Todd, Pollock & Granger v. Johnson

Rothrock, J.

1. moutgacte : warranty: sat-judgment. — The mortgage was given to secure the payment of a note executed by both of the defendants. There was a prior lien of two hundred and fifty dollars on the premises, which the plaintiffs discharged, Whether this payment was made before or after the purchase at the foreclosure sale does not appear from the record. Presumably it was made after the sale. If made before the plaintiffs would probably have included that lien in the suit for foreclosure.. This, however, as we view the rights of the parties, is not a material consideration, as will presently be seen.

In 1 Jones on Mortgages, § 68, it is said: “The covenants of warranty in a mortgage are often of importance, especially in eases where the mortgagor has no title, ,or an imperfect one, at the time of making the mortgage, but afterward acquires one. They operate by way of estoppel or rebutter to them, so that the after acquired title inures to the benefit of the holder of the mortgage. Except in this way the covenants are of little use in a mortgage, because the damages for a breach of them would only entitle the holder of the mortgage to recover the amount due him on the mortgage, and this he can more readily recover by suit for the mortgage debt upon the note or bond, or upon the covenant for the payment of it sometimes contained in the mortgage.”

It is averred by the petition, and appears by the agreed facts in the case at bar, that the mortgage was foreclosed. There is but one method by which a foreclosure can be had in this State. It must be by “action.in court by equitable proceedings.” Code, § 3319. And “when a mortgage or deed of trust is foreclosed by equitable proceedings the court shall render judgment for the entire amount found to.be due, and ■must direct the mortgaged property, or so much thereof as is necessary, to be sold to satisfy the same, with interest and costs. ” Code, § 3321. “If the mortgaged property does not sell for sufficient to satisfy the execution, a general execution *196 may be issued against the mortgagor, unless the parties have stipulated otherwise.” Section 3322.

We have, then, this state of facts: The plaintiffs obtained a judgment against the defendants for the full amount secured by the mortgage. They purchased the' mortgaged property at the foreclosure sale for the amount of the debt, interest and costs, as we understand the record before us. They now seek to recover on the covenants of warranty contained in the mortgage. We are clearly of the. opinion that the action cannot be maintained. The plaintiffs have had judgment against the defendants for every dollar that was secured by the mortgage. The judgment has been satisfied in full by a sale of the mortgaged property. Unless the sale and satisfaction shall be set aside they have no claim whatever against the defendants. The debt which the mortgage secured has been paid, and no right of action upon the mortgage remains.

It appears from the agreed statement of facts that the plaintiffs had no knowledge of the existence of the prior incumbrance at the time the mortgage was executed. Whether they had actual knowledge at the time of the sheriff’s sale does not appear, nor is it material whether they had such knowledge or not, for the principle is too well settled to need the aid of authority for its support that a purchaser at a foreclosure sale, whether he be a party to the record or a stranger, is presumed to know the condition of the title which he purchases, as it appears of record, and in the absence of fraud the law wiR not ordinarily relieve a purchaser at such a sale who acquires a defective title.

' Counsel for appellee have cited us to no adjudicated case in which the principle contended for by them in the suit at bar is recognized, and we have been unable to find any such ease. Whatever may be found in other jurisdictions, we feel constrained to hold that under the requirements of our statute, as to the foreclosure of mortgages, this action cannot be maintained.

Reversed.