Beebe v. Canney

Vanderburgh, J. The bond in suit was under consideration by this court in the case of Sprague v. Wells, 47 Minn. 504, (50 N. W. Rep. 535.) Sprague foreclosed his mortgage on the property described in the bond, by a sale thereof, December 30, 1890. His mortgage was the first lien. Plaintiffs held a second mortgage for $1,300, which was in fact a purchase-money mortgage: but the complaint shows that by the mutual agreement of the parties, and in consideration of the security of the bond referred to, Sprague’s mortgage was antedated, and was made the first mortgage. It was dated April 30, 1890, was payable three years after date, and was given nominally for $4, 000; but, of this sum, $1,900 only was actually advanced, which, with interest, was all there was due thereon. Plaintiffs’ mortgage was payable in six months after date, and became due November 22, 1890. By the terms of the bond, which was dated May 26, 1890, one Mary A. Wells, who was the principal in the bond, and the mortgagor in each mortgage, undertook to erect •expensive buildings on the property in question within four months, for which purpose the loan secured by Sprague’s mortgage was made, and which would, if properly expended, as intended, have made the property sufficient security for both mortgages. She, however, made default in the conditions of the bond, and no improvements were placed upon the property, or expenditure made by her upon it. The ■same was sold upon Sprague’s mortgage for $2,700, which is alleged to have been its full value. By the terms of the bond, the limit of the liability of the obligors to plaintiffs, including the defendant Ganney as surety, is “the deficiency, if any, after a foreclosure and sale of the premises under said second mortgage, of $1,300.” It does not appear, however, that any effort was ever made by the plaintiff to foreclose the same, or to assert any claim thereunder. It was not impossible to foreclose. ^ The title was in the mortgagor, and had not been divested when this mortgage became due. The sureties had a right to insist upon a foreclosure, unless waived by them. [495] The land was purchased by Wells of plaintiffs in May, 1S90, at the price of $3,200, alleged to be its true value then, and, as above stated, was bid in by Sprague December 30, 1890, at the price of $2,700, alleged to have been its value at that date. It is true the defendant might take issue upon the question of value, and have had the fact judicially determined, whether it was worth more, or how much more, than that sum, or it might be ascertained, also, upon the proper investigation, whether or not the plaiutiffs were not bound to have surplus moneys on the first foreclosure applied on the second mortgage, and charge defendant with the difference only. But the answer to all this is that the parties have agreed upon another method of ascertaining the deficiency, and the defendant may insist upon it. He was entitled to bid at the foreclosure, and to the benefit of the redemption statute, and an opportunity to contest* if need be, the first foreclosure. It cannot be said that the right to foreclose was utterly valueless in this case. The contract was made in contemplation of both mortgages, and there may have been special reasons, operating upon the minds of the parties, which led them to require a foreclosure, and consequent diligence in exhausting the mortgage security, before proceeding against defendant. Moakley v. Riggs, 19 John. 69, is disapproved by this court in Brackett v. Rich, 23 Minn. 485, as respects the main proposition therein decided. Nevertheless, what the court says in respect to the laches of the holder of the note in suit is applicable here. The excuse set up for not having proceeded against the maker was that he had been discharged from his debts under the statute, but the opinion states that “this was no excuse; for seventeen months had elapsed after the note became due, before his discharge, and that was negligence which absolved the defendant from his guaranty.” We think the special circumstances of this ease take it out of the rule laid down in Brackett v. Rich, supra, and that the trial court was right in sustaining the demurrer. Order affirmed.