Kelley v. Clark

SULLIVAN, J.

— On August 10, 1909, the district court in and for Ada county entered a judgment and decree in favor of C. K. Clark for the sum of $3,131.34, and adjudged and decreed the foreclosure of a certain mortgage on real estate situated in Boise City and for the sale of the property in payment of the judgment. In pursuance of this judgment and decree, the property was sold on the 2d day of October, 1909, and was bid in by C. K. Clark, the plaintiff in that action, who is defendant and appellant in this action. The time for redemption of the premises expired on October 2, 1910.

The whole controversy involved in this appeal centers in the transactions which took place between the parties on September 30, 1910, which was two days before the expiration of the period of redemption. On October 4, 1910, the sheriff of Ada county executed and delivered to Clark, the purchaser at the foreclosure sale, a sheriff’s deed to the property, and thereafter and on October 7th, Kelley commenced his action in the district court to quiet his title to the premises and secure a cancelation of the sheriff’s deed. Judgment was entered in favor of the plaintiff and the defendant Clark appeals.

The property had originally belonged to, and the mortgage had been executed by, John I. Wells and wife. The foreclosure had been against Wells and wife. On September 30, 1910, Wells and wife executed and delivered a deed to the property in favor of L. M. Kelley. Kelley succeeded to all the rights of Wells and all subsequent proceedings were taken in Kelley’s name. On September 30, 1910, and prior to the execution of the deed from Wells to Kelley, Wells and his attorney met Clark on one of the streets in Boise City and gave Clark a written offer to redeem the property from the foreclosure sale. At Clark’s request Wells and his attorney went with Clark to the office of his attorney. Here negotiations and conversations took place looking to a redemption of the property. There is a sharp conflict between the witnesses as to whether or not the money was actually in sight and tendered in payment of the mortgage. The court has found, however, that a tender was made, and the evidence is sufficient to sustain that finding. At the time this tender was made, Clark, acting under the advice of his attorney, declined to accept the payment unless Wells should also pay the amount due on a second mortgage which had been executed by Wells and wife in favor of C. P. McCarthy and B. S. Crow for the sum of $500 and which mortgage had been, sold and assigned to Clark. No question was. raised as to the existence of this $500 mortgage and the indebtedness thereby secured. It is admitted here that the mortgage did exist and that the debt existed. They refused, however, to pay this as a condition of redemption. The demand was made for the payment of this $500 mortgage under advice of Clark’s counsel, who claimed that under the provisions of sec. 4492 of the Rev. Codes, which provides, among other things, that “if the purchaser be also a creditor having a prior lien to that of the redemptioner, other than the judgment under which such purchase was made, the amount of such lien with interest” must also be paid. The interview terminated, and thereupon Clark’s attorney notified the sheriff of Ada county in writing not to accept the redemption money unless the redemptioner paid said $500 mortgage and interest thereon. It appears that Clark’s attorney made further investigation in regard to the matter, and finally concluded that Clark was not entitled to demand the payment of the $500 mortgage as a condition precedent to or attendant on the redemption from the foreclosure sale. On the 30th day of September, 1910, and after said tender had been made, Wells and wife sold and conveyed said mortgaged real estate to the respondent Kelley. Thereafter, on the same day, Clark’s attorney called Kelley’s attorney by phone and advised him that he would accept the tender and release the property, but Kelley’s attorney declined and refused to renew the tender. Clark’s attorney on the following day served written notice on Kelley’s attorney that he was willing to accept the tender and release and reconvey the property. Kelley’s counsel, however, refused to renew the tender, and thereafter, and subsequent to the expiration of the period of redemption, Clark procured a sheriff’s deed to said property, and a few days thereafter Kelley commenced this action to quiet his title. No tender of payment was made when this action was commenced, and no tender has ever been made since that -time. Kelley had taken the position, and was sustained therein by the trial court, that the refusal of Clark to accept the money when tendered- ipso facto discharged said lien, and that the cloud thereon "might be removed by a court of equity without any payment or tender of payment of the debt secured. This contention is based upon the provisions of see. 4494, Rev. Codes. That section reads as follows:

“The payments mentioned in the last two sections may be made to the purchaser or redemptioner, or for him, to the officer who made the sale. When the judgment under which the sale has been made is payable in a specified kind of money or currency, payments must be made in the same kind of money or currency, and a tender of the money is equivalent to payment.”

This case was first tried before Hon. Fremont Wood, judge of the third judicial district, and Judge Woo'd found that a tender was made by Wells through his attorney and was refused by Clark. He made the further finding, however, ‘ ‘ That a controversy existed between said Clark and said Wells, and said tender was refused by the said Clark because of a claim put forward by him, and was not refused wantonly, nor said claim put forward by him as a cover to a wrong purpose, and said Clark acted in said matters in all respects in good faith, ’ ’ and entered judgment in favor of the defendant, refusing to quiet the title to said premises in the plaintiff.

A motion for a new trial was made, and in the meantime Judge Wood’s term of office expired and the motion for a new trial was heard by Judge MacLane. A new trial was granted and the case was heard on the evidence previously taken and some minor evidence which was produced on the trial, and Judge MacLane found that a tender had been made and refused and the refusal to accept said tender was subsequently withdrawn. The refusal to accept the tender was based on the ground that the appellant had purchased said $500 mortgage on August 29, 1910, and that he would not accept said tender unless the debt represented by said $500 mortgage was paid. On the trial of the case before Judge MacLane, certain facts were stipulated, and it was stipulated that the question to be submitted to that court for decision was whether, under all the facts of the ease, a valid tender of money was made, within ’the meaning and intent of sec. 4494, Rev. Codes, and other sections of the Idaho statutes, such as will discharge the lien of the defendant’s judgment and make void the sheriff’s deed issued to the defendant. The court in its findings of fact found that the time for redemption of said property from the sheriff’s sale expired on October 2, 1910, and that the amount required to redeem the property was $3,798.-35; and that on September 30, 1910, the attorney for the mortgagor Wells tendered that sum to the defendant Clark in the presence of his attorney; that said Clark and his attorney refused to accept, and claimed at that time that they should receive in addition to said sum, the sum of $500 and interest thereon, being the amount of the mortgage executed by Wells and his wife to McCarthy and Crow, which mortgage had not at that time been foreclosed; that the plaintiff Kelley on September 30, 1910, purchased whatever interest Wells and his wife had in said property, and received a warranty deed therefor and succeeded to whatever right Wells acquired by virtue of the tender of redemption money; and as conclusions of law found that the plaintiff made a valid tender of the amount of money required to redeem said lots from said foreclosure sale, and that such tender was refused, and that the lien of the mortgage and the sale and the foreclosure thereof was discharged thereby; that the plaintiff is the owner of the premises, free of the lien of said mortgage and the sale thereunder; that the deed from the sheriff to said defendant Clark dated on the 4th of October, covering the premises described in the complaint, is void and of no force and effect, and entered judgment and decree quieting the title to said lots or land in the plaintiff.

The appeal is from an order denying a new trial.

(1) Appellant’s assignments of error may be considered under two heads: First, the insufficiency of the evidence to support the finding of facts to the effect that John I. Wells, through his attorney, made a tender to the appellant of the sum of $3,798.35 for the purpose of redeeming said property from sheriff’s sale; second, that the court erred in making its first conclusion of law from the facts, to the effect that a valid tender of the amount required to redeem lot 4 in block 84 of the original townsite of Boise, Idaho, from the sheriff’s sale of October 2, 1909, was made, and that such tender was refused by the defendant, and that the lien of the mortgage and of the sale on the foreclosure thereof was discharged thereby, and that the plaintiff is the own.er of the premises, free from the lien of said mortgage and the sale thereunder.

The evidence clearly supports said finding of facts that said tender was made in proper time and for the sole purpose of redemption. The appellant Clark made no claim whatever at the time the tender was made that said tender was not sufficient to discharge the mortgage debt and costs of foreclosure; neither did he ask for any time to ascertain whether such sum was sufficient, but he did then and there demand the payment of said $500 debt secured by another mortgage on said prémises, which mortgage and the debt secured thereby was purchased by the appellant on the 29th of August, 1910, more than thirty days prior to the time said tender was made, and he now contends that he was entitled to a reasonable time and opportunity to ascertain whether he was entitled to the payment of the last mentioned debt before a redemption could be made from said sheriff’s sale. He thus had had about thirty days in which to determine his rights under said second mortgage. We think the evidence is amply sufficient to sustain the finding of the court to the effect that a legal tender was made and refused.

(2) - It is next contended that the court erred in concluding as a matter of law, that on the refusal of said tender the lien of the said first mortgage and the sale on the foreclosure thereof was fully discharged. The trial court no doubt based said conclusion of law upon the provisions of said see. 4494, above quoted, which provides, among other things, that a tender of money by one entitled to redeem is equivalent to payment. Said section was adopted from the statutes of California. It was enacted by the legislature of that state in 1872 (see see. 704, 3 Kerr’s Cyc. Codes of Cal. and notes thereto), and was thereafter adopted by Idaho territory in 1874 (see 8th Terr. Sess. Laws, p. 140, sec. 254), and o-ur attention has not been called to a statute of any other state similar to said section. In Hershey v. Dennis, 53 Cal. 77, the court had under consideration said section of the California statutes, and there held that the tender of the redemption money extinguishes the purchaser’s lien and is equivalent to payment.

In Haile v. Smith, 113 Cal. 656, 45 Pac. 872, the court held that “While the unaccepted tender did not release the defendant from his obligation to pay the money, it had the effect to release the land from any further claim thereto by the plaintiff and to remit the plaintiff to his personal claim for the money.”

In the well-considered case of Leet v. Armbruster, 143 Cal. 663, 77 Pac. 653, the court held that if the purchaser refuses a lawful tender of the redemption money, he does so at his own risk, and his refusal cannot prevent the legal effect of the tender to defeat the sale and to extinguish the purchaser’s interest in the mortgage lien; and the purchaser is remitted to his action -at law for the recovery of the money which still remains due.

In that case the court reviewed many cases, and there laid down the correct rule applicable to the facts of this ease. Of course, it goes without saying that the purchaser at a foreclosure sale must have sufficient time to ascertain whether the amount of money tendered is sufficient to satisfy the debt, but he cannot evade the provisions of said sec. 4494 by refusing to accept the tender until he ascertains whether some other claim that he holds against the redemptioner must be paid at the time the tender is made.

In Moore v. Norman, 43 Minn. 428, 45 N. W. 857, 19 Am. St. 247, 9 L. R. A. 55, the court said: “If the mortgagor does not tender the full amount due, the lien of the mortgage is not extinguished, and he runs no risk in accepting it. If, upon the other hand, it is sufficient in amount, his debt is paid, and that is all he has any right to demand. It is his own folly if he attempts to exact more. But, in view of the serious consequences which might possibly result from a refusal to accept such a tender, the proof should be clear that it was fairly made, deliberately and intentionally refused by the mortgagee; that sufficient opportunity was afforded to ascertain the amount due, and that a sum sufficient to cover the whole amount due was absolutely and unconditionally tendered. ’ ’

See, also, Bunting v. Haskell, 152 Cal. 426, 93 Pac. 110.

Those cases rest on the proposition that a tender ipso facto discharges the lien, and that proposition finds much support among the decisions of the courts of last resort. (Ball v. Stanley, 5 Yerg. (Tenn.) 199, 26 Am. Dec. 263; Mitchell v. Roberts, 17 Fed. 779; Moore v. Norman, 43 Minn. 428, 45 N. W. 857, 19 Am. St. 247, 9 L. R. A. 55; Flanders v. Chamberlain, 24 Mich. 305; Bartel v. Lope, 6 Or. 321; Cass v. Higenbotam, 100 N. Y. 248, 3 N. E. 189; Kortright v. Cady, 21 N. Y. 343, 78 Am. Dec. 145.)

It is stated in 1 Jones on Mortgages, sec. 893, as follows: “The rule in several states, however, is that a tender of the amount due on a mortgage after the day fixed for payment is a discharge of the lien just as much as payment is, and in the same way that a tender at common law made upon the day named in the condition for payment has this effect. The lien of the mortgage is thereby ipso facto discharged, and the holder of the mortgage can only look to the personal responsibility of the person liable for the mortgage debt. ’ ’

Referring to the principle under discussion, the court in Merritt v. Lambert, 7 Paige (N. Y.), 348, said: “So that if the mortgagee is so unwise as to refuse his money when it is tendered at the time and place and in the manner prescribed in the instrument itself, he necessarily must lose his security upon the land which was merely collateral to the debt; although the mortgagor may be still liable for the money, where there is an existing indebtedness. ’ ’

In Jackson v. Crafts, 18 Johns. (N. Y.) 115, the court quotes the rule laid down by Lord Coke to the effect that “if the mortgagor tender the money to the mortgagee and he refuseth, the land is freed forever from the condition, but yet the debt remaineth.”

Sec. 4492, Rev. Codes, provides what the judgment debtor .or redemptioner must do to redeem the property from the purchaser at foreclosure or execution sale. Said Wells was the judgment debtor in the ease at bar', and when he tendered the full amount due, as provided by said sec. 4492, that was a good and sufficient tender, and under the provisions of said sec. 4494 said tender was equivalent to payment, and ipso facto discharged the mortgage lien. The right of redemption is purely statutory, and the statute provides that in a redemption case the tender of the money is equivalent to payment.

Tender is the unconditional offer of a debtor to the creditor of the amount of his debt. This means the real amount of the debt as fixed by the law, and the purpose of the law' of tender is to enable the debtor to relieve himself of interest and costs and to relieve his property of encumbrance by offering his creditor all that he has any right to claim. This does not mean that the debtor must offer an amount beyond reasonable dispute, but it means the amount due, — actually due. Some of the decisions hold that tender must be kept good at least for a reasonable length of time such as would enable the creditor in good faith to ascertain and determine his rights both in fact and in law. Such a holding places the debtor at a great disadvantage, as the creditor might involve him in prolonged litigation in order to determine some imaginary right, as, for instance, in the case at bar that holding would have required the debtor to have kept the tender good during an action to determine whether the creditor had the right to compel him to pay the debt secured by said $500 mortgage in order to redeem, thus compelling the debtor to employ counsel and go to the expense of a defense in an action which might be delayed for months and even years. Said sec. 4494 was adopted to protect the debtor from that kind of proceedings on the part of the creditor, and thus shield him from the rapacity of the creditor.

The case of Mitchell v. Roberts, 17 Fed. 779, is an instructive ease upon the question here involved, -although it involves the extinguishment of a lien on personal property pledged to secure payment. The court said:

“Upon this question there is no conflict in the authorities. The rule is settled that a tender of the debt, for which the property is pledged as security, extinguishes the lien, and the pledgor may recover the pledge, or its value, in any proper form of action, without keeping the tender good or bringing the money into court; because, like a tender of the mortgage debt on the law-day, the tender having once operated to discharge the lien it is gone forever. This rule accords with justice and fair dealing. It would be an exceeding great hardship on the debtor if the creditor had the right to refuse to accept payment of the debt after it was due, and at the same time retain the debtor’s property or a lien upon it for the debt. Advantageous sales would be prevented, collections delayed, and credit lost by the inability of the debtor to free his property. In many eases debtors would be ruined before they could obtain relief by the slow process of a bill in equity to redeem. And on a bill to redeem a debtor would have to pay interest and costs down to the decree, unless he had kept the tender good. Thus the debtor, in order to protect himself against interest and costs, would be deprived of both his property and the use of his money at the pleasure of his creditor, or until the end of a chancery suit could be reached. On the other hand, a creditor who refuses to receive payment of his debt when lawfully tendered, cannot complain at-the loss of his security for that debt, ‘because it shall be accounted his own folly that he refused the money when a lawful tender of it was made unto him.’ ”-

The equities and fair dealing in this ease, it seems to us, are all on the side of the debtor. The creditor did not question the amount of the tender, but had purchased a subsequent mortgage and debt secured thereby thirty days before the tender, and paid therefor $50, with the understanding that if he collected the whole amount due thereon he would pay to the mortgagee one-half of. what he collected. He made this purchase with the evident purpose of making the debtor pay it, or at least harassing him with it by declining to accept said tender. This transaction seems unfair to us, and we believe it is just such transactions that induced the legislature to adopt said section 4494. It is unreasonable for the appellant to contend that he ought to have a reasonable time to determine whether he was entitled to collect said note and mortgage at the time of redemption, as he had already owned said note and mortgage more than thirty days prior to the tender. There is no equity shown on his behalf, and the provisions of said sec. 4494 ought to be given some force and effect in favor of the debtor for whose protection the section was enacted. The statute has declared that tender is “equivalent to payment,” and under many well-considered cases it is held that upon tender the lien of the mortgage is thereby ipso facto discharged, and the holder of the mortgage can then only look to the personal responsibility of the person liable on the mortgage debt. It would completely nullify the provisions of said sec. 4494 to inject therein that in order to make tender “equivalent to payment” it must be kept good. Sec. 4492 provides that the debtor may redeem by payment, and sec. 4494 provides that tender is ‘ ‘ equivalent to payment,” and payment or its equivalent certainly discharges the lien. “Equivalent” is defined by lexicographers as “equal in value, force, measure, power and effect”; then “equivalent to payment,” under that definition, would be “equal in power and effect” to payment.

Tbe case of Salinas v. Ellis, 26 S. C. 337, 2 S. E. 121, is in accord with tbe views expressed in this opinion, but tbe supreme court of South Carolina in the ease of Reynolds v. Price, 88 S. C. 525, 71 S. E. 51, by a divided court'has overruled that case to a certain extent, and in our view of the matter the case of Salinas v. Ellis and the dissenting opinion in the Reynolds-Price case contain the better reasoning, and are in accord with the great weight of authority upon the question here involved. However, the statute of South Carolina is not the same as said sec. 4494, Rev. Codes, which section provides that tender of the money is equivalent to payment, but nowhere provides that in order to be equivalent to payment the tender must be kept good. A legal tender kept good was equivalent to a payment before the adoption of said section, and now to hold under the provisions of said section that a tender must be kept good would be to declare that the enactment of said section accomplished no purpose whatever, and was a work of pure supererogation by the legislature. The legislature in enacting said section had no intention of requiring the tender to be kept good, for to require it to be kept good would be of no benefit to the debtor whatever, but a disadvantage in that he might be under the necessity of borrowing the money tendered and giving as security the identical land included in the foreclosure proceedings, and unless the lien of the former mortgage was discharged by the tender, the debtor would not be able to borrow money to keep the tender good, as the person loaning the money might not be willing to loan it, at least for any considerable length of time, unless he was given as security a first mortgage on such land. In order to make the provision of said section of any benefit whatever to the debtor, it must be construed in conformity with its plain provisions, to wit, that a tender is equivalent to payment, and, being so, ipso facto discharges the mortgage lien. To require a debtor to keep the tender good under the provisions of said section is contrary to its express provisions.

There is no question presented in this case in regard to the creditor’s having reasonable time to compute the amount of the indebtedness due for redemption, and, as before stated, he had purchased said $500 note secured by mortgage more than a month before said tender was made, no doubt with the express purpose of compelling the debtor to pay it before he would permit him to redeem, and he ought not to be assisted in that purpose by this court by reading something into said section that is not there and was never intended by the legislature to be there.

It appears that the debtor, had borrowed the money with which to make the redemption, and upon the refusal to accept the tender may 'have been placed in a position where he would have had to return the money in case the tender was refused, and might not have been able thereafter to borrow money for redemption. The creditor refused payment of his debt, which was lawfully tendered, and he cannot justly complain at the loss of his security for that debt ‘ because it shall be accounted to his own folly that he refused the money when a lawful tender was made unto him.”

(3) It is next contended that one who asks equity must do equity, and that under that rule respondent must pay the amount due on the Wells mortgage foreclosure decree before a court of equity will quiet the title in the respondent. There is nothing in the record to show that respondent owes that debt. If respondent does not owe the debt, why should he pay it? Would it be equitable to require him to do so? The record shows that Wells owes the debt, and since the statute has made a legal tender by a mortgagor redemptioner, equivalent to payment, and thereby discharged the lien, why should a court of equity compel a subsequent purchaser of said real estate to pay the debt of his grantor when the mortgage lien had been already discharged by the tender made before respondent purchased the property? The sheriff’s deed was issued subsequent to the purchase made by the respondent Kelley, and the sheriff, without any authority of law whatever, executed the deed that now casts a cloud upon said title. The wrongful act of the sheriff created the cloud, as the lien was discharged ipso facto by the tender. Unless the. plaintiff in this action owes said debt, a court of equity has no authority to require him to pay it before it will clear the title from the cloud cast upon it by the unauthorized conveyance executed by the sheriff. The unauthorized act of the sheriff was brought about by the appellant himself because of his refusal to accept said tender, and therefore the equities are with the respondent and not with the appellant. A different .question would be presented if the mortgagor Wells had brought this action to quiet title in himself. Said contention of counsel is without merit.

The court, therefore, did not err in concluding as a conclusion of law from said findings that on the refusal of the appellant to accept said tender the lien of the mortgage and the lien created by the judgment on the foreclosure thereof were fully discharged. The judgment of the trial court must be affirmed, and it is so ordered, with costs in favor of the respondent.

Stewart, C. J., concurs.