Boyd v. Beaudin

Taylor, J. We see no reason why the court has not jurisdiction of the subject matter of this counterclaim. It may be that when a mortgagor seeks to redeem from a chattel mortgage, and recover the possession of the mortgaged property from the mortgagee in possession, he can accomplish the purpose in an action at law by first tendering the amount due on the mortgage, and bringing his action of replevin to recover the possession of the property. But this is not an adequate remedy when any part of the mortgaged property has been destroyed or unlawfully sold by the mortgagee. In such case the mortgagor has the right to charge the mortgagee with the value of the property sold, or he may waive that right and charge him with the moneys realized by him on such sale; and, when the mortgagee has used the mortgaged property, and realized money from such use, he may be charged with the moneys so realized. The general rule is, that when the mortgage is forfeited, and the mortgagee takes possession on account of such forfeiture, the remedy of the mortgagor is to bring an equitable action to redeem. Herman on Mortg., § 191; Jones on Mortg., §§ 683, 684. In this case the mortgagor had the right to bring his equitable action, because the mortgagee had made a sale which it might be necessary to avoid, and because he wished to charge him with the money received on the sale of the half interest, and possibly for the use of the other half interest; and it may also have been requisite to perfect the mortgagor’s title that he should have a conveyance from the mortgagee. The Kanes were not necessary or proper parties to the action, for the reason that the mortgagor does not propose to interfere with their title to the undivided half interest in the vessel. He is content to have that [199] sale stand, and receive the avails of it from the mortgagee. The joinder of Roissy as a party to the counterclaim is not a ground of demurrer. Willard v. Reas, 26 Wis., 540; Marsh v. Supervisors, 38 Wis., 250. We think there can be no doubt that the facts pleaded constitute a counterclaim between the appellant Beaudin and the respondent. The allegations in the pleading show that the respondent has converted the mortgaged property to his own-use without accounting to the mortgagor for the value thereof. It is true, the pleading shows that a sale was made at public vendue; and if the mortgaged property had been purchased at such sale by a third person, in good faith and without any collusion with the mortgagee to defraud the mortgagor, such sale would be" upheld notwithstanding the mortgagor had been misled by the agreement set out in the pleading. But the allegations showing that there was a want of good faith in the mortgagee in making the sale at all, and the further allegation that he was himself the purchaser at a merely nominal and grossly inadequate price, and that he has rendered no account to the mortgagor on account of such sale, are clearly sufficient, if proved, to avoid such sale as between the mortgagor and the mortgagee. In order to sustain this pleading as a good counterclaim, it is unnecessary to determine whether in any case the mortgagee may become the purchaser at a public sale, under the mortgage, so as to cut off the equity of redemption in the mortgagor. The later opinions in New York seem inclined to hold that where there is no unfairness on the part of the mortgagee, and the sale is public, and with express notice to the mortgagor, he may be a purchaser, and that such fair sale and purchase will bar the mortgagor’s equity. Hall v. Ditson, 55 How. Pr., 19; Olcott v. Tioga Railroad Co., 27 N. Y., 546; Jones on Mortg., § 808. This court has held that where there is any unfairness or want of good faith on the part of the mortgagee in making the sale, though it be a public sale, if he becomes the purchaser, such [200] sale will be held void at the option of the mortgagor, and in such case he may maintain*an equitable action to redeem, notwithstanding such sale;, and if the mortgagee, after having purchased such property at the mortgage sale, converts the property by a sale of the same to a third person, he will be held to account either for the value of the property sold, or for the money received upon such sale. Pettibone v. Perkins, 6 Wis., 616; Flanders v. Thomas, 12 Wis., 410. The counterclaim in the case at bar sets out facts which show conclusively a want of good fait lrand fairness on the part of the mortgagee in making the sale under the chattel mortgage. His purchase at such sale cannot, therefore, bar the mortgagor of his action to redeem, and compel him to render-an account for the money received by him upon the resale of that part of the property which he sold to the Kanes, and for any moneys received from the use of the property remaining unsold; nor of his right to redeem the mortgaged property remaining in the hands of the mortgagee by paying any sum which may be due to him on the mortgage after deducting the moneys so received. This right was aifirmed by this court in the case of Mowry v. First Nat. Bank of Baraboo, ante, p. 38. The fourth objection to the counterclaim, “ that the alleged cause of action is not pleadable as a counterclaim,” we think is not well taken. Admitting that the appellant Poissy has no interest in the counterclaim, that fact is no'objection to its being set up as a defense by the appellant Beaudin. The statute says “ the counterclaim must be one existing in favor of a defendant and against a plaintiff between whom a several judgment might be had in the action.” Sections 2656 and 2657, E. S. 1878, provide that counterclaims may be such as were formerly legal or equitable, or both. Under these provisions it seems to us very clear that this was a pleadable counterclaim in this action. It is a claim between the plaintiff and a defendant between whom a several judgment might be had in the action. The defendant in whose favor the coun [201] terclaim exists, is the maker of the notes on which the action is brought, and his co-defendant is an indorser of the same notes; and it is clear that in such cases a several judgment might be had in favor of the plaintiff against the maker. The defenses which the defendants have to the action not onfy may be different, hut in most cases they would be so. They’are not in fact jointly liable to the plaintiff, and the right to join them as defendants at all in the same action is derived from the statute. Section 2609, R. S. 1878; Decker v. Trilling, 24 Wis., 610; Clapp v. Preston, 15 Wis., 543; Borden v. Gilbert, 13 Wis., 670; Cady v. Shepard, 12 Wis., 639; Davis v. Barron, 13 Wis., 227; King v. Ritchie, 18 Wis., 554. It comes within the rule laid down in Dietrich v. Kooh, 35 Wis., 618, “ that a counterclaim must be a claim which, if established, will defeat or in some way qualify the judgment to which the plaintiff is otherwise entitled.” If the appellant is entitled to have the money received by the respondent, upon the sale of the one-half interest in the vessel to the Kanes, applied in part payment of the plaintiff’s claim on the notes upon which the action is brought, then the counterclaim set up by the appellants comes within the rule above stated, and will • defeat the plaintiff’s claim to that extent. The claim-of the appellants, if established, will be an equitable set-off to the claim of the plaintiff, so far as" the money equitably due from the plaintiff to Beaudin is concerned. It is unnecessary to determine whether, in an action at law to recover a debt due which is secured by a chattel or other mortgage, the defendant can, by way of counterclaim, maintain an action simply to redeem the property from the mortgage, when no claim is made for an accounting for any moneys received by the plaintiff growing out of the security, which, in equity, should be applied to the extinguishment of the debt upon which the action is brought. It is further objected that the counterclaim is not sufficient because it is an action to redeem from the mortgage, and [202] there should be an allegation that they have tendered the amount due to the plaintiff, before any such action can be maintained. This counterclaim is more than a simple action to redeem. Beaudin has the right to have the money received by the plaintiff on the sale of the half interest to the Kanes applied in part payment of .his debt, even though he has shown no right to redeem as to the half interest 'still owned by the plaintiff. We are, however, of the opinion that when it is necessary for the mortgagee to render an account' in order to ascertain what is necessary to be paid by the mortgagor seeking to redeem, no tender is necessary before bringing the action to redeem. And, under the decisions of this court, in similar cases, the want of a tender before suit brought does not defeat the action, but only goes to the question of costs in case the right to redeem be established on the trial. Wright v. Young, 6 Wis., 127; Cunningham v. Brown, 44 Wis., 72. We think the court erred in sustaining the demurrer to the counterclaim, and that the order must be reversed. By the Gourt.— The order of the circuit court is reversed, and the cause remanded for further proceedings according to law.