Maxwell v. Home Fire Insurance

77 N.W. 681, 57 Neb. 207, 1898 Neb. LEXIS 384
CourtNebraska Supreme Court
DecidedDecember 22, 1898
DocketNo. 8545
StatusPublished
Cited by3 cases

This text of 77 N.W. 681 (Maxwell v. Home Fire Insurance) is published on Counsel Stack Legal Research, covering Nebraska Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Maxwell v. Home Fire Insurance, 77 N.W. 681, 57 Neb. 207, 1898 Neb. LEXIS 384 (Neb. 1898).

Opinion

Norval, J.

This was an action by the Home Fire Insurance Company of Omaha against William J. Maxwell and John T. Clark as joint makers of a promissory note for $1,900 given March 29, 1890, and due three years thereafter, drawing eight per cent interest from date of obligation. The defendants, for answer to the petition, admit the execution of the note, and allege, in substance, that the defendant Maxwell delivered to plaintiff as collateral security to the debt a certain promissory note for $5,4=00 executed by one George M. O’Brien, Jr., payable to the said Maxwell, and secured by mortgage on real estate situate in Douglas county; that after the maturity thereof Maxwell commenced a suit to foreclose such mortgage, in which the Home Fire Insurance Company of Omaha intervened, and in the decree rendered therein it was awarded a first lien on the mortgaged premises for $1,913.55, being the amount at that time due upon the note in controversy herein; that said decree is still in [209]*209force and ‘wholly unsatisfied and is a bar to the present action; and that the defendant Maxwell was the principal on the note declared on herein, and that the defendant Clark signed the same as surety. A general demurrer to the answrer was interposed by the plaintiff, which the court sustained, the defendants refused to further plead, and a joint judgment was entered against both for $2,280, without designating which was principal on the note and -which executed as surety. Prom the order denying defendants’ motion for a new trial they prosecute error to this court.

The first argument of defendants below is that the taking of a decree of foreclosure in the suit on the collateral note and mortgage is a bar to the present action, by virtue of the provisions of section 847 et scq. of the Code of Civil Procedure, as they existed at the time when the note herein was given, this .action was instituted, and the judgment under review was pronounced: Section 845 of the Code of Civil Procedure (Compiled Statutes 1895) requires that a petition to foreclose real estate mortgages shall be filed in the county where the premises are situated. The next succeeding section authorizes the court in such a suit to decree a sale of the mortgaged premises, or such part thereof as may be sufficient to pay the amount due and costs. Section 847, as it then existed, relates to the rendition of deficiency judgments in foreclosure suits for’ the amount remaining due and unsatisfied after sale of the mortgaged premises, in cases in which such balance is recoverable at law, and authorizes the issuance of execution to collect such deficiency judgment. Sections 848 and 849 of said Code, as then in force, follow:

“Sec. 848. After such petition shall be filed, while the same is pending, and after decree rendered thereon, no proceedings -whatever, shall be had at law for the recovery of the debt secured by the mortgage, or any part thereof, unless authorized by the court.
“Sec. 849. If the mortgage debt be secured by the [210]*210obligation or other evidence of debt of any other person besides the mortgagor, the complainant may make such person a party to the petition, and the court may decree payment of the balance of such debt remaining unsatisfied after a sale of the mortgaged premises, as well against such other person as the mortgagor, and may enforce such decree as in other cases.”

The two sections quoted were considered and construed in connection with sections 850 and 851 of the Code of Civil Procedure, in Meehan v. First Nat. Bank of Fairfield, 44 Neb. 213, and in an opinion by the present chief justice it was ruled that the statute authorized either an action at law for the recovery of the debt secured by real estate mortgage or a suit to foreclose the mortgage, at the option of the owner and holder thereof; but when he chooses one remedy he must exhaust it before resorting to the other, unless permission of the court is first obtained to pursue both remedies at the same time; and that pending foreclosure suit or after decree an action at law on the obligation or evidence of debt of a person other than the mortgagor, such as an indorser of the note secured by the mortgage, cannot be prosecuted without consent of the court of equity. That this decision is sound we do not entertain the shadow of a doubt, and if this were an action at law against O’Brien to recover the amount of his mortgage debt, it is very evident the doctrine announced in the case of Avhieh mention has been made would control. Manifestly, after the entry of the foreclosure decree against O’Brien, an action at law could not be maintained to recover from him the sum due on the debt secured by the mortgage, without leave of the court, in which foreclosure AA’as brought, to pursue that remedy, having been first procured. However, this is not an action upon the O’Brien note, but upon an obligation to which he is not in any way a party, and which was not in existence when the mortgage was given. In the foreclosure against O’Brien no deficiency judgment could have been obtained against [211]*211either Maxwell or Clark for the amount remaining unpaid of the mortgage debt after sale of the mortgaged property, so that the case at bar does not fall within the scope and object of the statute stated in Meehan v. First Fat. Bank of Fairfield, supra, as follows: “The purpose of these provisions is evidently to avoid the two actions being in progress at the same time, and also the double costs and expenses, and to confine the creditor as closely as may be consistent with justice to him and his demands to the one action, and more especially does this seem true of the foreclosure action in which he- is allowed to first subject the mortgaged property to the payment of the debt and the further remedy of a deficiency judgment for any balance of the debt remaining unextinguished.” Section 848 is so plain and free‘from ambiguity as to admit of but one interpretation. During the pendency of a suit to foreclose a real estate mortgage, or after the rendition of the decree therein, the legislature has by said section prohibited the maintaining of an action “at law for the recovery of the debt secured by the mortgage, or any part thereof, unless authorized by the court.” There is no inhibition against the prosecution of proceedings at law to recover a debt, other than the one the mortgage at its inception was given to secure. It was never the- intention of the lawmakers that the statute should apply to cases like the one at bar, else appropriate language indicative of such a purpose would have been used in framing the law. The note in suit is not the mortgage debt, and the fact that a decree of foreclosure has been takén on the note and mortgage held as collateral thereto will not defeat the present action. The note signed by Maxwell and Clark was not taken as security for the mortgage debt of O’Brien, and hence is not embraced within the provisions of said section 849, and is not an obligation or other evidence of debt of any person besides the mortgagor, within the meaning of the law.

The two New York cases cited by counsel for defend[212]*212•ants below do not in the least conflict with the views herein expressed, or the conclusion we have reached on this question, as will be disclosed by an examination of the reported decisions.

In Suydam v. Bartle, 9 Paige Ch. [N. Y.] 294, it appears that James P.

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Cite This Page — Counsel Stack

Bluebook (online)
77 N.W. 681, 57 Neb. 207, 1898 Neb. LEXIS 384, Counsel Stack Legal Research, https://law.counselstack.com/opinion/maxwell-v-home-fire-insurance-neb-1898.