Norlin v. Montgomery

• Decision Date: 22 December 1961
• Docket Number: No. 35504,35504
• Citation: 367 P.2d 621,59 Wn.2d 268
• Court: Washington Supreme Court
• Parties: Roy NORLIN, Respondent, v. Wilburn F. MONTGOMERY and Magda Montgomery, his wife, Defendants, Marie Palmer, a widow, Appellant.

Page 268

59 Wn.2d 268

367 P.2d 621

Roy NORLIN, Respondent, v. Wilburn F. MONTGOMERY and Magda Montgomery, his wife, Defendants Marie Palmer, a widow, Appellant.

No. 35504.

Supreme Court of Washington, Department 2.

Dec. 22, 1961.

Newman H. Clark and Roy L. Cadwallader, Seattle, for appellant.

Ben A. Maslan, Maslan, Maslan & Hanan, Seattle, for respondent.

OTT, Judge.

Marie Palmer, a widow, purchased from Ted C. Schy and Elsie M. Schy, his wife, a residence property which was subject to a prior real-estate contract in which they had sold the property to Wilburn F. Montgomery and wife. The Schy-Montgomery contract, dated September 24, 1954, fixed the consideration at $9,250, provided for a $1,500 down payment, installment payments of $65 a month, and forfeiture of the contract and right of possession upon default.

August 21, 1956, after Mrs. Montgomery's death, Mr. Montgomery mortgaged his equity in the contract to Roy Norlin for $1,770. Norlin recorded the mortgage in the office of the county auditor on August 22, 1956. Subsequently, Mrs. Palmer advanced $1,500 to Mr. Montgomery. Mrs. Palmer and Mr. Montgomery thereafter went to the bank holding the contract for collection and, by endorsement, increased the amount of the real-estate contract payment schedule to include the advance.

Mr. Montgomery defaulted in the installment payments to both Mrs. Palmer and Norlin and, subsequently, abandoned possession of the property.

March 21, 1957, Mrs. Palmer gave written notice of forfeiture to Mr. Montgomery. March 25, 1957, Mr. Montgomery executed a quit claim deed of the premises which contained this provision: 'It is the intention of this deed to cancel that certain contract dated September 24, 1954.' Upon the execution of the deed, Mrs. Palmer took possession of the premises. When Mr. Montgomery deeded to Mrs. Palmer, he was indebted to her on the contract in the sum of $7,006.10 and on the advance in the sum of $1,500. He was indebted to Roy Norlin on the mortgage in the sum of $1,604.83.

April 15, 1957, Norlin's attorneys wrote a letter to Mrs. Palmer in part as follows:

'Mr. Norlin is entitled in law and in equity to take over that contract in view of the abandonment by the Montgomerys in order to protect his mortgage. Without waiving the right to institute immediate legal and equitable action, in order to prevent loss, we hereby on Mr. Norlin's behalf demand that he be recognized as above set forth. He is entirely willing to take over the original Schy-Montgomery real estate contract at the balance of approximately $7,000.00 or less and continue making the monthly payments thereon. We tender such performance on his behalf.'

Mrs. Palmer refused the offer. She requested Norlin to pay the amount of the contract, plus the $1,500 advance.

Thereafter, on April 16, 1957, Norlin commenced this action to foreclose his mortgage. Mrs. Palmer's answer alleged 'That the purported 'second mortgage' of the plaintiff is subsequent and inferior to the rights and title of the defendant,' and, by cross-complaint, requested that title to the property be quieted in her.

From a decree foreclosing the mortgage and declaring it to be a lien on the real estate, and directing Mrs. Palmer to account to Norlin for the rents, issues, and profits from the property since April, 1957, with an alternative right in Mrs. Palmer to pay to Norlin the sum of $1,604.24, plus interest and attorneys' fees, Mrs. Palmer has appealed.

Appellant assigns error to the court's finding that the Norlin mortgage is a first, prior, and preferred lien on the real estate, subject only to the vendor's interest in the contract exclusive of the $1,500 advance.

A purchaser of real estate under an executory contract has an interest in the property to the extent of his equity, which he can mortgage. Nelson v. Bailey, 54 Wash.2d 161, 338 P.2d 757, 73 A.L.R.2d 1400 (1959).

By August 21, 1956, Mr. Montgomery had reduced the real-estate contract from $9,250 to $7,111.84. Montgomery's equity as represented by these payments on the contract was given to Norlin as security for the payment of the loan. Applying the cited rule to the facts in this case, Norlin had a valid mortgage on Montgomery's equity.

Respondent contends that, by virtue of his mortgage being in default and possession abandoned by the mortgagor, his right to possession is superior to that of the appellant.

RCW 7.28.230 provides:

'A mortgage of real property shall not be deemed a conveyance so as to enable the owner of the mortgage to recover possession of the real property, without a foreclosure and sale according to law.'

This statute prevents the owner of the mortgage, Norlin, from obtaining possession of the real property from the mortgagor, Montgomery, 'without a foreclosure and sale according to law.'

RCW 6.24.220 provides in part:

'In all cases where real estate * * * may hereafter be sold in pursuance of law * * * by virtue of execution, or other process issued upon a decree for the foreclosure of a mortgage * * * it shall be the duty of the sheriff * * * making such sale to execute and deliver to the purchaser, or other person entitled to the same a deed of conveyance of the real estate so sold immediately after the time for redemption from such sale has expired: * * *.'

RCW 6.24.010, 6.24.020, 6.24.060, 6.24.090, and 6.24.100 establish the procedure for conducting an execution sale after a decree in foreclosure has been entered. RCW 6.24.190 establishes the possession and rental rights during the one-year...