Norton v. Baxter

• Decision Date: 02 July 1889
• Citation: 41 Minn. 146,42 N.W. 865
• Parties: NORTON v BAXTER ET AL.
• Court: Minnesota Supreme Court

41 Minn. 146

42 N.W. 865

NORTONvBAXTER ET AL.

Supreme Court of Minnesota.

July 2, 1889.

(Syllabus by the Court.)

1. A sufficient tender of payment of a debt, although made after maturity, the same being refused without good reason, discharges the lien of the creditor upon property held in pledge as security for the debt.

2. A tender by the pledgeor having been refused without sufficient reason, the pledgee loses his right to retain the pledge as against one who has, subsequent to the making of the pledge, acquired rights in the property, although the pledgeor did not keep his tender good.

3. A merely colorable and pretended sale of pledged property by the pledgee does not affect the rights of the pledgeor as against one not standing in the position of a bona fide purchaser.

Appeal from district court, Hennepin county; HICKS, Judge.

Noxon & Benton, for appellants.

Chas. J. Bartleson and Brooks & Hendrix, for respondent.

DICKINSON, J.

This is an action to foreclose a mortgage upon a lot of land, designated as lot 14, executed by the defendants Tousley and wife to the plaintiff, in August, 1887, and to bar or enjoin these appellants Lucy Baxter and Stephen H. Baxter from proceeding to enforce an earlier mortgage, executed by one Nye, in 1886, under circumstances to be hereafter referred to. This appeal by the two defendants just named is from a judgment granting that relief. The mortgage last referred to, which the appellants claim the right to enforce as the earlier lien, was executed under these circumstances: September 20, 1886, Tousley and wife conveyed several lots of land, including this lot 14, to one Nye, without consideration, and for the use and benefit of the grantor, Tousley. The same day Nye gave to Tousley her (Nye's) promissory note for $2,500, for the accommodation only of the payee, and executed to him a mortgage upon the same land, in terms securing the payment of the note. Subsequently, prior to Tousley's mortgage to the plaintiff, Nye reconveyed the property to Tousley. While Tousley held the accommodation note of Nye, and the mortgage securing it, in October, 1886, he borrowed $700 from the defendant Stephen H. Baxter and a brother, William Baxter, giving to them his note therefor, payable to the defendant Lucy Baxter. As collateral security Tousley executed an assignment to Lucy Baxter of the Nye note and mortgage, and delivered it to the Baxter brothers. Lucy Baxter had no interest in this transaction, and knew nothing of it, her name being employed for the benefit of the brothers. An agreement accompanied the assigned note and mortgage, authorizing the sale of the pledge after notice upon default of Tousley to pay the debt secured thereby. June 22, 1888, W. H. Baxter, assuming to act in behalf of Lucy, after notice to Tousley, offered the pledged note and mortgage for sale at auction. Tousley bid $800 for it, and no other bona fide bid was made; but the note and mortgage were struck off to one Prouty at $817. The securities were then assigned to him, although he paid nothing therefor, and he reassigned the same to Stephen H. Baxter. June 29, 1888, Tousley tendered to the Baxter brothers, who then had possession of the Nye note and mortgage, and to Stephen H. Baxter, the sum of $820 in payment of his own note, which the Nye note and mortgage had been pledged to secure. This tender was sufficient in amount to pay his debt. The tender was refused.

The pretended sale of the pledged securities to Prouty, and the assignment of the same to him, and by him to Stephen H. Baxter, were not effectual as a sale of the securities so as to extinguish or prejudice the previously existing rights of the pledgeor. The general property in the pledge remained in the pledgeor after as well as before default. The default of the pledgeor to pay his debt at maturity in no way affected the nature of the pledgee's rights concerning the property, except that he then became entitled to proceed to make the securities available in the manner prescribed by law, or by the terms of the contract. It is not the case of a defeasible title becoming absolute at law by default in the performance of the prescribed condition. The property was held as security before default. It was held only as security after default. The pledgee was authorized to sell the securities, and by a sale in good faith the pledgeor would have been divested of his...