Hinson v. . Adrian

Smith, C. J., after stating the above. While there is some diversity of opinion as to the practice in requiring the presence of prior and posterior mortagees in a foreclosure suit, the preponderance of authority favors the propriety, if not the necessity of their being parties, in order to a full and final adjustment to all the equities involved. The following rule is laid down by a writer on the subject, which seems reasonable and just: In general all incumbrancers, as well as the mortgagor ought to be made parties to a bill of foreclosure, and that, whether they are prior or subsequent incumbrancers ; those prior, because their rights are paramount to the foreclosing party; those subsequent, because their interests would otherwise be concluded without any opportunity to assert or protect them. Welf. Eq. Pl., 50; Mitf. Eq. Pl., 194; 2 Mad. Ch. Pr., 188; Story Eq. Pl., § 72;. Winchester v. Beaver, 2 Ves., 313. This would seem to result from the fact that the subordinate and'inferior liens are, by the sale, transferred from the corpus to the fund into which it is thus converted, with their respective priorities unimpaired, and must be then asserted and settled in its distribution. Cannon v. Parker, 81 N. C., 320. More especially should the second mortgagee be before the court, because his mortgage debt intercepts what remains of the fund after discharging the first mortgage, before it reaches any of the plaintiff’s demands, and *64 must be first satisfied. The Code has not in this Respect changed the practice in courts of equity. We think the second mortgagee, whose interest is set up in the answer of Knotts, and not (as in respect to the other creditors) in an affidavit offered just as the jury trial begins, ought to be made a party, and the decree of sale suspended until he is served with notice and has opportunity to come in and assert his claim ; and perhaps the same course should be pursued toward all the judgment creditors who have liens, in order that the rights of each may be adjusted in the action, and all controversies among them ended in the apportionment of the moneys arising from the sale. The court recognizes the propriety of their presence before final distribution, in the provision in the decree for a reference and account, but it is more appropriate they should be before the court when the decree of sale is made, and be heard, if they have aught to say against its being made, or as to its terms, and at least before the sale is confirmed. The verdict will remain. The judgment was therefore prema-' ture and must be reversed at the costs of the appellees, plaintiffs,, and remanded for further proceedings in the court below. Error. Reversed.