Kelley v. Clark

AILSHIE, J.,

Dissenting. — The conclusion reached by my associates in this case goes so wide of what seems to me to be justice and equity that I feel constrained to express my views in the matter.

Stripped of all disguise, the case involves the question, pure and simple, of the respondent avoiding the payment of a debt aggregating $3,798.35. Under the decision reached by the majority of this court, respondent will be successful in this attempt, and by solemn decree of court will be enabled to defeat the collection of this sum of money. I shall not attempt to make any additional statement of facts in the case except as in the course of the discussion I may deem it necessary to a clear understanding of my position to restate some of the facts or state some additional fact not embodied in the majority opinion.

In the very outset, let it be understood that the law question here involved is not whether a tender made under sec. 4494, Eev. Codes, shall be kept good from that time on, but the important question here is rather the facts and cireum*18stances under which a tender is made and the good faith and square dealing involved therein. See. 4493, of the Rev. Codes, prescribes the order of redemption and the- manner in which it takes place. It also provides that “upon a redemption by the debtor the person to whom the payment is made must execute and deliver to him a certificate of redemption,” etc. Sec. 4491 prescribes who may redeem; first, the judgment debtor or his successor in interest, and,' second, a creditor having a lien on the property subsequent to that on which the property was sold. These provisions of the statute have reference to the payment of a debt or the tender of payment after a foreclosure and sale, and these sections have no reference to the payment of the debt before judgment or before sale. We are not here dealing with the common-law right of redemption at maturity or on the “law-day.” We are dealing with statutory provisions governing redemption after sale. When respondent and his attorney went to the appellant and proposed to redeem the property from the foreclosure sale which had been made, the appellant consulted his attorney, Mr. Neal, and advised his attorney that he also held a second mortgage on this property for the sum of $500. Mr. Neal, acting as attorney for appellant, advised him that under the provisions of sec. 4492 of the Rev. Codes, the respondent was seeking to redeem as a redemptioner, and that before appellant would be required to make a certificate of redemption as provided by sec. 4493, respondent must also pay the amount of the $500 second mortgage lien. Appellant accordingly demanded the payment of this sum before releasing the security held by him. Respondent and his attorney declined to pay this additional claim and went away, and appellant’s attorney apparently investigated the matter further, and after examining the statute and authorities concluded that he was in error in-the advice he had given his client, and informed him that he could not demand payment of the $500 mortgage as a prerequisite to releasing the property from the foreclosure sale, and on the afternoon of the same day notified respondent’s attorney that they would accept the tender, and was met by the reply that he was too *19late and that “there was nothing doing.” On the folloiving morning counsel for appellant executed the proper certificate of redemption and acknowledged the same, and went to the office of respondent’s attorney and handed it to him and offered to accept the payment. Respondent’s attorney says: “I looked it over and handed it back, and said there was nothing doing.’-’

There is even a direct conflict in the evidence as to whether any payment was tendered or any money was in sight, and appellant’s counsel testifies that payment was not refused but that, as he understood it, the matter was left open until he could have time to further investigate the question as to whether his client was entitled to have the second mortgage paid as a condition of redemption under sees. 4492 and 4493 ■of the Rev. Codes. Now, in the face of all these facts, my associates suggest that the appellant was acting unfairly and was endeavoring to oppress and harass the respondent. They even seem to think there was something wrong, inequitable or unjust about the appellant urging that respondent pay an honest debt, the justice of which he did not question. Since when, I ask, has it become unfair, oppressive or wrongful for a creditor in Idaho to urge that his debtor pay an honest debt overdue? Why should he be mulcted out of his security for a debt approximating $4,000 because he has urged his debtor to pay an additional debt he owes? And, I may further ask, since when has it become inequitable or unjust for a creditor to purchase an additional claim against his debtor? By reverting to the legal phase of this case, we discover that Judge Wood upon the original trial found “that a controversy existed between said Clark and said Wells, and said tender was refused by 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.” Judge MacLane, on the second trial, did not reverse or disturb this finding nor has he made any finding in conflict therewith. On the contrary, it is admitted that the foregoing finding by Judge Wood is in fact true and correct. *20The witnesses for respondent testified to facts which show this to be unmistakably true. Now, in the face of these facts, can it be said, either as a matter of law or in good conscience, that this so-called tender was a straightforward good faith tender where the creditor, within less than ten hours thereafter, on discovering his mistake and being so advised by his attorney, notified the debtor that, he would accept the tender and execute the release and certificate of redemption ?

As above stated, there is no occasion in this case for considering or discussing the question as to whether a tender under our statute must be kept good until a suit to remove cloud and quiet title can be prosecuted, and I shall not attempt to discuss that question at this juncture. The only question here involved is the rule applicable to a tender and the good faith of the transaction. I shall first briefly address myself to some of the eases cited in the majority opinion.

In the first place, I may say, — and a reading of the decisions will amply justify me in it, — that not a single case cited in support of the majority opinion deals with the question here directly involved or is parallel with the facts of this case. Hershey v. Dennis, 53 Cal. 77, the first California case relied on by my associates, was an ejectment case, and does not touch the question here involved, nor . does it cite or consider the California statute corresponding with our sec. 4494. The syllabus to the case was not written by the court, but rather by the reporter, and does not correspond with the opinion itself.

Haile v. Smith, 113 Cal. 656, 45 Pac. 872, was another suit in ejectment, and involved the construction of a contract to sell real estate and a specific perforjnance thereof and a tender of payment provided for in the contract. It in no sense or particular deals with or. cites the statute here under consideration, nor was any such question presented to the court in that case.

Leet v. Armbruster, 143 Cal. 663, 77 Pae. 653, was also an action in ejectment, and the question there involved and considered was the necessity for keeping a tender good under *21the provisions of see. 704 of the Code of Civil Procedure of California. No question whatever arose as to the good faith of the tender or the grounds of the refusal of the tender or the good faith on the part of the creditor in refusing to accept the tender. No discussion whatever was had in that case of the important question of good faith, either in making the tender or in refusal to accept, that is here involved.

Mitchell v. Roberts, 17 Fed. 779, discusses the same question considered in Leet v. Armbruster, and in no way touches upon the good faith of the tender or the good faith of the refusal. That case, however, was dealing with a pledge of personal property instead of a mortgage on real estate, and the judge who wrote the opinion premised his discussion by pointing out the difference between the two, and showing that in a pledge of personal property the pledgee holds the possession, and that in such case an action might be maintained for the possession of the property as soon as a valid and legal tender has been made.

I shall not pursue an analysis of the cases cited further than to say that an examination of the remaining citations will disclose that they were each dealing with pledges of personal property or with common-law tenders, and that none of them was dealing with the statutory redemption from foreclosure, nor were they dealing with a question of good faith and bona fides on the part of either the debtor or creditor. So I dismiss the authorities cited in support of the majority opinion with the assertion that not a single one of them deals with or supports the doctrine enunciated by my associates.

I am not, however, without authority on the direct question involved in this ease, and that, too, from modern, eminent .and respectable jurists.

As late as May, 1911, the supreme court of South Carolina, in Reynolds v. Price, 88 S. C. 525, 71 S. E. 51, had before it a case involving a state of facts parallel with the case at bar. In that case a tender was made and the creditor demanded the sum of $2, which he called a renewal fee, for extending the time of the payment of the loan, and the sum of $10 as attorney’s fee for preparing summons and com*22plaint in foreclosure which had not yet been filed or served. Some days thereafter the creditor concluded that he would waive the demand for the $2 renewal fee and the $10 attorney’s fee, and accordingly went to the debtor and so notified him and offered to accept the sum tendered. The debtor refused to make the payment'or make good the tender, and claimed that the security had been discharged. The creditor commenced his action to foreclose the mortgage. The trial court, upon the authority of Salinas v. Ellis, 26 S. C. 337, 2 S. E. 121, held that the lien of the mortgage was discharged by the tender and entered judgment accordingly. The creditor appealed, and the supreme court of South Carolina considered this question at length, and with a keen sense of justice and equity reached the conclusion that the refusal to accept the tender had been made in good faith and without any purpose "to wrong, oppress or injure the debtor, and that the security was not discharged. The court there said: “If a mortgagee refuses a tender, not arbitrarily or for a wrongful purpose, but in good faith, under the honest belief, based upon reasonable grounds, that more is due him than has been tendered, refusal of the tender will not operate to discharge his lien.” The court thereupon quotes from the note to Parker v. Beasley, 33 L. R. A. 231, as follows: “In all the states the tender must be absolute and unconditional, and the mortgagee must be given a reasonable time to compute the amount' due in order to discharge the lien, and if he refuses the tender in good faith, even though the tender is sufficient, the lien will not be discharged. ’ ’ The court also quotes from Union Mutual Life Ins. Co. v. Union Mills Plaster Co., 37 Fed. 286, 3 L. R. A. 90, the following:

“But to produce such serious and heavy consequence the refusal must have been’ unqualified, and unaccompanied by any bona fide claim of right, which was supposed by the party to justify his refusal. The claim of right may have been one that could not be supported as matter of law; still if it was believed in, and was not wantonly put forward as a cover to a' wrong purpose, it is sufficient to prevent the forfeiture of the security.”

*23The court then proceeds to state the real question before it in that case as follows: “The question, therefore, is not whether the plaintiff’s claim to the renewal and attorney’s fee can be sustained in law, but, rather, owhether it was made in good faith. The testimony shows that it was.” Upon this finding of fact, the court reaches the conclusion which it says is unavoidable in equity, that the lien was not discharged by a tender made under such circumstances. A dissenting opinion wás filed in that case to which Justice Sullivan refers as being the sounder and better rule. It is perhaps to be regretted that a dissenting opinion must sometimes state the safer and more modern rule of law, — and I am fully pefsuaded that will be true in this case, — but unfortunately the dissenting judge in the Reynolds case insisted on standing on the ancient rule of “an eye for an eye,” instead of the modern and more humane rules of equity and good conscience. The dissenting opinion there insisted on cutting the creditor off and sweeping away his security irrespective of the question of good faith and fair dealing.

The majority have quoted at length from the opinion of the federal district judge reported in 17 Fed. 779, dealing with the straight question of the effect of a tender. I find the question, however, involved in the present case considered in 37 Fed. 286, 3 L. R. A. 90, in the case of Union Mutual Life Ins. Co. v. Union Mills Plaster Co., wherein another federal district judge holds that a refusal to accept the tender under a Iona fide claim of right does not extinguish the lien. The court said:

“But to produce such serious and heavy consequence the refusal must have been unqualified, and unaccompanied by any Iona fide claim of right, which was supposed by the party to justify his refusal. The claim of right may have been one that could not be supported as matter of law; still, if it was believed in, and was not wantonly put forward as a cover to a wrong purpose, it is sufficient to prevent the forfeiture of the security. So, here, while it is clear enough that the complainant had no right to make it a condition of receiving payment, that the defendant should enter into stipu*24lations about making repairs on the mortgaged property, still it may have been that it thought it had such right, and I do not find such evidence of its bad faith in this regard as to justify a declaration of forfeiture.”

The majority opinion in this case holds that it would be inequitable and unjust to require the debtor to keep the tender good “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.” That contention on the part of my associates strikes me as both remarkable and alarming. I confess that no authority whatever has been called to my attention which goes to any such length or intimates such a doctrine. Mr. Jones, in his work on Mortgages, sec. 893 (6th ed.), says: “If a mortgagee acting in good faith refuses a tender through a mistake as to-his legal rights, the lien of the mortgage is not discharged”; and again, in the same section, the author says: “One designing to make a tender with the purpose of insisting, in case of refusal, that the mortgage lien is discharged, is bound to act in a straightforward way and distinctly and fairly make known his true purpose without mystery or ambiguity, and allow reasonable opportunity for intelligent action by the holder of the mortgage.” The same doctrine is clearly and tersely stated by the supreme court of Michigan in Benard v. Klink, 91 Mich. 1, 51 N. W. 692, 30 Am. St. 458. Judge Black, in his text on Mortgages, at 27 Cyc. 1406, says: “A tender of payment or performance of a mortgage, to be effective, must be open, fair and reasonable, so clear and explicit as to leave no doubt of the intention to satisfy and discharge the mortgage.....” (See, also, 20 Am. & Eng. Ency. 1062.)

In the case at bar, at the time the alleged tender was made no intimation was given that the debtor intended to rely on the tender so made as discharging the security, nor was it intimated that the respondent meant to rely on the tender thus made as a discharge ipso facto of the security. The authorities are all agreed, so far as I have been able to find, that the proof should be clear and unmistakable that the *25tender was made, and that where there is any doubt about it the security will not be discharged. In the present case, it is proposed by this court to wipe away the security on a conflict of evidence, and where the very best that can be said for the tender is that it was open to doubt and the debtor refused to keep it good for a period of ten hours. It is held by the majority of the court that a tender ipso facto releases and discharges the security, and a number of authorities use that language. This language, however, is used only in cases where no dispute or controversy arises as to the fact of the tender actually being made, and its good faith and the absolute and unqualified refusal of the creditor to accept the tender. No such language is used by the courts in cases where the good faith of either party is involved. Now, it is clear and needs no legal argument or discussion to fully disclose that the facts which constitute a valid bona fide tender must necessarily cover some perceptible period of time, and that will necessarily vary in different cases. So, also, will the matter of acceptance or refusal necessarily involve a perceptible period of time, and the intelligent exercise of the right to reject or accept must necessarily occupy a space of time differing in different cases. In one case the party may have to go to the county-seat and consult the judgment itself in order to ascertain the amount of principal, interest and penalties, or he may have to do more than that. He may have to secure someone to make the necessary computations for him. In another ease, he may have to ascertain his legal rights in the premises as to the amount he is entitled to demand or whether he holds other encumbrances or claims against the property which are prior to the claim of the redemptioner. ' This may, and often will, necessitate consulting a lawyer and obtaining legal advice as to his rights, and this will take time. Surely no one would be so obtuse and deaf to the claims of equity and fair dealing as to deny the creditor the right to a sufficient length of time to inform himself either as to the facts or the law involved in the transaction and on which his demands must rest. In this ease there was no controversy between the parties as to the facts. There *26was no difference between them as to the amount of money due on the foreclosure sale, but there was a bona fide controversy between them as to whether or not the respondent fell within the provisions of see. 4492, and was obliged to pay to the appellant the amount of the other mortgage that he held against the same property as a condition precedent to redemption under the provisions of sec. 4493.- Appellant was not a lawyer, and did not know what his legal rights were in the matter. He did the best thing he knew, — consulted his attorney, a man holding a license from this court to practice law and advise a citizen as to his legal rights in matters arising under the laws of this state. In the face- of this state of facts, this court solemnly says that the appellant did not act in good faith, that he was endeavoring to oppress and harass his debtor, and that a court of equity will not protect him in acting upon the advice of his attorney, but will with one fell swoop wipe out the security he holds for a $3,700 debt. This, to my mind, demonstrates the truth of the current maxim that “Everybody is expected to know the law except lawyers and judges.” The appellant, although presumed in law to know the law, did not know it and consulted his attorney, and apparently his attorney did not know the law and wrongly advised- him, but as soon as he did ascertain his mistake he advised the appellant of the mistake, and also advised the respondent that they would accept the tender which they claim had been made only a few hours before. Although he had owned the second mortgage for some thirty days, he had no notice that a tender would be made until the alleged tender was made, and so he had no previous occasion to investigate his legal rights in the matter.

It is everywhere held that either debtor or creditor may be relieved and the time be extended by a court of equity on account of mistake, fraud or other circumstances appealing to the discretion of a court of equity. (Bunting v. Haskell, 152 Cal. 426, 93 Pac. 110.)

My associates tell appellant that although his security i,i wiped away, and in the meanwhile the property held as se*27curity has been sold to a third party, nevertheless the naked debt still exists. This may afford a balm to his lacerated sense of justice, but it will prove a very poor boon to his ravished purse when he discovers that under the provisions of the statutes of this state, sec. 4520, there can be “but one action for the recovery of any debt or the enforcement of any rights secured by mortgage upon real estate,” whieh action must be in accordance with the provisions of the statute for the foreclosure of mortgages. Another thing: he will discover that his judgment has been satisfied, that the property has been sold for the amount of the judgment and that the sheriff has made his returns and the judgment is satisfied of record. His security is gone, and, under the statute, he has no cause of action left.

My associates have construed sec. 4494 in the light of an old common-law rule which prevailed before these statutes were enacted, but that rule had no reference to redemption after sale on foreclosure. It had reference solely to the payment of the debt on the day of maturity, whieh was known at common law as the “law-day” for the debt. (Murray v. O’Brien, 56 Wash. 361, 105 Pac. 840, 28 L. R. A., N. S., 998.) Our statute says, however, that “a tender of the money is equivalent to payment, ’ ’ not merely equivalent to a discharge of the security, but equivalent to “payment” of the debt. I call attention to this simply as an illustration of the futility of a court'sweeping away the creditor’s security merely because he has been ill advised or has made a mistake in believing himself entitled to demand, as a condition of redemption, the payment of a second lien against the property and then trying to console him by telling him that the debtor, though a bankrupt he may be, is still indebted to him.

There is another aspect to this case whieh should not be passed over lightly, and in which this case differs from the eases cited in support of the majority opinion. Here the respondent came into a court of equity and sought to have his title quieted and the cloud upon his property caused by the foreclosure sale removed, at the same time admitting his indebtedness and refusing to pay the same and making no offer *28or tender whatever into court. So far as I am aware, the authorities are well-nigh, if not entirely, unanimous in holding that although a lien for some legal cause or other cannot be enforced, still a court of equity will not interpose to remove the cloud cast by such lien unless the debtor does equity and pays or offers to pay the debt. Those who seek the aid of a court of equity must themselves do equity, whether the cold letter of the law lays any obligation upon them or not. The fact that one’s adversary has done him a wrong or an injury even, or some act which has resulted in a hardship, does not justify a court of equity in sanctioning another or like wrong and injustice being done to the offending party.

In Tarr v. Western Loan & Savings Bank, 15 Ida. 741, 99 Pac. 1049, 21 L. R. A., N. S., 707, this court in a suit in equity declined to cancel a'mortgage and remove the cloud cast by the same from the property where the debt had not been paid, although the court at the same time declined to give the lender a judgment and decree of foreclosure because it had failed to comply with the foreign corporation laws of this state. This was done upon the principle that one who is seeking an inequitable and unconscionable advantage over his adversary will be left in statu quo or granted no relief by a court of equity until such time as he himself offers to do equity. (For a holding to same effect, see New York & C. B. & L. Assn. v. Cannon, 99 Tenn. 345, 41 S. W. 1054.)

Jones in his work on Mortgages, at sec. 893, in considering the effect of a tender upon the mortgage security, saysj “But even if a sufficient tender be made out, the mortgagor cannot come into a court of equity to have the mortgage decreed to be surrendered or extinguished, without paying the amount equitably due under it.” The author then proceeds with the proposition that the rule with reference to a sufficient tender extinguishing the mortgage lien is limited in its operation to defenses to the enforcement of the mortgage. “It does not,” says the author, “avail a mortgagor who seeks a discharge of his mortgage; for when he seeks relief in a court of equity he must do equity, and must pay the mortgage debt. The tender then avails merely to stop the interest and *29not to discharge the debt.” In support of the foregoing text, the author cites Tuthill v. Morris, 81 N. Y. 94, in which the court says: “A party coming into equity for affirmative relief must himself do equity, and this would require that he pay the debt secured by the mortgage and the costs and interest, at least up to the time of the tender. There can be no pretense of any equity in depriving the creditor of his security for his entire debt, by way of penalty for having declined to receive payment when offered.”

It has likewise been repeatedly held that even though the statute of limitations has run against a debt secured by mortgage, a court of equity will not grant a decree canceling the mortgage and removing the cloud from the debtor’s title, unless he pays the debt or tenders payment into court.

In Hall v. Hooper, 47 Neb. 111, 66 N. W. 33, the Nebraska supreme court said: “A mortgagor, in order to remove the cloud cast upon his title by a sheriff’s deed, executed in pursuance of a void foreclosure, must offer to pay what is equitably due under the mortgage, ’ ’ and this though the statute of limitations has barred the right to foreclose on the mortgage. To the same effect, see Michigan Trust Co. v. Frymark, 76 Neb. 634, 107 N. W. 760; Henry v. Henry, 73 Neb. 746, 107 N. W. 789; New York etc. Assn. v. Cannon, 99 Tenn. 344, 41 S. W. 1054; 28 Am. & Eng. Ency. of Law, 39; Werner v. Tuch, 127 N. Y. 217, 27 N. E. 845, 24 Am. St. 443 (holding tender not good for affirmative relief in equity); Ruppel v. Missouri Guarantee Assn., 158 Mo. 613, 59 S. W. 1000; Hall v. Arnott, 80 Cal. 348, 22 Pac. 200; Murray v. O’Brien, 56 Wash. 361, 105 Pac. 840, 28 L. R, A., N. S., 998 (holding that a tender will not entitle the debtor to have the cloud cast by the mortgage removed without an offer to pay into court).

I opine it would be difficult to find an authority sustaining the position that a debtor can have relief by way of removing the cloud cast upon his property by a mortgage or other lien where he admits, the tona fide existence of the .debt and refuses to make the payment.

From the foregoing considerations, I cannot escape the following conclusions:

*30First: That the tender made by the respondent in this case was not a bona fide, straightforward tender of payment within the contemplation of the statute, for the reason that it was not kept good for a sufficient length of time to enable the appellant to in good faith determine his rights and accept or refuse the tender.

Second: That the appellant acted honestly, fairly and in good faith when he procured the advice of his counsel, and, acting upon that advice, declined to accept the tender unless the second mortgage held by him was also paid.

Third: That the tender meant and intended by the provisions of sec. 4494 is a fair and straightforward offer to pay the amount when due with a present ability to make the payment in cash or in the specified kind of money or currency in which the judgment is made payable, and that this tender must be kept good for such a reasonable length of time as will enable the creditor in good faith to ascertain and determine his rights both in fact and in law.

Fourth: That a tender of payment under see. 4494, Rev. Codes, cannot afford a foreclosure debtor an affirmative cause of action in a court of equity to remove the cloud from the property cast by the sale unless he pays or offers to pay the debt secured thereby.

Fifth: That those who seek the aid of a court of equity must themselves do equity, and that it would be inequitable and unjust, and a recognition of dishonesty, for a court of equity to cancel and remove the cloud from the debtor’s property on the grounds that he had tendered payment where he refuses to make the tender good or to pay the debt which he admits is justly and honestly owing.

The foregoing are some of the salient reasons why I dissent from the majority opinion and believe that the judgment of the trial court should be reversed.

Action to Quiet Title — Redemption Money — Tendee oe. 1. Held, under the facts of this case that the refusal to accept the redemption money tendered was withdrawn and the offer to accept the same was made so soon after the refusal that in equity it should have been accepted. 2. He who seeks equity should do equity.