Shermer v. Merrill
| Decision Date | 18 January 1876 |
| Citation | 33 Mich. 284 |
| Court | Michigan Supreme Court |
| Parties | Henry Shermer v. David B. Merrill and another |
Heard January 13, 1876
Error to Kalamazoo Circuit.
Judgment reversed, with costs, and a new trial granted.
Arthur Brown, for plaintiff in error.
May & Mason, for defendants in error.
July 18, 1870, Shermer executed and delivered to Merrill and McCourtie three promissory notes, respectively falling due in one, two and three years from the date thereof, the one falling due in three years being for the sum of two hundred dollars with ten per cent. interest payable annually. He at the same time, in order to secure payment of these notes executed a mortgage to Merrill and McCourtie. After the two first notes, but before the third became due, Merrill and McCourtie foreclosed this mortgage by advertisement. The notice of sale contained this clause: "This foreclosure and sale is made subject to another note, secured by said mortgage, for the sum of two hundred dollars, and interest thereon at ten per cent. from January 18, 1870." The mortgagees became the purchasers at said sale, having bid the amount due on the two first notes and costs of foreclosure. The premises were not redeemed. The purchasers received a deed, and had the same recorded April 26, 1873, and afterwards brought an action against Shermer to recover the amount of this third note, and judgment was rendered in their favor for the amount thereof. Shermer removes the case to this court on writ of error, and insists that the mortgagees having purchased the land subject to this note, and having afterwards obtained a deed therefor, they cannot thereafter maintain an action upon the note.
The debt for which the note in question was given was a lien upon the land, which was sold subject to its payment. The intention was clear, and such must have been the understanding, that in case a third person became the purchaser, and the mortgagor should not redeem, the mortgagee, when this note became due, if it was not paid might proceed to foreclose and again sell this land in order to obtain payment of the note. Such would be the legal effect and result of such a sale. The purchaser would hold the lands subject to the payment of the note secured thereon. Under such circumstances it is quite clear that parties present at the sale contemplating a purchase would take into consideration the fact that they might thereafter be called upon to pay the outstanding note, in order to protect their title...
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