Warner v. Bookstahler
| Decision Date | 29 November 1929 |
| Docket Number | 5191 |
| Citation | 282 P. 862,48 Idaho 419 |
| Parties | T. F. WARNER, Respondent, v. REINHARD BOCKSTAHLER, Appellant |
| Court | Idaho Supreme Court |
MORTGAGES-ASSUMPTION OF MORTGAGE DEBT BY GRANTEE-FORECLOSURE OF FIRST MORTGAGE-RIGHTS OF JUNIOR MORTGAGEE-BILLS AND NOTES-ATTORNEY FEES.
1. Purchaser of property subject to mortgages, retaining from purchase price the amount of mortgages against property thereby assumed payment of same, and became personally liable regardless of fact that recital in deed that it was subject to mortgages would be insufficient in itself to fix personal liability.
2. Foreclosure of first mortgage without redemption and issuance of sheriff's deed "exhausted" security as to junior mortgagee within meaning of C. S., sec. 6949 forbidding recourse to general assets of debtor until security for debt has been exhausted without fault of person having mortgage thereon.
3. Allowance of attorney fee and interest at rate provided for in note, in action for debt evidenced by promissory note, was not error, where note and mortgage securing it provided for such fees, in that such instruments are to be construed as one contract.
APPEAL from the District Court of the Eleventh Judicial District for Twin Falls County. Hon. Hugh A. Baker, Judge.
Action for debt evidenced by promissory note. Judgment for plaintiff. Affirmed.
Judgment affirmed. Costs to respondent.
Sweeley & Sweeley, for Appellant.
As regards the liability of the purchaser to the mortgagee, the distinction must always be borne in mind between a purchase subject to a mortgage and one by which the purchaser assumes the payment of the mortgage debt. A purchase subject to a mortgage does not impose a personal liability to pay the mortgage debt.
"There is a broad and obvious distinction in the effect thereof upon the rights of the parties between the taking of mortgaged property subject to a mortgage subsisting thereon at the time of such taking and the assumption or agreement by the grantee to pay the debt secured by such mortgage, in that where the purchaser or grantee of the mortgaged property takes it subject to the mortgage only, there being no express or implied agreement to assume the mortgage debt, he is bound only to the extent of the property, but if the debt be assumed by the grantee he becomes the principal debtor." (Jones on Mortgages, 7th ed., sec. 751; Roberts v. Fitzallen, 120 Cal. 482, 52 P. 818; Brichetto v. Raney, 76 Cal.App. 232, 245 P. 235.)
The note in suit was secured by a second mortgage on the land, and at the time it was taken, the value of the equity thus mortgaged was worth $ 3,000. At the time the note in suit matured that equity was worth $ 2,600. Respondent took no action to enforce his mortgage or to realize on his security. That security was lost through his neglect, and he cannot maintain this action. (C. S., sec. 6949; First Nat. Bank v. Williams, 2 Idaho 670 (676), 23 P. 552; Rein v. Callaway, 7 Idaho 634, 65 P. 63; Clark v. Paddock, 24 Idaho 142, 132 P. 795, 46 L. R. A., N. S., 475; Winters v. Hub Mining Co., 57 F. 287; Brown v. Willis, 67 Cal. 235, 7 P. 682; Barbieri v. Ramelli, 84 Cal. 154, 23 P. 1086; Hibernia Savings etc. Soc. v. Thornton, 109 Cal. 427, 50 Am. St. 52, 42 P. 447; Biddel v. Brizzolara, 64 Cal. 354, 30 P. 609; McKean v. German American Sav. Bank, 118 Cal. 334, 50 P. 656.)
Harry Benoit and L. A. Warner, for Respondent.
"A grantee who has assumed and agreed to pay the mortgage debt, either by covenant in his deed or because of a deduction or retention from the purchase money, to discharge the encumbrance, according to the rule now generally accepted in the United States, incurs a personal liability to the mortgagee which may be enforced in some form by the mortgagee against him." (41 C. J. 743.)
"Where the mortgage debt forms a part of the consideration of the purchase, although the purchaser has not entered into any contract to pay it, he is bound to that extent to indemnify the debtor who is subrogated to all the rights of the mortgagee in the security, and, similarly if the property is sold subject to the mortgage, although the purchaser has not assumed or agreed to pay it, he is, as to the mortgage, the principal debtor." (Lamka v. Donnely, 163 Iowa 255, 143 N.W. 869; Wood v. Smith, 51 Iowa 156, 50 N.W. 581; 1 Jones on Mortgages, par. 751.)
"The general rule that a mortgage and note given to secure the payment of the same debt must be construed together as one contract, is reinforced by Section 4520 of the Revised Codes of this State." (Clark v. Paddock, 24 Idaho 142, 151, 132 P. 795, 46 L. R. A., N. S., 475.)
Edward L. Brackett and wife executed a first mortgage on land owned by them, and later a second mortgage to secure the payment of three notes for $ 500 each. The second mortgage contained the recital that it was "subject to a certain first mortgage" of $ 2,400. The property was purchased from the Bracketts by appellant, and the instrument of conveyance contained the statement--"this deed is subject to a mortgage of $ 2400 . . . . also to a mortgage of $ 1500 . . . ." The agreed purchase price was $ 5,400, and, deducting therefrom the amount of the two mortgages, appellant paid to the vendors the sum of $ 1,500. The first mortgage was foreclosed against the property, and, no redemption being made, sheriff's deed issued to the mortgagee. Appellant repurchased the property from the holder of the sheriff's deed, and was the owner of the same at the time of the trial herein.
Respondent is the transferee of one of the $ 500 notes executed by the Bracketts in connection with the giving of the second mortgage on the property, and brought this action to recover upon said note, his cause of action as to a right of recovery against appellant being upon the theory that appellant, as part of the purchase price when he bought the property from the Bracketts, had assumed and agreed to pay the first and second mortgages, and the property having been sold in satisfaction of the first mortgage the security for the note in suit had been exhausted and appellant was subject to personal liability for the amount of the note, it representing a part of the unpaid purchase price of the property.
It was and is the contention of appellant--he having appealed from judgment in favor of respondent--that he did not assume...
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