Carpenter v. Artisans' Savings Bank

Gimtllan, G. J. The only question in the case is on the validity of the foreclosure of the chattel mortgage. It is conceded by respondent that the defendant bank was the equitable owner of that mortgage; that it stood as security for the debt due it from Carpenter. Upon no other theory could the value of the mortgaged property be applied to satisfaction of the debt, for ordinarily a causé of action in Carpenter against the bank for converting property, not part of the securities held by it nor connected with the debt due, could not be set off against the debt. It appears also that Knoblauch, who was named in the mortgage as mortgagee, did not execute an express assignment of it to the bank. The case is one, therefore, where the equitable title to a security is in one person, and the apparent or legal title is in another, who has no actual interest in it. The court below [523] held the foreclosure void, because the bank in foreclosing did it in the name of Knoblauch,'that is, it affixed his name to the notices of sale. We presume the attention of the court was not called to the case of Bottineau v. Ætna Life Ins. Co., 31 Minn. 125, (16 N. W. Rep. 849,) which was the case of a.mortgage upon real estate foreclosed under the power by one to whom it had been formally assigned, others being equitable owners of the mortgage. It was decided that the former held the legal title to the mortgage and power of sale in trust for the latter to the extent of their interest; that they could require him to exercise the power and enforce the security, and, if they permitted him to exercise-the power, they would, as between them and the mortgagor, be bound by his action. The converse must be true, that if the holder of the legal title allows the equitable owner to foreclose, using his name, both are bound, and the foreclosure is valid. It is a matter between them alone, and does not concern the mortgagor. As said in the case cited: “The mortgagor, whose interests were not affected by the fact that others had equitable rights in the mortgage with the one in whom' the legal title was vested, could not on that fact alone object to his using such legal title.” So in this case, if the one in whom the legal title to the mortgage stood was content that the equitable owner — the one entitled to have the mortgage foreclosed and to the benefit of the foreclosure — should foreclose,, using his name for the purpose, it did not affect the interests of the mortgagor, and he could not object. The foreclosure was valid. Judgment reversed, and the court below will enter judgment fox the defendants.