Northwestern And Pacific Hypotheekbank v. Nord

• Decision Date: 09 October 1935
• Docket Number: 6251
• Citation: 50 P.2d 4,56 Idaho 86
• Parties: NORTHWESTERN AND PACIFIC HYPOTHEEKBANK, a Corporation, Respondent, v. HANNAH A. NORD and HANNAH A. NORD, Administratrix, Appellants
• Court: Idaho Supreme Court

50 P.2d 4

56 Idaho 86

NORTHWESTERN AND PACIFIC HYPOTHEEKBANK, a Corporation, Respondent, v. HANNAH A. NORD and HANNAH A. NORD, Administratrix, Appellants

No. 6251

Supreme Court of Idaho

October 9, 1935

MORTGAGES-FORECLOSURE SALE-PURCHASE BY MORTGAGEE-RIGHTS OF PARTIES - CONTRACT TO RECONVEY - DEED OR OTHER WRITING TO CONSTITUTE MORTGAGE WHEN.

1. Where mortgagee bid in property at foreclosure sale for amount of debt and costs and sheriff executed and delivered certificate of sale, title passed from mortgagors to mortgagee, and judgment was thereby paid, and there no longer existed any indebtedness from mortgagors to mortgagee, and the only right or property interest remaining in mortgagor was right to divest purchaser of his title at any time within year after sale by compliance with redemption statute (I. C A., secs. 8-310, 8-402 to 8-407).

2. Redemption when made is not from mortgage lien but from execution sale, and deed subsequently given by sheriff passes no additional title, but rather evidences that purchaser's title has not been divested by redemption (I C. A., secs. 8-310, 8-402 to 8-407).

3. Contract or deed will not be held to be mortgage in absence of showing that parties thereto intended at time of execution and delivery that instrument should be treated and considered as security for debt (I. C. A., sec. 44-804).

4. To constitute deed or other writing a mortgage, there must be existing indebtedness from mortgagor to mortgagee.

5. Contract by which mortgagors made payment on purchase price and contracted to pay future instalments to mortgagee who had purchased property at foreclosure sale and to whom had been issued sheriff's deed was contract for sale of property and was not remortgaging of property, in absence of showing that parties intended contract to be treated as remortgaging and mortgagee could maintain action in ejectment and to quiet title upon mortgagors' default under contract (I. C. A., sec. 9-401).

APPEAL from the District Court of the Ninth Judicial District, for Bonneville County. Hon. C. J. Taylor, Judge.

Action in ejectment and to quiet title. Judgment for plaintiff. Defendants appeal. Affirmed.

Judgment affirmed, with costs to respondent.

A. H. Wilkie, for Appellants.

The Supreme Court of this state has decided on numerous occasions--every time the question has been before it--that a deed or other conveyance of real estate, or an interest therein, given to secure the payment of a debt, is a mortgage, regardless of the form or the nature of the transaction.

The state and federal courts and the United States Supreme Court have held likewise, and the rule is universal, so far as we know. Courts will look through the form of transaction, regardless of how artfully disguised, to learn the real character and purpose of the transaction, and doubtful cases have generally been decided to be mortgages.

From the hundreds of cases that might be cited in support of this rule, we cite the following, which we have selected as upholding our position in this case: Kelly v. Leachman, 3 Idaho 392, 29 P. 849; Wilson v. Thompson, 4 Idaho 678, 43 P. 557; Fond v. McCreery, 55 Idaho 144, 39 P.2d 766.

Alvin Denman, for Respondent.

The purchaser of real property under decree of foreclosure is substituted for and acquires all the right, title and interest of the judgment debtor in the property, subject only to the bare statutory right to redeem, which is a personal privilege and not a property right.

A fee-simple title is presumed to pass by a grant of real property, and the claim that a deed was in fact a mortgage must be proved by evidence which is clear, satisfactory, convincing, explicit, unequivocal and indisputable. (41 C. J. 297; Parks v. Mulleday, 49 Idaho 546, 551, 290 P. 205, 79 A. L. R. 934; Shaner v. Rathdrum State Bank, 29 Idaho 576, 583, 161 P. 90; Robinson v. Barnard, 5 Cal.App. 396, 42 P.2d 711; Keel v. Vineyard, 48 Idaho 49, 53, 279 P. 420; Hillsdale College v. Thompson, 99 Mont. 400, 44 P.2d 753; Duff v. Randall, 116 Cal. 226, 48 P. 66, 58 Am. St. 158.)

AILSHIE, J. Givens, C. J., and Budge, Morgan and Holden, JJ., concur.

OPINION

AILSHIE, J.

In 1922 N. O. Nord and wife, Hannah A. Nord, mortgaged their homestead to the respondent Northwestern & Pacific Hypotheekbank for $ 11,000. In January, 1929, suit was instituted to foreclose the mortgage and thereafter a decree of foreclosure was entered, and on April 27, 1929, the property covered by the mortgage was sold at foreclosure sale and bid in by the respondent for $ 16,952.53; and certificate of sale was issued by the sheriff to respondent. During the period of redemption and prior to the expiration thereof negotiations were conducted between the parties, with a view to respondent giving appellants a contract to purchase the property on installment payments. These negotiations were conducted chiefly by correspondence. It was agreed that respondent would make a reduction from the total amount of principal, interest, cost and penalties of $ 751.37, and that the total purchase price should be $ 19,000; that the Nords would make a cash payment of $ 2,000 and that thereupon a written contract should be entered into for the purchase of the land and that the balance of $ 17,000 should be paid in installments, the first of which should fall due October 31, 1931; and that periodic installments of a thousand dollars should be made thereafter until the principal would be reduced to $ 10,000, whereupon the respondent should give appellants a deed of conveyance and receive back a mortgage on the land for the balance ($ 10,000) due on the purchase price. Check for $ 2,000 was mailed to respondent bank on April 18th and was received by the bank in due course. This contract bears date of April 21, 1930, and was apparently not delivered until some time in May following. On April 28th (the time of redemption having expired) the sheriff's deed was duly issued to respondent.

The Nords resided on and used the premises continuously and no physical change of possession of the premises ever occurred. The contract for purchase contemplated their remaining in possession and contained the following provisions:

"In case of failure of said party of the second part to make the payments, or any part thereof, or perform any of the covenants on his part hereby made and entered into, this contract shall, at the option of the said party of the first part, be forfeited and determined and the said party of the second part shall forfeit all payments, made by him on this contract as liquidated damages for failure to perform this contract and as rental for the use of said premises, and such payments shall be retained by said party of the first part, and it shall have the right to re-enter and take possession of the premises aforesaid without demand and without notice and at any time after such default."

. . . .

"The time of payment shall be of the essence hereof." The Nords defaulted in their payments and on January 15, 1934, respondent caused to be served on appellants a notice in words as follows:

"You, and all persons holding under you, are hereby notified that you have defaulted in the payment of the sums provided in that certain land contract, made and entered into between the Northwestern and Pacific Hypotheekbank (Northwestern and Pacific Mortgage Company) and you on April 21, 1930; that there is now due and owing under and pursuant to the provisions of said contract, the principal sum of sixteen thousand dollars; interest to December 15, 1931, $ 977.28; interest to December 15, 1932, $ 1280; interest to December 15, 1933, $ 1280; and 1931 and 1932 taxes paid by the said Northwestern and Pacific Hypotheekbank in the amount of $ 1052.71.

"You are further notified that by reason of your default in not making said payments, the said contract is hereby cancelled.

"And you are further notified that you are hereby required to vacate the northwest quarter of section 33, township 2, north of range 38 E. B. M., the property described in said contract within thirty days from the service of this notice on you."

No further payments having been made, the respondent commenced this action on February 23, 1934, setting up two causes of action: first, action in ejectment; second, to quiet title. The Nords answered, pleading that the transaction, whereby they contracted to purchase from the respondent the property on which the foreclosure proceeding had been taken, constituted a mortgage on the premises, and that it should be so held by the court; and for that reason the action in ejectment as well as the action to quiet title should fail. In the meanwhile defendant N. O. Nord died and defendant Hannah A. Nord, as administratrix, was substituted as a party defendant in place of her deceased husband. The trial court held against the contention of the defendants and they have appealed.

It is here contended...