Ponca City Bldg. & Loan Co. v. Graff
| Decision Date | 30 September 1941 |
| Docket Number | 29751. |
| Citation | 117 P.2d 514,189 Okla. 410,1941 OK 299 |
| Parties | PONCA CITY BUILDING & LOAN CO. v. GRAFF et al. |
| Court | Oklahoma Supreme Court |
Syllabus by the Court.
1. Where the plaintiff forecloses a mortgage, buys in the property at the foreclosure sale and takes possession thereof, and the court thereafter sets aside the proceedings and the sale thereunder, the possession of the plaintiff becomes that of mortgagee in possession and as such is entitled to remain in possession until payment of the debt or until the case is concluded by a new judgment and foreclosure sale.
2. Where such plaintiff proceeds with the foreclosure of the mortgage, the defendant mortgagors are entitled to an adjustment of all the equities between the parties. He may require an accounting for all rents received and disbursements made during plaintiff's possession, and may cross-petition for damages for the negligent care and mismanagement of the property and for damages to personal property not covered by the mortgage and wrongfully converted by the plaintiff.
3. Where one gives a note in renewal of another note with the knowledge at the time of a partial failure of consideration for the original note or false representations by the payee he waives such defense and cannot set it up to defeat a recovery on the renewal note. And where one giving such note either had knowledge of such facts and circumstances, or by the exercise of ordinary diligence could have discovered them and ascertained his rights, it becomes his duty to make such inquiry and investigation before executing the renewal note and, if he fails to do so, he is as much bound as if he had actual knowledge.
4. A general objection made to the introduction of documents is sufficient where such documents were inadmissible and no casting around by the court or opposing counsel for grounds of exclusion was necessary and where such documents could in no way be made admissible.
Appeal from District Court, Tulsa County; Prentiss E. Rowe, Judge.
Suit by the Ponca City Building & Loan Company against Maude E. Graff and Bennett Graff to recover on a note and to foreclose a mortgage. A default judgment was entered against the defendants, and a sale of the realty was ordered. The plaintiff purchased the realty at the sheriff's sale and went into possession thereof. Thereafter, Maude E. Graff filed a petition to vacate the judgment. A judgment was entered vacating such judgment and ordering all proceedings had thereunder, and the sheriff's sale conveying the realty to the plaintiff, set aside. The plaintiff then filed an amended petition. The defendants answered and filed a cross-petition. From a judgment in favor of the defendants the plaintiff appeals.
Judgment reversed, and cause remanded, with directions.
Oron S. Ellifrit, of Ponca City, and Eugene Rust and Gavin & Barnes, all of Tulsa, for plaintiff in error.
Bailey E. Bell and Ed Crossland, both of Tulsa, for defendants in error.
This is an appeal from the district court of Tulsa County.
On the 23rd day of May, 1928, the defendants, Maude E. Graff and Bennett Graff, executed a note in the sum of Eleven Thousand Dollars ($11,000), bearing interest at the rate of 7.8% per annum, in favor of the Ponca City Building and Loan Association. On the same date the defendants executed and delivered to plaintiff a real estate mortgage covering the property involved in this action to secure such promissory note. This was a regular building and loan contract providing for monthly principal payments which were to be used to purchase stock in said company and when there had accumulated a sufficient sum, or $11,000, said stock should be used to cancel and pay said note and mortgage.
On October 3, 1931, a renewal note was executed by the defendants in the sum of Nine Thousand and Fifty Dollars ($9,050); said sum being the balance due after the amount of stock so purchased was applied on the loan. This note provided that said loan should be reduced monthly by the amount of each principal payment made. It also provided an interest rate of 10%. The renewal note, as well as the loan agreement, provided that the mortgage lien above referred to should be continued in full force and effect until the entire indebtedness was paid.
On, or about, August 16, 1932, the plaintiff brought suit for the amount due on said renewal note, together with interest thereon at the rate of 10% per annum and the attorney's fee specified in said renewal note and sought to foreclose said mortgage and have the property sold after appraisement thereof; thereafter, on November 10, 1932, default judgment was entered against the defendants, Maude E. Graff and Bennett Graff, in the full amount prayed for, together with a judgment ordering the sale of said property; the plaintiff purchased the property at the sheriff's sale and went into possession thereof, about January 11, 1933.
On June 23, 1933, the defendant, Maude E. Graff, filed a petition to vacate the judgment above referred to; nearly four years thereafter, to-wit, January 21, 1937, a judgment was entered vacating said judgment and ordering all proceedings had thereunder, and the sheriff's sale conveying said property to the plaintiff, set aside. The plaintiff was granted leave to file an amended petition and caused summons to be issued to the defendants. The journal entry of judgment was not filed until June 21, 1938. On the same day the plaintiff filed its amended petition seeking to foreclose its mortgage. The allegations in the amended petition are the same as were set forth in the original petition, except that in addition thereto it alleges that the plaintiff went into possession of said property on January 11, 1933, and now holds possession thereof as a mortgagee in possession, and that the defendants are entitled to credit for only the net rentals received by the plaintiff in the operation of the property; also plaintiff sought judgment for a straight interest at 10%, as provided in the renewal note, from March 1, 1932, on the balance due on said note. The defendant, Maude E. Graff, answered by way of general denial and in addition thereto alleged full payment by reason of the rents collected by the plaintiff in excess of the total amount due, including interest. The defendant also cross-petitioned for damages for wrongful detention of said property, for rents collected, and for negligent care and mismanagement of the property; and also for the value of the use of defendant's furniture taken by the plaintiff, but not covered by the mortgage. The defendant, Bennett Graff, also answered by way of general denial and cross-petitioned for certain damages by reason of his loss of possession of the property which was his homestead. Trial was had before a jury and resulted in a judgment finding all the issues for the defendants and fixed the amount of their recovery at $3,766. From this judgment the plaintiff appealed.
The record discloses that the plaintiff took possession of the property immediately upon the execution and delivery of the sheriff's deed. When the court found that the judgment and sale were void and set the same aside, the possession of the plaintiff became that of mortgagee in possession. Harding v. Gillett, 25 Okl. 199, 107 P. 665; Page v. Turk, 43 Okl. 667, 143 P. 1047. The plaintiff, being a mortgagee in possession, was entitled to remain in possession until payment of the debt or until it proceeded to the conclusion of the case by a new judgment and foreclosure sale. Webb v. Semans, 110 Okl. 72, 235 P. 1074.
This it attempted to do; it filed the amended petition hereinbefore referred to seeking a new judgment and foreclosure sale. The defendants answered as indicated above. Under the rule announced in Brown v. State National Bank of Shawnee, 167 Okl. 366, 29 P.2d 955, the defendants could not maintain an action in ejectment to quiet title or for rents and profits against the plaintiff, mortgagee in possession, without first tendering payment of the mortgage debt. However, as in this case where the plaintiff proceeds by the filing of an amended petition seeking a new judgment and foreclosure sale, the defendants are entitled to an adjustment of all equities between the parties; and may demand an accounting of all rents and profits; and may cross-petition for damages for waste and wrongful conversion of personal property committed by the mortgagee in possession: Gillett v. Romig, 17 Okl. 324, 87 P. 325; Romig v. Gillett, 187 U.S. 111, 23 S.Ct. 40, 47 L.Ed. 97; Webb v. Semans, supra; Felino v. K. S. Newcomb Lumber Co. 64 Neb. 335, 89 N.W. 755, 97 Am.St.Rep. 646; Whiting v. Adams, 66 Vt. 679, 30 A. 32, 25 L.R.A. 598, 44 Am.St.Rep. 875; Beindorf v Thorpe, 126 Okl. 157, 259 P. 242, 55 A.L.R. 1014; Conner v. Smith, 88 Ala. 300, 7 So. 150; Onderdonk v. Gray, 19 N.J.Eq. 65. The contention made by plaintiff that the defendants cannot maintain a cross-petition for possession to quiet title or for damages after breach of condition without first offering to redeem and tendering payment of the mortgage debt is untenable.
The record discloses that the renewal note in question in the amount of $9,050 was executed and delivered by the defendants on the...
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