Connecticut Mut. Life Ins. Co. v. Cushman, 108 U.S. 51 (1883)
U.S. Supreme CourtConnecticut Mut. Life Ins. Co. v. Cushman, 108 U.S. 51 (1883)
Connecticut Mutual Life Insurance Company v. Cushman
Decided March 5, 1883
108 U.S. 51
The statutes of Illinois relating to the redemption of mortgaged property from sales under decree of the federal courts examined.
While the local law, giving the right of redemption first to the mortgagor, then to judgment creditors, is a rule of property obligatory upon the federal
court, it is competent for the latter by rules to prescribe the mode in which redemption from sales under its own decrees may be effected.
The rule in the Circuit Court of the United States for the Northern District of Illinois requiring a judgment creditor to pay the redemption money to the clerk of that court, and not to the officer holding the execution, sustained as being within the domain of practice, and not affecting the substantial right to redeem within the time fixed by the local statute.
The Illinois statute of 1879, entitling the purchaser in case of redemption to receive interest upon his bid at the rate of eight percent per annum (the previous law prescribing ten percent), is applicable to all decretal sales of mortgaged premises thereafter made, although the mortgage was given before the passage of that statute. Such reduction in the rate of interest did not impair the obligation of the contract between mortgagor and mortgagee, because the amendatory statute did not diminish the duty of the mortgagor to pay what he agreed to pay, or shorten the period of payment, or affect any remedy which the mortgagee had by existing law for the enforcement of his contract.
The purchaser at decretal sale is entitled to interest at the rate prescribed by statute when he purchased. The amendatory statute operated proprio vigore to change the rule of court previously fixing the rate at ten percent.
The existing laws with reference to which the mortgagor and mortgagee must be assumed to have contracted are those only which in their direct or necessary legal operation controlled or affected the obligations of their contract.
Bill for foreclosure of a mortgage; decree of foreclosure demand to redeem and tender of payment; petition of the plaintiff, purchaser at the foreclosure sale, for a master's deed denial of that petition, and an appeal from that denial.
The property involved in this suit was certain real estate in the City of Chicago covered by a mortgage, executed January 29, 1880, by W. H. W. Cushman and wife to secure the Connecticut Mutual Life Insurance Company in the payment of $75,000, five years thereafter, with interest payable semiannually at the rate of nine percent per annum. It was thereafter conveyed, subject to that mortgage, to one W. H. Cushman.
The local law in force when the mortgage was given provided that upon a sale of lands or tenements under execution, the officer should give to the purchaser a certificate showing the property purchased, the sum paid therefor, or, if the plaintiff was the purchaser, the amount of his bid and the time when the purchaser (unless the property be redeemed as provided in the statute) would be entitled to a deed. A duplicate of such certificate, signed by the officer, was required to be filed by him
in the office of the county recorder within ten days from the sale. Within twelve months from the sale, the defendant, his heirs, executors, administrators, or grantees may redeem by paying the purchaser, or the officer for his benefit, the sum bid by the former, with interest thereon at the rate of ten percent per annum from date of sale. Whereupon the sale and certificate becomes null and void. After the expiration of twelve and at any time before the expiration of fifteen months from the sale, a judgment creditor (even one who became such after the expiration of twelve months from the sale, Phillips v. Demoss, 14 Ill. 413) may redeem by suing out execution, placing the same in the hands of the proper officer (whose duty is to endorse thereon a levy upon the property to be redeemed), and by paying to such officer, for the use of the purchaser, his executors, administrators, or assigns, the amount for which the premises were sold, with interest at the rate of ten percent per annum from the date of sale. The officer, having filed in the county recorder's office a certificate of the redemption by such judgment creditor, is required to advertise and offer the property for sale under the execution. The judgment creditor, thus redeeming the property, is considered as having bid at the execution sale the amount of the redemption money paid by him, with interest from the date of redemption to the day of sale. If no larger bid is offered, the property is struck off and sold to such judgment creditor, who becomes entitled to a deed.
The statute provides that the whole or part of any lands sold under execution may be redeemed by a judgment creditor in the like distinct quantities or parcels in which the same are sold; also, if there be no redemption within the time prescribed, that the purchaser is entitled to a deed; further, that "lands sold under and by virtue of any decree of a court of equity for the sale of mortgaged lands" may be redeemed by the mortgagor, his heirs, executors, administrators, or grantees, and by judgment creditors, in the same manner as is prescribed for the redemption by such parties, respectively, of lands sold under executions at law.
By a subsequent act in force July 1, 1879, the foregoing statutes were amended so as to require the party redeeming to pay the amount going to
the purchaser, with interest at the rate of only eight percent per annum. This act continued in force till after July 1, 1879.
After the passage of this act, the rules of the circuit court relating to redemption were amended so as to be read as follows:
"Ordered that the following rules be entered in regard to the redemption of property from sales under decrees in chancery in this court:"
"First. That whenever any real estate is sold by a master in chancery, special commissioner, or other officer of this court by virtue of any decree of foreclosure of mortgage or vendor's lien, or mechanics' lien or for the payment of money, the master in chancery, or officer making such sale shall, instead of executing a deed for the property so sold, give to the purchaser a certificate describing the premises purchased by him, showing the amount paid therefor, or, if purchased by the complainant, in whose favor the decree is made, the amount of his bid, and that such purchaser will be entitled to a deed of the property so purchased, on the expiration of fifteen months from the date of said sale, unless said property shall have been duly redeemed."
"Second. It shall be the duty of the master in chancery or other officer making such sale to report the same to the court within ten days from the day of the making thereof unless time for filing said report shall be extended by the court, which report shall be confirmed as a matter of course unless objections to said sale are filed within twenty days after said report is required to be filed."
"Third. Any defendant in the suit in which such decree is rendered, his heirs, administrators, or assigns, or any person interested through or under the defendant in the premises so sold, may, within twelve months from said sale, redeem the real estate so sold by paying to the purchaser thereof, his heirs, executors, or assigns, or to the clerk of this court for the benefit of such purchaser, his executors, administrators, or assigns, the sum of money for which said premises were sold or bid off, with interest at the rate of ten percent per annum from the date of such sale, and in case such redemption is made by payment of the money to the clerk, the person so redeeming shall also pay an additional sum of one per cent. on the amount so paid in as the clerk's fee for receiving and disbursing said redemption, and the clerk on receiving
said redemption money shall at once deposit the same in the registry of this court, and file a certificate among the papers in the cause in which said decree was entered, stating that said real estate has been redeemed."
"Fourth. If property sold under any decree of this court shall not be redeemed by the defendant or defendants in the decree, or some persons claiming by, through or under him or them, within twelve months from the date of said sale, then any creditor of the debtor defendant or defendants in such decree who holds a decree or judgment in fall force and on which he is entitled to execution against such debtor defendant or defendants, may redeem said property after the expiration of twelve months and before the expiration of fifteen months, in the following manner. Such creditor shall sue out an execution on his decree or judgment and place the same in the hands of the proper officer to execute, who shall thereupon endorse on such execution a levy on the property which is to be redeemed, and thereupon the person desiring to make such redemption shall pay to the holder of such certificate or to the clerk of this court the amount for which the premises to be redeemed were sold, with interest at the rate of ten percent per annum from the date of such sale, and if the redemption is made by the payment of the money to the clerk, there shall also be paid the additional sum of one percent on the amount of money so paid to redeem as the clerk's fee for receiving and disbursing said redemption money. And the clerk shall at once pay said money into the registry of the court for the use of the person entitled thereto and give a receipt for said sum to the person making such redemption."
"And the clerk of this court shall thereupon make and file in the office of the recorder of the county where said premises are situate a certificate of such redemption, and the officer in whose hands said execution shall have been placed and who shall have made said levy shall proceed in the manner required by the twentieth and twenty-first sections of chapter seventy-seven of the Revised Statutes of Illinois, entitled 'Judgments, decrees, and executions.' After the first redemption, made as aforesaid, any other judgment or decree creditor who shall have the right under the laws of this State to redeem said premises from the first redeeming judgment or decree creditor may apply to this court for leave to redeem said premises from the creditor first
redeeming the same, and the court will make such order in regard to further redemption as the rights of the parties under the law shall seem to require."
"Fifth. In all cases when the master in chancery or any other special or general officer of this court is required to make sale of real estate under any decree or order of this court in any chancery suit, notice of the time and place of such sale shall be given by publication in some newspaper of general circulation published in the county where said real estate is situated, and in case there is no such newspaper published in such county, then such publication shall be made in one of the newspapers hereafter named, published in the City of Chicago, such publication to be made as often as once each week for three successive weeks, and the first publication shall be at least twenty days before the day fixed for such sale."
On the 12th day of December, 1877, the insurance company instituted a suit for foreclosure in which a final decree of sale was passed on the 14th day of July, 1879. The sale occurred on the 15th day of August, 1879, when the insurance company became the purchaser of various lots, into which the mortgaged premises had been subdivided at prices aggregating in amount the principal and interest of its debt, the latter being computed up to the decree at the rate stipulated in the mortgage, and thereafter at the statutory rate of six percent per annum. The sale was duly confirmed by an order entered October 10, 1879.
On the 3d day of November, 1880, these rules being in force and no redemption having been made by the mortgagor or by anyone claiming under him, a judgment by confession on a warrant of attorney was entered in the court below for $10,150 in favor of Henry S. Monroe against W. H. Cushman, grantee of the mortgagor. An execution on that judgment, sued out November 9, 1880, was placed in the hands of the Marshal of the United States for the Northern District of Illinois, who endorsed thereon a levy, as of that date, on a portion of the lots purchased by the insurance company. Monroe, on the succeeding day, deposited with the clerk of the federal court the sum of $12,741.95, which covered as well the aggregate
amount of principal and interest, as the commissions and fees allowed to the clerk. R.S. § 828. Thereupon, on the next day, the clerk, under his hand and seal of office, issued a certificate of redemption for the lots so levied on.
On November 15, 1880 -- on which day, according to the rule established by the Supreme Court of Illinois, the additional three months given to judgment creditors expired -- Robert D. Fowler, assignee of Monroe's judgment and of his interest in the levy and redemption that has been made, deposited with the clerk of the federal court the further sum of $62,047.01 for the redemption of certain others of the lots purchased by the company. That sum covered the latter's bid for those lots, with interest at eight percent. A certificate of redemption covering such lots was issued on the day of Fowler's deposit. The marshal, on November 16, 1880, advertised for the sale on the 8th day of December, 1880, of all the lots sought to be redeemed under the Monroe judgment and execution. The record does not show the endorsement of any additional levy beyond that made November 9, 1880. The sale occurred as advertised, Fowler becoming the purchaser of all the lots embraced in the two certificates of November 10 and November 15 at a sum equal to the amount of the sums deposited, with interest at the rate of eight percent per annum from the date of such deposits. No money was paid to the marshal, and none to any other officer except that deposited with the clerk, who, as required by the act of Congress and the rules in question, placed it in the registry of the court.
The property so sold was, as is claimed by appellee, subsequently redeemed within the time and in the mode prescribed in the rules established by the court below for the redemption of real estate from sales under decrees.
But the contention of the insurance company is that those rules do not conform to the statutes of Illinois; that the latter, equally, as to the time within which, the persons by whom, and the mode in which redemption may be effected, constitute a rule of property, obligatory as well upon the federal court as upon the courts of the state, and as the property sold was not redeemed in the particular mode prescribed by the local statutes,
there was no effectual redemption, and consequently the company became entitled to a deed at the expiration of the period fixed for the exercise of the right of redemption.
The circuit court was of opinion, and so adjudged, that the rights of the parties as to the mode of redemption were to be determined by its rules, and since there had been a substantial compliance with them, the application by the company for a deed was overruled. From the final order denying that application the present appeal is prosecuted.