Case Name: J. N. FOX v. NELS NELSON
Court: North Dakota Supreme Court
Jurisdiction: North Dakota
Decision Date: 1915-04-27
Citations: 30 N.D. 589
Docket Number: 
Parties: J. N. FOX v. NELS NELSON.
Judges: 
Reporter: North Dakota Reports
Volume: 30
Pages: 589–628

Head Matter:
J. N. FOX v. NELS NELSON.
(153 N. W. 395.)
Redemption — subsequent Hen holder — mortgage — foreclosure — remedial — benefit of creditors —to prevent sacrifice of debtor’s property.
1. Sections 7755 and 7756, Compiled Laws of 1913, which relate to the redemption by subsequent lien holders from the foreclosure of mortgages, are remedial in their nature, and are intended not only for the benefit of the creditors holding a lien subsequent to the lien in process of foreclosure, but also to make the property of the debtor pay as many of his debts as it can be made to pay, and to prevent its sacrifice.
Subsequent lienor — redemption — notice of — duplicate filed with register of deeds — other lien — notice of claim to — filing of — further redemption — not' required to pay other lien without notice.
2. Where a subsequent lienor redeems from a mortgage under §§ 7755 and 7756, Compiled Laws of 1913, and fails to file a duplicate of his notice of redemption with the register of deeds of the county, and a notice of another lien which he may happen to have against the property, as prescribed by § 7756, Compiled Laws of 1913, a person having a still subsequent mortgage or lien may redeem from such prior redemptioner within sixty days after the period of one year has elapsed since the foreclosure, and without the payment of the other lien so claimed by the prior redemptioner.
Opinion filed April 27, 1915.
Rehearing denied June 3, 1915.
Appeal from the District Court of Benville County, Leighton, J.
Action of subsequent lien holder to redeem from the redemption of a lien holder. Judgment for defendant. Plaintiff appeals.
Beversed.
Statement of facts by Bruce, J.
This is an action to redeem real estate from a mortgage sale which was made on the 29th day of July, 1911, and from the defendant, as a redemptioner, who redeemed from such sale on or about the 10th day of June, 1912. It appears that the title to the land was originally in E. W. Mattern, and that on the 8th day of November, 1906, Mattern and his wife mortgaged the land in question to one E. A. Thayer for $1,200 ; that this mortgage was assigned to Mary M. Brackett, and was foreclosed by the said Máry M. Brackett, and a sheriff’s certificate delivered to her on the 29th day of July, 1911; that prior thereto, and on. the 10th day of January, 1908, the said Mattern and his wife executed another mortgage to Simmons & Bodmer for $418, and on the 25th day of August, 1908, still another mortgage for $1,926.34 to the Advance-Thresher Company, a corporation; that later, and on the 11th day of' June, 1912, the Simmons & Bodmer mortgage was assigned to the defendant, Neis Nelson, and later, on the 25th day of July, 1912, the-Advance Thresher Company mortgage was assigned to him also.
As the owner of the Simmons & Bodmer second mortgage, the-defendant, Neis Nelson, irregularly redeemed from the foreclosure of" the 29th of July, 1911, on the 10th day of June, 1912, at which time the record title to the land was in the plaintiff, J. N. Fox, by virtue of a quitclaim deed to the said Fox which was given by the original owner, Mattern and his wife, on the 30th day of January, 1912, and during the year of redemption. No duplicate of the notice of such redemption was filed with the register of deeds of the county, as is required by § 7142, Rev. Codes, 1905, § 7756, Compiled Laws of 1913; nor was any notice filed of the taxes and liens which were paid or acquired by the redemptioner, that is to say, of the Advance Thresher Company mortgage. There is also much dispute in the testimony as to whether at this time this later mortgage had not been fully paid. Later, and on the 10th day of September, 1912, the plaintiff and appellant, J. N. Fox, the grantee in the quitclaim deed before mentioned, sought to redeem from the defendant, Neis Nelson, claiming such deed to be in fact a mortgage, and tendering the said Nelson the sum of $2,300 in currency, which was the amount of the Thayer mortgage with interest and the Simmons & Bodmer mortgage with interest. The said Fox also delivered to the sheriff at such time his notice of redemption, and filed a duplicate thereof with the register of deeds. This tender, however, did not include the amount of the Advance Thresher Company mortgage, which Nelson had bought in subsequent to his redemption. The defendant, Nelson, refused to accept such tender, assigning as his sole reason for such refusal that the amount tendered did not include the Advance Thresher Company mortgage. The record is silent as to whether the notice of redemption was served upon the sheriff, except that it is drawn as a notice both to that officer and to Nelson, the redemptioner, and no question was raised by Nelson on the redemption sought to be made from him as to the method or manner of redemption, if defective. Counsel 'also have taken it for granted on this appeal that, in so far as the manner of redemption was concerned, it was in accordance with the statute, as the brief of appellant so states it to have been, and the brief of respondent does not contradict the fact of the legality of the redemption, except that it was too late and made by a party not a qualified redemptioner, and that it did not include the Advance Thresher Company mortgage. On the 12th day of December, 1912, the plaintiff commenced this action, which the trial court adjudged should be dismissed, and from which judgment the plaintiff has appealed and has asked for a trial de novo.
Grace & Bryans, for appellant.
A party having an equitable mortgage in form of an absolute conveyance of land may redeem as a creditor having a lien, without having first a judicial determination of the conveyance or transfer into mortgage. Rev. Codes 1905, §§ 7139, 7753, Comp. Laws 1913; Scheibel v. Anderson, 77 Minn. 54, 77 Am." St.- Rep. 664, 79 N. W. 594; Leland v. Morrison, 92 S. C. 501, 75 S. E. 889, Ann. Cas. 1914B, 349; Murphy v. Murphy, 141 Cal. 471, 75 Pac. 60; 27 Cyc. 1847, 1861; Horn v. Indianapolis Nat. Bank, 21 Am. St. Rep. 247, note; Spackman v. Gross, 25 S. D. 244, 126 N. W. 389.
The time of redemption right begins to run from the date of the filing of the prior notice of redemption in the office of the register of deeds. A further redemptioner may redeem at any time within sixty days from filing of such notice. Brady v. Gilman, 96 Minn. 234, 1 L.R.A.(N.S.) 835, 113 Am. St. Rep. 622, 104 N. W. 897; Wilson v. Hayes, 40 Minn. 531, 4 L.R.A. 196, 12 Am. St. Rep. 754, 42 N. W. 467; Tincom v. Lewis, 21 Minn. 132; 27 Cyc. 1833.
Redemption statutes are liberally construed. 27 Cyc. 1800; North Dakota Horse & Cattle Co. v. Serumgard, 17 N. D. 466, 29 L.R.A. (N.S.) 508, 138 Am. St. Rep. 717, 117 N. W. 453.
A person contesting the right of redemption in another must show that he is prejudiced or injured in some manner, or redemption will be allowed. Styles v. Dickey, 22 N. D. 515, 134 N. W. 702.
L. F. Clausen> for respondent.
Plaintiff, by his representations to the defendant in regard to his deed and his interest in said land, and not placing on record any instrument showing what he now claims to be his interest therein, misled defendant, and he is estopped to claim that his deed was really a mortgage. 27 Cyc. 1024; 16 Cyc. 722, 785.
The failure of defendant to file notice of redemption in the office of the register of deeds is a mere irregularity, advantage of which can be taken only by a redemptioner. Wilson v. Hayes, 40 Minn. 531, 4 L.R.A. 196, 12 Am. St. Rep. 754, 42 N. W. 467.
Actual notice takes the place of the record notice, and plaintiff had such actual notice. N. D. Codes 1905, § 5042, Comp. Laws 1913, § 5598; McGhee v. Wells, 57 S. C. 280, 76 Am. St. Rep. 567, 35 S. E. 529; 10 Current Law, 1024.
No objection to the redemption can be made by a third person whose own right of redemption has been lost, or who does not attempt to redeem himself within proper time. 27 Cyc. 1835; Stocker v. Puckett, 17 S. D. 267, 96 N. W. 91.

Opinion:
Bruce, J.
(after stating the facts as above). The questions' to be determined in this case are: (1) Whether the quitclaim deed from E. W. Mattern and-wife-was in fact a mortgage; (2) if so, whether one who accepts a quitclaim deed can, for the purpose of redemption, claim it to be a mortgage; (3) whether the defendant had slept on his rights and was precluded from redeeming; (4) whether the failure of the defendant to file a notice of redemption, as provided in § 7142, Rev. Codes 1905, § 7756, Compiled Laws of 1913, extended the time in which' the plaintiff, or a second redemptioner, was entitled to redeem beyond the year of the time of redemption, if the plaintiff occupied the position of a redemptioner instead of an owner; (5) whether, under the proof, the Advance Thresher Company mortgage, purchased by the defendant subsequent to his redemption, had not been paid prior to such purchase by the original mortgagor, Mat-tern; (6) whether, by failing to file the notice of the assignment of the Advance Thresher Company mortgage to him, the defendant did not forfeit his right to demand the payment thereof at the time of the attempted' redemption by the plaintiff.
We must start with the promise that the North Dakota redemption statute "is remedial in its nature, and is intended, not only for the benefit of creditors holding liens subsequent to a lien in process of foreclosure, but more particularly for the purpose of making the property of the debtor pay as many of his debts as it can be made to pay, and to prevent its sacrifice, and should be liberally construed." North Dakota Horse & Cattle Co. v. Serumgard, 17 N. D. 466, 29 L.R.A.(N.S.) 508, 138 Am. St. Rep. 717, 117 N. W. 453; 27 Cyc. 1800. Also that mortgaged real estate which is transferred to a subsequent purchaser with recorded notice of encumbrances becomes "in equity a primary fund for the payment of the mortgage debt." Colonial & U. S. Mortg. Co. v. Flemington, 14 N. D. 181, 116 Am. St. Rep. 670, 103 N. W. 929; Paine v. Dodds, 14 N. D. 189, 116 Am. St. Rep. 674, 103 N. W. 931.
The rule has now become an established rule of property in this state, and should not be abrogated by this court. It cannot be claimed to be other than just and equitable. The decisions of this court are both retroactive and prospective in their nature, and any alteration or change of the rule on our part might greatly endanger titles and legitimate property interests. Such being the case, and, as the plaintiff, Fox, was in fact a lien holder and entitled to the rights of such, this right included the statutory right of redemption from a prior redemptioner within sixty days, even though this period extended beyond a year from the time of the original foreclosure. We say this because it is undisputed that the ' quitclaim deed in this case was in fact a mortgage, and the law seems to be well established that the rights of the holder of a deed which is in fact a mortgage are as far as the right to redeem is concerned, the same as if the instrument under which he claims were in express terms a mortgage, and that no prior adjudication of such fact is necessary. Scheibel v. Anderson, 77 Minn. 54, 77 Am. St. Rep. 664, 79 N. W. 594.
We must remember that the statute in regard to redemptions is not only for the benefit of the lien holder, but also for the benefit of the mortgagor, and that the policy of the law' and of the statute seems to be to give every encouragement to subsequent lien holders to redeem, and this as much for the benefit of the debtor as of the lien holder. Under the provisions of § 7755 and 7756 of the Compiled Laws of 1913, § 7141 and 7142, Rev. Codes 1905, the plaintiff was not required to redeem from the defendant, Nelson, within the year, since Nelson had not within said yearly period perfected his redemption by filing the duplicate notice thereof with the register of deeds, as required by § 7756 of the Compiled Laws of 1913.
"The notice to be filed by a redemptioner," says the supreme court of South Dakota in construing a similar statute, "is for the benefit of the person filing it, as its filing is the beginning of a brief period of limitation of which he may take advantage as against other redemptioners. But under this statute the redemption and the filing of the notice of redemption are distinct acts. As against the person from whom redemption is made, no notice is necessary. The notice is only operative and necessary as against other redemptioners, and their right to redeem can be barred only by filing the notice of redemption as required by the statute. The failure to file the notice of redemption does not render the redemption itself irregular or illegal. It merely 'leaves the rights of other redemptioners unaffected. It does not extend the limitations of sixty days, because that period begins only when the notice is filed." Spackman v. Gross, 25 S. D. 244, 126 N. W. 389. This rule is subject, of course, to the further condition that, as the first redemption, although irregular, was made within the year, the period of redemption could only be extended sixty days from the end of the year, and the plaintiff would be required to redeem within that period or not at all.
We can, indeed, see no foundation for the contention that whether the notice is filed or not, the redemption of a subsequent lien holder must be made within the year from the original foreclosure. The statute expressly provides that "if the property is so redeemed, by a redemptioner another redemptioner may, even after the expiration of one year from the day of sale, redeem from such last redemptioner; provided, the redemption is made within sixty days after such last redemption." [Comp. Laws 1913, § YY55.] We have before us merely a redemptioner who is allowed by the grace of the statute to redeem. He is given a brief statute of limitations as against still other redemptioners, and such persons are given a still further period in which to redeem, and this,.not for the benefit of the redemptioners merely, but of the original debtor, and in furtherance of the theory that the real estate shall be looked upbn as a trust fund for the payment of the mortgagor's debts. Nor is there any merit in the contention that the plaintiff is estopped from redeeming because, prior to the subsequent redemption by the defendant, he may have said that he had no intention of redeeming. Even if he made such a statement, the original mortgagor and debtor should not be deprived in equity of his accruing advantage from having the notice filed and subsequent lien holders given the power and the opportunity to resort to and extend the uses of the mortgaged property, and to thus relieve him of his personal indebtedness and liability. So, too, the defendant in this case is not in any way prejudiced in so far as his claim or security is concerned* but merely, if at all, in Ms rights as a speculator, and in such a court of equity is but little concerned. If he receives the amount of his claim with statutory 12 per cent interest, it is all that he can reasonably demand. He is a redemptioner, and not a purchaser, and he is not supposed to be a speculator. Styles v. Dickey, 22 N. D. 515, 134 N. W. 702. It is also to be noticed that no objection was made by the defendant, Nelson, to the redemption by the plaintiff, Fox, on the ground that it was too late, but merely on the ground that Fox refused to pay the amount of the alleged lien of the Advance Thresher Company mortgage. In his answer in the case before us the defendant states that all he wants is the money due him, and this statement is confirmed by counsel in Ms brief. "Further answering the complaint," the answer says, "defendant states that he has no objection to the plaintiff redeeming, and that he is perfectly willing that he do so, provided that he shall pay to the defendant all sums due to him by the said Mattern, and necessary to make such redemption."
We, too, are well satisfied that whether the Thresher Company mortgage had been paid or not (and from our perusal of the evidence we think it was), it was not incumbent upon the plaintiff to pay the same at the time of his attempted redemption. At that time, and as far as we know up to the present time, no duplicate notice of redemption was or has been filed by the defendant, Nelson. Section 7142, Eev. Codes 1905, being § 7756, Compiled Laws of 1913, provides that "written notice of redemption must be given to the sheriff and a duplicate filed with the register of deeds of the county, and if any taxes or assessments are paid by the redemptioner or if he has or acquires any lien other than that upon which the redemption is made, notice thereof must in like manner be given to the sheriff and filed with the register of deeds; and if such notice is not filed, the property may he redeemed' without paying such tax, assessment or lien." It will be noticed that in the latter part of the section we have just quoted there is an express provision that where no such notice is filed the payment of no other than the original debt sought to be redeemed from is necessary. It is also to be noticed that the provision relating to notice of the acquirement of subsequent liens is separate and distinct from the notice of redemption which must be filed in order to effect a regular statutory redemption. We may also add that after a careful examination of the record we come to the conclusion that the Advance Thresher Company mortgage was in fact paid. The witness Mattern, the original mortgagor, testified positively to this fact, and the defendant, Nelson, though in the position of one who is seeking to assert a lien, singularly fails in disproving the fact. Though a business man, maintaining a machinery business and a retail store, he is unable to produce any records or books except the notes on which he claims to have indorsed all of the payments, but admits himself of having failed to indorse at least one payment. He admits that the original mortgagor, Mattern, knew of the facts and of the payments, and that at any rate, if he, Mattern, had kept any books, they would have been conclusive of the question. He admits that collections were made, not only by himself, but by the agents of the threshing machine company. He admits that numerous threshing machine accounts against farmers were turned over to him for collection. Receipts for payments to nearly half' of the amount of the mortgage were produced over what he claims were paid thereon. Added to all this is the fact that he failed to file a duplicate notice of the redemption with the register of deeds of the subsequent lien which he claims to have purchased, and which he now claims not to have been fully paid.
The judgment of the District Court is reversed, and the cause is remanded with directions to enter judgment allowing the plaintiff to redeem said premises within sixty days from the filing of the remittitur in the District Court, upon the paying to the clerk of the 'District Court for the defendant the sum of $2,300, less taxable costs herein on trial and on appeal, which amount was tendered to the defendant by the said plaintiff on the 10th day of December, 1912, and the judgment and decree herein will further satisfy and cancel of record the mortgage and notes of the said Mattern to the said Advance Thresher Company.