Citizens' National Bank v. Western Loan & Building Co.

MR. JUSTICE HOLLOWAY

delivered the opinion of the court.

In 1916 the Western Loan & Building Company held a mortgage upon lot 4, block 2, first addition to the town of Hardin, in Big Horn county, and in an action to foreclose the mortgage such proceedings were had that a decree was duly given and made and thereunder the sheriff sold the property on June 4, 1917, and issued his certificate of sale to the loan company, the purchaser. O. M. Solso held a second mortgage upon the same property and in foreclosure proceedings secured a decree under which the sheriff sold the property to Solso on November 17, 1917, and issued to him a certificate of sale. On February 18, 1918, Solso sold, assigned and transferred his certificate to the Citizens’ National Bank of Laurel. On April 30, 1918, the bank gave notice of redemption from the first sale and tendered to the sheriff the full amount due. On May 4, 1918, the bank made demand in writing upon the loan company for a verified statement of the amount of rents and profits received by it from June 4, 1917, and the loan company having failed for more than a month to furnish the statement, this action for an accounting was instituted.

After the pleadings were settled, the parties submitted the controversy upon an agreed statement of facts which embraces the foregoing facts and, in addition thereto, the following: After the loan company received its certificate of sale from the sheriff, and on July 21, 1917, it entered into a contract with Mrs. A. Becker by the terms of which it agreed to sell lot 4 to her (provided there was not any redemption) for $1,000, payable $100 in cash and the balance in monthly installments.. The contract provided further that the legal title and right of possession should remain in the loan company until the full purchase price should be paid; that time should be deemed to be of the essence of the contract, and upon failure of Mrs. Becker to make any payment as provided, the loan company might declare the contract forfeited and retain all payments made as liquidated damages. It was provided further that if there should be a redemption, the loan company would refund to Mrs. Becker “all sums theretofore paid # * * upon the purchase price in excess of interest at the rate of twelve per cent per annum.” It was provided further that Mrs. Becker should have possession of the property on July 23, 1917, and it is agreed that she took possession on that day “and has continuously since been in possession thereof and has received the rents and profits therefrom.” A copy of the contract, the decree of foreclosure in the Solso case, the sheriff’s certificate of sale issued to Solso, the written demand made by the bank upon the loan company, and certain letters written by the loan company to Mrs. Becker, were attached to and made a part of the agreed statement. Upon this record the trial court found for plaintiff, and from the judgment entered upon the findings defendant appealed.

This action is brought under section 6843, Revised Codes of 1907 (sec. 9448, Rev. Codes 1921), which provides: “The purchaser, from the time of the sale until a redemption, and a redemptioner, from the time of his redemption until another redemption, is entitled to receive from the tenant in possession, the rents of the property sold, or the value of the use and occupation thereof. But when any rents or profits have been received by the judgment creditor or purchaser, or - his or their assigns, from the property thus sold preceding such redemption, the amount of such rents and profits shall be a credit upon the redemption money to be paid; and if the redemptioner or judgment debtor, before the expiration of the time allowed for such redemption, demands in writing of such purchaser or creditor, or his assigns, a written and verified statement of the amount of such rents and profits thus received, the period for redemption is extended five days after such sworn statement is given by such purchaser or his assigns to such redemptioner or debtor. If such purchaser or his assigns shall, for a period of one month from and after such demand, fail or refuse to give such statement, such redemptioner or debtor may bring an action in any court of competent jurisdiction, to compel an accounting and disclosure of such rents and profits, and until fifteen days from and after the final determination of such action, the right of redemption is extended to such redemptioner or debtor.”

1. Under section 9441, Revised Codes of 1921, the purchaser at an execution or foreclosure sale is substituted to and acquires the right, title and interest of the judgment debtor in the property sold (Hamilton v. Hamilton, 51 Mont. 509, 154 Pac. 717; Banking Corporation v. Hein, 52 Mont. 238, 156 Pac. 1085; Power Mercantile Co. v. Moore Mercantile Co., 55 Mont. 401, 177 Pac. 406), leaving in the judgment debtor only the bare right to redeem (McQueeney v. Toomey, 36 Mont. 282, 122 Am. St. Rep. 358, 13 Ann. Cas. 316, 92 Pac. 561), and the certificate of sale issued by the sheriff is a conveyance within the meaning of the Recording Act (Duff v. Randall, 116 Cal. 226, 58 Am. St. Rep. 158, 48 Pac. 66). These principles are now settled beyond controversy.

It is the' contention of the loan company that it assigned its interest to Mrs. Becker, and that if plaintiff has a cause of action, it is against Mrs. Becker and not against the loan company, but an assignment would have carried with it all the interest acquired by the loan company by virtue of its purchase at the foreclosure sale. (5 C. J. 836.) That the loan company never intended to make such a conveyance is manifest. Its contract with Mrs. Becker provides specifically that neither its title nor right of possession in the property passed to Mrs. Becker, hence the contention that Mrs. Becker became substituted for the loan company is without merit.

2. Although the statute above employs the phrase “tenant in possession,” the word “tenant” is not used in the restricted sense as having reference only to the relation of landlord and tenant within the technical meaning of those terms; on the contrary, it is employed as a generic term to indicate one who holds possession of lands or tenements by any kind of title, either in fee, for life, for years, at will, or upon sufferance. (Powers v. Ingraham, 3 Barb. (N. Y.) 576; Harris v. Reynolds, 13 Cal. 514, 73 Am. Dec. 600; Walker v. McCusker, 71 Cal. 594, 12 Pac. 723; Whithed v. St. Anthony & D. Elev. Co., 9 N. D. 224, 81 Am. St. Rep. 562, 50 L. R. A. 254, 83 N. W. 238; 8 Words and Phrases, 6904, 6909.) In Power Mercantile Co. v. Moore Mercantile Co., above, this court indicated the view, without directly passing upon the question, that the purchaser at execution or foreclosure sale is, as against the judgment debtor, entitled to possession during the period of redemption, and we are satisfied that the view thus indicated interprets correctly the provisions of our statute, and added emphasis is given to that interpretation by the fact that in 1921 the legislature enacted Chapter 230, Laws of 1921, now section 9449, Revised Codes of 1921, which makes an exception in favor of the execution debtor who personally occupies the premises as a home for himself and family. The proceedings in this action were taken prior to the enactment of that statute and are governed by the general rule adverted to above. Mrs. Becker, and not the loan company, was in actual possession after July 23, 1917. She was given possession by the loan company and held subject to its title and is to be deemed a tepant in possession within the meaning of our statute. (See, also, Lightbody v. Truelsen, 39 Minn. 310, 40 N. W. 67.)

That the loan company was required to account to the bank cannot be questioned seriously. The only phase of the controversy which presents any difficulty is suggested by the inquiry: For what must it account! Under the express terms of the statute (section 9448, above) it was entitled to receive “the rents of the property” or “the value of the use and occupation thereof,” but only rents or profits actually received by the loan company could be credited upon the redemption money to be paid by the bank. Ita lex scripia, est. Certainly this is the plain intent of the statute in the absence of any showing of willful default or negligence on the part of the loan company. (2 Jones on Mortgages, 7th ed., sec. 1123; Murdock v. Clarke, 90 Cal. 427, 27 Pac. 275.) It is only for such rents or profits thus received that the bank was authorized to demand an accounting either by notice or by this suit in equity. It is stipulated in the agreed statement that the only moneys received by the loan company were “one hundred dollars cash down and the monthly payments of twelve dollars per month from and after the 21st day of August, 1917.” It is stipulated further: “That the value of the use and occupation of said property has been, during all times since the first day of August, 1917, the sum of $26 per month.”

In its decree the trial court declared: “That the plaintiff [bank] is entitled to an accounting from the defendant [loan company] for the rentals derived from said property beginning with the month of August, 1917, to June, 1919, at $26 per month,” or $572. The profits actually derived by the loan company from the property amounted to only $364, and in charging it with the larger amount, the court erred.

There is a suggestion in the brief of counsel for the loan company that it received only $148, and though in its letter to Mrs. Becker dated April 11, 1918, it notified her that her contract had been forfeited for nonpayment of monthly installments, in the later letters of April 25 and 26 it apparently acknowledged the receipt of the payments which had been in arrears, and this must be so, for in the agreed statement it is stipulated that it did receive the $100 paid at the time the contract was entered into and $12 per month from and after August 21, 1917. The order denying a new trial is affirmed.

The cause is remanded, with directions to the district court to modify the judgment as of the date of its rendition by reducing the amount for which the defendant loan company must account, from $572 to $364, and as thus modified it will stand affirmed. Each party will pay its own costs of appeal.

Modified and affirmed.

Associate Justices Farr, Cooper and Galen, and Honorable Roy E. Ayers, District Judge, sitting in place of Mr. Chief Justice Brantly, disqualified, concur.