Case ID: wis_13/html/0444-01.html
Source: Caselaw Access Project
Author: {"author": "Cole J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Bassett vs. McDonel and others.
    Where a mortgagor, subsequently to the execution of the mortgage, agreed to pay a higher rate of interest than was therein stipulated for, the mortgagee had nó lien upon the mortgaged premises for such additional interest, as against a third party who purchased the same before such agreement was made, or after it was made, but without notice thereof.
    To a complaint in a foreclosure suit, which set up an agreement after the execution of the mortgage, for the payment of a higher rate of interest than was therein stipulated for, A answered that he had purchased from the mortgagors a part of the premises covered by the mortgage, without knowledge of such agreement for additional interest, and insisted that the residue of the premises, still held by the mortgagors, should be first sold for the payment of the mortgage debt, and that the portion held by him should be adjudged free of any lien for such additional interest; and B, one of the mortgagors, answered that he and C, the other mortgagor, had made partition of such residue, and that he had paid nearly the whole of his share of the mortgage debt, and insisted that C’s portion of the premises should be first sold for satisfaction of C’s share of the mortgage debt. Held, that on proof of the facts alleged in their answers, A and B would be entitled to the relief claimed therein.
    
      Held, also, that it was erroneous for the court, without any trial of the issues raised by such answers, to grant an esc, pw'te order of reference, to compute the amount due, &e., as in case of default.
    
      Hdd, also, that where such order of reference directed the referee to take proof of the facts set up in the complaint and answers, the defendants who had answered were at least entitled to notice of the time and place of taking testimony in the case.
    
      Held, also, that when the order of reference did not direct such notice to be given, and the referee’s report merely stated the amount computed to be due * (including therein the additional interest so agreed to be paid), it was error for the court, upon the filing of said report, to render judgment for the whole amount so reported due, and direct a sale of the whole of the mortgaged premises, without providing for the sale thereof in parcels in any particular order.
    
      APPEAL from the Circuit Court for Walworth County.
    Tbis was an action to foreclose a mortgage executed tbe defendants McDonel and Graham, to secure two promissory notes made in March, 1856, and payable on tbe 1st 0f January of tbe years 1857 and 1858, respectively, “ with interest.” Tbe complaint alleges, among other things, that on or about tbe days when tbe notes - were respectively made payable, tbe defendants agreed with tbe plaintiff, in writing, to pay 12 per cent, interest on so much as remained unpaid upon each after it fell due. Tbe defendants Shiells and McDonel filed answers, tbe substance of which; is stated in tbe opinion of tbis court. The circuit court, on motion of tbe plaintiff, made an order referring tbe cause to a referee, to take proof of and compute tbe amount due to tbe plaintiff, and to take proof of tbe facts stated in tbe complaint and tbe answers of Shiells and McDonel, &c. Tbe referee reported tbe amount due, including therein interest at 12 per cent., as claimed in tbe complaint; and tbe court thereupon directed judgment to be entered for the sum so reported due, and for a foreclosure of tbe equity of redemption, and a sale of tbe whole of tbe premises, without any provision for selling tbe same in parcelsjn any particular order. From tbis judgment tbe defendants Shiells and McDonel appealed.
    
      JEdson Kellogg, for .the appellants,
    contended that the court erred in making tbe order of reference (Rule 30 of circuit court rules; 2 Monell’s Pr., 227); that if tbe reference were proper, tbe order should at least have provided that tbe appellants should have notice of the time and place of bearing (2 Monell’s Pr., 226 — 230) ; that tbe court erred in ordering judgment upon tbe referee’s report, because it appears therefrom that no proof was taken of the facts stated in the com? plaint and answers (2 Monell’s Pr., 229), and for other reasons ; and that tbe judgment was erroneous because it was for tbe whole amount reported due by the referee, including interest which tbe mortgagors agreed to pay after tbe mortgage was executed, and which did not constitute a lien upon tbe land, at least as against tbe defendant Shiells (Fame vs. Winans, Hopk., 283), and because it did not direct the sale °mortgage(3- premises in parcels and in. proper order. Ogden vs. Glidden, 9 Wia, 46.
    j\T S. Murphy, for tbe respondent:
    All presumptions are in favor of the judgment, and to impeach it the appellants must show error. Shaw vs. Shaw, 8 Wia, 168. This court must presume, since no case is settled, that the appellants were present, by their attorney, on the hearing before the referee, and that the respondent made out his case to the satisfaction of the referee and court, by legal and competent testimony. Meyer vs. The Town of Prairie du Ohien, 9 Wia, 233; Weelcs vs. School District, 8 Wia, 166; Code, § 191. In such cases this court will presume that the finding of the court below was authorized by the evidence. ■Smith vs. Lavin, 8 Wia, 265; Session Laws, 1860, 248, § 11. The power of the court to order a reference to take testimony is unquestionable. This order protects the appellants by ordering the referee to 'take proof of the facts stated in their answers, which this .court must presume he did, and that the hearing before referee was regularly brought on.
    April 10.
   By the Court,

Cole J.

As we understand this case, the answers of Shiells and McDonel raised material issues, which should have been tried and disposed of before judgment of foreclosure and sale was rendered. Shiells claims in his answer to be a subsequent purchaser of a portion of the mortgaged premises, and insists upon his right to have them sold in the inverse order of alienation. He further claims that the supplemental agreement of the mortgagors to pay 12 per cent interest on all sums due and unpaid on the mortgage on the 1st of January, 1857, has no. effect as to him, and could not become a lien upon the premises purchased by him. If he bought before this agreement to pay additional interest, or afterwards, without any notice of it, we cannot see but this portion of his answer must prevail.

Again, McDonel claims that he and Graham have made partition of the mortgaged premises; that he has paid nearly his share of the mortgage debt, and therefore insists that Graham's portion should first be sold. Now all these matters are left undisposed of, and the ordinary judgment of foreclosure and sale was rendered. It seems there was an ex parte order of reference to compute tbe amount due, as ordinary cases of default. This was improper practice in view of tbe matters set up in tbe answers. It is insisted that by tbe order of reference, tbe referee was required to take proof of tbe facts stated in tbe complaint and answers, as well as compute tbe amount due ; and that we must presume tbe referee complied witb tbe order. But bis report is utterly silent as to tbe facts stated in tbe answers. It does not state tbat be took any proof offered to sustain tbem, or that be gave the appellants any opportunity to bring forward their testimony to support tbe answers. Indeed tbe cause seems to have proceeded to judgment in tbe same manner as though no answers bad been filed. If this ■ practice can be sustained, we cannot see why it might not be under all circumstances, however good and sufficient a defense a party might have in a foreclosure case. No attention is paid to tbe answer; an order of reference is made ; tbe referee reports tbe amount due; no notice is given to the defendant for taking proof, nor any opportunity to make bis defense. If tbe referee was required to take proof of tbe facts stated in tbe answer, tbe appellant should have bad some notice as to tbe time and place when testimony would be taken. If tbe answer of McDonel was sustained,' then by tbe decision in Ogden vs. Glidden, 9 Wis., 46, be bad a right to have Graham’s portion of tbe premises first disposed of to satisfy tbe judgment. And Shields, of course, being a subsequent purchaser of a portion of tbe premises, could insist upon tbe property being sold in tbe inverse order' of alienation.

We think the judgment must be reversed, and the cause remanded, with directions properly to determine tbe facts set up in tbe answers, and enter a judgment thereon in conformity to this decision.

'Judgment reversed, and cause remanded for further proceedings ’according to law.