Court Opinion

ID: 6906940
Source: CourtListenerOpinion
Date Created: 2022-07-23 22:02:00.62119+00
Date Added: 2024-06-11T16:06:23.228534
License: Public Domain

HARRIS, J.
Although the note of April 20, 1915, represented a joint and several indebtedness from the four makers to the payee, yet as between the makers themselves, the bank says, the sum of $6,211.50, or 27.34 per cent of the face of the note, was the debt of the Matsons, while the sum of $16,500, or 72.66 per cent of the face of the note was the debt of the Lockharts. If as between the makers of the note the Matsons owed 27.34 per cent and the Lockharts owed 72.66 per cent of the aggregate indebtedness on the note, then the Matsons owed $8,188.23 and the Lockharts $21,761.41 of the judgment for $29,949.64 secured by the Chandler Investment Company against them. The bank argues that as between the makers of the note parcels 10 to 16, inclusive, or the Matson lands, were chargeable with $8,188.23, while parcels 1 and 3 to 9, inclusive, the lands formerly owned by the Lockharts but now owned by the bank, are chargeable with $21,761.41. At the sale the Matson lands, parcels 10 to 16, inclusive, brought the aggregate sum of $6,090.50, or $2,097.73 less than the Matsons’ share of the indebtedness, while *401the Lockhart parcels were sold for $23,859.14, or $2,097.73 more than the Lockharts’ share of the indebtedness. The bank contends that the statement made by L. A. Liljeqvist at the sale chilled competition, with the result that the Lockhart lands were compelled to carry a portion of the burden which should have been carried by the Matson lands.. In substance, the argument of the bank is that as between the makers of the note the Matson lands were charged with the obligations of a principal as to the Matsons’ share of the indebtedness and with the duties of a surety as to the Lockharts’ share of the indebtedness. Although each of the four makers of the note was primarily liable to the payee for the whole debt, and none of the makers occupied the position of a surety as between them and the payee, still it may be assumed for the purposes of the discussion that, as between the makers themselves, the Matsons owed only 27.34 per cent of the total indebtedness.
1, 2. As a general rule, false representations made by a purchaser or by a judgment creditor to prevent competition will render a sale void: Bethel v. Sharp, 25 Ill. 173 (76 Am. Dec. 790). If the representation is untrue, it is usually immaterial whether the person making the representation did or did not know of its falsity (Reed v. Diven, 7 Ind. 189), although illustrations are not lacking of instances where the sale will not be set aside unless it is shown that the representation deterred some person or persons from bidding: Conley v. Redwine, 109 Ga. 640 (35 S. E. 92, 77 Am. St. Rep. 398). However, if a party has an interest in or a valid claim against property to be sold under execution, he may announce such interest or claim without invalidating the sale: 17 Cyc. 1257; Nodine v. Rich*402mond, 48 Or. 527, 546 (87 Pac. 775); Leake v. Anderson, 43 S. C. 448 (21 S. E. 438). See note in 20 L. R. A. 545.
The bank stipulated that it became the owner of the Lockhart parcels after the execution of the note, deeds, and trust agreement dated April 20, 1915. It is not contended by the bank that it purchased without knowledge of the first mortgage, nor does the bank claim that it acquired the interest of the Lockharts without notice of the second mortgage. Whatever interest the Lock-harts conveyed to the bank was acquired by the latter subject to both mortgages. Prior to the sale under execution T. T. Bennett, who represented the bank, was made aware of the fact that the Chandler Investment Company claimed that its second mortgage on the Mat-son parcels was still a lien, although it was junior to the mortgage of April 20, 1915; and, indeed, he expected that L. A. Liljeqvist would make public announcement of that fact at the time and place fixed for the sale under execution, for the record shows that, at the request of Mr. Bennett, Fred Hollister attended this sale for the sole purpose of listening “very attentively to the statements made by Mr. Liljeqvist” and thus be enabled to “testify in the future to what he said.” According to the testimony of Fred Hollister there were “probably half a dozen” persons present at the sale. The officer who conducted the sale says that he remembers the names of all the persons “who came and went and stopped and listened to the proceedings that took place” during the sale; and according to his testimony there were present during the sale the officer, a stenographer employed in the sheriff’s office, T. T. Bennett, L. A. Liljeqvist, “Henry Wells and Mr. Chandler.” Besides Fred Hollister, who was present only a part of the time, Mr. Brand “stayed a *403while, but not all of the way through.” Laying aside for the moment the statement made by Mr. Liljeqvist, there is no evidence tending to show that any person was deterred from bidding, unless it can be said that Mr. Bennett was such a one. Mr. Bennett testified thus:
“While the Flanagan & Bennett Bank does not believe that Mr. Liljeqvist’s claim of $3,500 is a legitimate one, we do believe that we would have a fight or a lawsuit on our hands if we bought in the Matson property, and to that extent it deterred us from bidding at that sale; deterred me from bidding in the Mat-son property. * * My object at that sale at that time was to force Mr. Chandler to bid as much as possible for the Matson property; I did not want the property, but I wanted them to bid as high as I could induce them to bid, and I bid against them on every piece of property of Mr. Matsons that was sold, and I took into consideration, and I thought and believed that if I purchased the Matson property I would have to fight Mr. Chandler and Mr. Liljeqvist in another lawsuit in order to set aside this illegal claim of Mr. Chandler’s claim of $3,500 and interest, which they claim is ahead of the sale and which I claim was not. * * I did bid, I am very sure, on every piece of property of Mr. Matsons that was offered; I bid something.”
In brief, the purpose of the witness was, not to acquire any of the Matson property, but to induce the Chandler Investment Company to bid as high as it could be induced to bid. Mr. Bennett, who represented the Bennett Trust Company as well as the bank, bid on every piece of Matson property; and it may be noted in passing that some of his inducing bids were higher than the Chandler Investment Company was apparently willing to offer, for portions of the Matson lands were struck off to the Bennett Trust Company, including parts of parcel 10, a part of parcel 13, parts *404of parcel 14, and the whole of parcel 15. Indeed, the only lands purchased by the Bennett Trust Company were the Matson lands; this company did not buy any of the Lockhart property. H. A. Wells purchased the whole of parcel 7, a portion of parcel 3, and a part of parcel 13. The remainder of the mortgaged property was struck off to the Chandler Investment Company. It is not alleged that any part of any parcel sold for an inadequate price. True it is that the appellant suggests in its brief that the total price realized at the sale was considerably less than the sum of the release prices fixed on the several parcels in the agreement of trust; but it is also true that the plaintiff suggests that the difference merely represents the difference between the boom times of 1915 in that section and the normal conditions now prevailing there. At any rate it is not alleged by the bank in its objections to confirmation that any portion of the Matson lands was sold for an inadequate price. J. Albert Matson testified not only that he “did not make any objections to the sale” but also that he had no objection to the sale. 'When rendering his decision the trial judge said:
“There is no evidence in this case whatever, that any statement made by Mr. Liljeqvist, or any parties representing the Chandler Investment Company chilled the sale, or deterred any person whatever from bidding upon the property,” and “so far as the records show the sale was regularly conducted and fairly made.”
3. The plaintiff vigorously insists that it could not in a single proceeding foreclose both the first and the second mortgage, for the reason that the first note was the debt of four persons while the other was the debt of only two of them, and because the debt of the four persons was secured by all the land while the other debt was secured by only a part of the lands. It is not neces*405sary to decide whether both mortgages could have been foreclosed by the rendition of two money decrees in one suit, although it may with propriety be said that even though it be assumed that both mortgages could have been foreclosed in a single proceeding, nevertheless they could not have been consolidated into a single'money decree: Peck v. Hapgood, 10 Met. (Mass). 172. In this connection see: 2 Jones on Mortgages (7 ed.), § 1234; 3 Jones on Mortgages (7 ed.), § 1458. We need not now decide whether both mortgages could have been foreclosed in one suit, for the reason that even though it could have been done, a mere voluntary failure to do it did not of itself operate as a cancellation of the debt and security. True it is that the second note and mortgage constitute a lien which is junior and subordinate to, and not senior and superior to, the first note and mortgage, and yet it was. not entirely inaccurate to say that the purchaser of the Matson parcels took “subject to the mortgage for $3,500,” for every purchaser of Matson lands did in truth take subject to whatever right may arise out of the junior mortgage. While the word ‘ ‘ subj eet ’ ’ might convey different meanings to different persons, still it is the identical word which this court used in an analogous situation: Sellwood v. Gray, 11 Or. 534, 540 (5 Pac. 196).
4. Notwithstanding the language of Section 423, L. O. L., this court has consistently ruled, beginning with Sellwood v. Gray, 11 Or. 539 (5 Pac. 196), and ending with Higgs v. McDuffie, 81 Or. 256 (157 Pac. 794, 158 Pac. 953), that the failure to make a junior encumbrancer a party to the foreclosure of a senior encumbrance does not invalidate the decree, although the foreclosure of the first lien does not bar the equity of redemption available to the junior encumbrancer: *406Osburn v. Logus, 28 Or. 302, 310 (37 Pac. 456, 38 Pac. 190, 42 Pac. 997); Gaines v. Childers, 38 Or. 200, 203 (63 Pac. 487). In other words, the purchaser of lands sold under a decree foreclosing a first mortgage can, where the holder of a second mortgage was not made a party to the suit in foreclosure, maintain a suit to compel the holder of the second mortgage to redeem, or be foreclosed; but this right to compel a redemption or be foreclosed proceeds on the theory that the second mortgage is still in existence and unpaid. The second note and mortgage given by the Matsons are still uncanceled and unpaid. The Chandler Investment Company, through its attorney, stated the truth when it made the announcement about the second mortgage.
The order confirming the sale is affirmed.
Affirmed.
McBride, C. J., and Benson and Burnett, JJ., concur.