Hodson v. Treat

[278] By the Court, Smith, J. This bill was filed by the complainant to redeem the premises described therein, from a mortgage executed by William Hodson to the complainants. The plaintiff claims as a purchaser subsequent to the mortgage. The facts in the case are substantially as follows : On the 21st day of November, 1850, William Hodson and wife executed and delivered to the defendant, Eliza A. Morgan, now the wife of the defendant, David S. Treat, a mortgage for the premises described in the complaint, which was recorded on the day of its date. On the 29th day of September, 1851, and before the mortgage was due, the said William Hodson and wife executed and delivered to the complainant, his son, a warranty deed of the mortgaged premises, which was recorded in the register’s office on the 10th day of February, 1853. On the 28th day of January, 1852, the defendant, Eliza A. Morgan, now Eliza A. Treat, by S. A. Hudson, her solicitor, filed her bill of foreclosure, in the circuit court of Rock county, making parties thereto such persons as appeared of record to have an interest in the said premises, but the present complainant was not made a party; and afterwards, on the 28th day of September, 1852, a decree of foreclosure and sale was made in the usual form. On the 16th day of December, 1852, the mortgaged premises were sold under and by virtue of the decree; and were bid off by the ■ said S. A. Hudson, the solicitor for the complainant in said suit, for the sum of $270, a sum insufficient to satisfy the decree, interest and costs. At the sale, William A. Hodson appeared as the agent of the complainant, and also David Noggle, Esq., and for, and on his behalf, gave public notice of his interest in said premises, that he held the same by virtue of a war-anty deed; that he had not been made a party to the suit, and that all who purchased must purchase subject to his right of [279] redemption. Notwithstanding this notice, the sale went on, and the premises were bid off as before mentioned. The only question presented for our consideration in this case is: Did the purchaser at the foreclosure sale purchase subject to the right of the complainant to redeem ? There can be no doubt that John R. Hodson took, by his deed from William Hodson and wife, the fee in the premises, subject to the mortgage of the defendant. He had the right at the date of his deed, or at least as soon thereafter as the mortgage should become due, to discharge the incumbrance by paying off the mortgage. After the mortgage had become due, his right of redemption continued until it should be foreclosed in equity, or should lapse by time. It could not be foreclosed by any proceedings in equity to which he was not a party. His title might possibly be superceded by another registered conveyance prior to the registry of his. Perhaps a bona fide purchaser at the foreclosure sale, without notice, would hold in preference to the complainant’s unrecorded deed. But the purchaser in this case had notice of the complainant’s interest, and therefore that question does not arise. His equity of redemption had not been foreclosed in equity, for he was not a party, and authority need not be cited to show, that a purchaser of the fee subsequent to The mortgage is not barred of his equity of redemption by a decree of foreclosure, unless he is a party to the suit. It will not be contended that his equity of redemption was barred by lapse of time. How then, or in what manner, was his right of redemption cut off ? It is contended that this sale by William Hodson to John R. Hodson, was fraudulent as to the defendant, being made to hinder and delay her in the foreclosure of her mortgage. But this is simply impossible. It is not possible for the mortgagor to defraud his mortgagee by a conveyance of the premises. The mortgage is registered, and will hold in spite of all manner of conveyances by the mortgagor. The same re [280] marks apply to subsequent purchasers. They must of necessity purchase subject to the mortgage, and the interests of the mortgagee can, by no possible contrivance be affected thereby. There was therefore no fraud in the sale to the complainant. Such transactions are of every day occurrence. The interest acquired by the complainant is one recognized by law, and is entitled to the protection of the law. It is contended that the conveyance from William to John R. Hodson was fraudulent and void as to the creditors of the former. If it were so, it was not void as to the defendant. Her interest in the lands was secure. If, however, it was the design of William and John R. to defraud the creditors of the former, it is somewhat singular that the deed was not recorded, and that William remained the ostensible owner all the while. But this discussion is fruitless, for it has no application to the case. But it is contended, “ that to sustain the right of the complainant in this case to redeem, would place it in the power óf a crafty mortgagor forever to prevent the foreclosure of his mortgage.” This is the view which the circuit judge took of the case, and on this view alone he appears to have based his decree dismissing the bill. We think this is a mistaken view of the case. This complainant purchased before the mortgage was due, and hence before the commencement of the suit. There could be but one holder of the fee, or equity of redemption at the commencement of the suit, and he should be made a party if known. Of course any conveyance by the mortgagor after the commencement of the suit, would be made Ms pendens, and with notice to the purchaser. There would therefore be no room for a mortgagor, however crafty or however numerous his creditors, to prevent or prolong the foreclosure of the mortgage. It is not pretended that the mortgagee must go hunting up grantees of the equity of redemption, up to the time of sale. But the equity of redemp [281] tion was in the complainant at the time of the commencement of the suit. There was no law requiring him to put his deed on record, or that forfeited his title in case he did not. Perhaps the complainant might have been estopped from asserting his title had he stood by and allowed the sale to be consummated without notice of his interest. But I have failed to discover, nor have we been cited to any law, authority, or rule of practice, which declares that the equity of redemption in the purchaser from the mortgagor, acquired before the mortgage is due, is extinguished by a decree of foreclosure to which he was not a party, because his deed was not on record at the time of the commencement of the suit, or of the decree. Such we do not believe to be the law. We think the notice given at the sale was sufficient to all parties, to the defendant through her solicitor, if the purchase was for her benefit; to Hodson personally, if for his. It might operate to delay the foreclosure; but this is always the case when new and essential parties are discovered. The complainant not having been made a party to the suit for the foreclosure of the mortgage, his equity of redemption was not thereby extinguished, and for aught that appears in the pleadings and proofs in this case, that equity still remaining in the complainant, the court below erred in dismissing the bill. The judgment of the court below must therefore be reversed, and the cause remanded to be further proceeded in, according to this opinion.