Court Opinion

ID: 3986966
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:43:03.922068+00
Date Added: 2024-06-11T07:44:20.305632
License: Public Domain

I concur, but I think the majority opinion does not adequately answer the principal arguments raised by plaintiff in support of the petition for the writ.
The real crux of the case is that the order of the defendant court is in excess of its jurisdiction and void because it deprives the mortgagee bondholder of substantial and presumably valuable rights with respect to her contract in that (a) It deprives her of the presumably valuable benefits to be derived from possible redemption from the foreclosure sale; (b) It deprives her and them of the right to apply the indebtedness (the bonds) to the purchase of the property. In short, plaintiff contends that as a bondholder she is a mortgagee and therefore by virtue of her mortgage has a contractual property right in the equity of redemption, which is a valuable or property right, of which she is deprived *Page 525 
by the sale without redemption and free of encumbrances. This it seems to me is founded upon a misapplication of the statute. The right of redemption did not exist at common law. It is a creation of the statute, exists only by virtue of the statute and confers rights only on those designated by statute and in the cases therein specified. It was created for the benefit and protection of the owner or mortgagor. It is a limitation upon the rights and privileges of the mortgagee or creditor; from him that taketh, it takes; and to him that loseth, it giveth. It seeks to prevent the creditor or the foreclosing mortgagee from obtaining, due to his position, a drop of blood and confines him as far as practicable to his pound of flesh, that which the bond giveth. The right of redemption does not exist in the foreclosing mortgagee; he is given no such right; he cannot redeem from the sale made at his instance. Nor can the judgment creditor who sells on execution do so. He has the right to ask a sale of the property and have the proceeds applied in satisfaction of his claim, and when that is done his interest in the property ceases. Redemption is a right granted only to those whose rights are adversely affected by the sale, those who stand to lose and not to those who stand to receive or gain from the sale. The statute, Sec. 104-37-30, R.S.U. 1933, reads:
"104-37-30. Who May Redeem.
"Property sold subject to redemption as provided in the next preceding section, or any part sold separately, may be redeemed, in the manner hereinafter provided, by the following persons or their successors in interest:
"(1) The judgment debtor, or his successor in interest in the whole or any part of the property.
"(2) A creditor having a lien by judgment or mortgage on the property sold, or on some share or part thereof, subsequent to that on which the property was sold.
"The persons mentioned in subdivision (2) of this section are in this chapter termed redemptioners."
It is plain that redemption is only in the owner, in judgment creditors, or in the holder of a mortgage subsequent *Page 526 
in date to the judgment or the mortgage under which a sale is had. It exists only in favor of the owner or a junior lienor from a sale brought about by his senior lienor. It does not lie from voluntary sales by the owner nor from forced sales by the holders of junior or inferior liens. It exists to protect the owner or junior lienor from the advantage of position held by the superior or senior lienor. The superior lienor, that is, the one causing the sale, may bid on the property and pay his bid by credit on the judgment under which sale is made. Such right does not exist in a junior lienor. To protect his lien he may therefore redeem, that is, pay off the interest of the superior lienor in the property and thus render his lien the paramount one. The right of redemption is one given by the law and not by contract of the parties. Courts generally hold that a waiver of the right of redemption, inserted in a mortgage, is void and unenforceable.Brine v. Hartford Fire Ins. Co., 96 U.S. 627, 24 L. Ed. 858;Peugh v. Davis, 96 U.S. 332, 24 L. Ed. 775; Dennis v.Kelley, 81 Okla. 155, 197 P. 442; Tracy on Corporate Foreclosures, Sec. 217.
Neither can an owner by his voluntary act create a right of redemption in another. The owner or lienor having such right may sell or assign the same to another but he cannot create such right by any act of his own. And unless he is one in whom the law has created such right he cannot sell or create it. It is a right which the statute gives to the limited class it seeks to favor and protect and which it withholds from all others. It does not, it cannot, exist by virtue of contract; it is not founded on contract, and interference with it or its denial or abrogation is not impairing any contractual rights or privileges. The lawmakers may at any time change, enlarge, diminish, or deny it altogether and no one cay say them "Nay" or be heard to complain.
How then can the receiver's sale deprive plaintiff of a right of redemption from foreclosure sale? If there is no foreclosure sale there can be no right of redemption therefrom. If plaintiff's mortgage, the trust deed, was foreclosed, *Page 527 
she being the mortgagee whose mortgage foreclosure brought on the sale would have no redemption right thereunder. If the second trust deed or mortgage was foreclosed the beneficiaries under the first mortgage, not being affected by the sale, have no redemption rights. Only in the event that the first mortgage was foreclosed and plaintiff stood upon her rights under the second mortgage could she claim any redemption status at all. It may well be doubted that the holder of a first and also a second mortgage by foreclosure of the first mortgage can under his second mortgage still stand as a lienor entitled to redeem from his own sale. But that we need not decide. Plaintiff does not seek a foreclosure of either mortgage. She has never sought such foreclosure. She merely wants a right of redemption from a judicial and not a statutory sale where the statute gives no such right of redemption.
Complaint is next made that the sale as ordered deprives the bondholders of the right to apply the indebtedness to the purchase of the property. Any condition which would allow them to apply the indebtedness on the purchase price would deny them the position of redemptioners because only the creditor who forces the sale, that is, the one under whose judgment the sale is made, can apply his indebtedness on the purchase price. One cannot redeem by crediting an indebtedness on the price. He must pay cash to redeem. The court order expressly permits the bidder, if a bondholder, to pay his bid in bonds subject only to these two requirements: (a) That the obligations having priority over the bonds and not assumed by the purchaser shall be paid in cash. They, being in the nature of costs of the proceedings and sale, must needs be paid in cash even in foreclosure proceedings; (b) Such additional amount must be paid in cash as would pay to other bondholders of the same issue of bonds their proportion of the purchase price if they were not in as one of the purchasers. This is only in accordance with the well established principle of law that if the trustee forecloses he only may bid and take credit for his judgment or determined *Page 528 
indebtedness on the purchase price. Another purchaser could not do so. If foreclosure were instituted, not by the trustee but by one or more bondholders they must bring the action for all bondholders similarly situated and protect the interest of the others, the same as the trustee must do. Chicago D.  V.R. Co.
v. Fosdick, 106 U.S. 47, 1 S. Ct. 10, 27 L. Ed. 47; Morgan's R. S.S. Co. v. Texas Cent. R. Co., 137 U.S. 171, 11 S. Ct. 61,34 L. Ed. 625; Guaranty Trust  S.D. Co. v. Green Cove R. Co.,139 U.S. 137, 11 S. Ct. 512, 35 L. Ed. 116; Farmers' Loan  TrustCo. v. Chicago  A. Ry. Co., C.C., 27 F. 146; Lowenthal v.Georgia Coast  P.R. Co., D.C. 233 F. 1010; Brown v. DenverOmnibus  Cab Co., 8 Cir., 254 F. 560; Omaha Hotel Co. v.Wade, 97 U.S. 13, 24 L. Ed. 917; Toler v. East Tenn. V.G.R.Co., C.C. 67 F. 168; Cochran v. Pittsburg S.  N.R. Co., C.C., 150 F. 682; Wheelwright v. St. Louis N.O.  O.C. Transportation Co., C.C., 56 F. 164; Tracy, "Corporate Foreclosures," Sec. 6, Sec. 25, and Sec. 37; First Nat. FireIns. Co. v. Salisbury, 130 Mass. 303; Hackensack Water Co.
v. De Kay, 36 N.J. Eq. 548; Pennock v. Coe, 23 How. 117,16 L. Ed. 436; Commonwealth v. Susquehanna, etc., R. Co., 122 Pa. 306,15 A. 448, 1 L.R.A. 225; New Orleans Pac. R. Co. v.Parker, 143 U.S. 42, 12 S. Ct. 364, 36 L. Ed. 66; Wabash R. Co.
v. Adelbert College, 208 U.S. 38, 28 S. Ct. 182, 52 L. Ed. 379;Id., 208 U.S. 609, 28 S. Ct. 425, 52 L. Ed. 642. If they would bid on the property the whole purchase price must not be paid with bonds, but only the proportion thereof represented by the bonds held by such purchaser as compared with the total of such bonds outstanding or rather the amount distributable on such bonds after deduction of costs, allowances and prior liens.Ketchum v. Duncan, 96 U.S. 659, 24 L. Ed. 868; AmericanWaterworks Co. v. Farmers' Loan  Trust Co., 8 Cir.,73 F. 956; Toledo St. L.  K.C.R. Co. v. Continental Trust Co., 6 Cir., 95 F. 497; Continental Trust Co. v. Toledo St. L.  K.R.Co., C.C., 86 F. 929; Tracy, "Corporate Foreclosures," Secs. 209 and 210; Grape Creek Coal Co. v. Farmers' Loan  Trust *Page 529 Co., 7 Cir., 63 F. 891. And by either of these rules the indebtedness could, under the order of the court, be properly applied upon the purchase price. Analysis of the statutes and the order of the court therefore leads to conclusions against plaintiff.