Skinner v. Harker

Mr. Justice Campbell delivered the opinion of the court. There are but two questions for determination upon this appeal: First. Is the thirty acre tract the primary fund out of which, as between the different debtors, the entire mortgage debt is first to be paid, before resorting to. the other tract of — 339 — one hundred and eighteen acres, or is the former liable only for its proportionate share of the indebtedness ? Second. Was the personal judgment against appellants authorized ? In this opinion Harker and Williams are designated as mortgagees, the securities as mortgages, and the notes as mortgage indebtedness, for the rules as to the questions before us concerning mortgages proper apply equally to trust deeds, both being liens or securities upon land for the payment of a debt. 1. We are clearly of the opinion that the court erred in decreeing the thirty acre tract not primarily holden for the payment of the entire mortgage debt represented by the Crippen, Lawrence & Co. notes. The assumption by the plaintiff, in the deed of conveyance to it, of only a proportionate.share of such incumbrance is good as against its immediate grantor; and plaintiff’s personal liability to its grantor and to the mortgagee is limited by such contract; but as to the mortgagee and the previous grantees, in so far as is concerned the mortgaged land, the contract between the mortgagee and mortgagor cannot thus be varied, nor can the contract of assumption by the prior grantees inuring to the benefit of the mortgagee be thus set aside. When a mortgagor grants the mortgaged premises in separate parcels, and at different times, he may, as between himself and his grantees (though not as against the mortgagee) burden one tract with the entire debt, and release the remainder; and when he deeds one parcel to a grantee who assumes and agrees to pay the entire mortgage debt, and subsequently, by warranty deed, conveys the balance of the land, as between these three persons and the subsequent grantees with notice, the tract first conveyed is, in equity, the primary fund which must be exhausted before the other tract subsequently conveyed can be applied to the payment of the debt. Therefore, when Foote, by his deed, which was at once recorded, conveyed to Skinner and Ware the thirty acre tract, and they agreed to pay, as part of their purchase price, the entire debt secured by the mortgage, this — 340 — tract, in the hands of these and all subsequent grantees, became primarily charged with the payment of the whole debt. The mortgagee and all prior grantees, unaffected by plaintiff’s assumption from his immediate grantor of only a part of the debt, had the contract right to subject this tract of thirty acres to the burden of the entire debt before resorting to any of the remaining one hundred and eighteen acres; so that the mere fact the mortgagee had a junior mortgage upon the latter tract only which it proposed to reserve as a separate and distinct fund to satisfy a later indebtedness, is immaterial so far as the plaintiff in this case is concerned, for the mortgagee had the unquestioned right to do this. To this effect are 3 Pomeroy’s Eq. Juris., secs. 1206, 1225; 1 Jones on Mortgages, sec. 749 et seq.; Sheldon on Subrogation, sec. 82; 2 Jones on Mortgages, secs. 1091, 1625; Burger v. Greif, 55 Md. 518; Welch v. Beers, 8 Allen, 151; Marsh v. Pike, 10 Paige, 595; Caruthers v. Hall, 10 Mich. 40 ; Weber et al. v. Zeinet et al., 30 Wis. 283; 2 Devlin on Deeds, secs. 1056, 1074, 1096. For still another reason this decree is wrong. If the indebtedness must be apportioned between the two tracts, which is not the rule under the facts of this case, the proportionate share thereof which the thirty acres should pay is not necessarily such proportion as the said tract bears to the entire quarter section. The record shows that the thirty acres were worth one hundred thousand dollars. There is no evidence of the value of the one hundred and eighteen acres. It may be worth more or less per acre than the smaller tract. If there is any difference in value, the proportion the latter tract is to pay should be determined upon the basis of relative value, and not that of the relative number of acres in the two parcels. There being no evidence in the record upon which to predicate the finding in the decree in this particular, the court erred in apportioning the burden upon the basis of acreage. 2 Jones on Mortgages, sec. 1625. 2. That the appellants’ assumption of the mortgage debt made them, as to their grantor, the primary debtors of the — 341 — mortgagee, and the grantor their surety, and that they, as such grantees, are personally liable to the mortgagee for the whole debt, is unquestioned. That the rights of all the parties who did appear, as well as the rights of all concerned as successive grantees, might, under proper pleadings, be settled in one action, is also true. The law is, also, that the mortgagee has his election to sue and obtain a personal judgment upon the contract of assumption before resorting to a foreclosure of the mortgage. Instead of doing so, however, in this case, the mortgagees elected to pursue their remedy against the land by sale and foreclosure at the hands of the trustee. To the enforcement of this remedy the plaintiff objected, and by suit sought to restrain the sale upon the ground that this land was subject only to its proportionate share of the mortgage debt. The answer and cross complaint of the mortgagees, Harker and Williams, sought to defeat the injunction by obtaining a decree to subject this thirty acre tract to the payment of the debt, as the primary fund for that purpose, and to preserve for the satisfaction of a junior debt, owned by them, the remainder of the quarter section, upon which latter only was their junior debt secured. A like object as to the thirty acre tract was the aim of the appellants in their answer. Up to this stage certainly no reasonable claim can be made that appellants’ personal liability was an issue in the ease. The object which James B. Foote, the mortgagor, had in view was to have his grantees, who assumed the mortgage debt, save him harmless; while that of his wife, as the last purchaser and grantee of the one hundred and eighteen acres that were intended to be relieved of the lien of the mortgage until the parcel first conveyed was exhausted, was to cast upon the latter the burden of earing for the mortgage debt, to the extent of its value. The Footes were not made parties by the plaintiff, nor. does the record show that the court ordered them to be brought in at the request of the mortgagees. They voluntarily appeared and filed their pleading, but did not, so far as — 342 — the record discloses, serve a copy upon the appellants, as section 17 of the code of 1887 requires. If their cross complaint sought to introduce into the case any such issue as appellants’ personal liability, before that could be done a copy of their pleading must be served upon the adverse parties, which was not done, and this requirement was not dispensed with, by agreement or waiver. It is clear, therefore, that the pleadings tendered no such issue as warranted the court in rendering a personal judgment against the appellants. A careful examination of the record satisfies us, in addition to this, that it was not treated by the parties as an issue in the case, nor was there any evidence responsive to it, and that the first intimation thereof came when the court entered its so-called second decree. The mortgagees having thus voluntarily elected to pursue _their remedy by a sale of the mortgaged property, should be held to that remedy exclusively, unless the proceeds of the sale were insufficient to satisfy the mortgage debt, and until that fact was ascertained. The mortgagees not having asked for personal judgment against their primary debtors, such a judgment in this action is not to stand, merely because it might have been obtained in an action brought for that purpose, or might have been rendered, had the pleadings so warranted, in the present action. 5 Ency. PI. & Pr., pp. 624, 673, 957, 958, et seq. Besides, the appellants insist, also, if this personal judgment is paid by them, that they will not be in a position to be subrogated to the rights of the mortgagees, and their remedy against their own grantees will be ineffective, if not altogether lost. However this may be, and whatever the appellants’ equities in this case may be, if they should be required to pay the judgment, we need not determine, because, for another reason, this judgment should not stand. If the pleadings and the evidence had warranted the personal judgment,'—this being an equitable action,—all of the parties to be affected by the decree should have been brought in, if not already before the court, and the equities of the various grantees and debtors, among themselves, determined — 343 — in the one action. To say that the appellants may still, by an appropriate action, have contribution from those liable to them, is no sufficient answer. If in the pending action, which was brought against the trustee by a remote grantee of part of the mortgaged property who personally assumed only a part of the debt, merely to restrain a sale and foreclosure of the trust deed constituting.the incumbrance, the issues have been so enlarged in the progress of the case as to justify a personal judgment against another and prior grantee of the same parcel of the mortgaged property who assumed the entire mortgage debt, the court might have provided, and it was its duty to provide, in the decree for the protection of such grantees when they, or any of them, paid the judgment, not only with respect to the mortgaged property, but as against their grantees, who, in turn, assumed the same debt. The decree contains no such provision as to the latter, and .erroneously cancelled the" mortgage upon the only property which furnished any security for the appellants. The conclusions reached by us in no wise prejudice or impair the rights of the mortgagees. They may be delayed for a time in the recovery of their debt, which is, however, the result of their own election. The result of our determination is that the thirty acre tract is the primary fund for the payment of the mortgage debt, and that the court should have decreed a sale thereof in accordance with the prayer of the mortgagees unless the owners of the tract paid the full amount of the indebtedness. The injunction was improperly awarded, and should be vacated. The mortgagees, and various grantees, if they so desire, may, in the district court, have leave to amend their pleadings as they are advised, so that all of the questions involved in this case and the rights of all the parties interested may be determined in one action; and all necessary parties, if not already present before the court, may be brought in for that purpose. The decree of the district court will, therefore, be reversed, and the cause remanded with instructions for further proceedings in accordance with the views herein announced. Reversed.