Roos v. Belcher, 8610

• Decision Date: 29 January 1958
• Docket Number: No. 8610,8610
• Citation: 79 Idaho 473,321 P.2d 210
• Parties: William L. ROOS and Ethel A. Roos, husband and wife, Plaintiffs-Respondents, v. William G. BELCHER and Mabel M. Belcher, husband and wife, and Louise Lykins, a single woman, Defendants-Appellants.
• Court: Idaho Supreme Court

Page 210

321 P.2d 210

79 Idaho 473

William L. ROOS and Ethel A. Roos, husband and wife, Plaintiffs-Respondents, v. William G. BELCHER and Mabel M. Belcher, husband and wife, and Louise Lykins, a single woman, Defendants-Appellants.

No. 8610.

Supreme Court of Idaho.

Jan. 29, 1958.

Clemons, Skiles & Green, Boise, for appellants.

Richards, Haga & Eberle, Boise, for respondents.

TAYLOR, Justice.

March 23, 1957, defendants (appellants), husband and wife, executed and delivered a trust deed to Title and Trust Company, as trustee, for the use and benefit of the plaintiffs (respondents), as beneficiaries. The deed was given to secure the payment of a promissory note of even date, executed by defendants and payable to plaintiffs, the beneficiaries, in installments of $25 per month, commencing April 23, 1957. Defendants defaulted, in their failure to pay the first installment. The trustee filed notice of default April 25, 1957, and after giving notice of trustee's sale, and in other respects complying with terms of trust deed and the applicable provisions of Chapter 181 of the Idaho Session Laws 1957, the trustee sold the property described in the trust deed to the plaintiffs on August 26, 1957. The amount bid was equal to the amount due upon the note secured by the trust deed, and was the highest bid. The trustee executed and delivered its deed conveying the property to the plaintiffs. Thereafter, plaintiffs commenced this action against the defendants to quiet the title thus acquired.

In the trial court and on this appeal, defendants contend that the trust deed is in effect a mortgage and that the attempted foreclosure by notice and sale is invalid, and that no judicial foreclosure having been made, they have a right to redeem the property. In support of this contention they urge that Chapter 181 of the 1957 Session Laws is unconstitutional on the ground that sale without judicial proceedings and without right of redemption, as authorized by that act, deprives them of their property without due process of law, in violation of art. 1, §§ 1 and 13, of the Constitution of Idaho, and the Fourteenth Amendment to the Constitution of the United States.

The statutory right of redemption, following an execution sale of real property, given by §§ 11-310, 11-401 and 11-402, I.C., and following judicial foreclosure of a mortgage, given by § 6-101, I.C., is expressly denied to the grantor in a trust deed by § 8, Chapter 181, Laws of 1957, where the sale is made by the trustee by notice and sale, or advertisement and sale, pursuant to the power contained in the deed and the applicable provisions of said Chapter 181. The legislative withdrawal of this legislatively given right of redemption is not a denial of due process, where the withdrawal is effected only in cases where the property owner by his contract so agrees. By the terms of their trust deed and the applicable law the defendants agreed to, and authorized, the sale of the property by the trustee without judicial proceedings and without a right in them to redeem. The statute authorizing trust deed with power of sale in cases coming within its terms, is a recognition of the right of a property owner, as an incident of ownership, to dispose of his property on terms agreeable to himself.

'* * * There is nothing in the law of mortgages, nor in the law that covers what are sometimes designated as 'trust deeds in the nature of mortgages,' which prevents the conferring by the grantor or mortgagor in such instrument of the power to sell the premises described therein upon default in payment of the debt secured by it, and, if the sale is conducted in accordance with the terms of the power the title to the premises granted in that way of security passes to the purchaser upon its consummation by a conveyance.' Bell Silver & Copper Mining Co. v. First Nat. Bank of Butte, 156 U.S. 470 at page 477, 15 S.Ct. 440 at page 443, 39 L.Ed. 497 at page 501.

As to the contention that the trust deed given as security for the payment of a debt is in effect a mortgage, and as such must be foreclosed by judicial proceedings, we note that by § 16 of Chapter 181, '57 Laws, § 45-901, I.C., defining 'mortgage', was amended to eliminate 'a trust deed or transfer in trust', and § 45-904, I.C., providing in effect that a transfer of property made only as security is to be deemed a mortgage, was also amended to eliminate a trust deed from its operation. Likewise, other provisions of the mortgage laws were appropriately amended to draw a distinction between a trust deed or transfer in trust and a mortgage. The result of these changes is that § 6-101, I.C., providing in effect that a mortgage can be foreclosed only by judicial action, and § 6-104, I.C., to the effect that a mortgagee cannot recover possession without a foreclosure sale, are not applicable to proceedings for the foreclosure of a trust deed by advertisement or notice and sale as authorized by Chapter 181, 1957 Laws. A trust deed 'may be foreclosed by advertisement and sale in the manner hereinafter provided, or, at the option of beneficiary, by foreclosure as provided by law for the foreclosure of mortgages on real property.' § 3, Chap. 181, Laws 1957.

Observance of due process as to notice is required by the provisions of said Chapter 181. Section 5 thereof requires the recording of the trust deed and any assignment thereof as well as any change in the office of trustee; the filing for record by the trustee of notice of default; and that a copy of such notice be given by registered or certified mail to any person requesting such notice of record. Section 6 requires that notice of trustee's sale be given following notice of default, at least 120 days before the day fixed for the sale; that such notice be given by registered or certified mail to the last known address of the grantor and to any person requesting notice of record; likewise, to any successor in interest of the grantor where his interest appears of record or where the trustee or beneficiary has actual notice thereof, or where the successor in interest is in possession of the property; to any lessee or other person in possession; also to any person having a lien or interest subsequent to the interest of the trustee, where such lien or interest appears of record, or where the trustee or beneficiary has actual notice thereof.

Section 6 also details the contents of such notice from which it appears adequate information is given to inform the recipient, so that he may be advised and act thereon for the protection of his interest. The section further provides for personal service of the notice upon occupants of the property and for posting thereof upon the property if it is unoccupied; also, that the notice shall be published in a newspaper of general circulation in each of the counties in which the property is situated, once a week, for four successive weeks, the last publication to be 30 days prior to the date of sale; and affidavits of mailing, of posting, and of publication of notice of sale, are required to be recorded at least 20 days prior to the date of sale. Subsection (12) of § 6 provides that the grantor, or any successor in interest, or any person having a subordinate lien or encumbrance of record, at any time within 115 days of the recording of the notice of default, may pay the obligation secured by the trust deed, or such part thereof as is in default, and thus redeem the property or cure the default, as the case may be.

In Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865, the supreme court considered the requirements of due process in relation to the duties of a trustee in the closing of a trust estate. There it is said:

'* * * 'The fundamental requisite of due process of law is the opportunity to be heard.' Grannis v. Ordean, 234 U.S. 385, 394, 34 S.Ct. 779, 783, 58 L.Ed. 1363, [1368]. This right to be heard has little reality or worth unless one is informed that the matter is pending and can choose for himself whether to appear or default, acquiesce or contest.

* * *

* * *

'An elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections. (Citations). The notice must be of such nature as reasonably to convey the required information, * * * and it must afford a reasonable time for those interested to make their appearance. (Citations).' 339 U.S. 306, 70 S.Ct. at page 657, 94 L.Ed. at page 873.

It was also held in Hamilton v. Brown, 161 U.S. 256, 16 S.Ct. 585, 40 L.Ed. 691, that notice necessary to due process is afforded by actual notice to all known claimants, and constructive notice by publication to those unknown.

We think the requirements of Chapter 181, as to notice and opportunity to be heard, are sufficient to meet the constitutional requirements of due process. Strict compliance with the terms of both the trust deed and the statute is required. Garrett v. Soucie, 46 Idaho 289, 267 P. 1078; McDougall v. Kasiska, 48 Idaho 424, 282 P. 943, certiorari denied 50 S.Ct. 347, 281 U.S. 740, 74 L.Ed. 1154; Shillaber v. Robinson, 97 U.S. 68, 24 L.Ed. 967; Bell Silver & Copper Mining Co. v. First Nat. Bank of Butte, Mont., 156 U.S. 470, 15 S.Ct. 440, 39 L.Ed. 497. Moreover, the courts are always open to hear and determine the complaint of any interested party deeming himself aggrieved by the notice and sale proceedings had under a trust deed.

Trust deeds with power of sale in the trustee are upheld in other jurisdictions where the same constitutional due process requirement is in effect. Koch v. Briggs, 14 Cal. 256, 73 Am.Dec. 651; Shillaber v. Robinson, 97 U.S. 68, 24 L.Ed. 967; First Nat. Bank of Butte v. Bell Silver & Copper Mining Co., 8 Mont. 32, 19 P. 403; 156 U.S. 470, 15 S.Ct. 440, 39...