Court Opinion

ID: 6740072
Source: CourtListenerOpinion
Date Created: 2022-07-20 23:21:13.279664+00
Date Added: 2024-06-11T16:01:55.944634
License: Public Domain

Grace, J.
(dissenting). This appeal is from a judgment of the district court of McLean county. The material facts are as follows: On September 28th, 1915, one Krupsky owned a quarter section of land in McLean county, North Dakota. On that day he mortgaged it to the First National Bank of Turtle Lake for $1,100. Subsequently the mortgage was foreclosed by advertisement, and the land sold to pay the mortgage debt, interest thereon, and costs of foreclosure sale. The foreclosure sale occurred on the 20th day of June 1921. The sheriff pursuant to law, sold the land for $1,983.87, a sum which paid the mortgage, the interest, and the cost of sale. In other words, the full amount of the indebtedness. At the sale, the land was purchased by the mortgagee, the plaintiff herein.
On September 16th, 1917, Krupsky mortgaged the land to this defendant. Thereafter this mortgage was foreclosed, a sale had, the sheriff’s certificate of foreclosure issued, which ripened into a right of sheriff’s deed on January 4th, 1921. The defendant took possession of the land and raised a crop thereon during the season of 1921. The plaintiff brought this action for rents and profits. It is claimed that the principal question of the case is the constitutionality of chapter 132, Session Laws of 1919, which provides as follows: “An act to amend and re-enact § 7762 of the Compiled Laws of North Dakota for the year 1913, relating to the rent, use, and benefit of property sold under execution or foreclosure sale. Be it enacted by the legislative assembly of the state of North Dakota:
“Sec. 1. That § 7762 of the Compiled Laws of North Dakota for the year 1913 is hereby amended and re-enacted to read as follows:
“Sec. 7762. The debtor under an execution or foreclosure sale of his property shall be entitled to the possession, rents, use and benefit of the property sold from the date of such sale until the expiration of the period of redemption.
“Approved February 18, 1919.”
The plaintiff claims the rents and profits under § 7762, Comp. Laws as it was prior to its amendment, which, so far as necessary to state here provides: “The purchaser from the time of the sale until a redemption and a redemptioner from the time of his redemption until another redemption is entitled to receive from the tenant in possession, the rents of the property sold, or the value of the use and occupation thereof.” *460This section refers to the alleged rights of the purchaser after a foreclosure and during the period of redemption.
Section 6740, Comp. Laws provides: “A mortgage does not entitle the mortgagee to the possession of the property, unless authorized by the express terms of the mortgage.”
Section 8085, Comp. Laws provides: “The property sold may be redeemed within one year from the date of the sale in like manner and to the same effect as provided in chapter 12 of this Code for redemption of real property sold upon execution so far as the same may be applicable by:
“1. The mortgagor 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. Such creditor is termed a redemptioner and has all the rights of a redemptioner under that chapter. And the mortgagor and his successors in interest has all the rights of the judgment debtor and his successor in interest as provided therein.”
Upon sale of the real property a certificate of the officer making the sale must be issued immediately to the purchaser which shall contain a description of the property sold, the whole price paid, and the cost and fees of making the sale. The certificate must be acknowledged and may be recorded.
In this case, we will assume that the defendant is in the same position as if it were the original owner and the mortgagor of the land at the commencement of this action. Under § 6740 it will be seen that the mortgagee is not entitled to possession of the property mortgaged, unless it is expressly so provided in the mortgage. The mortgage here does not so expressly provide. In such circumstances, the meaning to be derived from the language of that section is, that the mortgagor or the owner of the land is entitled to possession of the land. This being true, the mortgagor or owner is also entitled to the use of the land or property during the period of redemption as provided by § 8085. But, it is claimed that the right to the use and profits during the period of redemption is taken away by § 7762, as it existed, prior to its amend.ment. This section will be given particular attention later in the opinion. It cannot be successfully denied that the right of possession of *461tbe land during the period of redemption, coupled with tlie right and use of the profits thereof, during that time, are valuable property rights and are in fact valuable property, none of which the mortgagor or owner of the land parted with by any stipulation or agreement in the mortgage. Neither can it be denied that the law providing for a period of redemption contemplates that the mortgagor or owner shall have the use and profits of the land during that time, for this may perhaps be the very means of preventing the loss of his property by foreclosure.
The first question, which we will here examine, is not a constitutional one. Whatever we have to say with respect to any constitutional question will receive attention later. The question which we desire first to examine is that of payment. The. relation established between plaintiff and the mortgagor or owner of the land by the mortgage was that of debtor and creditor. When the mortgage was foreclosed and a sale of the land effected by reason of that foreclosure, that relation ceased at the completion of the sale and thereafter the relation was that of purchaser and owner. At the plaintiff’s foreclosure sale of this land, the land was sold for an amount sufficient to pay in full the mortgage, all of the interest thereon and all costs of foreclosure. lienee, the mortgage debt was fully paid. It makes no difference that the mortgagee was the purchaser; he stands in exactly the same position as if a stranger had been the purchaser, instead of the mortgagee. By the sale of the land in the above manner and for the above amount, the land was discharged from the lien of the mortgage and the purchaser received a sheriff’s certificate, which at the expiration of the period of redemption, and if no redemption were made, entitled it to a sheriff’s deed, conveying to it a fee title thereof. It received the deed January 4th, 1921.
The court held in Geo. B. Clifford & Co. v. Henry, 40 N. D. 604, 169 N. W. 508, that the lien of the mortgage still continued after the foreclosure sale. This holding is clearly erroneous, as will be shown by the language of the Supreme Court of the United States in the case of Hooker v. Burr, 194 U. S. 415, 48 L. ed. 1046, 24 Sup. Ct. Rep. 106, where it was said: “It is seen that the amount due on the mortgage in question at the time of the sale upon foreclosure was $6,182.49, and that the property sold for $9,500. That amount was paid by the purchaser to the sheriff, and it resulted in the payment of the mortgage debt, principal and interest, and the release of the land from the lien of the mort*462gage. Subsequently to that payment the mortgagee had no interest in further proceedings.”
We think it is clear that where the mortgage debt, the interest thereon, and the costs of foreclosure sale have been paid to the mortgagee that he has no further claim upon the mortgaged property; or if he is the purchaser, and bids the full amount of the debt, interest and costs, that he has no other right than to receive the fee title to the property mortgaged and described in the mortgage, if a redemption, as provided by law, is not made within the time specified by law. We think what has been said is sufficient to dispose of plaintiff’s claim to the rents, profits, or crops grown on the land during the period of redemption adversely to him. It is not really necessary to consider here any constitutional question, but, as the constitutional question here presented is one that both sides desire should have some consideration, we have no hesitancy in discussing it to some extent.
It is claimed that chapter 132, supra, if held to be constitutional, impairs plaintiff’s contract, the mortgage, and that it purports to take away from him a right claimed by him under § 1762, that is, the right to the rents and profits, including in a case like this, the crops of grain grown on the land during the period of redemption. If it were true, and we do not think it is (which we will later show), that plaintiff had the right under § 7762 to the rents, profits, and crops of this land during the period of redemption and if chapter 132 impaired the obligation of his contract with reference to those rights, he is not injured thereby,' since by the foreclosure sale under his mortgage, he has realized the full amount of his debt, principal, interests and costs, by receiving a sheriff’s certificate of the land described in the mortgage, through which at the expiration of the time of redemption, if no redemption is made, ho receives the-title of the property. And as we have before stated, it makes no difference whether a stranger purchased the property at the foreclosure sale for the full amount of principal, interest and costs, or whether the mortgagee does the same thing. Their rights as purchasers by reason of such purchase are similar. Hooker v. Burr, supra.
■ There is another reason why plaintiff is not entitled to the rents, profits, and the crops. It is this. We think that, that part of § 7762, above set forth, is unconstitutional.
1. Because the legislature was without power to enact it.
*4632. Because it is contrary to tbe 14th Amendment of the Constitution of the United States, in that it takes property from the mortgagor or the owner without due process of law.
3. That it denies the mortgagor or owner of the property, equal protection of the law, the law itself being only a penalty to compel the payment of the debt.
In the case of Davis v. Wallace, 257 U. S. 478, 66 L. ed. 325, 42 Sup. Ct. Rep. 164, decided at the October 1921 term of the Supreme Court of the United States the court said: “The case made by the bill involved a real and substantial question under the Constitution of the United States and the amount in controversy exceeded three thousand dollars, exclusive of interest and costs, so the case plainly was cognizable in the district court. In such case the jurisdiction of that court, and of ours in reviewing its action, extends to every question involved, whether of Federal or of state law, and enables the court to rest its judgment or decree on the decision of such of the questions as in its opinion effectively dispose of the case.”
So in the case now before this court, where the constitutionality of chapter 132 is challenged, any question or any principle of law which will tend to show either that the statute (chapter 132) is or is not constitutional, is pertinent. In this view, we are justified in examining the constitutionality of that part of § 1762, above mentioned. Wc have before stated, and it is true, that the right of possession and of the rents, profits, and crops raised upon the land during the period of redemption, are valuable property rights which belong to the mortgagor or owner. Section 7762 without any consent of the mortgagor or owner and without any authority under the Constitution or otherwise, and contrary to our Constitution and the Federal Constitution, by this enacted law, attempts to take the private property of one individual citizen and hand it over to another.
In 6 E. C. L., page 310, in § 297, it is stated: “The state cannot, by a mere act of the legislature take property from one man and vest it in another directly.”’ It is further stated that “a statute would be unconstitutional which in effect, either by legislative fiat or by direct or indirect operation should take the property of one man and give it to another.” Citing cases in the notes. The section further states: * ‘There is probably no instance in the history of the American common*464wealths of an attempt by a legislature to deprive any citizen of bis property for the avowed purpose of giving it to another; but many statutes have been attacked on the ground that they operate to produce that unjust and unlawful result, and some of these attacks have been sus-cessful.” Yet, that is just what has in effect been attempted by § 7762, the mortgagor or owner is deprived of the rents, profits, and crops of the land during the period of redemption, though they are not mentioned in nor included in the contract, the mortgage.
The Geo. B. Clifford & Co. v. Henry Case, supra, illustrates what may occur under this section. Henry purchased a section of land for $22,400. He paid $5,000 cash. The balance of the purchase price was divided into sixteen annual payments of $1,000 each and one of $1,400, with interest at 6 per cent secured by a mortgage on the land. Default was made in some of the payments and the whole sum secured by the mortgage declared due; the mortgage foreclosed and the land sold at a foreclosure sale for $19,297.82, the total of principal, interest, and costs of foreclosure. But the mortgagee was not satisfied with the payment of his debt. It wished also to recover the value of the occupation during the year of redemption, which included the value of the ci’ops on the premises. It brought suit for $5,000, and recovered $960. If the crops had been worth $5,000, on .the theory of that case, the plaintiff there would have recovered that amount and in such case the law would have taken $5,000, of defendant’s money and given to plaintiff without any other authority than that of § 7762, there being no agreement in that mortgage that the mortgagee was entitled to the rents, profits, or crops. We think a law that prescribes this may be done, is unconstitutional, and hence, § 7762 which takes the private property of one person and gives it to another, we think, is unconstitutional, either under the Federal or state Constitution. If § 7762 is unconstitutional the plaintiff may not be heard to assert any rights under it. If it is unconstitutional, and we believe it is, no question can arise concerning the unconstitutionality of chapter 132, as it accords to the mortgagor or owner, only such rights as are his under the right of redemption, that is, the rights of possession and the use and ownership of profits of the property mortgaged or crops raised thereon during that time.
*465Considering the second and third reasons of the unconstitutionality of this section, we think it is clear that § VV62 takes the mortgagor’s or owner’s property without due process of law and denies him the equal protection of the law. 6 R. C. L. page 442, § 438 says: “As has already been seen the principle of due process of law has its origin in England, as a protection to individuals from arbitrary action on the part of the Crown. It has been said that in this country the requirement is intended to have a similar effect against legislative powers, that is, to secure the citizen against any arbitrary deprivation of his rights, whether relating to his life, his liberty, or his property. It is a limitation upon arbitrary power, and is a guaranty against arbitrary legislation. The primary purpose of the guaranty was the security of the individual from the arbitrary exercise of the powers of government, unrestrained by the established principles of private rights and distributive justice.” See also notes to the section. Section YV62 is an arbitrary taking of the mortgagor’s or owner’s property and is without any due process of law. Furthermore, that section is simply a penalty upon the mortgagor or owner to compel payment of the debt and for that reason is not due process of law. Gulf, C. & S. F. R. Co. v. Ellis, 165 U. S. 150, 41 L. ed. 666, 17 Sup. Ct. Rep. 255; Chicago & N. W. R. Co. v. Nye Schneider Fowler Co. 260 U. S. 35, 67 L. ed. 115, 43 Sup. Ct. Rep. 55, decided at the October 1922 term of the United States Court.
.But, if § VV62 were not unconstitutional — though it seems clear that it is for the reasons above given — still we think plaintiff could not invoke the contract impairment clause of the Federal Constitution, and this for the reason that the origin of the right that he claims, is wholly statutory. It is claimed, asserted, and based wholly on § VV62, and hence cannof be based upon the contract, the mortgage. In such case, the United States Supreme Court in the case of Crane v. Hahlo, 258 U. S. 142, 66 L. ed. 514, 42 Sup. Ct. Rep. 214, held that there is nothing for the contract impairment clause of the Constitution to operate upon.