Swanson v. Realization & Debenture Corporation of Scotland
| Decision Date | 08 December 1897 |
| Docket Number | 10,829--(122) |
| Parties | MARTIN SWANSON v. REALIZATION & DEBENTURE CORPORATION OF SCOTLAND and Another |
| Court | Minnesota Supreme Court |
Action in the district court for Polk county to enjoin the sale of certain real estate upon foreclosure of a mortgage claimed to be usurious. The facts are stated in the first opinion. After a trial without a jury judgment was entered pursuant to the findings and order of Ives, J., setting aside the mortgage and note as usurious and enjoining the defendants from foreclosing it. From this judgment the defendant corporation appealed. Reversed.
A. A Miller and Wilson & Van Derlip, for appellant.
Inter partes, the assignments were valid and effectual without filing. The statute, G. S. 1894, § 5431, is for the benefit only of subsequent attaching creditors and purchasers in good faith. Coykendall v. Ladd, 32 Minn. 529; Bank v. Ellis, 30 Minn. 270; Tolbert v Horton, 31 Minn. 518; Howe v. Cochran, 47 Minn 403; Clark v. B. B. Richards, 68 Minn. 282. Judgment is paid by operation of law the moment redemption is effected, by reason of the lesser title (the lien) becoming ipso facto merged in the greater. Sprague v. Martin, 29 Minn. 226, 231. The judgment of the municipal court of Duluth was for $ 9.08 damages and costs. Only judgments exceeding ten dollars exclusive of costs can be transcripted to the district court. Sp. Laws 1887, c. 320, § 14. The district court never acquired jurisdiction to issue execution. But no one is in position to contest the sufficiency of the lien under which a creditor seeks to redeem except a subsequent lienor. Bovey v. Tucker, 48 Minn 223, 229.
The right of redemption is purely statutory. Atwater v. Manchester, 45 Minn. 341. After a valid foreclosure sale the interested parties have their several absolute rights connected with the property. (1) The mortgagor has the right to pay the amount for which the property was sold, with interest and costs, at any time within a year after the sale, and so annul the sale. (2) The purchaser has the right to maintain his absolute ownership of the property sold, as against the mortgagor, provided no redemption is made within a year after the sale; and as against subsequent lien creditors the right to receive his mortgage debt with interest and costs in case of their redemption, and if none of them redeem within the statutory time the ownership of the property freed from the liens. (3) A lien creditor has the right to redeem from the purchaser and all prior redeeming creditors, if any, by paying the proper amount and thereafter own the property if no older creditor redeems and pays his debt. Abraham v. Holloway, 41 Minn. 156, 161; Pamperin v. Scanlan, 28 Minn. 345; Tice v. Russell, 43 Minn. 66; Todd v. Johnson, 50 Minn. 310; Sprague v. Martin, supra; Smith v. Buse, 35 Minn. 234. To redeem creditors having a lien must file notice of intention to redeem within the twelve months allowed for redemption, and must redeem "within five days after the expiration of the said twelve months." G. S. 1894, § 6044. As respects all other parties interested in the property, the only absolute right of the mortgagee, or the purchaser who succeeds to his contingent interest, is to receive the principal and interest of his mortgage debt. Atwater v. Manchester, supra; Bovey v. Tucker, supra. It follows that the pretended extension of time of redemption was nugatory as respects any subsequent creditor.
The sale was not only regular, but was valid. Johnson v. Williams, 4 Minn. 183 (260); Merrill v. Nelson, 18 Minn. 335 (366); Abbott v. Peck, 35 Minn. 499; G. S. 1894, § 6036. The sale is regular if no request be made by one interested in the title that the separate tracts shall be sold. Willard v. Finnegan, 42 Minn. 476; Ryder v. Hulett, 44 Minn. 353; Clark v. Kraker, 51 Minn. 444; Abbott v. Peck, supra. If the sale was valid it cannot be attacked with success either collaterally or in a direct proceeding. But see 2 Jones, Mort. § 1921, and cases cited.
Every suit must be prosecuted by the real party in interest. If a plea sets up a lack of interest in the plaintiff, and is admitted, it will be a bar to the suit. But when the necessary interest has been transferred by the original plaintiff or devested by operation of law, the present owner of the interest for his own protection may prosecute the suit to a close in the name of either the original plaintiff or himself after substitution. Mills v. Hoag, 7 Paige, 18; Ingersoll v. Sawyer, 2 Pick. 276; Cresap v. Hutson, 9 Gill, 269; Kidd v. Morrison, Phil. Eq. (N. C.) 31; True v. Haley, 24 Me. 297; Rowell v. Hayden, 40 Me. 582; Phillips v. Leavitt, 54 Me. 405; Mason v. York, 52 Me. 82; Colwell v. Warner, 36 Conn. 224; Brewer v. Dodge, 28 Mich. 359; Smith v. Price (Ky.) 7 S.W. 918; Leavitt v. Inhabitants, 78 Me. 574; Fulton v. Greacen, 44 N.J.Eq. 443; Faucher v. Grass, 60 Iowa 505; Bailey v. March, 2 N.H. 522; Story, Eq. Pl. § 348; State v. Kansas, 97 Mo. 331; Dunning v. McDonald, 54 Minn. 1; St. Anthony v. Vandall, 1 Minn. 195 (246).
Defendant corporation is a bona fide holder of the notes. Peters v. Gray, 9 Wash. 383. The contract to pay interest semiannually, even at the highest rate permitted by law, does not constitute usury. Myer v. City, 1 Wall. 384. Neither does the fact that the interest coupons bore interest after maturity constitute usury. Rose v. Munford, 36 Neb. 148; Hawley v. Howell, 60 Iowa 79; Hager v. Blake, 16 Neb. 12. Nor does the fact that a few days intervened between the date of the securities and the time when the money was paid over to the borrower constitute usury. Daley v. Minnesota, 43 Minn. 517. An intention on the part of the lender to obtain more than the legal rate of interest is necessary to constitute usury. Jackson v. Travis, 42 Minn. 438; Ward v. Anderberg, 31 Minn. 304; Condit v. Baldwin, 21 N.Y. 219; Lloyd v. Scott, 4 Pet. 205; Bank v. Waggener, 9 Pet. 378.
H. Steenerson, for respondent.
White did not have the status of a bona fide purchaser at a judicial sale, and should therefore be compelled to make restitution. Branley v. Dambly, 69 Minn. 282; 2 Black, Judg. § 955. If the judgment was permitted to live through White's neglect, it was extinguished by being levied upon and sold under the execution in favor of Maghan, as fully as if it had been vacated, reversed, set aside or otherwise satisfied. Reynolds v. Harris, 14 Cal. 667; Marks v. Cowles, 61 Ala. 299; Twogood v. Franklin, 27 Iowa 239; Major v. Collins, 17 Ill.App. 239; Smith v. Bohon, 12 Bush, 448; Gott v. Powell, 41 Mo. 416.
When the Maghan judgment was rendered the law relative to the transcripting of judgments from the municipal court of Duluth to the district court was regulated by Sp. Laws 1891, c. 53, § 47, under which any judgment, regardless of the amount, could be transcripted.
The time for redemption may be extended by the agreement of the parties. Steele v. Bond, 28 Minn. 267. An extension of the redemption period may also arise by estoppel. Tice v. Russell, 43 Minn. 66; 2 Jones, Mort. § 1053; 20 Am. & Eng. Enc. 620, and cases cited; Brown v. Lawton, 87 Me. 83. Since it is lawful for the parties to extend the period of redemption, it is clear that a subsequent lienor can acquire no interests in the premises by attempting to redeem before the extended redemption period expires. G. S. 1894, § 6039. The agreement extending the period of redemption needs not to be in writing, under the statute of frauds. The statute provides that "No action shall be maintained" upon an agreement of this kind. Bishop, Cont. §§ 1235, 1273.
The appellant did not get the note until after maturity, hence he is not a bona fide holder. First Nat. v. County, 14 Minn. 59 (77); First Nat. v. Forsyth, 67 Minn. 257. The test of whether a contract is usurious is will it, if performed, result in securing to the lender a greater rate of interest than is permitted by law. Smith v. Parsons, 55 Minn. 520.
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 enjoin and restrain permanently 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 Investment 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 six 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 ten per cent. interest, and payable November 1, 1891; one for $ 150 with ten per cent. interest after maturity, payable January 1, 1892; and the third for the same amount with the same rate of interest after maturity, 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...
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