Parker v. St. Martin

Vanderburgh, J. In 1884 one Peterson died seised of the lands described in the complaint, then subject to a mortgage thereon, previously executed by him to the Northwestern Mutual Life Insurance Company. He left him surviving, his wife, Hilda, and four minor children, to whom the land was assigned by the probate court, in the proportion of one third to the widow, and the remaining two thirds to the children, undivided. The mortgage was afterwards foreclosed, and the year for redemption expired January 27, 1890. Prior to the foreclosure the defendant St. Martin was appointed guardian of the estate of the minor children, and on or about December 30, 1889, he obtained a license of the probate court to sell their interest in the land at private sale. It is further alleged in the complaint, and admitted by the demurrer, that on the 25th day of January, 1890, the three defendants conspired together to cause a mortgage to be made of the two-thirds interest of the minor children, alleged to be without consideration, but nominally for the sum of $1,500 and interest, which should be an apparent incumbrance thereon for that sum; the object being to practice a fraud upon subsequent lienholders who should redeem from such foreclosure sale, and thereby secure to themselves the amount of the consideration named in the mortgage in case such subsequent lienholders, or any of them, should redeem. To this end it was agreed between the defendants that St. Martin, acting as guardian, should sell the interest of the minor children to defendant Baillif under the probate license, and that the latter should execute the mortgage as above described, with note for same amount, to McLeod, without any consideration running from the latter. It was also agreed between them that Baillif should make no redemption, but McLeod should redeem by virtue of his mortgage, as a creditor having a lien, and that, in case any subsequent creditor having a lien should [7] redeem from him, then, from the redemption money paid him, to the amount of the mortgage, should be paid Baillif’s purchase money for the land conveyed to him by the guardian’s deed, ($650,) and the balance should be divided between the defendants. The guardian’s report of sale was made and approved January 25, 1890, and the same day the deed was recorded, and also the mortgage to McLeod, who also, at the same time, filed notice of his intention to redeem; he being the fifth in order of redemption creditors. None of the owners of the land having redeemed, the creditors made redemption in their order. Subsequently to the execution of the mortgage, and on the 27th day of January, 1890, the plaintiff recovered a judgment against Hilda Peterson which on that day became a lien on her one-third interest in the land, and on the same day filed notice of intention to redeem. There were other redemption creditors subsequent to the mortgage, but having liens prior to that of plaintiff, so that plaintiff was the last redemption creditor, and the eighth in order. The amount of plaintiff’s judgment was $52.37; but neither the value off the land nor the amount of the lien claims, save as above stated,, appears. The plaintiff made final redemption, and in the amount, paid was included the sum of $1,513.60, being the amount of the mortgage above referred to, and the interest thereon, as called for by the terms of the same; and the defendants, it is alleged, recovered the same of the redemption creditors entitled to redeem next in order to the mortgage, and applied and divided the proceeds as they had previously agreed to do, as above stated. The plaintiff had no notice of the fraudulent character of the mortgage, and was deceived thereby, and made redemption in reliance upon the record thereof as a valid lien. The plaintiff therefore claims that as the result of the alleged conspiracy, and the fraudulent conduct of the defendants, he was obliged to pay the amount of the mortgage in addition to what, he was lawfully required to do in order to effect redemption; and he' claims that he is entitled to recover the same of the defendants, onu the ground that the mortgage was absolutely without consideration* and that McLeod was not in fact a creditor having a lien, entitled to redeem, but was a fraudulent redemption er. [8] On the first impression, the case stated in the complaint seems very plausible, but upon a careful examination it will appear, we think, that it fails to make a case warranting a recovery by the plaintiff. It omits any reference to some matters essential to be considered m order to a clear understanding of the case, but-which cannot well be overlooked in the discussion. In the absence of any allegation as to the value of the property, or the amount of the original mortgage and other liens, we may infer that it was sufficient to pay them all, including plaintiff’s judgment, notwithstanding McLeod’s intervening incumbrance. Again, nothing is stated in respect to the understanding between the parties in the event that there should be no redemption from McLeod, and the title should finally rest in him, but it is proper to consider the legal relations and rights of the parties in that contingency. The first and most essential condition of the contract was that McLeod should make the redemption and secure the title. The stipulation as to the division of the profits depended upon a subsequent redemption from him. The guardian’s sale, mortgage, and redemption by McLeod were, according to the agreement, to be parts of one entire transaction. It was a device or plan to secure a redemption. It was doubtless also anticipated that other lienholders would redeem from McLeod, but if they had not done so the legal title would have passed to him; for there is no question that his redemption was effectual, as between the parties. In that case McLeod would either be adjudged to hold the title as trustee, subject to an accounting for his advances, or he would be obliged to pay over the consideration of his mortgage. The fact that no consideration money was paid to Baillif at the time did not necessarily make the mortgage without consideration, as between McLeod and the real beneficiaries, especially if, as we think may be inferred, the consideration for the guardian’s sale was raised by, and was to come from, the McLeod mortgage, as a part of the transaction; and, since the redemptions have been made under and from it, it cannot be treated as wholly invalid, for the purposes of this case. [9] If the facts alleged are true, the parties may still be liable to account for the proceeds of the mortgage, as if actually advanced, on the application of the minors, if they have not voluntarily done so. If the consideration had been paid over at the date of its execution, its validity could not have been questioned by creditors, for the owner of property may incumber it; but the result would have been no different, as respects subsequent redeeming creditors. It is not alleged that the incumbrance was excessive. A subsequent lien creditor is entitled to his right to secure the amount of his debt by redemption, if the property is sufficient. He cannot lawfully be deprived of this fight by the interposition of apparent and simulated, but spurious, incumbrances. What the exact form of remedy should be, in any particular case, it is not necessary to determine here. But if fraudulently prevented from redeeming, or his right to do so is seriously impaired, his damages would not exceed the amount of his debt and expenses necessarily incurred. The court will not consider the speculative or extra value of the land beyond this, or allow him the benefit of his bargain in addition to the recovery of his debt. In this ease it does not appear that the incumbrance in question was void or excessive, or that the property is not amply sufficient to pay all the creditors, including this mortgage, or that the plaintiff would be willing to surrender the property, if fully reimbursed and his own debt paid. The purpose of the statute, in providing for redemption by creditors, is to enable them to collect their debts out of the debtor’s lands, to the extent of the value of the property over the amount paid to redeem; and when this is effected, and the redemptioner elects to take and keep the property, the object is attained. We do not hold that a subsequent lienholder can be obliged to pay a debt which the debtor does not owe, and which is not a lien; but if he chooses to do so, and takes no steps to protect himself before redemption, but thereby collects his debt, it is difficult to see wherein he is damaged. He must investigate beforehand, and decide upon the course to pursue; otherwise the courts may be called on, in every ease, to investigate the amount actually due on the [10] claims Of prior redemptioners, or as to their validity, in order to increase the value of the estate finally purchased. Order affirmed. Dickinson, J., did not participate in this decision. (Opinion published 55 N. W. Rep. 113.)