Redding v. Gibbs, 41908

• Decision Date: 19 June 1979
• Docket Number: No. 41908,41908
• Citation: 203 Neb. 727,280 N.W.2d 53
• Parties: Dale REDDING, Appellant, v. Audra GIBBS et al., Appellees.
• Court: Nebraska Supreme Court

Page 53

280 N.W.2d 53

203 Neb. 727

Dale REDDING, Appellant, v. Audra GIBBS et al., Appellees.

No. 41908.

Supreme Court of Nebraska.

June 19, 1979.

Syllabus by the Court

1. Statutes: Parties. Under section 25-301, R.R.S.1943, every action must be prosecuted in the name of the real party in interest, except as otherwise provided in section 25-304, R.R.S.1943.

2. Judgments: Parties: Res Judicata. In ascertaining whether the plaintiff is the real party in interest, the primary and fundamental test to be applied is whether the prosecution of the action will save the defendant from further harassment or vexation at the hands of other claimants to the same demand. If the defendant is not cut off from any just defense, offset, or counterclaim against the demand and a judgment in behalf of the party suing will fully protect him when discharged, then is his concern at an end.

3. Mortgages: Assignments: Foreclosure: Parties. Where the mortgagee has made an assignment of the mortgage, and the assignee has not reassigned or redelivered it to the mortgagee at the time a foreclosure action is commenced by the mortgagee, the mortgagee is not the real party in interest to bring the action.

4. Mortgages: Equity: Default. A court of equity has the power to relieve a mortgagor from the effect of an operative acceleration clause when the default of the mortgagor is the result of some unconscionable or inequitable conduct of the mortgagee.

5. Mortgages: Equity: Default: Foreclosure. Equity will grant relief to prevent an acceleration of a mortgage debt predicated on an inadvertent default where there are indications that the mortgagee had knowledge of the default and, subsequent to the expiration of the grace period, in personal dealings with the mortgagor failed to inquire about the delayed payment but immediately thereafter brought an action to foreclose.

6. Mortgages: Equity: Default: Foreclosure. When an advantage is unconscionable depends on the circumstances. The gravity of the fault must be compared with the gravity of the hardship. "Unconscionable" conduct means conduct that is monstrously harsh, that is shocking to the conscience.

True R. Ferguson of Atkins, Ferguson, Hahn & Zimmerman, Scottsbluff, for appellant.

John F. Wright of Wright & Simmons, Scottsbluff, for appellees.

Heard before KRIVOSHA, C. J., McCOWN, and BRODKEY, JJ., and RICHLING and CLARK, District Judges.

BRODKEY, Justice.

Plaintiff, Dale Redding, appeals from a decree entered by the District Court for Sioux County dismissing his petition to foreclose a certain mortgage upon a ranch which the defendant, Cameron Cattle Company, had purchased through mesne conveyances from the original owner, the plaintiff herein.

Plaintiff Redding was the owner of a ranch located in Sioux County which, on June 30, 1967, he sold to the original purchaser, Scottsbluff Angus Ranch, Inc., later renamed Shalco Land & Cattle Company, Inc. As part of that transaction, the purchaser gave Redding a purchase money mortgage and a note in the amount of $500,000 as partial payment therefor. The note and mortgage provided for quarterly payments on interest and/or principal to be made on March 31, June 30, September 30, and December 31 of each year thereafter. The note and mortgage contained an acceleration clause providing that in the event of default in the payment of any installment due for a period of 60 days from the date the same was due, the holder had the option to declare the entire balance of the debt due without notice. The note also contained a provision permitting both the maker and holder at any time to assign or transfer all of their rights and obligations under the note and mortgage, provided any assignment or transfer by the holder would be of the holder's entire interest in both the note and the collateral.

On July 22, 1971, Redding, as the holder of the mortgage on the ranch, assigned all of his interest in the mortgage to Wichita Falls Production Credit Association, Wichita Falls, Texas, hereinafter referred to as Wichita Falls. The purpose of the assignment was to secure certain promissory notes executed by Redding and his son Paul in connection with a loan made to them by Wichita Falls. The assignment contained the condition that when those promissory notes were paid, the assignment would be void. The assignment was recorded in the office of the county clerk of Sioux County on August 27, 1971. Wichita Falls still retains possession of the assignment, and has never cancelled it or reassigned it to Redding. The ranch was sold several times thereafter; and was subsequently conveyed to the defendant, Cameron Cattle Company, hereinafter referred to as Cameron, who bought the ranch on April 3, 1973, subject to the mortgage and note originally given to Redding. Shortly after the purchase of the ranch by Cameron, Wichita Falls advised Cameron in writing that all quarterly payments on the mortgage were to be made directly to Redding unless and until Wichita Falls gave Cameron at least 30 days notice of a default by Redding. It was also stipulated between the parties that on May 1, 1973, Redding gave Cameron a statement of the principal balance due of $467,500, and that the next payment due on the mortgage was on June 30, 1973.

The record reveals that Cameron was anything but regular in making the payments on the mortgage. For example, it appears that the first payment from Cameron was due on June 30, 1973, but was not paid until August 6, 1973, 36 days late. The September 30, 1973, payment was not paid until November 12, 1973, which was 43 days late. The December 31, 1973, payment was made on February 6, 1974, 37 days late. The payment due March 31, 1974, was paid on May 10, 1974, which was 40 days late. It does not appear from the record that any complaint was ever made directly to Cameron about his late payments, although Redding testified he was dissatisfied with the way Cameron was making his payments. Cameron did not tender the payment due on June 30, 1974, until September 25, 1974, after Redding had commenced his foreclosure action. Darrell Cameron, who was the president of Cameron Cattle Company, testified that he was under the impression that the payment he had made in May 1974 was the payment which was due on June 30, 1974. As previously stated, both the note and the mortgage contained a 60-day grace period in which to make each quarterly payment after due; and it appears that Cameron frequently utilized the additional 60 days to make his payments.

It further appears that on or about June 25, 1974, Cameron sold the ranch to Audra Gibbs, who was the executive officer of the Gibbs Cattle Company, hereinafter referred to as Gibbs. In the contract between the parties Gibbs was given the right to assume the existing mortgage to Redding, which, as previously stated, provided for a 6 percent interest rate. It appears from the record that the Scottsbluff National Bank was holding a prior security interest in the ranch as additional security for indebtedness owed to the Bank by Cameron. For the purpose of protecting its security interest, the Scottsbluff National Bank, hereinafter referred to as Bank, wrote to Redding, advising him the ranch had been sold by Cameron to Gibbs. In its letter of June 27, 1974, the Bank stated: "It is our understanding that the balance is now $457,500.00, and that the interest rate is 6% with payments of $2,500.00 plus interest payable quarterly on March 31st, June 30th, September 30th, and December 31st of each year. I would appreciate confirmation of the balance and payments due." (Emphasis supplied.) The plaintiff did not respond to the Bank's request for a confirmation of the balance and payments due, although the June 30, 1974, payment became due and delinquent.

The record reveals that on or about August 24, 1974, Redding visited the ranch and talked to Cameron. The conversation was primarily with reference to the condition of the grass and the cattle market. However, Cameron then informed Redding that he had sold the ranch to Gibbs, and that he (Cameron) would make the payment due on the mortgage on September 30, 1974, and that the Bank would make all subsequent payments. Cameron testified that he asked the plaintiff "if everything was alright." Cameron testified that Redding replied: "Yes, I just wanted to check on the condition of the ranch." There were no questions or conversation concerning the note and mortgage although the 60-day grace period for the June 30, 1974, payment had nearly expired. Redding testified he knew the June 30, 1974, payment had not been made at the time he visited with Cameron at the ranch on or about August 24, 1974. Redding also testified he was dissatisfied with Cameron's late payments. Plaintiff was asked at the trial: "Why didn't you discuss this matter with Cameron when you met him at the ranch?", to which Redding replied: "I had been talking to my attorney, Mr. Ferguson, and asking him all the time, what I could do and he said, 'There's not a thing you can do, because you gave sixty-days grace,' * * *."

Shortly thereafter, on September 19, 1974, Redding filed this foreclosure action. After the filing of the foreclosure action the Bank sent Redding the delinquent payments which were due June 30, 1974, and September 30, 1974. Redding returned both payments to the Bank early in October of 1974. On October 15, 1974, Cameron directed the Bank to send the two checks for the delinquent payments to Wichita Falls, the assignee of the mortgage on the ranch. Wichita Falls accepted the tendered payments, and credited Redding's account for them, and then contacted Redding. Redding instructed Wichita Falls to return the payments to the Bank. Wichita Falls did so, referring to their previous statement that Cameron's payments were to be made directly to Redding unless notice to the contrary was given 30 days in advance. Cameron had never previously made the payments to Wichita Falls, but had...