Scott v. Dist. Court of Fifth Judicial Dist. for Barnes Cnty.

• Decision Date: 28 April 1906
• Citation: 107 N.W. 61,15 N.D. 259
• Parties: SCOTT et al. v. DISTRICT COURT OF FIFTH JUDICIAL DISTRICT FOR BARNES COUNTY et al.
• Court: North Dakota Supreme Court

15 N.D. 259

107 N.W. 61

SCOTT et al.

v.DISTRICT COURT OF FIFTH JUDICIAL DISTRICT FOR BARNES COUNTY et al.

Supreme Court of North Dakota.

April 28, 1906.

Syllabus by the Court.

A purchaser of land at a tax sale cannot avail himself of the ex parte remedy provided by section 5845, Revised Codes of 1899, to enjoin the foreclosure of a mortgage.

That an action to foreclose a mortgage is barred by the statute of limitations is one of the defenses which may be shown as a ground for enjoining a foreclosure by advertisement under section 5845 of the Revised Codes of 1899.

Although the law now appearing as section 5845, Revised Codes of 1899, was first adopted by the Legislature of Dakota Territory in 1883, after defendants' mortgage containing the power of sale was given, the obligation of the mortgagee's contract was not thereby impaired; nor was the mortgagee thereby deprived of any property right without due process of law.

The term “mortgagor,” as used in section 5845, Revised Codes of 1899, includes within its meaning any person claiming title to the mortgaged premises under and in privity with the original mortgagor.

Certiorari by W. A. Scott and H. O. Wheeler to the district court of the Fifth judicial district for the county of Barnes and others to review an injunction. Injunction vacated.

Young, J., dissenting in part.J. E. Robinson, for petitioners. Herman Winterer and Lee Combs, for respondents.

ENGERUD, J.

This is a writ of certiorari issued by this court to inquire into the validity of an injunction order issued by the district court under section 5845, Revised Codes of 1899, to enjoin a foreclosure by advertisement of a real estate mortgage. This same injunctional order was sought to be reviewed on appeal, but we held that the order was not an appealable one. Tracy v. Scott, 101 N. W. 905, 13 N. D. 577. The mortgage in question was executed and recorded in November, 1882, and was given to secure the payment of a note for $700 and interest, due November 10, 1887. The mortgage contained the usual power of sale in case of default. The plaintiffs, Wheeler and Scott, are the legal representatives of the deceased mortgagee. As such they commenced to foreclose the mortgage under the power of sale. One John Tracy is the administrator of the estate of Frank J. Young, deceased. After the foreclosure proceedings were commenced, said Tracy, as such administrator, obtained from the judge of the district court an ex parte injunctional order, under section 5845, Revised Codes of 1899, to enjoin the foreclosure by advertisement, on the ground that an action to foreclose the mortgage had become barred by the statute of limitations. Wheeler and Scott then applied to the district court to vacate said injunctional order, on the ground that it was improvidently issued, but their application was denied. Thereupon this proceeding was instituted.

The plaintiffs contend that section 5845 impairs the obligation of the contract evidenced by the mortgage, and deprives the owner of the mortgage of his property without due process of law, and is therefore unconstitutional. Plaintiffs further contend that the statute of limitations is not one of the defenses which are ground for enjoining the exercise of the power of sale under section 5845, and they finally assert that Tracy, as the legal representative of Frank J. Young, deceased, the tax title purchaser, is not entitled to the benefits of section 5845, because he is neither the mortgagor nor in privity with the mortgagor. We think the last point is well taken. Section 5845 provides that the mortgagor, his agent or attorney, may obtain the ex parte injunctional order. The tax title purchaser, under the laws of this state, is not in privity with the mortgagor. He derives his title from the state, which conveys the land in the exercise of its taxing power. The tax deed, if valid, passes an absolute title in fee simple, and terminates all prior estates and liens held by individuals. A tax title purchaser is not within the spirit of this statute. If his title is valid, it is a complete bar of the mortgage lien. A foreclosure before or after the tax sale or tax deed could not affect the right of the tax title purchaser. The injunctional order in question was therefore erroneously issued, and should be vacated.

Discussion of the other questions presented by the record is not strictly necessary to the decision of this case. The same questions, however, arose in Tracy v. Wheeler, and our views thereon were expressed in the first opinion in that case. The Chief Justice and the writer still adhere to the conclusions then announced, and as the writer's dissent in Tracy v. Wheeler is based upon the assumption that the remedy under the power of sale may be perpetually barred, on the ground that the remedy by action is outlawed, it is proper to state the reasons for that conclusion. Those reasons may be restated more appropriately in this case than in the other. Section 5845, Revised Codes of 1899, provides a summary proceeding by means of which the mortgagor and those claiming in privity with him may avail themselves of the limitation statute as a bar against the exercising of the power of sale. That section reads as follows: “When the mortgagee, or his assignee, has commenced proceedings for the foreclosure of a mortgage advertisement, and it shall be made to appear by the affidavit of the mortgagor, his agent or attorney, to the satisfaction of a judge of the district court of the county where the mortgaged property is situated, that the mortgagor has a legal counterclaim or any other valid defense against the collection of the whole or any part of the amount claimed to be due on such mortgage, such judge may by an order to that effect, enjoin the mortgagee or his assignee, from foreclosing such mortgage by advertisement, and direct that all further proceedings for the foreclosure be had in the district court properly having jurisdiction of the subject matter; and for the purpose of carrying out the provisions of this section, service may be had upon the attorney or agent of the mortgagee or assignee.” The effect of this law is to subject the mortgagee's right to exercise the power of sale to the right of the mortgagor to forever prevent that method of foreclosure, so as to enable the latter to plead and prove, in an action to foreclose, any defense or counterclaim he may have. The defense which the mortgagor may thus avail himself of clearly includes the defense of the statute of limitations. A defense is any fact or state of facts which will defeat in whole or in part, a cause of action. 2 Words and Phrases, p. 1939. The statute plainly means that a foreclosure under the power of sale shall be forever enjoined by order of the district court, if it appears prima facie from the affidavits submitted that the mortgagor has any defense or counterclaim, which, if pleaded and proved in an action to foreclose the mortgage, would defeat the action or reduce the amount claimed to be due on the mortgage. It is asserted in argument that the “legal counterclaim or other valid defense,” which may be shown to enjointhe exercise of the power, means a counterclaim or defense against the exercise of the power. The statement of the argument is sufficient to show its absurdity. There cannot, in the nature of things, be such a thing as a counterclaim or defense against the exercise of the power, which is an ex parte, nonjudicial proceeding. Relief against a foreclosure by advertisement must necessarily be obtained by some action or judicial proceeding, in which the party seeking relief is the moving party, and a defense or counterclaim can only be conceived of as something asserted by a defendant to defeat an action or similar judicial proceeding instituted against him by the other party.

It is contended, however, that section 5845 contemplates the granting of an injunction only on a showing of a state of facts which would have been good ground for affirmative relief in a suit in equity to enjoin the foreclosure. If the Legislature had so intended, it would have been an easy matter to express that intention in clear language. The language used negatives any such intention. It declares that the injunction shall be granted on a prima facie showing of “a legal counterclaim or any other valid defense against the collection of the whole or any part of the amount claimed to be due on such mortgage.” As already stated, this language can only mean that any facts which prima facie would defeat an action or similar judicial proceeding for the collection of the debt by foreclosure shall be available to prevent the exercise of the power; and the defense of the statute of limitations is as effective for that purpose as any other defense. We know of no reason for arbitrarily excluding from the provisions of the law the defense of the statute of limitations. That defense is one which defeats the collection of the debt. The statute does not say that the injunction shall be granted only when it is made to appear prima facie that the mortgagor has a good ground for a suit in equity to enjoin the foreclosure under the power. That statute declares that prima facie proof of “a legal counterclaim or any other valid defense” shall be ground for injunction. The use of the word “counterclaim” emphasizes the meaning that the act has reference to something which may defeat recovery on a cause of action; and the more comprehensive words, “or any other valid defense,” under a familiar rule of construction must be construed in pari materia with what precedes-i. e., any defense, whatever its character, which will have the same effect as a counterclaim to defeat in whole or in part the cause of action or judicial proceeding. It is needless to say that the right to foreclose by advertisement is not a cause of action. Nor is that ex parte proceeding an action or judicial proceeding. It is perfectly clear, therefore, that...