Northwestern Mutual Life Insurance v. Nebraska Land Corp.

223 N.W.2d 425, 192 Neb. 588, 1974 Neb. LEXIS 756
CourtNebraska Supreme Court
DecidedNovember 14, 1974
Docket39443-39446
StatusPublished
Cited by7 cases

This text of 223 N.W.2d 425 (Northwestern Mutual Life Insurance v. Nebraska Land Corp.) 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
Northwestern Mutual Life Insurance v. Nebraska Land Corp., 223 N.W.2d 425, 192 Neb. 588, 1974 Neb. LEXIS 756 (Neb. 1974).

Opinion

McCown, J.

In this case four separate real estate mortgage foreclosure actions have been consolidated for appeal. The mortgage debtor, Nebraska Land Corporation, by and through its trustee in bankruptcy, has appealed from an order of the District Court directing the distribution of a portion of surplus sale proceeds to Wheatbelt Public Power District, the holder of a contractual lien in each of the four cases.

On September 16, 1970, Northwestern Mutual Life Insurance Company filed four separate real estate mortgage foreclosure actions against Nebraska Land Corporation, the titleholder of the land in each case. For purposes of clarity, the separate actions will be designated by the case numbers given them in this court.

In cases Nos. 39444, 39445, and 39446, the mortgages were each a first lien on the land involved in each respective case. In case No. 39443, the mortgage was a first lien on the property being foreclosed in that case, and a second lien on all the property in cases Nos. 39444, 39445, and 39446. In the foreclosure actions the mortgage creditor joined a number of other creditors, including Wheatbelt Public Power District. In each case Wheat-belt held a contractual lien for power furnished to the property involved in that case. After the foreclosure actions were initiated, a petition in bankruptcy was filed *590 by Nebraska Land Corporation under Chapter X of the Bankruptcy Act.

The District Court entered a decree of foreclosure in each case which fixed and determined the amounts of the mortgage and lien indebtedness as follows: No. 39443, Northwestern $397,593, and Wheatbelt $10,100.98; No. 39444, Northwestern $187,027, and Wheatbelt $3,868.32; No. 39445, Northwestern $184,011, and Wheat-belt $4,580.34; and No. 39446, Northwestern $.156,676, and Wheatbelt $4,405.37.

In each case the property was ordered sold, and the net proceeds of the sales in each case were: No. 39443, $302,614.57; No. 39444, $249,732.13; No. 39445, $244,844.05; and No. 39446, $220,340.73. Each sale was confirmed.

After application of sale proceeds to .Northwestern’s first mortgage in each case, there was a deficiency of $109,688.43 in case No. 39443; and surpluses of $55,885.13 in No. 39444; $54,025.05 in No. 39445; and $58,783.73 in No. 39446. Northwestern then moved in case No. 39443 that it be paid the total net sale proceeds in that case to apply on its first mortgage; and that $109,688.43 of the total surplus in cases Nos. 39444, 39445, and 39446 be paid to Northwestern on its second mortgage,, with the balance of the surplus to be retained by the court for distribution among the junior lienors. Northwestern also moved in cases Nos. 39444, 39445, and 39446 to have the remaining surplus in each case paid into case No. 39443 to be applied, first to Northwestern’s second mortgage in that case, and the balance to be distributed among the junior lienors. These motions were neither granted nor denied.

On January 26, 1973, Northwestern moved in each case for an order requiring the sheriff to disburse to it from the proceeds of the sales in cases Nos. 39443, 39444, 39445, and 39446, the total sum of the indebtedness and interest due it in all four cases. These motions were granted by an order entered in each case, which also *591 directed that the balance be retained until further order of the court.

On July 20, 1973, Wheatbelt moved in each case for an order to distribute to it $24,800.53, the total sum of its liens, with interest, in all four cases, from the proceeds'of the sales in all four cases. The appellant moved for an order denying any distribution to Wheatbelt and establishing and decreeing the priorities of the liens of each party in each separate case. On August 23, 1973, the District Court entered an order in each case requiring that out of the $59,005.48 total surplus remaining after satisfaction of Northwestern’s mortgages, the sum of $24,800.53 be paid to Wheatbelt, and finding that the trustee appellant’s rights and claims were inferior to the Wheatbelt liens. The appellant moved for a new trial, and upon overruling of that motion, this appeal followed.

The appellant contends that the proceeds of a mortgage foreclosure sale must be applied in accordance with the provisions of the mortgage or in accordance with the terms of the foreclosure decree. The thrust of the argument is that the sale in case No. 39443 resulted in a deficiency and therefore eliminated Wheatbelt’s contractual lien in that case.

Wheatbelt, however, in effect contends that its liens were a pervasive single lien, which attached to all the premises involved in the four cases. The nature of Wheatbelt’s liens therefore becomes critical. At the time of the foreclosures in each of the four cases here involved, Wheatbelt held four separate liens, one in each case, which arose out of four independently executed contracts between Wheatbelt and the titleholder of the real estate, for the furnishing of power by Wheatbelt to irrigation wells and pumps located on each of the four parcels of real estate. Wheatbelt’s lien in each foreclosure case covered only the premises that were the subject of that foreclosure petition.

As a general rule, a lien creditor has no right to apply *592 the surplus proceeds of a foreclosure sale to other debts or claims which he holds against the debtor, and in this respect has no priority over other general creditors of the debtor, at least in the absence of an agreement relating thereto. A lien established for one debt or liability does not cover other and different debts or liabilities of the same debtor, especially where the rights of third persons intervene. The holder of two liens against the same debtor but on distinct parcels of land and for different debts cannot apply the surplus arising on the foreclosure of one of the liens to make up a deficiency on the other as against a trustee of the debtor for the benefit of creditors. 59 C. J. S., Mortgages, § 799(d), p. 1529; 53 C. J. S., Liens, § 9, p. 854; Bruckman v. Healy, 126 Ore. 129, 268 P. 1001; Swann v. Maxcy, Inc., 120 Fla. 283, 162 So. 696; Midland Nat. Life Ins. Co. v. Johnson, 69 S. D. 150, 7 N. W. 2d 620.

In this case Wheatbelt’s lien of $10,100.98 against the land foreclosed in case No. 39443 was wiped out when that land was sold on foreclosure sale for less than the amount of Northwestern’s first mortgage. Unless that deficiency of $10,100.98 can be carried over and asserted as a lien against the surpluses in the other cases, Wheat-belt is relegated to the position of a general creditor with respect to the indebtedness formerly secured by its lien in case No. 39443.

Wheatbelt contends that the judgment or decree of foreclosure in case No. 39443 created a general judgment lien in Wheatbelt’s favor that extends over to the property in cases Nos. 39444, 39445, and 39446. A foreclosure proceeding, however, is not brought to create a lien but to enforce one already in existence. It affects no property except the property being foreclosed for the particular lien and affects it only by limiting the time for redemption and authorizing its sale if not redeemed. A general lien on all the debtor’s property is not created by a judgment or decree for the foreclosure of a lien on specific property described in the foreclosure action. *593

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Bluebook (online)
223 N.W.2d 425, 192 Neb. 588, 1974 Neb. LEXIS 756, Counsel Stack Legal Research, https://law.counselstack.com/opinion/northwestern-mutual-life-insurance-v-nebraska-land-corp-neb-1974.