Bliss v. Weil

By die Gourt, Cole, J. The single question presented in this case is, whether the proceedings and decree of foreclosure in the United States district court constitute a bar to this suit. The action is brought on a promissory note given by the respondent to the appellant, bearing date the 26th of [37] August, 1857, for $8,140, and made payable two years from date. At the same time another note was given for payable ninety days from date. To secure the payment of these notes, a mortgage was simultaneously executed by the respondent and wife. When the first note became due, proceedings were instituted in the United States district court for a foreclosure and sale of the mortgaged premises, to pay the amount due. A decree of foreclosure and sale was entered, by which the court adjudged that the sum of $861 was then due on the notes and mortgage; that the sum of $3,140 was to become due with interest; and that the mortgaged premises could not be sold in parcels; and ordered a sale of the mortgaged premises. The premises were sold and bid in by the appellant for $400, and a judgment for the deficiency due and unsatisfied was given on the coming in and confirmation of the marshal’s report. The decree also contained the usual clause that in case the amount actually due with interest and costs should be paid before the sale, the -complainant might, at any time thereafter, when any principal sum or interest secured by the note and mortgage should become due, go before a master on the foot of the decree, and procure a report of the amount which might be due, to the end that upon the coming in and confirmation of such report a decree might be made for a sale of said premises to satisfy the amount dne; and a further clause for judgment for any deficiency ultimately found to be unsatisfied by the proceeds of the mortgaged property. Now it is contended that this decree constitutes a bar to an action upon the second note; and the circuit court so decided. This decision we hold erroneous. Chancellor Kent states that the general rule is, that the mortgagee may exercise all his rights at the same time, and pursue his remedy in equity upon the mortgage, and his remedy at law upon the bond or covenant accompanying it concurrently. 4 Kent’s Comm., 184. In the absence of special statutory provisions prohibiting it, there seems to be no doubt that the appellant might have brought his action at law upon the notes when due, and at the same time foreclosed the mortgage in equity. And although there has been [38] a great conflict in tRe authorities in England and in the States as to what would be the effect of bringing an action at law upon the obligation after a foreclosure in equity, and whether such action would open the foreclosure and let in the equity of redemption, still we find nothing in the cases which sustains the decision of the circuit court in this case. We fail to perceive anything in principle or reason which forbids the appellant from sustaining the action. His debt has not been paid. The mortgaged property has been sold and fully exhausted. Unless he has an action in per-sonam, he is remediless in the premises. We have been referred to section 78, chap. 84, R. S., 1849, which declares that after a bill is filed for the foreclosure of a mortgage, while the same is pending, and after a decree rendered thereon, no proceedings whatever shall be had at law for the recovery of the debt secured by the mortgage,- or any part thereof, unless authorized by a court of chancery. But this shows that even under that statute a suit at law might be prosecuted on the special order of the court of equity. The statute, however', requiring special leave is not now in force, and consequently the cases in 8 Paige, Williamson vs. Champlin, 70; and 9 id., Suydam vs. Bartle, 294, to which our attention has been called, are inapplicable. It is suggested that the record of the district court is a complete bar to the action, for the reason that the appellant could have obtained execution on application to that court, for any deficiency after the sale of the mortgaged premises. But the note upon which the suit is brought was not merged in that decree, and no judgment was then given upon it, for the obvious reason that it was not due. The decree does not profess to cover this note; it merely provides that when it should become due, the appellant might go before a master on the foot of that decree, and procure a report as to the amount due, and that upon the coming in and confirmation of that report, a further decree might be made for a sale of the mortgaged property. This clause in the decree was based upon section 89, chap. 84, R. S, 1849, and was undoubtedly intended to save the mortgagee the necessity and expense of filing a bill for a foreclosure and sale of the mortgaged prop39 ertj whenever any instalment of principal or interest became due. Having once obtained a decree for a sale of the property, he was enabled to avail himself of its conditions whenever default was made, while the property remained unsold. But surely that portion of the decree would have been ineffectual and would have had nothing to operate upon after the property had been sold. It was not designed to give the mortgagee the right to come into court, after the sale, and enter up a personal judgment upon the notes accompanying the mortgage. Such was not the object of these conditions in decrees of foreclosure, and we are not aware that such a practice has ever obtained. It appears to us that it would be a great stretch of power in a court to enter up personal judgments in that manner, and the practice* ought not to be tolerated. So, since there never has been a judgment on the note sued on, and as it would be irregular and improper to attempt, after a sale of the mortgaged premises, to give a judgment upon it under the decree in the United States district court, the record of that court offered in evidence constituted no bar to the action. Having no remedy under that decree, he should be permitted to proceed on the- note and recover the balance of the debt. 4 Kent’s Comm., 184, and cases cited in the notes; Hatch vs. White, 2 Gallison, 152; Omaly vs. Swan, 3 Mason, 474; Schoole vs. Sall, 1 Sch. & Lefroy, 176; Dunkley vs. Van Buren, 3 Johns. Ch. R., 330; The Globe Ins. Co. vs. Lansing, 5 Cow., 380. 'The judgment of the circuit court is reversed, and a new trial ordered.