Swanson v. Realization & Debenture Corp. of Scotland

• Decision Date: 08 December 1897
• Court: Minnesota Supreme Court
• Parties: SWANSON v REALIZATION & DEBENTURE CORP. OF SCOTLAND ET AL.

70 Minn. 380

73 N.W. 165

SWANSONvREALIZATION & DEBENTURE CORP. OF SCOTLAND ET AL.

Supreme Court of Minnesota.

Dec. 8, 1897.

(Syllabus by the Court.)

1. The mere fact that interest payments upon a loan maturing five years from date have been advanced so that a slightly greater rate of interest than that allowed by law is reserved or secured to the lender will not, of itself, support a finding that the loan was usurious, and that the contract was made with a corrupt intent to evade the law.

2. A mortgage upon real estate having been foreclosed under the power, W., claiming to be a judgment creditor of the mortgagors, redeemed, in strict accordance with the provisions of Gen. St. 1894, § 6044. The judgment under which he made the redemption had been obtained by another party, and had been assigned twice before it became the property of W. through a third assignment in writing. None of these assignments had ever been filed or entered in the manner pointed out by Gen. St. 1894, § 5431. Held, that the redemption was valid when made.

3. Some weeks subsequent to the redemption, the assignments remaining unfiled, a judgment creditor of the party originally obtaining the judgment upon which the redemption was made caused a writ of execution to be issued upon his judgment, and a levy to be made upon the other judgment; claiming a right so to do by virtue of the provisions of section 5431, supra. A sale upon this writ and levy was made. The mortgagors (judgment debtors) paid the amount due upon the judgment to the purchaser at the sale, and thereupon he satisfied and discharged the same. Held, that this did not invalidate or affect the redemption previously made by W.

4. There can be no modification of a creditor's right to redeem under section 6044, supra; nor can he be deprived of his rights, when he has redeemed, by any agreement made between a mortgagor and a purchaser at the foreclosure sale to extend the statutory period of redemption.

5. Although a mortgagor may have parted with his interest in real property mortgaged to secure the payment of a note tainted with usury, he may maintain an action to cancel his note upon the ground of usury when a foreclosure of the mortgage, under a power therein contained, is attempted.

Appeal from district court, Polk county; Frank Ives, Judge.

Canty, J., dissenting.

Action by Martin Swanson against the Realization & Debenture Corporation of Scotland and another. From a judgment for plaintiff, the defendant corporation appeals. Reversed.

A. A. Miller, for appellant.

H. Steenerson, for respondent.

COLLINS, J.

Appeal from a judgment entered on findings of fact and conclusions of law filed upon the trial of an action brought by a mortgagor of real property to permanently enjoin and restrain the defendant sheriff from selling at a foreclosure of the mortgage under the power, and also to have the mortgage and the notes thereby secured adjudged void and canceled upon the ground of usury. There was little or no dispute over the facts, but they are quite complicated, and had best be fully stated: Swanson, the plaintiff, was the owner of the mortgaged land, April 17, 1891, at which time he and his wife executed and delivered the mortgage in controversy. The Security Insurance Company, a corporation, was the mortgagee; and the entire transaction was conducted and concluded by its president and general manager, Willis A. White. The mortgage was given to secure plaintiff's note for $1,500, payable to the corporation in five years, with 6 per cent. interest coupons attached, payable semiannually. At the same time this plaintiff and his wife executed and delivered another mortgage upon the land, in which White was named as mortgagee, and also a mortgage upon certain personal property, with White as mortgagee. These last-named mortgages were given to secure three notes payable to White,-one for $300, bearing 10 per cent. interest, and payable November 1, 1891; one for $150, with 10 per cent. interest after maturity, payable January 1, 1892; and the third for the same amount, with the same rate of interest after maturity, and payable November 1, 1892. This was all one transaction. Swanson actually received $1,800 in cash, and the three notes last mentioned, as well as the mortgages securing them, were really the property of the corporation. It was agreed that the loan was to bear 10 per cent. interest, and it is claimed that the two notes, each for $150, represented, in fact, nothing but the difference between the 6 per cent. annual interest on $1,500, evidenced by the coupons, and the 10 per cent. agreed upon as the annual rate of interest. No bonus was charged, or agent's fees deducted from the $1,800; and it was shown upon the trial that the fees or commissions of the local agent through whom the application for loan was made, $45, were paid by the mortgagee corporation. November 5, 1894, the $1,500 note and the mortgage securing the same were duly assigned by the mortgagee to this defendant, a foreign corporation, to enable the latter to act as trustee for the original mortgagee. The court did not find what coupons had then been paid, but from the evidence it seems that default in the payment of interest was not made until the November 1, 1894, coupon matured. Foreclosure proceedings under the power were instituted May 4, 1895, default having been made in the payment of at least one interest coupon; and, as authorized in the mortgage, the defendant assignee elected to declare, and did declare, the whole debt due. This action was soon afterwards commenced. June 14, 1892, Swanson and his wife executed and delivered a third mortgage upon this land to one Tronnes. This was given to secure the payment of a note for $800, and, default having been made in payment, a foreclosure under the power was had; sale of the premises being duly made December 9, 1895, to the mortgagee, Tronnes. October 29, 1892, one Mary Dowling duly obtained a judgment for the sum of $104.55 against said mortgagors, Swanson and his wife, in justice's court, in the county in which the land was situated. A transcript of this judgment was duly docketed in the office of the clerk of the district court for said county May 31, 1893. It was then sold, and in writing assigned by said creditor, Dowling, to one Montague, and by Montague to one Meagley, and by the latter to Willis A. White, before mentioned. He was the owner of this judgment December 9, 1896, and no part of it had been paid. None of these written assignments had then been, or were thereafter, filed in the office of the clerk of said district court; and, of record, Dowling still appeared to be the judgment creditor. December 9, 1896, White filed due notice of his intention to redeem as a judgment creditor from the foreclosure sale under the third, or Tronnes, mortgage. No redemption was made by the mortgagors, and, in due form, White, as creditor, made the redemption by paying to the sheriff of the proper county the full sum necessary for the purpose; receiving from such sheriff a certificate of redemption, which was duly recorded December 11, 1895. Tronnes refused to accept the money paid in redemption, of which White was duly advised. The sheriff still holds the funds. In April, 1892, one Maghan duly obtained a judgment for $14.33 in the municipal court for the city of Duluth, in St. Louis county, and against Mary Dowling, the judgment creditor before mentioned. This judgment was duly transcripted and docketed in the office of the clerk of the district court for said county, and was also duly transcripted and docketed in the same office in Polk county. January 2, 1896, by virtue of an execution duly issued upon said judgment, the sheriff of the last-named county levied upon the judgment in favor of said Dowling and against said mortgagors, which had theretofore been assigned, and had been made the foundation of the redemption. A sale upon such execution was thereafter had of the judgment, and at such sale it was sold to one Austin. This was January 29, 1897, and on the same day the mortgagors (judgment debtors) paid the full sum due, and the judgment was satisfied by Austin. At some time during the year of redemption it was verbally agreed between the mortgagors and Tronnes, the purchaser at the foreclosure sale, that the period of redemption should be extended one year. The cause was tried by the court without a jury. Upon the facts as stated, the court's conclusions of law were that the $1,500 note and the mortgage securing the same should be canceled and adjudged void, that White never redeemed from the Tronnes foreclosure sale, and that plaintiff was still entitled to redeem the premises from the sale just mentioned.

While it is obvious that, from the very complicated facts, several questions were presented to the court below, we are of the opinion that two only will have to be discussed at this...