Salter v. Bank of Eau Claire

WiNslow, J. It was vigorously contended by the appellant that the bill of sale of the lumber to the bank was not [87] ■a mortgage, as held by the circuit court, but was an absolute bill of sale, which vested title to the lumber in the bank unconditionally. We are unable to agree with this contention. Though absolute in form, it was in fact given as security only for the payment of a debt. There was unquestionably an equity of redemption left in the mortgagor. Had he been able to pay the debt at any time before the foreclosure of the mortgage and sale of the lumber, he would have been entitled to receive back the lumber. Such a transaction has been uniformly held by this court to constitute, in legal effect, a mortgage, rather than a sale. First Nat. Bank v. Damm, 63 Wis. 249, and cases cited. Eor the purposes of this case, we shall assume that, as against Smith’s creditors, it was a mortgage for two dollars only, and that the true consideration cannot be shown by parol. This was the conclusion of the circuit court, and we do not find it necessary to affirm or deny the correctness of the ruling, because there are other facts in the case which lead us to the conclusion that the bank is entitled to recover the money in court, notwithstanding the consideration was wrongly .stated in the mortgage. As between the parties, this mortgage was perfectly good for the whole debt intended to be secured by it. A consideration in addition to that expressed in the mortgage may be shown by parol. Kickland v. Menasha Wooden Ware Co. 68 Wis. 34. No person could take advantage of the failure .to state the full consideration except some third person, such •as a creditor or purchaser who has secured some lien upon ■or interest in the mortgaged property before foreclosure of the mortgage. Clearly if the mortgage has been foreclosed and the property fully relieved from the lien, before any third person attempts to attack it, the question of the validity of the mortgage is no longer open. In the present case the mortgage had been foreclosed by the parties before the plaintiff made any move towards at [88] tacking it. Tbe mortgagee allowed tbe mortgagor to sell tbe property, and turn over tbe proceeds of sales to apply on tbe mortgage. Under this authority, tbe mortgagor sold out and delivered to purchasers tbe entire property. Tbe purchase price of all except tbe last two lots sold to tbe furniture company had been delivered to tbe bank. Tbe bank could undoubtedly recover of tbe furniture company tbe purchase price of tbe lumber if it made demand therefor before tbe company paid Smith, and manifestly, also, tbe mortgagor was entitled to have credited on bis notes tbe amount for which be sold tbe lumber to tbe furniture company, if, as it appears in this case, tbe sale was made in good faith and within tbe limits of bis authority. Before tbe plaintiff made any move, tbe mortgage was, in effect, fully foreclosed; tbe property was sold and delivered to tbe purchaser, by authority of both mortgagor and mortgagee; tbe lien was gone forever, tbe debt of tbe mortgagor pro tanto discharged, and tbe mortgagee tbe owner of a money demand against a third person. All questions as to tbe validity of tbe mortgage seem to be at rest. There is no claim of actual fraud in the transaction, and we see no ground on which it can be held that tbe bank’s claim upon tbe money in court is not perfect. By the Court.— Judgment reversed, and action remanded with directions to render judgment for tbe appellant in accordance with this opinion.