Court Opinion

ID: 8186002
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:08:27.580389+00
Date Added: 2024-06-11T16:40:25.018014
License: Public Domain

Pinney, J.
The main question is as to the proper construction of the $4,000 note. What is the meaning of the provision therein “ if recourse is had to the collaterals,” and was such recourse had by the plaintiffs in this case ? The note gave the pledgee or holder thereof conditional authority to sell the shares of stock, or any part thereof, but depending on the previous maturity of the $4,000 note, or at any time thereafter, in the event of the securities depreciating in value in the opinion of the holder, at public or private sale at his discretion, without advertising the same or demanding payment or giving any notice, and to apply so much of the proceeds thereof to the payment of the note as might be necessary to pay the same, with all interest due and all expenses attending the sale of the securities, including attorney’s fees, etc.; and, in case the proceeds of the sale of said securities should not cover the principal, interest, and expenses, the maker or makers thereof promised to pay such deficiency forthwith after such sale. The sale specified *428was exceedingly summary in its nature, and its conditions and consequences were extremely stringent. The pledgee might purchase at his own sale, and it was stipulated that, “ if recourse is had to the collaterals, any excess of collaterals 'irpon this note shall he a^pfUcable to am,y other note or clam}, held hy said holder agamist the maker or makers hereof; andr in case of exchange of or addition to the collaterals above named, the provisions of this note shall extend to such new or additional collaterals.”
The law regards the right of redemption with favor, and it would seem that it cannot well be doubted but that the pledgor in this case might lawfully redeem the pledge at any time before actual sale; that by the recourse mentioned in the note was intended an efficient resort to the collaterals-by sale for the purpose of realizing their value, with a view to a proper application of the same to the debts of the makers ; and it would seem clear that a mere notice of intention to exercise the power of sale could not be considered as an actual or efficient recourse or resort to the collaterals for any real or practical purpose. Mere notice of an intention to sell could not of itself be attended by any legal consequences, and the mere declaration of an intention to sell, wholly un-executed, cannot properly be considered as a resort to them for any cause or purpose, particularly when, by mutual consent of the parties, the proposed sale at the time specified was wholly abandoned, and a different time was specified or agreed on. We think it would be harsh and inequitable to hold that a notice thus given, and not pursued, but really abandoned, presumably to allow the pledgor time and oppoi’-tunity to save his property from sacrifice, can with any propriety or justice be characterized or considered as an actual practical recourse or resort to the collaterals, and that a tender before the second time designated for the sale of the collaterals would not be held sufficient to defeat or prevent the exercise of the power of sale. Such tender would cer*429tainly have been attended by such consequences had it been made before the notice had been given; and we see no reason why a tender should not have the same effect when made at any time before the time to which the sale had thus been postponed. The parties must be fairly held to have contemplated such result. The forty-three shares of the capital stock of the Concordia Eire Insurance Company continued, therefore, to remain the property of Eichter, notwithstanding he had pledged the same, as stated, for the payment of the $4,000 note to bPunnemacher; and the right conferred on the latter to apply any part of the proceeds of the stock to other claims or other obligations was uncertain and contingent upon recourse or resort being had to said securities for the satisfaction of the $4,000 note, and was defeated by the tender subsequently made of the amount of the note by the defendant Magdeburg. “ Eecourse ” to the collaterals, in the connection in which it is used in the note, signifies a going back to or resort to them for the purpose of obtaining payment of the note. Anderson, Law Diet. The mere giving of a notice of an intention to sell the collaterals, which appears to have been abandoned or delayed by agreement of the parties to a later period, and not executed, cannot, in our judgment, answer or fulfill the meaning or purpose of the actual resort to the collaterals contemplated by the note for the purpose indicated. We think, therefore, that the tender of the amount of the debt before any actual sale had been made, superseded the authority of sale, so that the tender came in due season, and that the superior court rightly decided that the plaintiffs had no interest in the excess of the collaterals, or in the forty-three shares of stock of the Concordia Fire Insurance Company mentioned in the complaint and findings, and had no right to apply the proceeds or any part thereof upon any other debt than the $4,000 noté. The collaterals were primarily pledged for the payment of the $4,000 note only; and, by the terms of the contract, any ex*430cess only of collaterals in case of realizing from recourse or resort to them — that is, from a sale of them — was to be applied to other debts.
The court found that sufficient ground existed for the appointment of a receiver to collect the rents, with the powers and duties stated in the order for that purpose. The defendant was in possession, taking the rents and profits of the mortgaged premises; and he had failed to pay taxes and the cost of insurance thereon. It was found that the mortgage debtors had assigned for the benefit of their creditors to the defendant Magdeburg and were insolvent. There was a question, in view of the showing on the application for the appointment of a receiver, as to whether the mortgaged premises would be found to be adequate security for the amount of the mortgage debt and subsequent incumbrances at the time of the sale. In view of all the circumstances, we regard the granting of the receivership in question as a prudent and judicious exercise of the power of the court. The payment of taxes and cost of insurance is necessary to preserve the property. Equity devolves it upon him who has the use. Not to pay them is waste. The failure of the defendant to pay the taxes and insurance was casting a bui--den on the mortgaged estate, which equity demanded that the mortgagors should discharge. The order was fully justified, as within the rule of adjudicated cases. Schreiber v. Carey, 48 Wis. 208. It was a want of good faith on the part of the mortgagors to neglect to pay the taxes and insurance upon the property, and yet remain in possession and appropriate all of the profits of the use of the estate to their own purposes.
It is proper to state that there is no bill of exceptions in the record, so as to admit of a review of the case upon any of the findings of fact essential to the judgment.
For the reasons stated, the case should be affirmed on both appeals.
By the Court.— Judgment is ordered accordingly.