Sherman v. Droubay

• Decision Date: 09 November 1903
• Docket Number: 1399
• Citation: 74 P. 348,27 Utah 47
• Court: Utah Supreme Court
• Parties: FRANK A. SHERMAN, Respondent, v. HARRIET F. DROUBAY, PAUL DROUBAY, CLARA A. GILE and JOSEPH A. GRAHAM, Appellants

74 P. 348

27 Utah 47

FRANK A. SHERMAN, Respondent, v. HARRIET F. DROUBAY, PAUL DROUBAY, CLARA A. GILE and JOSEPH A. GRAHAM, Appellants

No. 1399

Supreme Court of Utah

November 9, 1903

Appeal from the Third District Court, Salt Lake County.--Hon. W. C Hall, Judge.

Action to foreclose a certain trust deed upon certain real estate situated in Tooele county given to secure two promissory notes by their terms payable in Salt Lake City, Utah. From a judgment in favor of the plaintiff, the defendants appealed.

REVERSED.

C. S Price, Esq., and W. M. McCrea, Esq. for appellants. Elmer B Jones, Esq., of counsel.

A mortgage does not affect a transfer of title, but merely creates a lien upon the property. Thompson v. Cheesman, 15 Utah 43, 48 P. 477.

"In those states in this country where the mortgage is considered a mere lien, and the legal estate as remaining in the mortgagor, the decree (of foreclosure) operates either to deprive the mortgagor of that estate, by vesting it in the mortgagee as by strict foreclosure or by sale to convey it to the purchaser, and therefore would be regarded as a local action. If a sale of the property is asked for, as this operates in rem, jurisdiction is restricted to the local court of the county in which the land lies." 2 Jones on Mortgages, 367, sec. 1444; Campbell v. West, 86 Cal. 197, 24 P. 1000; Stephens v. Ferry, 48 F. 7; Wood v. Mastrick, 2 Wash. T. 64, 3 P. 612; Chadborn v. Gilman, 29 Iowa 181.

"In those states where a mortgage is regarded as a mere lien, if the sale of the property is asked for, this is essentially a proceeding in rem, and the court where the land lies has jurisdiction." 2 Pingree on Mortgages, sec. 1739; 1 Wiltsie on Mort. Foreclosure, sec. 25; Vallejo v. Randall, 5 Cal. 461; Miller v. Hull, 3 How Pr. (N.Y.) 325.

Messrs. Powers, Straup & Lippman for respondent.

ROLAPP, District Judge, delivered the opinion of the court. BASKIN, C. J., concurring. BARTCH, J., dissents.

OPINION

ROLAPP, District Judge,

STATEMENT OF FACTS.

On November 1, 1899, the defendants executed and delivered to the plaintiff two promissory notes--one for $ 275, due November 1, 1900--and one for $ 275, due November 1, 1900--both of which notes upon their face provided, "Payable at the Wilson-Sherman Company's office in Salt Lake City, Utah," etc. To secure the payment of these notes the defendants executed and delivered a trust deed upon certain real estate situated in Tooele county. The notes being past due and unpaid, on the fourth day of November, 1901, the plaintiff commenced an action in the district court of Salt Lake county for the foreclosure of the said trust deed and for a personal and deficiency judgment against the said defendants. Personal service was had on the said defendants. They appeared, and demurred to the complaint for want of jurisdiction, contending that the action should have been brought in Tooele county. The court overruled the demurrer, and upon proceedings properly had gave judgment for said plaintiff as is usual in such case, providing for the sale of the mortgaged premises, and for a deficiency judgment. From such order and judgment defendants appeal.

ROLAPP, District Judge, after stating the facts, delivered the opinion of the court.

This appeal involves simply the determination of the question as to where an action shall be brought for the foreclosure of a real mortgage, when the indebtedness by express terms is made payable in one county and the real estate securing the payment of such indebtedness is situated in another county. Our statute provides that "there can be but one action for the recovery of any debt secured by mortgage" (Rev. Stat. 1898, section 3498); that "a mortgage of real property shall not be deemed a conveyance, whatever its terms, so as to enable the owner of the mortgage to recover possession of the real property, without a foreclosure and sale" (Id. section 3517); and that "actions for the following causes must be tried in the county in which the subject of the action or some part thereof is situated: . . . Subd. 3. For the foreclosure of all liens and mortgages on real property" (Id. section 2928). Respondent contends, however, that this latter section is unconstitutional, as being in conflict with that part of the provisions of article 8, section 5, of the Constitution of this State, which reads as follows: "All civil and criminal business arising in any county must be tried in such county." As general propositions of law, he insists that in case of a debt evidenced by a promissory note secured by mortgage the debt is the principal thing, and the mortgage is but an incident and collateral thereto; that with the establishment of the doctrine in this country that a mortgage is a mere security for the payment of the debt, a breach of condition for the payment merely gives to the mortgagee a right to proceed for his judgment against the security; that, in other words, the breach of payment gives rise to the right of action, and that the mortgagee's right to foreclose does not accrue and his cause of action does not arise until the time when and the place where the debt becomes due and remains unpaid; and that it is upon this essential fact of failure to pay the notes that the right to foreclose the mortgage is based. Upon this correct statement of fundamental legal principles, and based upon the decisions of this court that an action can only be commenced in the county where the cause of action arises (Konold v. Rio Grande Wes. Ry. Co., 16 Utah 151, 51 P. 256), and the further decision that a cause of action for the nonpayment of a note arises alone in the county in which the instrument is made payable (Overland Mining Co. v. McMaster, 19 Utah 177, 56 P. 977), the respondent very naturally concluded to commence this action in the county where the note, by its express terms, was made payable, rather than to follow the statutory direction to commence such action where the mortgaged premises were situate. Counsel for respondent were doubtless aware of the fact that this court, by way of dicta, in two cases has held that section 2928, Rev. St., affecting the venue of actions for mortgage foreclosure, is in force, and not unconstitutional; yet they evidently reasoned that whenever the matter should come directly before this court the contrary conclusion must inevitably follow from the past views of this tribunal upon the constitutional clause involved.

The more recent decisions of Gibbs v. Gibbs, 26 Utah 382, 73 P. 641, and Fields v. Daisy Gold Min. Co., 26 Utah 373, 73 P. 521, however, overrule the former decisions and are more in accord with my views of the correct interpretation of the constitutional clause in question than are the decisions rendered prior to that time. It has always been difficult for me to understand the reasons for the past judicial correctness of the apparently wholly unambiguous language in our Constitution: "All civil and criminal business arising in any county must be tried in such county." This statement would seem to be so plain that it would require no judicial interpretation, much less to have caused so much uncertainly as to venue as has in fact been produced. I apprehend that the error has arisen from the judicial notion that the constitutional convention intended to upset an existing judicial system, when, as a matter of fact they apparently desired simply to provide for the holding of trial courts in each county, and gave to such courts probate as well as ordinary civil and criminal jurisdiction. With this, as I think, erroneous judicial notion...