Heitsch v. Minneapolis Threshing Mach. Co.

Beuoe, J. (after stating the facts as above). It is difficult for us to see how the usurious character of the mortgage can be urged by the plaintiffs in this action. The Minneapolis Threshing Machine Company had nothing to do with its making nor with its foreclosure. The usurious nature of the transaction was a matter which should have been litigated at the time of the foreclosure. If sought to be foreclosed by advertisement, the mortgagors (the plaintiffs herein) could have enjoined such foreclosure, and compelled an action in which they could have interposed the defense. If foreclosed by action in the first place, they could also have made use of the defense. This was not done. It was not until after the mortgage was foreclosed and the sheriff’s certificate of sale issued to the Berwick State Bank on November 30, 1907, and the redemption had been made by the defendant Threshing Machine Company, the lienor and the holder of the third mortgage, and a certificate of redemption issued to it, that the question was ever raised. There is no proof, even, that at the time of its — 108 — redemption tbe defendant bad any knowledge of tbe usurious nature of tbe transaction, if usurious it was. It is true that counsel for appellant denies tbis fact, and refers us to tbe record to corroborate bis statement. All there is in tbe record, however, is tbe statement by Henry Heitscb that at tbe time of buying tbe threshing rig be bad a talk with Mr. Wiff about tbe $400 mortgage and tbe $80 mortgage. Nothing is disclosed as to what that conversation was, and no reference whatever is made to tbe alleged usurious nature of tbe mortgage in question. Tbe usurious nature of tbe transaction, then, is a matter which should have been litigated at tbe time of tbe foreclosure of tbe mortgage, and tbe matter cannot now be adjudicated. It seems, indeed, to be tbe established law that “where property is sold on a usurious mortgage, one who purchases at tbe foreclosure sale and pays bis money without any notice of tbe usurious character of tbe mortgage is protected as a bona fide purchaser of tbe property; and tbe same is true where, after tbe foreclosure sale and before tbe expiration of tbe time of redemption, a person buys tbe interest or estate of tbe mortgagee who bid in tbe property at such sale.” Holmes v. State Bank, 53 Minn. 350, 55 N. W. 555; McNeill v. Riddle, 66 N. C. 290. There seems to be no question as to tbe regularity of these foreclosure proceedings, nor that tbe plaintiffs were properly served and bad notice thereof. Tbe presumption is that they bad notice. Bailey v. Hendrickson, 25 N. D. 500, 143 N. W. 134. Even if not a subsequent lienor and entitled to redeem as such, tbe defendant was at any rate an assignee for value of tbe sheriff’s certificate. On no theory of agency can tbe sheriff be said to have been authorized to waive tbe payment of tbe taxes, or to postpone tbe payment of tbe same. We held in tbe case of North Dakota Horse & Cattle Co. v. Serumgard, 17 N. D. 466, 29 L.R.A.(N.S.) 508, 138 Am. St. Rep. 717, 117 N. W. 453, that “tbe sheriff or other person who conducts tbe sale on foreclosure by advertisement is tbe agent of tbe purchaser or bolder of tbe certificate to receive tbe redemption money, but is not such an agent as can bind bis principal to accept a check, instead of money from one qualified to redeem, or to retain tbe money received by such agent from one not a lawful redemptioner.” Erom tbis analogy it is perfectly clear that tbe sheriff in tbis ease, — 109 — if an agent of tbe Minneapolis Tbresbing Machine Company at all, was an agent with limited authority merely, and was only authorized to receive the redemption money and to issue the certificate, provided that the redemption was made in compliance with the statute, and that the amount paid covered the taxes as well as the principal debt. It is well established that an agent to collect has no authority to accept less than the principal debt, nor to compromise the claim, or to allow any extensions thereon. See North Dakota Horse & Cattle Co. v. Serumgard, supra. These facts the Heitsehs were bound to know, as the right and form of redemption is strictly limited and defined by the statute. They must have known that the sheriff was a statutory agent who exercised a limited authority. It is well established that a principal is not bound by the unauthorized acts of an agent which are not ratified by him, and where the lack of authority is known or should be known to the third party. The issuance of the certificate in this case was therefore in no way binding upon the defendant and appellant. There is clearly no merit in respondents’ contention that they were and should be excused from tendering the taxes and interest due because the notice of the payment and lien was not filed with the register of deeds as required by § 7142, Eev. Codes 1905, § 7756, Compiled Laws of 1913, which provides that, “written notice of redemption must be given to the sheriff, and a duplicate filed with the register of deeds of the county; and if any taxes or assessments are paid by the redemptioner, or if he has or acquires any lien other than that upon which the redemption was made, notice thereof must in like manner be given to the sheriff and filed with the register of deeds; and if such notice is not filed, the property may be redeemed without paying such tax, assessment, or lien.” The evidence shows that the notices were duly and seasonably recorded. This we believe was sufficient. The notices were recorded in February, 1908. In 1907 the legislature specifically enacted that such notices should be recorded rather than filed. See chapter 127, Laws of 1907. The act of 1907 was in force at the time of the attempted redemption in this case, and was applicable thereto. It repealed all acts and parts of acts in conflict with its provisions, and in this way — 110 — amended § 7142, Bev. Codes 1905, and changed the remedy of the redemptioner, the appellant herein. The amended statute in no way impaired the obligation of the contract of the mortgagor, or deprived him of property without due process of law. No person has a vested interest in any particular remedy, the exercise of which does not deprive him of any substantial right. To require a notice by a redemptioner or purchaser of taxes and interest paid to be recorded, and not merely filed, can hardly be said to be the deprivation of a substantial right, or an impairment of the obligation of its contract. Craig v. Herzman, 9 N. D. 140, 144, 81 N. W. 288; Orvik v. Casselman, 15 N. D. 34, 105 N. W. 1105; Scott v. District Ct. 15 N. D. 259, 107 N. W. 61; Jack v. Cold, 114 Iowa, 349, 86 N. W. 374; Strand v. Griffith, 63 Wash. 334, 115 Pac. 512; State ex rel. National Bond & Secur. Co. v. Krahmer, 105 Minn. 422, 21 L.R.A.(N.S.) 157, 117 N. W. 780; Webb v. Lewis, 45 Minn. 285, 47 N. W. 803; Northwestern Mut. L. Ins. Co. v. Neeves, 46 Wis. 147, 49 N. W. 832; Tuolumne Redemption Co. v. Sedgwick, 15 Cal. 515. Nor can it be claimed that the plaintiffs were misled in the case before us. On November 29th, 1908, Mrs. Ileitsch signed and delivered to her husband to take to Towner, a redemption notice which, among other things, stated that she was redeeming from the redemption of the appellants, and in which she recopied the notice of appellant, which contained the following words: “Together with all taxes and assessments ... as set forth in certain affidavits and notices served upon you by the redemptioner of said property, the Minneapolis Threshing Machine Company, and filed in the office of the register of deeds of McHenry county, North Dakota, on the 24th day of February, 1908, which said notice was recorded in Book 198 of Mortgages, at page 459 thereof.” It is perfectly clear also that her husband, Henry Heitsch, who-acted as her agent in the proposed redemption, was fully aware of the taxes and of the lien thereof, and this, if not before the receipt of the certificate, at any rate on the day thereof and before he left, Towner. Campbell, his lawyer, testified: “I personally wrote on the back of Ex. 45 (Anna Heitsch’s notice of redemption) the words appearing there in pencil, ‘pay no moi'e than due on sale $111.02 and 12 per — 111 — cent interest and taxes and assessments. Pay no other liens or mortgages/ — and called Heitsch?s attention to this notation, and told him to show it to the sheriffPleitsch testifies that he not only showed, the notation to the sheriff, but “told him about the taxes. . . .. Sometimes he (the sheriff) said it would be all right to pay the taxes, afterwards, and sometimes he said maybe it ought to be paid then,, he and the lawyers up there didn’t seem to know. The sheriff said he-didn’t have anything to do with them. ... I had talked about taxes before I went to get that money in the morning. The sheriff said he didn’t have nothing to do with the taxes that he knew of; he said all that he had anything to do with was the $125.35, and $1 was his,, and I went to the bank and drew this money. . . . Mr. Campbell told me to pay the sheriff what he asked on the foreclosure, and also-wrote it down so I wouldn’t forget, and taxes and interest and no more. . . . I and the sheriff, from around shortly after 9 :00 o’clock until. 2:00 o’clock that day, were getting copies of the papers and going-to see lawyers and seeing about the taxes. . . . Mr. Javnager told me that he thought it was necessary to pay the taxes at that time, and then at times he told me it was all right if I paid them afterwards. I believe he told me that the Minneapolis Threshing Machine Company had paid some taxes. He told me he had nothing to do with it, that the land was safe and I could pay this afterwards. I went, to see Mr. Christianson about the taxes. Mr. Christianson did not, tell me that it wouldn’t be a redemption unless I paid the taxes, not in those words. lie told me it would be all right if I paid them after-wards. ... I remember phoning to Mr. Campbell, I think it was-in the forenoon sometime. At the time I talked with Mr. Campbell I did not have the certificate of redemption. I wouldn’t be certain-, that I said that I had the certificate at the time I phoned to Mr. Campbell. I think Campbell told me that if the sheriff wanted that money, that it was all right or something to that effect; that the taxes or anything could be sent to them later on.” We cannot, indeed, read the whole testimony without being thoroughly convinced that the. version of the sheriff is the correct one, that the-Heitschs knew of the taxes, and merely failed to pay the same because-they were short of funds, and that after arguing with Heitsch for half — 112 — a day, and giving him a chance to consult lawyers, he grew tired of the controversy and issue the certificate. It is quite noticeable, indeed, that though Mr. Christianson and Mr. Donnelly were both admittedly consulted by Mr. Heitsch while at Towner, neither Mr. Christianson nor Mr. Donnelly were called as witnesses by the plaintiffs, and, though Mr. Donnelly was. called by the defendant, the plaintiff objected, on the ground of professional connections, to all evidence of the advice given. Mr. Donnelly, however, did testify that the sheriff told him •over the phone that “there was not enough money to pay the amount required and the taxes “ The question, then, is simply this, Can a sheriff bind a prior redemp-tioner or purchaser on a foreclosure sale by a certificate of redemption which he issues without authority from the purchaser or prior re-demptioner, and without having first received the full sum which is required to be paid, and where both he and the last would-be-redemp-tioner know of the shortage ? and when such is done, may the last re-demptioner compel the purchaser or prior redemptioner to accept the balance after the time for redemption has expired ? We think not. In view of our conclusion that the defendants failed to redeem from the foreclosure of the mortgage to the Berwick State Bank, and that the title to such land vested in the defendant Minneapolis Threshing Machine Company on the failure to so redeem, and the fact that the said defendant has only asked for a foreclosure of its other liens and for a deficiency judgment in case the first relief prayed for is not granted and the land quieted in it, it is unnecessary to pass upon the validity of the other liens which are herein asserted. The judgment of the District Court will be reversed, and judgment entered confirming and quieting the title of the said Minneapolis Threshing Machine Company in and to the lands described in the plaintiffs’ complaint herein, and awarding to said defendant the costs ■of the action. Plaintiffs and. respondents will also pay the costs and disbursements of this appeal.