Case ID: ohio-np-ns_31/html/0338-01.html
Source: Caselaw Access Project
Author: {"author": "Snediker, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Common Pleas Court of Montgomery County.
    E. L. Keplinger v. Mary C. Kinsser, et al.
    Decided July 13, 1933.
    
      Kerr, Kerr & Kerr (Tippecanoe City, O.), for plaintiff.
    
      Allaman, Funkhouser & Murr, for defendant.
   Snediker, J.

This is an action to foreclose a mortgage given by defendants to plaintiff to secure a note for $2850.00, dated October 2, 1931, due 90 days after date, on which, with interest, plaintiff claims $3156.17. The mortgage is on property owned by defendants, located in Butler township, this county. The mortgage contains the ordinary defeasance clause.

The answer filed by the defendants admits the allegations of the plaintiff as to both the note and mortgage; and under favor of House Bill No. 219, recently passed by the legislature, which is an act to amend Section 11588 of the General Code, relative to the sale of foreclosed property and to declare an emergency, they plead that the real estate described in the second cause of action is worth at least $6,000.00, that the tax valuation is $5460.00, and that if the property is ordered sold at the present time and under present economic conditions it will result in a sacrifice at a very low price, which would discharge their debt to the plaintiff but would leave no equity whatever for the defendants; that the sale of the property under such conditions would not be just and equitable, considering the rights and equities of the defendants. And they pray that the court may postpone the order of sale after a full hearing and upon such terms and conditions as the court may deem to be just and equitable, and for other and further relief to which the defendants may be entitled.

Plaintiff’s reply to this answer is that the tax valuation is not a true criterion of the value of. the property. He denies that it is worth $6,000.00 or anywhere near that amount; sets up the fact that the property is in bad condition and run down; that the fields are in a bad state, of cultivation, the buildings need repair, and that the farm has grown less valuable each year for a number of years. In addition to this the plaintiff says that there has been a judgment taken against the defendant since the filing of the petition herein for about $500.00 and an execution has been issued and levied on these lands,. And he pleads, on information, that another judgment for $500.00, taken by the Englewood Bank, is a lien on the farm. He says there has been nothing paid on the principal of the indebtedness in controversy since the loan was made and that the note has been renewed and the interest added, and the money furnished to pay the taxes on the farm up' until the last renewal, since which time he has refused to pay the taxes; and at the date of the filing of the petition they are delinquent to the extent of $342.65, with interest and penalty from January 1, 1933, and that on the 20th day of this month (June) another installment of $54.54 will be due.

As a second cause of reply he says that the act under which the defendants frame their answer and on account of which they ask their relief is unconstitutional, being in violation of Article I, Section 10 of the Constitution of the United States, which prohibits the impairing of the obligation of contracts. And, third, he says that the new law deprives him of the remedy that was in existence at the date of his note and mortgage and that that remedy forms part of the contract of the mortgagors. He says that the new law does not give him any remedy but deprives him of the one that he had when his contract came into existence. Fourth, he claims that the law is invalid because it constitutes class legislation in that it provides that: “No sale shall be postponed and no such proceedings had upon a mortgage executed after the effective date of this act.” And he claims, further, that the law is unconstitutional because it is retroactive in its operation.

Upon the issue thus made up a' full hearing was had; all the facts relative to the inception of the contract relationship between the parties were developed. In short, they disclosed that the defendants, two maiden ladies of advanced age, own the properties covered by the mortgage. They use the farm for their home and are themselves undertaking to run it. Their fields are leased to neighbdrs. Their principal source of income is from the milk which they sell and from the amount paid by those who use their fields. The result has been that the farm buildings have become in disrepair, and generally, the farm may be said to be run down.

The first loan they made from the plaintiff was in the sum of $700.00. This was not paid when it became due and renewal notes were given from time to time until property owned by the defendants in Vandalia became involved, and eventually the farm was mortgaged. Defendants were unable to meet their taxes, which have increased in amount from year to year, and were delinquent at the time of the bringing of the suit to about $300.00. There are two judgments outstanding against these defendants; one in favor of a woman by the name of Campbell, and the other in favor of the Englewood Bank; which together aggregate a little over a thousand dollars. - The farm is variously testified to be worth $4500.00 to $5,000.00; $4,000.00; and $4,000.00.

Plaintiff has been patient in asserting his claim to collect his note and foreclose his mortgage. The defendants being unable to satisfy him in whole or in part, it became necessary for him to bring this action.

The evidence disclosed that just at this time farm property is greatly depreciated in value and that a rise in farm values might be anticipated in the not very distant future.

The law on which the defendants assert their claim to relief is an amendment to Section 11588 of the General Code, which relates to procedure in the sale of incumbered property and reads;

“When a mortgage is foreclosed or a specific lien enforced a sale of the property shall be ordered; and when the real property to be sold is in one or more tracts the court may order the officer who makes the sale to subdivide, appraise, and sell them in parcels or sell any one of the tracts as a whole.”

That part of the amended section with which we are here principally concerned is:

“However, any court before which a proceeding for the foreclosure of a mortgage or the enforcement of a specific lien or execution against real property is had on or before the first day of February, 1935 may, after a full hearing and upon such terms and conditions as may be fixed by the court, order that the sale be postponed and that proceedings to enforce the debt or to recover possession be restrained until such time, not later than the first day of January, 1935, as the court may in the exercise of its discretion believe to be just and equitable, considering the rights and equities of all parties affected by such order in the light of existing economic conditions, but in no event postpone said sale and/or such proceedings unless the current taxes and the interest due from and after the date of said postponement by said court order shall be paid as due; provided no sale shall be postponed and no such proceedings had upon a mortgage executed after the effective date of this act.
“In the event of default as to any of the terms and conditions fixed by the court in postponing a sale under the provisions of this act, and upon application of the lien-holder, his heirs, successors, or assigns, the court may set aside the said order of postponement and injunction and order the sale to proceed.”

It will be observed that Section 11588 as amended affects the order of sale for the property foreclosed and that so much of the remedy in foreclosure is changed from what if formerly was under Section 11588. The amendment gives the court the power to regard the equities under conditions which will work a hardship upon one of the parties to the foreclosure, and permits an order or decree in accordance therewith. If a sale at the time when the application for the relief afforded by the amendment is made, although it permitted the plaintiff to realize the amount of his claim, also would result in an inequitable destruction of the value which the defendant had in the property, the court is empowered to postpone the sale so as to preserve the rights of the defendant, so far as it may, in furtherance of justice. In doing so, the sale may be postponed with the condition that the current taxes and all interest due from and after the date of the postponement shall be paid by the defendant. The law requires that the conditions fixed by the court in pursuance of this power be complied with, and in the event there is a default on the part of the defendant, upon application of a mortgagee the court may set aside the order of postponement and order the sale to proceed. Under this amendment “The sale (may) be postponed and proceedings to enforce the debt or to recover possession may be restrained until such time” and upon such terms and conditions as may be fixed by the court.

Does this arbitrary provision of the law impair the obligations of the contracts in litigation?

If it is remedial in its nature — and we think it is — then the defendants are entitled to the benefits which it affords.

“Remedy” means the action or means given by law for the recovery of a right. It pertains more particularly to those modes. of procedure and pleading which lead up to and end in the judgment. A remedy is not a right.

In discussing remedies, Watson in his work on The Constitution says:

“The general doctrine on this subject is, that while laws which are in force when a contract is made enter into its obligation, yet parties do no acquire vested rights in the special remedies or modes of procedure existing at that time; and, while the legislative department cannot withdraw all remedies and so, in effect, destroy the contract, nor impose new restrictions or conditions such as would prevent the enforcement of rights under the contract according to the usual course of justice when the contract was made, for neither could be done without impairing the obligation of contract, the legislative department can modify or change existing remedies or prescribe new modes of procedure without impairing the obligation of contracts, conditioned, however, that a substantial remedy remains or is afforded by means of which a party can enforce his rights under the contract.”

Black on his work on Constitutional Law says:

“No one can be said to have a vested right in any particular remedy for the enforcement of his rights or the. redress of injuries done him. Remedies and remedial rights and process are always subject to the control of the legislature. It would not be competent to deny all remedy. But, subject to this limitation, the state may substitute one remedy for another or change modes of procedure or alter the system, of courts, as public policy may seem to require. A man with a fixed right of action may be said to have a vested right to a remedy but not to that particular form of remedy which was available when his cause of action accrued.”

It seems to us manifest that this section was passed on account of public policy and that it appeared to the legislature to be essential — as it no doubt is in many cases— to prevent extreme hardship.

The amendment is not a denial of the right of foreclosure; it defers the sale and attempts to save accruing loss to a party by giving the court control of the period of time during which the sale is postponed and proceedings deferred, and imposes the duty on the court to require that the current taxes and the interest due from and after the date of the postponement shall be paid as' due, one to the county, the other to the plaintiff, so that there is not an increase of tax lien nor an increase of obligation of the defendant to the plaintiff.

This law, being applicable to all persons coming before the court in such cases cannot be regarded as class legislation. Nor is it retroactive. By its very terms it “shall take effect and be in full force from and after its approval by the governor.”

As it appears from the evidence that a sale at this time might result in an entire loss of all their property to these defendants, whereas if it is deferred both the plaintiff and defendants may be protected, it is the order of the court that this sale be postponed on condition that current taxes and interest due from and after the date of the entry of postponement shall be paid by the defendants to this plaintiff and to the county treasurer, and this order shall continue in force until the first day of February, 1934, when the question as to whether or not the sale shall further be postponed will be considered by the court.