Southwick v. Reynolds

• Decision Date: 19 February 1916
• Docket Number: No. 18629.,18629.
• Parties: SOUTHWICK v. REYNOLDS ET AL.
• Court: Nebraska Supreme Court

99 Neb. 393

156 N.W. 775

SOUTHWICK

v.REYNOLDS ET AL.

No. 18629.

Supreme Court of Nebraska.

Feb. 19, 1916.

Syllabus by the Court.

In a suit to foreclose an unrecorded mortgage a cross-petitioner seeking to foreclose, as a first lien, a subsequent mortgage, duly recorded, must allege the actual consideration therefor and the payment thereof, and must also allege facts showing that he took his mortgage without notice of plaintiff's interests.

In a suit to foreclose an unrecorded mortgage where a cross-petitioner seeks to foreclose, as a first lien, a subsequent mortgage, duly recorded, the presumption that the secured note was issued for a valuable consideration is insufficient for the purpose of showing the actual consideration paid.

Where a cross-petitioner obtains all the relief to which he is entitled under his pleadings, the denial of a continuance requested by him is not prejudicial error.

Appeal from District Court, Dawson County; Grimes, Judge.

Suit by Linus E. Southwick against Etta M. Reynolds and others. From a judgment for plaintiff, defendant Great Western Commission Company appeals. Affirmed.John D. Ware, of Omaha, for appellant.

R. M. Proudfit, of Friend, and John N. Dryden, of Kearney, for appellees.

ROSE, J.

Plaintiff brought this suit to foreclose a lien on 2 1/2 sections of land in Dawson county. Of the realty in controversy Etta M. Reynolds had entered into contracts to purchase from the Union Pacific Railroad Company 2 sections, and from Jesse Good a half section, and to pay the purchase price in installments. Before maturity of a number of the payments, she borrowed from plaintiff $6,500 March 6, 1908, gave him a note executed by herself and her husband, defendants, and secured the loan by assigning to the payee the land contracts mentioned. Pursuant to the terms of the assignment, plaintiff, upon default of assignors, paid the deferred installments and taxes in full, and by deeds from the vendors acquired the legal title to the lands described. The assignment was not recorded in Dawson county. Plaintiff prays for a foreclosure of the land contracts. The proceeding amounts to a suit to foreclose a mortgage. Defendants made no defense. In a cross-petition, however, the Great Western Commission Company pleaded that defendants executed and delivered to it October 12, 1908, their promissory note for $2,338.32 and secured it by incumbering the same lands with a mortgage recorded October 21, 1908, that the assignment of the land contracts was never recorded, and that cross-petitioner “had no knowledge of the existence of said contract” until May 31, 1911. A lien superior to plaintiff's assignment was asserted by cross-petitioner, and there was a prayer for a foreclosure of the mortgage. The reply admitted that the note and the mortgage pleaded in the cross-petition were delivered to the payee, that the mortgage was recorded, and that plaintiff's assignment was not recorded. The trial court found that plaintiff had the first lien, and ordered a foreclosure thereof, but granted the cross-petitioner permission to apply for the surplus, if any, after payment of plaintiff's claim from the proceeds of a foreclosure sale. Cross-petitioner has appealed.

[1] It is argued that the pleadings of plaintiff do not state facts sufficient to constitute

a cause of action to foreclose a first lien; the defect urged being a failure to plead that cross-petitioner had actual notice of the unrecorded assignment of the land contracts or unrecorded mortgage. On the record presented the point does not seem to be well taken. Cross-petitioner sought to establish a lien prior to plaintiff's unrecorded mortgage. In this situation the burden was on it to allege and prove facts showing that it was a bona fide purchaser or incumbrancer for value. Sanely v. Crapenhoft, 1 Neb. (Unof.) 8, 95 N. W. 352;Dundee Realty Co. v. Leavitt, 87 Neb. 711, 127 N. W. 1057, 30 L. R. A. (N. S.) 389;Upton v. Betts, 59 Neb. 724, 82 N. W. 19. In the latter case, quoting from 2 Pomeroy, Equity Jurisprudence (3d Ed.) § 785, it was said:

“The allegations of the plea, or of the answer, so far as it relates to this defense, must include all those particulars which, as has been shown, are necessary to constitute a bona fide purchase. It should state the consideration, which must appear from the averment to be ‘valuable’ within the meaning of the rules upon that subject, and should show that it has actually been paid, and not merely secured. It should also deny notice in the fullest and clearest manner, and this denial is necessary, whether notice is charged in the complaint or not.”

Plaintiff insists that the judgment of the district court should be affirmed on the ground that the cross-petition does not state facts showing that cross-petitioner is a bona fide purchaser or incumbrancer entitled to a lien superior to plaintiff's unrecorded mortgage or...