Morton v. Covell ( 1880 )

Maxwell, On. J.

In the year 1876 William Morton and wife executed and delivered to the plaintiff a promissory note, of which the following is a copy:

“No. “Nebraska City, October 12, 1876.

“ Eive years after date, for value received, I promise to pay to the order of Thomas Morton seven thousand dollars, at Nebraska City, with interest at twelve per cent per annum from date until paid, together with a sum equal to ten per cent of said amount as attorney’s fees if action is brought on this note or on the mortgage given to secure the same, or if the same is not paid when due.

“ $7000. “ William Morton.

“Hattie Morton.

“Due October 12, 1881.”

To secure the payment of this note William Morton and wife executed a mortgage upon productive real estate in Nebraska City, the mortgage containing this provision: “This conveyance is intended as a mortgage to secure the payment of the sum of seven thousand dollars, due five years from the date hereof, with interest at twelve per cent per annum, payable annually, according to the conditions of one promissory note, bearing even date herewith, and executed by the said party of the first part to the said party of the second part; and these presents shall be void if such payments be made. But in case default shall be made in the payment of the principal or interest as above provided, then the party of the second part, his executors, administrators, and assigns, are hereby impowered to sell the premises above described,” etc. The plaintiff' by agreement entered into possession of the mortgaged property.

On the second day of July, 1877, one Joshua H. Buell recovered a judgment against William Morton and Hattie Morton in the county court of Otoe county for the sum of $465.78, and $3.50 costs. On the tenth day of August, 1877, a transcript of the judgment was filed in the office of the clerk of the district court of Otoe county, and on the twenty-seventh day of that month an execution was duly issued thereon and levied upon the mortgaged property, and the same was sold to the defendants for the sum of $20.00. The sale was thereupon reported to the- court and confirmed, and an order made to put the purchaser in possession, the plaintiff herein not being a party to that action. The purchaser seems to have been put in possession of said' real estate, but the plaintiff afterwards obtained possession of the same.

On the ninth day of December, 1878, William Morton and Hattie Morton executed an instrument to the plaintiff, reciting in substance that, whereas the plaintiff had become absolutely liable for the payment of the security debts heretofore mentioned, and consenting that said note and mortgage may on that day be declared due and payable.

On the eleventh day of December, 1878, the plaintiff commenced an action of foreclosure of the mortgage in question in the district court of Otoe county, William Morton, Hattie Morton, Joshua H. Buell, George W. Covell, and Elizabeth M. Covell being made defendants.

To this petition Covell and wife filed an answer, setting up various defenses, and praying in substance for the following relief: First, That the pretended mortgage of the plaintiff be declared fraudulent and void as against the interests of the defendants. Second, That the injunction be vacated and set aside. Third, That the claim and interest of these defendants in and to said premises, and the possession thereof, be declared valid and subsisting as against the plaintiff’s mortgage, etc. There is also a prayer for general relief. In September, 1879, a decree.of foreclosure was rendered in favor of the plaintiff for the sum of $9,457.00 and costs. Covell and wife appeal to this court.

The answer of Covell and wife charges that the mortgage in question is fraudulent and void as to creditors, but there is not a particle of proof showing such to be the case. So far as this record discloses, the mortgage was given in good faith to secure the plaintiff'from loss as surety of William Morton. The testimony shows that he was thus liable for more than $13,000.00, which had been diminished by the rents from the premises in question to some extent, but that at the date of the decree he had actually paid thereon the sum of $10,038.57, in excess of .rents received. The transaction seems to have been entered into in good faith, and the court could not have found otherwise from the testimony. The' mortgage therefore was not fraudulent and void.

The second defense was sustained in the court below. The third defense seems to be the principal one relied on. The defendants do not ask to be permitted to redeem the mortgage. If so, the change of the time of payment might become material, and any change which restricted the right to redeem would not be binding on the defendants. But the object of the answer is not to redeem, but to be placed in possession of the property.

Section 55 of chapter 61 of General Statutes, provides, that “in the absence of stipulations to the contrary the mortgagor of real estate retains the legal title and right of possession thereof.” In the case at bar, while the mortgage is silent about the right of possession the mortgagee is shown to have taken possession of the property with the consent of the mortgagors immediately after the execution of the mortgage, and to have been thus in possession at the time the defendants purchased the equity of redemption. It is alleged in the petition, and not denied, that the plaintiff collected the rents upon the property from and after the first day of June, 1877, to the commencement of the action, and that they amounted to the sum of $1,800.00. It is also alleged, and not denied, “that said premises were occupied solely for stores for the sale of merchandise, on the ground floor of the buildings erected thereon, and occupied and used as offices, etc., upon the second floor thereof.” Can it be possible that the defendants for the sum of $20.00 purchased the right to enter into possession of the premises and collect these rents? We think not. The mortgagee was in possession, collecting and applying the rents upon the mortgage debt at the time the defendants purchased the equity of redemption, and the purchase price indicates that appellants purchased nothing but the naked legal title. The equities of the case are clearly with the plaintiff, and the judgment of the district court must be affirmed.

Judgment accordingly.