Straight v. Harris

By the Court, Colb, J. It is very clear that tbe judgment of foreclosure in tbe case of Haseltine vs. Harris, Straight et al., did not bar or cut off tbe respondent’s rights under bis prior mortgage. Eor although be was made a party to that suit, it was for tbe express purpose of cutting off any claim which be might have in tbe mortgaged premises accruing subsequently to tbe date of tbe mortgage in that suit. Tbe complaint in tbe suit of Haseltine vs. Harris, Straight et al., alleges that Straight and others therein named claimed to have an interest in tbe mortgaged premises, but which claim, if any, accrued subsequently to tbe mortgages therein foreclosed. Straight entered no appearance in that case, but let judgment go by default. What then was tbe effect of that judgment so far as be was concerned ? Simply to bar any right or claim which be might have in tbe premises, accruing subsequently to tbe Huntington mortgage. But clearly it could not bar and cut off bis rights under a mortgage prior [513] and paramount to that mortgage. This point was directly adjudicated in tbe case of Strobe vs. Downer, recently ded in this court. 13 Wis., 10. That was an action to foreclose a mortgage, to which Downer, as assignee of a subsequent mortgage, was'a party. He claimed that Strobe’s interest in the mortgaged premises had been barred and cut off in a previous suit instituted by him to foreclose his mortgage, to which suit Weimar, the assignor of Strobe, had been made a party. It appeared that the assignment of the first mortgage had never been recorded, and that when Downer took the assignment of the second mortgage, he supposed that the prior incumbrance had been paid off and discharged. In the Downer suit a printed blank had been used for the complaint' in which, after stating that Weimar claimed an interest in the premises, the claim that such interest accrued subsequently to the mortgage sought to be foreclosed, was erased. The case was considered in the same light as though Weimar had never assigned his mortgage. Anri we held that although he had been made a party to that suit, yet as his right was prior and paramount, it was not affected or barred by the proceedings in the Downer suit. It would certainly be strange and extraordinary doctrine, to say that a judgment of foreclosure barred and cut off rights under a prior mortgage, when the holder of such prior mortgage did not appear in the action, and when the complaint alleged that he was a subsequent incumbrancer," and proceeded against him as such. In no possible view of the case can any such effect be given to the judgment in the case of Has-eltine.vs. Harris, Straight et al, as claimed for it here. It could not affect rights accruing under prior liens. That judgment may well be held to bar and cut off the claims of all parties defendants whose rights in the mortgaged premises accrued subsequently to the mortgage there foreclosed, but can have no wider application. See the authorities cited in Strobe vs. Downer, where this question is fully discussed. Another question presented is as to the effect of the release of a portion of the mortgaged premises by Straight. It is contended that the holder of the second mortgage was great [514] ly prej ucliced by this release, and tbat where this is the case, rule in equity is, that a prior mortgagee will not be permitted to charge other portions of the premises with the debt, without deducting the value of that part released. This may be the rule where the prior mortgagee releases with notice of the subsequent incumbrance. It is not pretended that Straight had any actual notice of the existence of the subsequent mortgage, and we have recently decided in Deuster vs. McCamus [ante, p. 307], that the recording of a subsequent mortgage was not a sufficient notice to a prior mortgagee, who releases a portion of the mortgaged premises, to bring him within the operation of the equitable rule just cited. Had it appeared that Straight, when he executed the release, had notice of the existence of the Huntington mortgage, the rule would have applied. This disposes of all the material questions in the case. The judgment of the circuit court is affirmed.