Carleton College v. McNaughton

Berry, J. On May 18, 1867, Hebron Ellingsen, being ■owner of 120 acres of land in Bice county, sold a forty-acre piece of the same to John Curren, who paid fifty dollars down, and for the remainder of the purchase price gave his promissory notes for $300. Ellingsen at the same time executed and delivered to Curren a bond, conditioned for the exe■cution and delivery of a deed of the forty, upon payment of the notes. Thereupon Curren and his wife entered into possession of the forty, and they “have ever since continued to reside thereon as their homestead, claiming the same under-said purchase,” and they have paid a considerable sum of money as the interest and a portion of the principal of said notes. On June 26, 1871, Ellingsen mortgaged the 120 acres of land to the plaintiff, and the mortgage was duly recorded. On October 28, 1872, Curren entered into an agreement with the plaintiff and Ellingsen to pay or secure to be paid to the plaintiff the remainder of the purchase price of the forty, under his purchase from Ellingsen, amounting to about $250, on condition that Ellingsen would execute and deliver to him the deed called for by the bond, and on the [198] further condition that the plaintiff would release and discharge the forty-acre tract from the mortgage. Ellingsen, accordingly, on said October 28fch, executed and delivered a warranty deed of the forty to Curren, and on the next day the same was duly recorded. On the same 28th day of October, Curren and wife executed and delivered to the plaintiff a mortgage upon the forty to secure the sum of $400 and interest, and on the next day the mortgage was duly recorded. No release or discharge of the forty from the Ellingsen mortgage has been executed by the plaintiff. Default having been made in the payment of the Ellingsen mortgage, it was foreclosed by advertisement, and all the lands described therein, to wit, 120 acres, including Curren’s forty, were bid off and purchased at the foreclosure sale, on August 12, 1875, by the plaintiff, and a sheriff’s certificate duly executed and recorded. Shortly before the expiration of the period of redemption from the foreclosure sale, the plaintiff sold and assigned to the defendant McNaughton all its right, title and interest in the certificate, and in and to the lands therein described, and on August 28, 1876, the assignment was duly recorded. At the time of taking and paying for the assignment, McNaughton was ignorant of the agreement between Curren and the plaintiff as to the discharge of the forty from the Ellingsen mortgage, and he was also ignorant of Curren’s purchase and occupancy of the forty, and of the execution and record of the deed from Ellingsen to Curren, and of the existence of the Curren mortgage, except so far as he was in law affected with notice and chargeable with - knowledge on account of Curren’s possession, and the record of the deed and mortgage.. The court below further finds that in the assignment to McNaughton there was no intention on the part of the plaintiff' to transfer any interest in the Curren mortgage. The present action is brought to foreclose the Curren mortgage, and the plaintiff also prays that Curren may be adjudged to be the owner of the forty, subject to the lien of [199] said mortgage, and that McNaughton be adjudged to have no estate or interest therein. As conclusions of law, the court below finds — First, that Curren’s possession of the forty-acre tract, at the time McNaughton took the assignment, “affected McNaughton with full knowledge of all Curren’s rights thereto, and of the plaintiff’s claim therein by virtue of the- Curren mortgagesecond,. that McNaughton has no right, title or interest in or to the forty, but that Curren is owner thereof, subject to plaintiff’s; rights under the Curren mortgage; third, that plaintiff is entitled to a foreclosure of said mortgage, as prayed for in the complaint. According to the records of title, the Ellingsen mortgage was a valid lien upon the entire 120 acres, including the Curren forty, and therefore the foreclosure sale a valid sale of the entire 120 acres. As McNaughton purchased the right of the plaintiff in the certificate of sale and the land sold, he, according to the records, acquired a good title to the 120 acres when the redemption expired. His title, being a good record title was a perfect title if he was a purchaser in good faith. As he had no actual notice of Gurren’s rights, he was a purchaser in good faith, unless Curren’s possession of the forty was in law notice to him of Curren’s rights. Curren’s possession was certainly sufficient in character to operate.as notice. It is found by the court to have been a possession evidenced by the residence of Curren and his wife upon the forty as a homestead. The general rule established by a series of decisions in this state is that the possession of the occupant of real estate is notice of his rights in the premises, as against one who has purchased without exercising due diligence by making inquiry of the occupant as to the nature of his claim and interest. Morrison v. March, 4 Minn. 325 (422;) Groff v. Ramsey, 19 Minn. 44; Palmer v. Bates, 22 Minn. 532. No such inquiry appears to have been made by McNaughton. He was therefore not a purchaser in good faith, and acquired no right to the forty, unless Curren’s conduct was such as to do [200] away with the effect of his possession as notice. To have this effect, Curren must have done something which he ought not to have done, or have refrained from doing something which he ought to have done, with proper reference to the rights of parties who might purchase under the Ellingsen mortgage. He must have failed in some duty which he owed to such parties. It is not claimed that Curren did any positive affirmative act in the premises. But it is contended that he failed in his duty, because he did not procure the promised release from the plaintiff, and put it on record; also, because he did not interfere and stop the foreclosure sale of his forty. In the first place, it is to be observed that the plaintiff was the purchaser at the foreclosure sale, the party which had agreed to execute the release, and which had actual notice of Curren’s rights. Certainly, Curren owed the plaintiff no duty either as respected the release or the sale. He owed Mc-Naugliton no duty at the time of the sale, for McNaughton acquired no claim under the Ellingsen mortgage until shortly before the expiration of the period of redemption. But aside from these considerations, we are of opinion that Curren owed no duty to parties who might purchase at the foreclosure sale. He was not the mortgagor in the Ellingsen mortgage, and, therefore, he had not, as in Palmer v. Bates, 22 Minn. 532, clothed the plaintiff with authority to sell the forty upon foreclosure. He was not, therefore, guilty of laches, as was held in that case, in not withdrawing the indicia of that authority. The case at bar is further distinguishable from Palmer v. Bates by the fact that here Curren had no release, for the plaintiff had failed to perform its agreement to execute one. Hence there was no laches in failing to record a release. As respects Curren’s supposed duty to interfere and ■stop the sale, it is pertinent to ask why he should be required to do so. He was entitled to his forty clear of the Ellingsen mortgage. The plaintiff knew this to be the fact, yet made the purchase in the face of it. Curren was in actual [201] possession of the premises, and in the full enjoyment of his right and title to the forty. Why should he go to the trouble ■of stopping an unauthorized sale of his property, when he had •done nothing to give it an appearance of authority? We see no reason why he could not, as he did, safely rest upon his possession, leaving intending purchasers under the Ellingsen mortgage to take notice of his occupancy of the land, and make inquiries accordingly. We are, therefore, of opinion that Curren’s possession was notice to McNaughton of his rights as respected the forty-acre tract. From this it follows that we are further of opinion, as found by the court below, that McNaughton has no right, title or interest in or to said forty-acre tract; that Curren is owner •of the same, subject to plaintiff’s rights under and by virtue •of the Curren mortgage, and that the plaintiff is entitled to a .foreclosure of said mortgage. Judgment affirmed.