Court Opinion

ID: 4011035
Source: CourtListenerOpinion
Date Created: 2016-07-06 11:13:39.909276+00
Date Added: 2024-06-11T07:44:44.610580
License: Public Domain

Two claims filed against the estate of Lenore H. Cawker to recover deficiency, after foreclosure and sale of mortgaged premises, due on two notes owned by the executor of Charles A. Koeffler, Jr.  From a judgment disallowing both claims, claimant appeals.
The First Wisconsin Trust Company, as executor of the will of Charles A. Koeffler, Jr., deceased, filed two claims on September 27, 1932, against the estate of Lenore H. Cawker, deceased.  One was based on a note of $30,000 and the other upon a note of $18,000.
On October 28, 1928, Lenore Cawker gave her promissory note for $30,000, payable in five years with interest, to Charles A. Koeffler, Jr., and secured the same by a mortgage on real estate owned by her.  On January 30, 1930, Miss Cawker gave her promissory note for $18,000 to Mr. Koeffler, due three years after date, and secured the same by a mortgage on real estate other than that covered by the mortgage of October 28, 1928.  There was default on both mortgages, and foreclosure proceedings were prosecuted. *Page 650 
Upon the sale of the premises affected by the mortgage of 1928, there was realized $30,504.78, and upon the sale under the mortgage of 1930 there was realized the sum of $18,386.76.
The claims were filed in the county court for the full amount of the notes with interest, and recited that they were secured by a mortgage upon separate parcels of real estate. This proceeding was begun before the foreclosure of the mortgages.  Foreclosure proceedings on the 1928 mortgage were instituted August 2, 1935.  The representative of the Lenore Cawker estate was not made a party defendant.  Miss Cawker during her lifetime had conveyed the mortgaged premises to another subject to the mortgage.  No deficiency was sought in that action or demanded in the complaint. On August 24, 1937, the sheriff of Milwaukee county sold the mortgaged premises for $30,504.78, subject to the outstanding taxes and tax liens, there being due at the time on the judgment the sum of $33,967.29, leaving a deficiency of $3,493.51, including revenue stamps on sheriff's deed.  The court in confirming the sale found that the bid was fair and adequate, and provided in the order of such confirmation that it was without prejudice to any rights the plaintiff might have to enforce collection of its claim filed in the county court for the balance due on the note.
As to the mortgage securing the note of January 30, 1930, foreclosure proceedings were begun November 6, 1935, and in this proceeding the representative of the estate of Lenore Cawker, deceased, was a party defendant.  Again no judgment for deficiency was demanded in the complaint, and the cause of action set forth was for the foreclosure of the mortgage only.  All defendants defaulted and judgment was entered upon due notice to all parties on March 27, 1936.  On May 25, 1937, the property covered by the 1930 mortgage was sold by the sheriff of Milwaukee county, purchased by the plaintiff, the executor of the Koeffler estate, for $18,386.76, there being then due $21,029.99, leaving an unpaid balance *Page 651 
of $2,661.73, including revenue stamps on sheriff's deed. Notice of motion to confirm the sale was given to all parties. This notice recited material facts and included the statement "the plaintiff will not and does not if such report and sale be confirmed make any claim for such deficiency against the defendants or any or either of them, personally, and that no motion for a deficiency order or judgment for deficiency is or will be made or asked in favor of the plaintiff against the defendants or any or either of them."  This sale was duly confirmed, and the court expressly found that the bid was fair and adequate and ordered that the clerk of the circuit court certify the amount remaining unpaid for filing to the county court in the estate of Lenore Cawker, deceased.  Notice of entry of the order was given on July 24, 1937, and no appeal was ever taken from such order.
Objections to the claims filed in the county court were entered.  Upon hearing on the claims after the foreclosure proceedings had been concluded, the notes were offered in evidence and the records of the circuit court judgments were submitted.  Testimony was submitted as to each of the claims that nothing had been paid to cover the deficiency mentioned. No evidence was offered on behalf of the estate.  Counsel representing the estate objects to the amounts of the claims, because no deficiency was prayed for nor was any deficiency judgment entered in the circuit court foreclosure proceedings. The county court disallowed the claims and the executor appealed.
Claimant filed claims for amounts due upon notes which were liabilities of the Cawker estate.  Filing of these claims was the virtual equivalent of commencing an ordinary action upon the notes, and such actions may be *Page 652 
prosecuted independently of the foreclosure of the security. While the matter of deficiency might have been litigated in the foreclosure proceedings in the circuit court, it was not necessary to do so.  The claimant could seek first foreclosure of the mortgages only, leaving recovery of the balances due upon the notes to the proceedings which have been initiated by the filing of the claims in the county court.  White EagleBuilding  Loan Asso. v. Freyer, 231 Wis. 563,286 N.W. 32; Cavadini v. Larson, 211 Wis. 200, 248 N.W. 209.
The objections to the allowance of the claims in the county court involved the contentions:  (a) That evidence was not produced which shows that the fair value of the mortgaged premises was obtained upon the foreclosure sale, and (b) that the Koeffler estate has lost its rights to insist upon the recovery of a deficiency against the Cawker estate at least as to one of the notes by reason of the failure to make a representative of the mortgagor a party to the foreclosure action, or to serve upon him notice of its application for confirmation of the sheriff's sale.  These objections are without force in this case.  As to the foreclosure action in which the mortgagor was made a party, it is clear that the latter is conclusively bound by the finding of the circuit court in the foreclosure proceeding that a fair price was realized upon the foreclosure sale.  But the contentions have no merit apart from this.  This proceeding does not constitute a direct attack upon the foreclosure judgments which have been entered, and questions as to defects of parties in those proceedings or the propriety of notice to mortgagors who are not parties, is wholly immaterial here.  The claims being equivalent to actions upon the promissory notes secured by the mortgage, production of the notes created a prima facie case of liability, and the burden of establishing payment of the notes, whether in whole or in part, rested throughout upon the representatives of the Cawker estate.
By the Court. — Judgment reversed, and cause remanded with directions to allow the claims. *Page 653