Sellwood v. Gray

• Decision Date: 26 November 1884
• Citation: 5 P. 196,11 Or. 534
• Parties: SELLWOOD v. GRAY and another.
• Court: Oregon Supreme Court

5 P. 196

11 Or. 534

SELLWOOD v. GRAY and another.

Supreme Court of Oregon

November 26, 1884

Appeal from Multnomah county.

W.W. Chapman, for appellant.

H.B Nicholas, for respondents.

LORD J.

This is a suit instituted by the plaintiff, as a senior mortgagee, to compel the defendants to redeem his mortgage, or that they be foreclosed. The facts out of which the controversy arose are That on the first day of February, 1875, the plaintiff loaned to C.M. Carter the sum of $3,000, and took a note therefor payable two years after said date, with interest at the rate of 1 per cent. per month, payable monthly, secured by a mortgage on blocks 133 and 110, in Caruthers' addition and blocks 35, 47, and 58, in Carter's addition to the city of Portland; that by the terms of said mortgage default in the payment of any installment of interest should render the entire sum, both principal and interest then accrued due, and the mortgage might be foreclosed; that on the twenty-fourth day of January, 1877, the plaintiff commenced suit to foreclose said mortgage against Carter and wife, who executed the mortgage, and George P. Gray, one of the defendants in this suit, who had in the mean time obtained judgment against Carter, which was a lien on his interest in the mortgaged property; Gray was not served with the summons, and made no appearance in the suit; that on the twenty-fourth day of February, 1877, a decree was rendered by the court in said suit in favor of the plaintiff for the amount due on the note, and attorney's fees, and directing a sale of the mortgaged property to satisfy the same; that in pursuance of such decree, and on the ninth day of March, 1877, the said property was sold by the sheriff, and the plaintiff became the purchaser for the sum of $750, and, after due confirmation of such sale, received a sheriff's deed for the property, and entered upon the possession of the premises. Subsequently, Gray caused an execution to be issued upon his judgment, which was a junior lien, and sold the same property on the eleventh day of February, 1878, and the defendant Delashmutt became the purchaser, for the sum of $32, and on the sixteenth day of May, 1878, received a sheriff's deed for the property. At the time of making the loan to Carter the plaintiff received from him by assignment, as additional and collateral security for the repayment of such loan, three promissory notes against P.A. Marquam, amounting altogether to the sum of $2,450, bearing date December 11, 1874, and payable 2 years and 10 months thereafter, with interest at the rate of 10 per cent. per annum, secured by mortgage upon the real property of the said Marquam; that on the fourth day of April, 1879, the plaintiff, without any knowledge, as he alleges, of the sale under the judgment of the defendant Gray, entered an acknowledgment of satisfaction upon the margin of the decree entered in the foreclosure suit, in words, to-wit: "Full payment and satisfaction of this judgment is hereby acknowledged;" that on the eight day of September, 1878, the plaintiff executed a quitclaim deed for block 133, in Caruthers' addition, to D. P. Thompson, for the consideration of $1,000. The defendant Delashmutt afterwards recovered possession of the property in an action of ejectment against Sellwood, the plaintiff herein, and the said D.P. Thompson, and subsequently conveyed by quitclaim deed block 133 back to the said Thompson.

Upon this state of facts the plaintiff has brought this suit for the purpose of compelling the defendants to redeem his mortgage for the full amount and accruing interest, or else that a decree of foreclosure be entered against them, barring all their rights and interests in the mortgaged property. As preliminary to and for a better understanding of the question involved and to be decided, it will be necessary to ascertain the legal and equitable relations which the parties respectively occupy to each other. In this state a mortgage does not operate, as at common law, to vest in the mortgagee an estate upon condition, the breach of which works a forfeiture and the estate becomes absolute. It is in fact what the parties intended, and as equity treated it, a mere security for the repayment of the debt or obligation, and serves simply to create a lien or incumbrance upon the property. The title, both before and after condition broken, remains in the mortgagor until foreclosure and judicial sale. The mortgage works no change in the ownership of the property. It is still the property of the mortgagor in law and in equity, is liable for his debts, may be sold under execution, or conveyed or devised, is subject to dower, or may be again mortgaged, as any other estate in land. Nor do any of the qualities or incidents of an estate in land attach in the mortgagee; he has but a lien upon the land as a security for repayment, and which cannot operate to affect the possession of the mortgagor without his consent, or to transfer his estate in the land, except after default, and by force of a judicial sale under a decree of foreclosure. But before such proceedings are had, payment of the debt by the mortgagor will extinguish the lien and free the estate from the mortgage.

Although this right of the mortgagor to intervene after default, and before judicial sentence, and discharge the mortgage, is usually termed his "equity of redemption," it is not so in fact or in equity in the sense which recognized the legal estate in the mortgagee defeasible before and absolute after default, and which, on the condition of paying his debt, allowed him to redeem a forfeited estate and demand a reconveyance. Kortright v. Cady, 21 N.Y. 365. His equity of redemption is the right to redeem from the mortgage--to pay off the mortgage debt--until this right is barred by a decree of foreclosure; but until this right is barred, his estate, in law or in equity, is just the same after as it was before default. It is a right, though, of which the law takes no cognizance, and is enforceable only in equity, and has nothing to do with our statute of redemptions. Wiley v. Ewing, 47 Ala. 418; Anson v. Anson, 20 Iowa, 56. This is a valuable right, and exists not only in the mortgagor himself, but in every other person who has an interest in, or legal or equitable lien upon, the mortgaged premises, and includes judgment creditors, all of whom may insist upon a redemption of the mortgage, (4 Kent, Comm. 162; 2 Story, Eq. § 1023; Will. Eq Jur. 447; Holmes v. Bybee, 34 Ind. 262;) nor can one against his consent be deprived of this right without due process of law. To bar his right of redemption he must be made a party to the foreclosure, or the proceeding as to him will be a nullity. Jones, Mortg. §§ 1047, 1395, 1396. When, therefore, the plaintiff instituted his suit of foreclosure against Carter, the mortgagee, and obtained a decree for the sale of the property without making the defendant Gray a party, the proceeding as to him was a nullity; but the sale effected some important results. Except as to the defendant Gray, who was not bound by it, it had operated to cut off the right of the mortgagor to redeem, and to change the ownership of the property from the mortgagor to the mortgagee, who had become the purchaser. The relations of the parties were changed, and stood thus: As to the defendant Gray, it stood as if no such sale had been made; he had a right to redeem by paying the amount of the incumbrance. The plaintiff, as purchaser at the foreclosure sale, took all the rights of his senior...