Strimling v. Union Indemnity Co.
| Decision Date | 07 December 1928 |
| Docket Number | No. 26925.,26925. |
| Citation | 176 Minn. 26,222 N.W. 512 |
| Parties | STRIMLING v. UNION INDEMNITY CO. |
| Court | Minnesota Supreme Court |
Appeal from District Court, Ramsey County; Grier M. Orr, Judge.
Action by Moses Strimling against the Union Indemnity Company. Judgment for plaintiff, and defendant appeals. Affirmed.
See, also, 172 Minn. 320, 215 N. W. 67.
Herbert T. Park, of Minneapolis, for appellant.
Leonard, Street & Deinard, of Minneapolis, for respondent.
Appeal by defendant from a judgment. Plaintiff purchased a note secured by second mortgage upon real estate in Minneapolis. The mortgage was subject to a prior mortgage on which there was an unpaid balance of some $72,000. A large building was being erected upon the property, and lienable claims existed and would arise from the building operations. As a protection and further security for plaintiff's mortgage, the defendant had issued to the holder thereof its indemnity bond, conditioned that the defendant would well and truly pay, or cause to be paid, all claims for labor performed and materials furnished in the erection and construction of the building on the premises. Liens accrued against the premises, resulting in a judgment, in a mechanic's lien action, in the amount of $10,497.61, entered May 9, 1925. Defendant failed to pay the lien claims or the judgment thereon. No sale has been made under this judgment. By agreement between the holder of the mechanic's lien judgment and the holder of the first mortgage, the judgment was made subject and inferior to the first mortgage, but such judgment remains superior to plaintiff's mortgage. The first mortgage was foreclosed by advertisement on November 9, 1925, and the property bid in for some $74,000. So far as appears, no one redeemed therefrom. Plaintiff foreclosed his mortgage by action, and sale was had on October 5, 1926. Under the decree of foreclosure, the premises were sold to a third party, as purchaser, for the sum of $15. The sale was confirmed by the court. Plaintiff then brought this action to recover damages from defendant for breach of the condition of its bond, failure to pay the lien judgment. Plaintiff recovered judgment for an amount equal to the unpaid balance of $8,100 and interest on his note and mortgage, and an item of $103, expense incurred by him in defending against the mechanic's lien action. The appeal is from this judgment.
1. The appeal presents the question whether the evidence sustains the findings as to damages and the recovery thereof beyond a nominal amount.
The bond sued upon is held to be a contract of indemnity to protect plaintiff's mortgage against paramount liens which would impair or destroy the security. In order to recover more than a nominal amount, the plaintiff must prove damages, and compensation can be awarded only for loss actually sustained. American B. & L. Ass'n v. Waleen, 52 Minn. 23, 53 N. W. 867; Mechanics' Savings Bank v. Thompson, 58 Minn. 346, 59 N. W. 1054. The indemnity was against the effect of valid liens upon the value of plaintiff's security. The breach of the condition of the bond occurred not later than when judgment was entered in the mechanic's lien action, establishing valid liens against the property. Strimling v. Union Indemnity Co., 172 Minn. 320, 215 N. W. 67. Plaintiff sues to recover for the loss or impairment of his security, caused by the failure of defendant to pay established prior valid liens. When the breach of the condition of the bond occurred, he had a cause of action against defendant for such loss or impairment of his security as did then result from the paramount liens. The measure of damages was the depreciation in the value of his security so caused. Under the bond he was entitled to the security granted him by his mortgage free and clear of mechanics' liens. In a strict sense, he was entitled to have the property remain free of such liens, even if the property was of such value that there remained a sufficient equity therein, over and above all prior liens, to satisfy his mortgage. His actual damages, in such case, might be small or nominal.
The evidence of damages here was that the makers of the note and mortgage were insolvent; that, upon a public judicial sale of the property, the premises were sold, subject to the prior mortgage and lien judgment, for the sum of $15; and that the sale was confirmed by the court. The price obtained for property at a public sale by auction, whether under judicial sale or otherwise, is generally held to be competent evidence of value of the property. Navarre Hotel & Importation Co. v. American Appraisal Co., 156 App. Div. 795 142 N. Y. S. 89; Raymond Syndicate v. Guttentag, 177 Mass. 562, 59 N. E. 446; Maguire v. Pan-American Amusement Co., 211 Mass. 22, 97 N. E. 142; Koski v. Haskins, 236 Mass. 346, 128 N. E. 427; Appeal of Freeman, 71 Conn. 708, 43 A. 185; Loeb v. Stern, 198 Ill. 371, 64 N. E. 1043; Conroy v. Coughlon Auto Co., 181 Iowa, 916, 165 N. W. 200; Id., 186 Iowa, 671, 171 N. W. 10; Rogers v. Dent, 292 Mo. 576, 239 S. W. 1074, 26 A. L. R. 615; Rosenblatt v. Winstanley (Mo. App.) 186 S. W. 542; Perkins v. Ewan, 66 Ark. 175, 49 S. W. 569; First Nat. Bank v. Am. State Bank, 73 Colo. 254, 215 P. 473; Roy v. Clark (Mont.) 215 P. 232; Woolfolk v. Lyons, 59 S. W. 21, 22 Ky. Law Rep. 918; May v. Leverette, 164 Ga. 552, 139 S. E. 31; Moore v. Lachmund, 59 Or. 565, 117 P. 1123, Ann. Cas. 1913C, 1273.
Where personal property is resold for failure of purchaser to accept the goods, the price obtained at the resale is used as a measure of the loss and damage. White Walnut Coal Co. v. Crescent C. & M. Co., 254 Ill. 368, 98 N. E. 669, 42 L. R. A. (N. S.) 669, and cases cited in the notes. Where, in a judicial sale proceeding, the purchaser fails to complete the sale of real property and a resale is ordered, the price obtained as such resale fixes the value of the property and the measure of damages. District of Columbia v. McBlair, 124 U. S....
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