Whitbeck v. McClenahan ( 1918 )

WHITING, P. J.

Chapter 274, Laws 1913, provides, among other things: Thiait the 'purchaser at a foreclosure sale of real estate, whether such foreclosure was had either beibre or after the en'actmenlt of such .act, may, where during the year of redemption an 'insurance' policy on the premises sold lias expired, pay the ¡premium necessary to procure 'a renewal of such .policy: that the amount so -paid, -with interest thereon, shall -be and constitute a part óf the sum necessary to be paid! for the redemption from ‘said s'dle*; that, in case the mortgagor or otter redemptioner ©hail object to tibe payment icif 'such insurance premium on account of, the incorrectness or invalidity thereof, he may file ■with the sheriff an indemnity 'bond; that thereupon the sheriff must permit redemption tio be made -without tibe payment of such insurance .premium so excepted to; and that' the purchaser may determine the validity or correctness of such premium by an action directly upon such blond.

Plaintiff, the mortgagee, was the purchaser, in August, 1914, at a foreclosure sale under a mortgage given- in 1910. During the period! of redemption he renewed a policy of 'insurance on the 'buildings on salidl premises. He brought tilnis action to recover upon an indemnity bond given under the -prtovisian.s of the law above ¡referred to. The mortgage contained no covenant on tine part -of the mortgagclr to keep tibe buildings on salid premises insured, neither dlid it contain, any pravisliion authorizing' the mortgagee to insure the buildings and .add the cost of insurance ita the mortgage indebtedness. The mortgagor and his ■immediate grantor had, pursuant ’to .an, oral agreement with the mortgagee, .insured such buildings — the policies providing “that tithe loss if any 'should be .payable tio said mortgagee as hisi interests might appear.” Such insurance was in force 'at time of foreclosure sale. After foreclosure sale tibe premises- were transferred, finally becoming the property of tihle -redemlptioner, the defendant 'MdCienfllhlam. It was prior to. tibe .p-uindhiaste! by MbClenahan, but while Ibbe property was owned! by one who haidi n|oit insured -same, that ¡plaintiff took out tire insurance.

The trial court sustialiinied a demurrer to -a complaint settling forth'the above facts, and it is from such ruling that this appeal ■was taken'.

[1] The sole question, before us is whether to require the redtemptiiomer tio repay this insurance money would be to impair the obligation of the dontiralcit evidenced by the mortgage. If so, the demurrer wia's property sustained, -because, while the law is not retrospective -in lilts wording — being one which provides' for the doing of something lin the future; yet the'thing to which -the law applies — the future payments of premium's' — may be payments based upon mortgages theretofore given.as well as to those based upon future mortgages.

[2] By ciltiing and quoting from Lynch v. Ryan, 137 Wis. 13, 118 N. W. 174, 129 Am. St. Rep. 1040, appellant implies that the .purcha-ser at a foreclosure sale is ini a like position, as to the property purciblaBed, as ¡is ;a mortgagee in possession to the mortgaged property — that 'he is a ¡trastee, and that expenditures far •insurance are tin the nature of reasonable expenditures for the preservation of the 'trust property for which such a trustee can recover. We are unable to -siee any anlalogy between the position of a mortgagee in poslses'sion and that iqf the purchaser at foreclosure sale. Sulch pulr'chaser is not entitled to possession, and lio the present case ¡there is no- claim that 'he was in ¡possession. But,, even if such, -a purchaser were -a trustee, while such fact might afford a sufficient ground! to justify ithie enalctment of the law, it would hardily change the fact that, in a ease such as the one before us, to apply the provisions of the law would1 impair the obligations of an existing contract.

A mortgagee may see- fit to loan money on real property, looking for lilis security to the soil and not to the insurable improvements. The mortgagor may, perhaps unwisely, diesire to run his own risk of loss from fire or tomado and -thus escape the payment of premium®. If, under such circumstance, a mortgage -i-s given such as thie one in this case and thereafter a law is enacted requiring every mortgagor icif rtíaüi property, including those whose mortgage wa's in existence at th.e ¡time ¡the law was enacted, to insure the mo-rtgage'cl property for the 'benefit of the mortgagee, would any one contend far a moment thalt s-uch law if enforced- would melt .-impair the 'obligation of the contract previously entered into ? Certainly not. And lit impairs' -the -obligation ¡of ¡the contract just as much- to put this extra burden on the redemptioinier ¡as it'w'aukli ¡to ipiut fit 00 thie mortgagor before- foreclosure sale,. This case is ruled by the holding of this court in Hollister v. Donahoe, 11 S. D. 497, 78 N. W. 959.

The order -appealed from- is affirmed.