Northwestern Mutual Life Insurance v. Drown

Cole, C. J.

It is not entirely clear that the condition of the bond imposed upon the appellants the obligation of paying the insurance money which the respondent paid out after the judgment of foreclosure and sale was rendered. The Baraboo Manufacturing Company was undoubtedly bound by the covenants of its mortgage to repay this money. Eor the purposes of this case we assume that the appellants incurred the same responsibility. The question then arises, Could that liabili ty be enforced in theynanner attempted in this suit? It seems to us it coirld not. A reference to the steps taken in the cause is all that is deemed necessary to show the correctness of this view.

*424The action was to foreclose a mortgage given by the Baraboo Manufacturing Company. It is a fair inference from the record that this company was the principal debtor, the appellants having signed the bond as sureties. The appellants and others, who were subsequent incumbrancers, were made parties defendant to the foreclosure suit. There was no appearance by any defendant, and judgment of foreclosure and sale was entered on default. In the judgment the amount due on the bond and mortgage was determined, and the court adjudged that the plaintiff recover of the obligors of the bond that amount, together with costs and disbursements. The judgment was entered pursuant to the provisions of chapter 143, Laws of 1877. By the first section of that statute it is provided, that if the plaintiff recover, judgment shall be entered in his favor against the defendants personally liable for the indebtedness which the mortgage was given to secure, with interest and costs. Such a judgment was taken in this case. At the expiration of the period of redemption, the mortgaged property was sold for the full amount of the' judgment and costs, which, together -with the interest, was paid over to the plaintiff’s attorneys, and a receipt taken for the same. After this was done, on an affidavit of the assistant cashier of the plaintiff that intermediate the entry of the judgment and sale of the premises the plaintiff had insured the property, an order or judgment was entered against the appellants for $386.85 insurance 'money thus paid out, and that execution issue therefor.

We do not know of any law or rule of practice which would authorize such an order. To our minds' it is perfectly clear that the personal liability of the appellants — so far, at least, as this action was concerned — was limited and fixed by the amount of the original judgment. That judgment was satisfied and discharged out of the proceeds of the sale of the property. But the learned counsel for the plaintiff says tl\at the default to keep up the insurance did not occur until $fter the judgment was entered, and therefore the claim for pre*425miums paid in consequence of such default could not have been anticipated or provided for in the original judgment. But it seems to us there might have been a direction in the judgment for the sheriff to pay out of the proceeds of the sale any taxes or insurance money which would become due and might be paid by the plaintiff’ intermediate the entry of the judgment and sale. "We see no difficulty in framing a decree to meet such a case. The mortgage contained a covenant that the mortgagor would keep the building standing on the land insured against loss by lire, in some solvent insurance company, to the amount of at least $5,000, and would assign the policy to the plaintiff. In case the mortgagor failed to keep up such insurance, the mortgagee was authorized to effect an insurance to that amount, and the premiums paid were to become a part of the mortgage debt unless otherwise discharged. There was also a covenant that the mortgagor would pay all taxes annually assessed upon the property. It seems to us provision might have been made in the judgment for reimbursing the plaintiff for any money which it might pay out under these covenants before the property was sold on foreclosure. But as no such provision was made in the judgment, we deem it entirely irregular and unwarranted to attempt to collect those moneys out of the appellants in the manner resorted to in this case. If provision had been made in the judgment for paying future insurance money, the appellants might, as claimed by their counsel, have protected themselves by seeing that the mortgaged property sold for enough to meet all liabilities which they had incurred on the bond. As the case stands, we must hold that the judgment definitively settled their liability, so far as this action is concerned, and that the order appealed from was erroneous. The counsel for the plaintiff attempted to sustain the order under section 3, cli. 243, Laws of 1862. But we have no doubt that this section was repealed, by implication, by the subsequent statute of 1STT, which prescribed what the judgment should be in foreclosure actions. . _■

*426It follows from these views that the order of the circuit court must he reversed, and the cause remanded for further proceedings in accordance with this opinion.

By the Court.— So ordered.

Mr. Justice Cassoday, being a policy-holder in the plaintiff company, took no part in the decision of this cause.