Court Opinion

ID: 3541624
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:53:06.256039+00
Date Added: 2024-06-11T14:21:37.842161
License: Public Domain

In view of section 9449, Revised Codes 1921, could the mortgagors enter into a contract in the mortgage giving to the mortgagee the right to immediate possession of the mortgaged land on default in payment of the mortgage debt, or the interest thereon, or the taxes? This, as we contend, must be answered in the affirmative, for section 8252, Id., enacted at the same time with section 9449 expressly authorizes it. It provides: "A mortgage does not entitle the mortgagee to the possession of the property, unless authorized by the express terms of the mortgage." Without that section, we concede there would be no authority to insert in the mortgage an agreement authorizing the mortgagee to take possession on default; but with it we contend that the mortgagors had the right to stipulate in their mortgage contract giving to plaintiff, the mortgagee, the right to possession of the mortgaged premises on default.
This court has said that a right to the possession of the mortgaged premises on default under a mortgage contract amounts to the giving of additional security and is unobjectionable. (Union Central Life Ins. Co. v. Jensen, 74 Mont. 70, 80,237 P. 518; Morton v. Union Central Life Ins. Co., 80 Mont. 593,608, 261 P. 278; see, also, Wells-Dickey Co. *Page 108 
v. Embody, 82 Mont. 150, 164, 266 P. 869; Sharp Bros.,Inc., v. Bartlett, 76 Mont. 415, 418, 248 P. 199; Long v.W.P. Devereaux Co., 87 Mont. 198, 286 P. 402.)
Section 9449 has been given its place in the Codes under the subject of "The Execution." It is, as we contend, an exemption statute, following closely the other exemptions specified, including the homestead (sec. 9430). An exempt homestead may be conveyed or encumbered (sec. 6950), or abandoned (sec. 6951). The right to claim property as exempt is a personal privilege and may be waived. (Tetrault v. Ingraham, 54 Mont. 524,171 P. 1148.) "That one may waive the advantage of a law intended solely for his benefit is established by the statute. * * * This may be done by implication as well as by agreement." (Anaconda C. Min.Co. v. Ravalli County, 56 Mont. 530, 186 P. 332; Cheney v.Caldwell, 20 Mont. 77, 49 P. 397.) Treating section 9449 as providing an exemption to an execution debtor on foreclosure of mortgage under certain conditions, there is nothing in the Codes prohibiting the waiver of such exemption or such right.
It cannot be said that the agreement in the mortgage for the immediate possession of the mortgaged property on default contravenes the public policy of this state. Being expressly authorized by the law-making power (sec. 8252), such agreement was within the public policy of this state. "When the legislature, exercising its constitutional powers, has spoken upon a particular subject, its utterance is the public policy of this state on that subject." (Parchen v. Chessman, 49 Mont. 326,334, 142 P. 631, 146 P. 469, Ann. Cas. 1916A, 681;Cruse v. Fischl, 55 Mont. 258, 175 P. 878; Spaulding v.Maillot, 57 Mont. 318, 188 P. 377.)
Appellant, in his brief, covers only the question and interpretation and enforcement of a mortgage contract as such, but does not touch the real question at issue, which is this: The application of section 9449, Revised Codes 1921, after *Page 109 
the mortgage has been foreclosed and the property sold under the foreclosure decree. This section applies only after the mortgage is eliminated as a contract and does not pretend to, in any way, interfere with the right of contract between the mortgagor and mortgagee, but applies only to the remedy and procedure thereafter.
Appellant cites numerous cases upon two propositions of law, the one being cases that interpret the rights of the parties to a mortgage contract as such, prior to foreclosure and sale. It would serve no purpose in this action whatsoever in discussing these cases, as they are not in point. The second proposition covered consists of cases involving the right of parties to waive their exemptions and privileges granted them by statutes. Section 9449 is a remedial statute, and does not come under the class of an exemption statute that can be waived.
Appellant relies upon the case of Union Central Life Ins.Co. v. Jensen, 74 Mont. 70, 237 P. 518. There the sole question was the interpretation of the contract, to-wit, the mortgage before the foreclosure, and the court was very particular in calling the attention to this fact with the following statement of the law on the subject: "And upon a judicial sale of mortgaged property the purchaser is not entitled to possession by reason of the mortgage contract, for the mortgage is at an end and is merged in the judgment, and the purchaser's right of possession of the mortgaged premises is pursuant to purchase made thereof at a decretal sale," citing cases, among them Connecticut Mutual Life Ins. Co. v.Cushman, 108 U.S. 51, 2 Sup. Ct. Rep. 236, 27 L. Ed. 648, in which it was said: "The rights of the purchaser at a decretal sale, if one was had, were not of the essence of the mortgage contract, but depended wholly upon the law in force when the sale occurred. Thenceforward its interest in the property was as a purchaser, not as a mortgagee." And this court in the case ofState ex rel. Thomas Cruse Sav. Bank v. Gilliam, Sheriff,18 Mont. 94, 44 P. 394, quotes and approves the last above statement. (See, also, 41 C.J. 892; *Page 110 
19 R.C.L. 548, 653.) It is therefore clear that the rights of the parties to a mortgage, mortgagor and mortgagee are absolutely eliminated, ended and determined after the foreclosure decree and sale, and the new rights in the event that the mortgagee purchases the property, or any other purchaser, and determined and fixed by the legislature, through the statutory provisions enacted for that purpose.
Of course, the mortgagor, after decree and sale under foreclosure, has a right for sufficient consideration to sell, waive or otherwise contract away his remedial rights granted by the statutes of the state. But this court has continually held that this cannot be done through and by the original obligation or mortgage. (Doggett v. Johnson, 82 Mont. 338,267 P. 292.)
While this court has not directly passed on section 9449, yet it has, in cases where the mortgage contract was under construction and application, referred to it with approval, in the following cases: Citizens' Nat. Bank v. Western L.  B.Co., 64 Mont. 40, 208 P. 893; Dyer v. Schmidt, 67 Mont. 6,213 P. 1117; State ex rel. Flowerree v. District Court,71 Mont. 89, 227 P. 579; Union Central Life Ins. Co. v.Jensen, supra; State ex rel. Kester v. District Court,74 Mont. 100, 238 P. 875.
Even considering that it were possible to contract away the rights under and by virtue of section 9449 in the original mortgage, as claimed by the plaintiff, and that the entering of a decree and sale would not end the mortgage contract, the respondents still claim that the contract would be against public policy and null and void.
The purpose of that section is to make more effective the right of redemption, and since all sections of the Code are of equal force and effect, this section becomes a part and portion of the statutes granting a right of redemption of property. The legislature has granted the original debtor, who is residing on the property and making his home there, the right to remain there during that period so as to give him a much better opportunity to redeem. (See Hamilton v. *Page 111 Hamilton, 51 Mont. 509, 154 P. 717.) While it is not necessary for the legislature to specifically state that a certain section of a certain statute is a matter of public policy, yet in this particular instance we do have such a statute. Section 8230, Revised Codes 1921, reads: "All contracts for the forfeiture of property subject to a lien in satisfaction of the obligation secured thereby, and all contracts in restraint of the right of redemption from a lien, are void."
This is an appeal by plaintiff from a judgment in an action to foreclose a real estate mortgage made by defendants to plaintiff.
The mortgage contained the following stipulation: "In case of default in payment of any interest payment or of said principal sum, or in the payment of any taxes on said described real property, or any taxes becoming a lien on said real property, then the said party of the second part or holder of this mortgage has the right to take immediate possession of said mortgaged property and the crops grown or growing thereon, whether the same be severed or not in the year in which default shall be made as aforesaid, and shall have the right to sell and dispose of the same and apply the proceeds of such sale first to the payment of interest and taxes and then to the payment of said principal sum remaining unpaid. This right shall not be considered as waived by any delay in taking possession of said mortgaged property and crops as aforesaid, and this stipulation agreement shall be continuous relating thereto."
The complaint, which was filed October 14, 1931, alleged a default in the payment of interest since November 12, 1929, and failure to pay the principal at due date. It sought the usual decree of foreclosure and the possession of the property. The only defense asserted to the action was that defendants are occupying the property as a home for themselves and their family, and that, therefore, they are entitled to remain *Page 112 
in possession of the property during the period of redemption in accordance with section 9449, Revised Codes 1921.
A general demurrer to the answer was overruled, and plaintiff in his reply admitted that defendants occupy the property as a home for themselves and family, but denied their right to retain possession. Plaintiff at the trial, which occurred in February, 1932, submitted proof entitling him to a decree, and showed that he demanded possession of the property by serving upon defendants a written notice to vacate on October 15, 1931, but that they still retain possession of the property. Defendants offered no evidence. Decree was entered for plaintiff on February 5, 1932. The decree specifically provided that defendants, the mortgagors, be entitled to remain in the possession of the property during the period of redemption, "regardless of the agreement of said defendants in said mortgage that the plaintiff, as mortgagee, has the right to take immediate possession of said mortgaged property on default in payment of interest or the said principal sum secured by said mortgage." This portion of the decree was excepted to by the plaintiff. Plaintiff also requested a finding, as conclusion of law, that the purchaser at the foreclosure sale be entitled to possession immediately after the sale. This was refused and an exception noted.
The appeal presents the single question whether, in view of[1]  section 9449, Revised Codes 1921, the mortgagors are entitled to the possession of the property during the period of redemption, in the face of the stipulation contained in the mortgage which we have quoted above.
Prior to the enactment of section 9449, the purchaser at a foreclosure sale was entitled to the possession of the property during the period of redemption. (Citizens' National Bank v.Western L.  B. Co., 64 Mont. 40, 208 P. 893; Dyer v.Schmidt, 67 Mont. 6, 213 P. 1117.)
Section 9449 provides: "The purchaser of lands at mortgage foreclosure or execution sales is not entitled to the possession thereof as against the execution debtor during the period of redemption allowed by law while said execution *Page 113 
debtor personally occupies the land as a home for himself and his family."
At the time section 9449 was enacted, there was, and still is, in force section 8252, Revised Codes 1921, which provides: "A mortgage does not entitle the mortgagee to the possession of the property, unless authorized by the express terms of the mortgage; but after the execution of the mortgage, the mortgagor may agree to such change of possession without a new consideration." This constitutes an express authorization for incorporating a stipulation in the mortgage for possession by the mortgagee in case of default, such as the one in the mortgage before us. (And see Union Central Life Ins. Co. v. Jensen, 74 Mont. 70,237 P. 518, 520; Morton v. Union Central Life Ins. Co.,80 Mont. 593, 261 P. 278; Wells-Dickey Co. v. Embody, 82 Mont. 150,266 P. 869.) And if the agreement sufficiently identifies[2]  the property right sought to be relinquished, public policy will not prevent its enforcement even though that right comprises that which is otherwise preserved to the mortgagor under section 9449. (United States Bldg.  Loan Assn. v.Stevens, ante, p. 11, 17 P.2d 62.)
Plaintiff here, under the terms of the mortgage, was entitled[3]  to the possession of the property as against the mortgagors, upon default by the mortgagors without reference to the foreclosure proceeding, and he had the right to obtain possession after foreclosure proceedings were commenced. (Wells-Dickey Co. v. Embody, supra.) He demanded possession on October 15, 1931, long before the decree of foreclosure was entered. After default by the mortgagor and prior to a demand for possession by the mortgagee in a case such as this the mortgagor is a tenant by sufferance only. (41 C.J. 618; 35 C.J. 1137.) After demand was made by the plaintiff upon defendants for the possession of the property, defendants were no longer rightfully in possession thereof. Section 9449 affords protection to those mortgagors only who at the time of the decree of foreclosure are rightfully in possession of the mortgaged property. *Page 114 
It is true, as defendants contend, that "upon a judicial sale[4, 5]  of mortgaged property the purchaser is not entitled to possession by reason of the mortgage contract, for the mortgage is at an end and is merged in the judgment, and the purchaser's right of possession of the mortgaged premises is pursuant to purchase made thereof at a decretal sale." (Union Central LifeIns. Co. v. Jensen, supra.) And "the rights which the purchaser at the decretal sale, if one was had, were not of the essence of the mortgage contract, but depended wholly upon the law in force when the sale occurred. * * * Thenceforward its interest in the property was as purchaser, not as mortgagee." (Connecticut Mutual Life Ins. Co. v. Cushman, 108 U.S. 51,2 Sup. Ct. Rep. 236, 244, 27 L. Ed. 648.)
At most, these cases hold that where the purchaser asserts rights by virtue of a foreclosure sale, the extent of his rights must be measured by the decree without reference to the terms of the mortgage. In apparent recognition of this fact, the mortgagee took every precaution to see to it that the decree afforded all the relief which could be afforded under the terms of the mortgage. Not having secured all the rights which he believed the mortgage afforded, he took this appeal from the decree. There has, as yet, not been a decretal sale.
It would be a monstrous doctrine to hold that the terms of the mortgage cannot be resorted to in order to ascertain what should properly be included in the decree of foreclosure. And where, as here, the mortgagors by the stipulation in the mortgage had agreed that the mortgagee is entitled to immediate possession upon default by the mortgagors, and had stipulated that the agreement shall be continuous and not waived by delay in taking possession they cannot, when in default and after demand had been made, before the foreclosure decree was entered, that they yield possession, thereafter assert that they are entitled to possession during the period of redemption. *Page 115 
To the extent that the decree provides for possession by the mortgagors and their family during the period of redemption, rather than by the purchaser at the foreclosure sale, it was and is erroneous and should, to that extent, be modified. It is so ordered.
MR. CHIEF JUSTICE CALLAWAY, MR. JUSTICE MATTHEWS, HONORABLE FRANK P. LEIPER, District Judge, sitting in place of MR. JUSTICE GALEN, disqualified, and HONORABLE R.M. HATTERSLEY, District Judge, sitting in place of MR. JUSTICE FORD, disqualified, concur.