Fry v. Merchants' Insurance

COLLIER, C. J. It may be premised, that if a conflict of interest should exist among the defendants as to the disposition of the fund arising under the mortgage, of which the complainant is the assignee, beyond what is necessary to discharge it, the complainant should not be delayed in proceeding to a foreclosure and sale of the mortgaged premises, as its rights can be in no manner affected by a controversy, which merely concerns the defendants inter se se. Cullum et al. v. Erwin, 4 Ala. Rep. 453. It is certainly true, that a court of chancery should guard the interests of infants, who are brought before it, and see that no decree, not in conformity to strict law, shall be made, which injuriously affects their rights. Where the object of a suit is to foreclose a mortgage, to which such persons are defendants, an inquiry should be made, not only, whether a sale of the whole, or-only of a part, and what part of the premises will be most beneficial, but it is said the plaintiff must also prove his debt, before the master, in the same manner as if nothing had been admitted by the answer; and the master must report such proof, and also the computed amount/ of the principal and interest due; and of what, and which part of the premises, (if any short of the whole,) a sale would be sufficient to raise the debt; and at the same time, be most beneficial to the infant. Mills v. Dennis, 3 Johns. Ch. Rep. 367; Brinckerhoff v. Thalimer, 2 Johns. Ch. Rep. 486; Ontario Bank v. Strong, 2 Paige’s Rep. 301; Walker et al. v. Hallett, 1 Ala. Rep. 379. The order of reference, and report of the master, made professedly in pursuance of it, are defec [815] tive in several of the particulars, which we have stated are essential to the regularity of the proceedings. In respect to the dower interest of Mrs. Fry, neither the bill, nor her answer, alleges that she was, or was not, married to her deceased husband at the time the mortgage was executed, and the register does not show, by any proof accompanying his last report, which was the only one received and acted on by the chancellor, when their marriage took place. The report, however, affirms, that the interest of the deceased husband, “after the satisfaction of the complainant’s debt, is subject to the dower of Mrs. Fry; that the property should be sold clear of dower, and that her interest should be protected by allowing her one-fourth of the proceeds of said sale, after the payment of the complainant’s debt.” We infer from this statement, that the register was satisfied by proof, that the deceased mortgagor was not married to his surviving wife, at the time the mortgage was executed. His conclusion, that the wife should be allowed one-fourth of the remaining interest of her husband, after the complainant’s debt was paid, cannotbe supported as a legal proposition. In Beavers v. Smith, 11 Ala. Rep. 20, it was held, that when compensation is made in money, the decree should not be for a gross sum, by estimating the supposed present value of the widow’s life estate, but for the payment annually, of the sum ascertained to be the annual value of the dower interest, during the life of the dowress, secured by a lien upon the estate. See also Johnson v. Elliott, 12 Ala. Rep. 112. In Bell v. The Mayor of New York, 10 Page’s Rep. 49, the widow was the actor by bill in chancery, to be endowed of an equity of redemption. The chancellor said, “ where the heir has the right to redeem, and the wife is entitled to dower in the equity of redemption, she has the equitable right to redeem her dower, as against the mortgagee, and those claiming under him, upon the payment of such portion of the encumbrance as is equitable and just. Van Dyne v. Thayer, 19 Wend. Rep. 162. Where that equitable right is actually vested in her, by the death of her husband in possession of the premises, as in this case, I can discover no principle of law or equity, which authorises the mortgagee to deprive her of it, except by the institution of such proceed [816] ings against her, to foreclose the equity of redemption, as are by law, required to bar the equity of redemption of the heirs at law, in the same premises.” It must, however, be observed, that there is a statute is New York which, either in terms, or by an equitable construction, authorises a life estate in lands to be valued and compensated in money. Such, at least, is inferable from the case cited. But it is said further, “ In the ordinary case, of a life estate in the equity of redemption, existing in one person, and the remainder in fee belonging to another, if the mortgagee has foreclosed the equity of redemption of the remainder-man, but has through inadvertence, neglected to make the owner of the life estate a party to the foreclosure, the latter cannot claim possession of the premises, during the continuance of his life estate, upon paying the interest on the amount due upon the mortgage, from year to year, for life. But the court should, in such case, direct the master to fix a gross sum, upon the principles of which, the present value of a life annuity is calculated, considering the annual interest on the amount then due. on the mortgage, as the annuity. And the proportion of the mortgage money of the owner of the life estate, being thus ascertained, he should be permitted to redeem his interest in the mortgaged premises, by the payment of that amount ; and then to be let into the possession during the continuance of his particular estate in the premises. Or the decree might direct his life estate to be sold, for the purpose of satisfying his proportion of the debt thus ascertained, and that the surplus arising from such sale should be paid to him.” We have quoted thus largely from the case cited, though we cannot recognize it, at least, in some of its positions, as an authority to guide us, without overruling our decisions, and perhaps, arrogating, to some extent, the power of legislation. If Mrs. Fry is not entitled to dower, as against the complainant, the complainant is entitled to have all, or so mueh (as may be necessary) of the mortgaged premises sold, as may be required, after appropriating the nett amount of rents, since the premises have been placed in the hands of the receiver, to pay the debt sought to be recovered, with interest. The dowress has never, by any direct proceeding, asked an assignment of dower, and if she were, it would only be allowed her, if at all, [817] subject to the complainant’s rights, if they are paramount to her claim. In the present posture of the case, and upon the hypothesis that she was not married, until after the execution of the mortgage, all that a court of chancery could do, would be while it made the complainant’s security available, to affect in as small a degree as is consistent with this paramount object, her subordinate interest. We have not stopped to scan, with particularity, the ex-ceptións to the register’s report, though we have seen that it is obviously defective, in respect to the lien of the infant mortgagee. Nor will we inquire, whether the chancellor should not mero moiu have set it aside, as an insufficient basis for his final action. Whatever our conclusions might be, upon these questions, we are satisfied that the decree itself, is erroneous, in ordering a sale of the entire mortgaged premises, though they consisted of three several tenements, which, he directed to be sold separately. The decree certainly should not have adjudged all the property to be sold, if a part is sufficient to pay the debt. An application of the rents, as we have iudicated, should first be made, and then, only so much, and such part of the property (having a due regard to the interest of the widow and heir,) as will extinguish the mortgage. To enable him to act understandingly in the matter, there should be a special reference to the register, and a report by him. The priority of the subsequent incumbrances, is not a question which the assignment of errors presents, and perhaps, it will more appropriately arise upon the register’s report, subsequent to the sale under the decree of foreclosure. We therefore, decline its consideration. It was not incumbent upon the register, to have adopted the proposition of the guardian of the infant heir. The mode of sale it proposed, might, and would probably, have operated prejudicially to the defendant, who claims under George H. Fry, in subordination to the complainant, as well as to the branch of the bank of the state of Alabama, at Mobile. In protecting the widow and jheir, it is not allowable to disregard the interests of their co-defendants. This view is sufficiently indicative of onr opinion, upon several of the questions, suggested by the record, and if at [818] tentively observed, may serve as a guide in the ulterior proceedings, at least, so far as it respects the complainant’s rights, as against the defendants. We have but to add, that the decree is reversed and the cause remanded, that another reference may be ordered, &c. Dargan, J. not sitting.