Court Opinion

ID: 9544618
Source: CourtListenerOpinion
Date Created: 2023-08-07 16:57:58.246407+00
Date Added: 2024-06-11T15:13:19.047205
License: Public Domain

Hill, J.
(dissenting)—I dissent. My only quarrel with the majority’s academically sound opinion is that it ignores the practicalities of our time and the importance of a title search in all real-estate transactions.
We live in a time when both a seller and a purchaser may be frequently conveying, mortgaging, or pledging their respective contract interests.
The majority points out that had the mortgagees of the contract interest, Lee James Finance Company, Inc., and Lee James Finance Plan, Inc., notified R. H. Kendrick of the mortgage they would have been entitled to notice of the forfeiture. The plaintiff is not R. H. Kendrick, but Phillip N. Kendrick, as executor of the estate of R. H. Kendrick, (it might have been John Doe or Richard Roe, as assignee or grantee of R. H. Kendrick) who may not have been ad*467vised of the notice given to R. H. Kendrick. We live in a time when both the seller’s interest and the purchaser’s interest are subject to frequent transfer and frequent use in credit transactions. It would be much better for all concerned “to give constructive notice to all the world” than to rely on actual notice to one or two.
The traditional prudent and cautious man would not proceed in such a situation without a title search, and it seems to me that we better serve the public interest by holding that the one who neglects to do so will not be permitted to acquire a more advantageous position than one who uses the sources of information open to all.
I would, therefore, recognize the interests of the mortgagees, Lee James Finance Company, Inc., and the Lee James Finance Plan, Inc.
The plaintiff-seller does not dispute the proposition that the corporate defendants are mortgagees of the contract purchasers, but urges that he was entitled to rely on strict contract foreclosure procedure, and that he was only obligated to give notice of intent to forfeit to the purchasers since he had no knowledge, actual or constructive, of the rights of those who had loaned money to the purchasers on the security of their contract interest. It is argued that the rights of the purchasers being forfeited, their assignees or mortgagees have no rights which the plaintiff-seller must recognize.
We cannot agree with this contention. It is logical but it is not equitable, nor is it consistent with usual practice. The aid of the court has been invoked to forfeit the contract and to quiet title against the purchasers. Into the action came Lee James Finance Company, Inc., and Lee James Finance Plan, Inc. (claiming to have loaned $4,951 on the security of the purchasers’ interest in that contract). If, without injury to the rights of the plaintiff-seller under the contract, it is possible to protect the rights of the corporate defendants who have loaned money to the purchasers on the security of that contract, it would seem the proper and just thing to do. In this case the interest of the plaintiff-seller in *468the executory real-estate contract was completely protected by the tender of $16,113 into court.3
Plaintiff-seller is like the appellant in Dill v. Zielke, 26 Wn.2d 246, 253, 173 P.2d 977 (1946), of whom we said, “appellant has not lost one cent upon her contract but is in a position to receive every dollar to which she is entitled under her agreement/’ In that case, we also said that a forfeiture would not be enforced if it “would do violence to the principle of substantial justice between the parties” (p. 252). In rather early times, we declared that we would “seize upon any circumstance, however slight, to prevent the enforcement of a forfeiture” where equities existed that merited protection. Smith v. Northern Pac. R., 22 Wash. 500, 509, 61 Pac. 255 (1900).
The following are a few of the many cases in which we have refused to permit an unconditional forfeiture: State ex rel. Foley v. Superior Court, 57 Wn. 2d 571, 358 P.2d 550 (1961); Radach v. Prior, 48 Wn.2d 901, 904, 297 P.2d 605 (1956); Moeller v. Good Hope Farms, Inc., 35 Wn.2d 777, 783, 215 P.2d 425 (1950); Dill v. Zielke, supra, and cases cited therein.
Such a procedure is not a denial of the right to forfeit a contract, but is a condition imposed upon that right when the equities of a particular case warrant it. Moeller v. Good Hope Farms, Inc., supra, and cases cited therein.
If the plaintiff-seller had had actual notice of the interests of the mortgagees of the purchasers, there is no question thát he would be required to recognize their interests and give them notice of any intent to forfeit the contract. Scott v. Farnam, 55 Wash. 336, 104 Pac. 639 (1909); Smith v. Northern Pac. R., supra.
The successors in interest of the sellers should be charged with constructive notice which all the rest of the world possesses concerning the mortgage of the purchasers’ interest in the contract.
The two corporate defendants had equities as mortgagees of the purchasers’ interest which the trial court could properly consider. Instead, the trial court treated .them as as*469signees of the purchasers’ interest, and to that extent it erred. The situation makes it necessary to discuss the distinction between the two. Certainly it is not a distinction without a difference; their procedural rights and their property interests are quite different. The purchaser is entitled to possession of the property and to acquire title on performance of the contract. Griffith v. Whittier, 37 Wn.2d 351, 223 P.2d 1062 (1950); Eckley v. Bonded Adjustment Co., 30 Wn.2d 96, 190 P.2d 718, 1 A.L.R.2d 717 (1948); Turpen v. Johnson, 26 Wn.2d 716, 175 P.2d 495 (1946); Lawson v. Helmich, 20 Wn.2d 167, 146 P.2d 537, 151 A.L.R. 930 (1944). An assignee is entitled to succeed to those rights.
The mortgagee is a creditor who is entitled to the return of his money. If he is not paid, he can' foreclose his mortgage.4 The cases hold that he has also the right to make or tender the payments to the seller necessary to protect his security, i.e., to keep the.contract in effect. Scott v. Farnam, supra; Shaw v. Benesh, 37 Wash. 457, 79 Pac. 1007 (1905).
'• However, the mortgagee has no right of possession and no right to require the transfer of title under the contract until he. has acquired the interests of the purchaser-mortgagor, among which is the right to require performance on payment of the purchase price. The acquisition of the interests of the purchaser-mortgagor may require a foreclosure of the mortgage and the securing of a sheriff’s deed covering that interest. It is, of course, hornbook law that a mortgagee has no right to possession of mortgaged real property without a “foreclosure and sale according to law.” See also RCW 7.28.230. Howard v. Edgren, 62 Wn.2d 884, 385 P.2d 41 (1963); State ex rel. Gwinn, Inc. v. Superior Court, 170 Wash. 463, 16 P.2d 831, 19 P.2d 1119, 87 A.L.R. 620 (1932), and cases cited therein; Western Loan & Bldg. Co. v. Mifflin, 162 Wash. 33, 297 Pac. 743 (1931). Norlin v. Montgomery, 59 Wn.2d 268, 367 P.2d 621 (1961), has applied the same rule where the property mortgaged was the interest of the purchaser under an executory real-estate contract.
*470It follows that the trial court erred in reinstating the contract with the mortgagees (the' corporate defendants) as the purchasers before they foreclosed their mortgage, or otherwise acquired the interests of the contract purchasers.
It would appear that the trial court was misled by the statement in some of our opinions that “the mortgagee of the vendee in virtue of his mortgage acquires the right to complete the purchase if the mortgagor fails or refuses to do so.5 Such a statement is incorrect if construed literally. The mortgagee could acquire that right only by a conveyance from the mortgagor or by a foreclosure of his mortgage. He would have, however, the right to make or tender such payments as would be necessary to protect his security, i.e., to keep the contract in effect (supporting authority cited, supra).
The summary judgment of October 7,1966, entered herein, should be set aside with instructions to limit the summary judgment against the purchasers, Millard C. Davis and wife, as indicated, and to permit the mortgagees of the interest of the contract purchasers to foreclose their mortgages. The mortgagees have the right and the obligation to make all payments necessary to keep the contract in force until their mortgages are satisfied, or until they foreclose their mortgages and secure the payment of the amounts due them, or acquire by sheriff’s deed the interests of the pur*471chasers in the contract. I do not question the plaintiff’s right to possession during the pendency of this appeal.
Rosellini, J., concurs with Hill, J.
March 31, 1969. Petition for rehearing denied.

Referred to on page 458 of the majority opinion.

Frequently, to make foreclosure unnecessary, the mortgagor—after default in his payments—will convey his interest to the mortgagee; but that is not the situation here.

This statement appears in Scott v. Farnam, supra (p. 340), but had no application in that case, as the mortgagee of the contract purchaser’s interest had foreclosed his mortgage and successfully maintained an action to recover the amount he had paid to the contract seller to complete the payment on the contract. It is reiterated in a quotation from Young v. Clay, 139 Ore. 427, 10 P.2d 602 (1932), appearing in Nelson v. Bailey, 54 Wn.2d 161, 165, 338 P.2d 757, 73 A.L.R.2d 1400 (1959). It had no application in either case.
The Oregon court quoted the statement from 59 C.J.S. 237, § 184, and the statement in that text is based upon an erroneous interpretation of an 1863 Illinois case, Alden v. Garver, 32 Ill. 32.
I find no case authority to support such a statement unless, as I indicate in this dissent, the mortgagee has foreclosed his mortgage or otherwise acquired the entire interest of the purchaser-mortgagor.