor.

When one who in good faith claims title under a void foreclosure sale takes possession of the mortgaged premises under such claim, but with the consent of the mortgagor, although he is to be deemed a mortgagee in possession, his possession is adverse to the mortgagor from its inception.

Such adverse possession puts the statute of limitations in motion against the remedies of the mortgagor.

When an adverse possession of real property has continued for a sufficient length of time, so that all remedies of the owner to recover the land or enforce his rights are barred by the statute of limitations, such adverse possession operates to divest the former owner's title and vest it in the adverse occupant.

Where the successive adverse occupants hold in privity with each other under the same claim of title, the time limited for maintaining an action may be computed by the last occupant from the date when the cause of action accrued against the first adverse possessor.

The only remedy of the mortgagor against the mortgagee in possession while that relation continues is a suit in equity.

The 20-year limitation fixed by sections 5188, 5189, Rev. Codes 1899 (sections 6774, 6775, Rev. Codes 1905), does not apply to such suits.

The right to maintain such an equitable action by the mortgagor is limited by section 5207, Rev. Codes 1899 (section 6793, Rev. Codes 1905), to 10 years from the time the cause of action accrued.

A title acquired, as in this case, by operation of the statute of limitations, is not a mere equitable right, but is a perfect legal title, which may be proved under a complaint alleging a fee-simple title in the form prescribed by the statute relating to actions to quiet title.

Appeal from District Court, Ward County; L. J. Palda, Jr., Judge.

Action by Mary J. Nash against the Northwest Land Company and others. Judgment for plaintiff, and defendants appeal. Affirmed.Le Seuer & Bradford, for appellant Ehr. P. J. McClory, for appellants Brogan and Flummerfelt. John E. Greene, for respondent.

ENGERUD, J.

Plaintiff, claiming to be the owner in fee of the real property in controversy, which consists of two lots and buildings thereon in the city of Minot, brought this action to quiet her alleged title. The action was commenced in February, 1904. The complaint is in the form prescribed by chapter 5, p. 9, Laws of 1901 (section 7522, Rev. Codes 1905). The defendants Brogan and Flummerfelt answered, denying plaintiff's title to one of the lots (lot 10 of block 3 of the original townsite of Minot), and alleging title in themselves. The defendant Peter Ehr in his answer alleges that he is the assignee and holder of a mortgage upon said lot 10, executed by defendants Brogan and Flummerfelt, who, he alleges, were at the time of executing the mortgage, and still are, the owners of the said lot 10, and he prays foreclosure of the mortgage. No other defendants appeared. There was a trial to the court without a jury, resulting in a judgment quieting the title in plaintiff as prayed for in the complaint. The defendants Brogan and Flummerfelt and Peter Ehr appeal from the judgment and demand a retrial of all the issues; a statement of the case having been duly settled for that purpose.

The facts developed by the evidence are as follows: On April 1, 1889, defendants Dennis M. Brogan and William Flummerfelt were the owners of said lot 10 of block 3 of the original townsite of Minot. They held the fee-simple title as tenants in common. On that day they executed and delivered to the Bank of Minot, a banking corporation, a mortgage of said property to secure the payment of a promissory note made by them that day to the said Bank of Minot, for the sum of $2,100 and interest, from its date at 8 per centum per annum, payable semi-annually. The interest payments were evidenced by coupons attached to the principal note. The principal note was due April 1, 1894. In May, 1890, said Bank of Minot, claiming that there was a default by the mortgagor authorizing a foreclosure, instituted proceedings to foreclosure the mortgage by advertisement under the power of sale therein contained. The sale under these proceedings was made by the sheriff of Ward county on May 31, 1890, the Bank of Minot being the purchaser for the full amount of the debt. A certificate of sale was executed to said bank and recorded. After the year for redemption had expired, a sheriff's deed in proper form was executed to said bank and was recorded. It is conceded that this attempt at foreclosure was void because the notice of sale was not published a sufficient length of time before the sale. After receiving the sheriff's deed, the Bank of Minot conveyed the premises to the Merchants' National Bank of Devils Lake by warranty deed, dated March 15, 1892, and recorded March 21, 1892, reciting a consideration of $3,000. The Merchants' National Bank of Devils Lake conveyed the premises to the First National Bank of Minot by a warranty deed, dated August 31, 1892, and recorded. This deed also recites a consideration of $3,000. On October 7, 1892, said First National Bank of Minot sold the premises to Strain Bros., a copartnership, composed of Herbert Strain and Joseph Strain, and placed them in possession; at the same time executing to them a warranty deed reciting a consideration of $2,500. This deed was dated October 7, 1892, and recorded December 5, 1892. Strain Bros. took actual possession of the property in November, 1892, and held possession of it continuously from that time until the conveyance to plaintiff. In the meantime Herbert Strain had conveyed his interest in the property to his copartner, Joseph Strain, by a deed duly recorded. On May 2, 1900, Joseph Strain sold the premises to the plaintiff, Mary J. Nash, for the sum of $1,750, and executed to her a warranty deed dated May 22, 1900, and duly recorded. Mrs. Nash took immediate possession and has since occupied the premises. It is undisputed that the consideration recided in the respective deeds above mentioned was actually paid by the respective grantees. Although the attempted foreclosure was void and its invalidity appeared on the face of the recorded proceedings, it is wholly undisputed that Strain Bros. and Mrs. Nash had no actual knowledge of such invalidity when they received their respective deeds. They bought, paid for, and occupied the premises in good faith, in the belief that they had acquired the fee title. The Bank of Minot became insolvent in 1893 and was placed in the hands of a receiver. The Brogan and Flummerfelt note and mortgage were found among the papers and assets of the Bank of Minot. On February 14, 1898, the receiver sold and assigned to B. S. Brynjolfson all the assets of the Bank of Minot, and the note and mortgage in question were included in the assignment and delivered to the assignee. Brynjolfson subsequently sold a large number of the notes and mortgages so acquired including the note and mortgage in question, to the defendant Peter Ehr; who paid $1,000 for the entire lot. On these facts, it is plain that Ehr acquired no right to the mortgage. The foreclosure being void, and having been made for the entire debt secured by the mortgage, the deed of the Bank of Minot operated as an equitable assignment of the mortgage. Brynjolfson v. Osthus, 12 N. D. 42, 96 N. W. 261. Each of the subsequent deeds must necessarily have the same effect. Cooke v. Cooper, 18 Or. 142, 22 Pac. 945, 7 L. R. A. 273, 17 Am. St. Rep. 709;Johnson v. Sandhoff, 30 Minn. 197, 14 N. W. 889. The note and mortgage were purchased from the receiver after maturity, and hence the purchaser acquired no better right than that of the Bank of Minot. Moreover the possession of Strain Bros. who claimed title through recorded mesne conveyances from the purchaser at the void foreclosure sale was notice of their rights. The sufficiency and admissibility of the evidence to establish the foregoing facts are challenged by Ehr, but we do not think any of the objections are well founded. The objections urged by him are the same as those urged by his co-appellants and will appear in the discussion of the points urged by the other appellants, to defeat the plaintiff's claim of title. Ehr's claims being thus disposed of the action may be dealt with as one between Mrs. Nash and Brogan and Flummerfelt.

As is apparent from the foregoing statement of the facts, the plaintiff asserts that she and her grantors were mortgagees in possession, and she claims to have acquired an indefeasible title by the operation of the statute of limitations. It is a well-settled rule of law that when an adverse possession of real property has continued for a sufficient length of time, so that all the remedies of the owner to recover the land have become barred by the statute of limitation, the title of the former owner is divested and becomes vested in the adverse occupant. Sprecker v. Wakeley, 11 Wis. 432;Rogers v. Benton, 39 Minn. 39, 38 N. W. 765, 12...