Court Opinion

ID: 3839368
Source: CourtListenerOpinion
Date Created: 2016-07-06 08:08:24.649424+00
Date Added: 2024-06-11T07:40:27.884591
License: Public Domain

Petition for rehearing denied September 29, 1942                        ON PETITION FOR REHEARING 129 P.2d 66
The purchasing defendants (Watters et al.) have filed a petition for rehearing. The defendant attorneys have not joined therein. The petitioners set forth eight specifications of alleged error, the first seven of which concern the merits of the controversy.
We have carefully considered the briefs of both parties on the petition and have considered the evidence *Page 419 
and find no reason for modification of our previous opinion.
The eighth specification of the petition is as follows:
    "The decree is inequitable and unjust in that it does not provide for costs of management and repairs of building by the mortgagee in possession and that it does not provide for a strict foreclosure."
Concerning the allegation that we have not provided for costs of management and repairs of the building by the mortgagee in possession, it must be noted that our original opinion provided that
  "Upon full accounting being had, covering the matters indicated and all dealings by the defendant purchasers as mortgagees in possession, a decree should be entered fixing the amount, if any, in which the property described in the complaint is subject to a lien in favor of the purchasing defendants * * *."
Upon the record in this court, it is impossible to determine the amount of any expenditures for management and repairs or the character of such expenditures for management and repairs, if any. Upon such amended pleadings as the trial court may find proper to permit, an accounting will be had, and the purchasing defendants will be entitled to credit for such expenditures as may have been properly made by them as mortgagees in possession, bearing in mind the fact that they are not bona fide purchasers for value without notice.
In our former opinion we said:
  "The decree should provide that upon payment to the purchasing defendants and to the defendant attorneys of the amounts of their respective liens, the defendants, and all of them, be directed to reconvey the property to the plaintiff, and that *Page 420 
in default of such reconveyance the decree stand in lieu thereof."
We adhere to that opinion. We also said:
  "The decree should also provide that if the respective sums are not paid, the plaintiff be foreclosed by a sale, subject to redemption as in other mortgage foreclosures * * *."
The question as to the form of the decree and as to the rights of the parties in the event that the plaintiff should fail to redeem, was not argued in the original briefs. We were under the impression that in the event of plaintiff's failure to redeem after accounting, a sale on foreclosure, subject to redemption, would be necessary in order to extinguish the plaintiff's interest in the property, in accordance with O.C.L.A. 9-501, which provides in substance that liens on real property shall be foreclosed and the property advertised to be sold to satisfy the debt secured thereby. Upon further consideration, however, we have concluded that the statute is not controlling under the facts of this case. It is obvious that by reason of the redemption from the sale on the first mortgage by the purchasing defendants, the plaintiff has, as to that sale, already enjoyed more than a year after the foreclosure sale within which he will be entitled to redeem. There is no reason in equity and good conscience for allowing him another year for redemption after another sale on foreclosure. Furthermore, this is not a suit instituted by the mortgagees to foreclose a mortgage. It is a suit by the mortgagor to redeem. The requirement that in suits brought for the foreclosure of a mortgage the property shall be sold subject to the right of redemption by the mortgagor is obviously for the benefit of the mortgagor. In the case *Page 421 
at bar, the plaintiff seeking to redeem does not ask that the property be sold subject to redemption, but, on the contrary, plaintiff prays for a decree
  "Requiring each and all of the defendants herein (other than J.W. Maloney) to account to plaintiffs for all sums received by them from said property, its income, rents or profits, and to prove in this court all sums paid out by them for the protection and preservation of said trust properties and determining the amounts due from said trustees and the amounts to be allowed to them in the execution of said trust, including whatever sums may be due said defendants from said defendant J.W. Maloney for and on account of the said surplus resulting from said income tax foreclosure sale; and if the balance of said accounts shall be in favor of plaintiffs, decreeing that said balance be paid to them forthwith, but if the balance of said account shall be in favor of defendants, then directing that said balance be paid defendants as a condition precedent to the reconveyance of the property by defendants to plaintiffs upon such conditions as to the court may seem just and equitable."
The authorities, which have not been called to our attention by either party, disclose an exception to the rule requiring a sale on foreclosure subject to redemption. We find the exception applicable to the case at bar. The rule is stated by an eminent authority as follows:
  "As affecting the right of redemption, it frequently becomes necessary to determine the character of the instrument under which redemption is sought. This happens where the conveyance is by a deed absolute on its face but which the grantor claims was executed to secure the payment of a debt or the performance of a condition. Under such circumstances, where the grantee refuses to reconvey on payment or tender of payment of the debt *Page 422 
on performance of the condition, insisting that the transaction was an absolute conveyance, the grantor may institute a suit to determine the character of the instrument. This may be done by a bill in equity or by an action under the statute in the nature of a bill in equity. The action being equitable in its nature, the grantor is entitled to complete relief and the petition usually asks for an accounting accompanied with a prayer that the petitioner be allowed to redeem. Where it clearly appears that the deed was intended as a security the action will lie. The action may be instituted for the sole purpose of having the deed declared to be a mortgage, but the grantor must also offer to redeem the property and place himself within the jurisdiction of the court to settle the whole controversy. Reconveyance will be decreed upon payment of the debt in full." Jones on Mortgages, Vol. II, 8th ed., p. 881, No. 1398.
Again, it is said:
  "The form of the judgment ordinarily is, that the plaintiff may redeem upon paying the amount found due on the mortgage within a specified time, together with costs; and that upon his doing so the defendant shall discharge the mortgage and deliver up the mortgaged premises; and that upon default of such payment the complaint be dismissed with costs. The determination of the form together with the terms and conditions rests largely in the sound discretion of the court under the facts of each case. A decree which provides that on failure to make payment within the time named the mortgage shall stand foreclosed, is not erroneous in that it does not direct a sale on failure to redeem, and the proceedings are in a state in which a strict foreclosure is not allowed. A decree in this form is in legal effect the same as a decree that upon default the bill shall be dismissed with costs, for upon dismissal the mortgage is foreclosed without *Page 423 
any formal decree." Jones on Mortgages, Vol. II, 8th ed., p. 901, No. 1412.
In the case of Martin v. Ratcliff, 101 Mo. 254, 13 S.W. 1051, 20 Am. St. Rep. 605 (1890), the plaintiffs as heirs of the mortgagor brought suit to redeem real property from a sale which had been had under a power contained in the mortgage. It was held that the plaintiffs were entitled to redeem. The court said:
  "Our statute concerning mortgages and deeds of trust contemplates a sale of the premises in all suits brought to foreclose such instruments, and a strict foreclosure in any such case would be erroneous on its face. There is no doubt but the court may, on a petition to redeem, direct a sale of the premises in the event the redemption money is not paid within the specified time. And in such cases the sale may be ordered, though there is no specific prayer therefor, either in the petition or answer. But it is a different thing to say that a decree is, on its face, erroneous, and must be reversed, because it does not provide for a sale. The plaintiffs in this case did not ask for a sale of the property in their petition. They did not, by motion or otherwise, ask the court to modify the decree. They have made no showing that a sale can be of any possible benefit to them. If this decree is reversed, it must be upon the ground that in all suits, where there is a decree permitting the plaintiff to redeem, there must be a further order that, in case of default in payment of the amount found due, the premises shall be sold. This, in our judgment, is not the law, for there is a wide distinction between a suit of foreclosure and one brought to redeem from a voidable foreclosure sale."
To the same effect, see Machold v. Farnan, 20 Idaho 80, 117, P. 408 (1911); Decker v. Patton, 120 Ill. 464, *Page 424 11 N.E. 897 (1887); and Blanchard v. Hoffman, 154 Minn. 525,192 N.W. 352 (1923). As said by an Illinois court:
  "[One seeking to redeem] must be regarded in equity as bringing the amount which should be so found due into court, and tendering the same when so ascertained." Magnusson v. Charlson, 32 Ill. App. 580
at 587 and 588.
This being a suit by the mortgagor to redeem, provisions concerning sale on foreclosure being for the benefit of the mortgagor and plaintiff having prayed only for relief in the nature of strict foreclosure, we are of the opinion that we are authorized to and in equity we should modify the last sentence of our former opinion. We apprehend that the plaintiff will not redeem from the purchasing defendants unless he is also able to and does redeem from the defendant attorneys, so the decree of the circuit court should determine upon and specify a reasonable time within which plaintiff may redeem from both liens or be forever barred.
The petition is denied. *Page 425