Flentham v. Steward

Ragan, C. On the 5th of August, 1889, one Daniel O. Steward made in writing of said date his promissory note for $500, due on August 1, 1894, with interest at the rate of seven per cent per annum, payable annually, such interest evidenced by coupons or interest notes of $35 each, attached to said principal note. This principal note and coupons were made payable to the order of one Dan. H. Cole. To secure the payment of said debt Steward executed to Cole a mortgage upon certain real estate in Hitchcock county. This mortgage debt Cole duly assigned to William S. Flentham. The notes and mortgages were executed by Steward to Cole in consideration of a loan of $500 made by the latter to Steward in August, 1889. The loan was negotiated by Dawes & Foss, copartners, and at the time of the delivery of the notes, coupons, and mortgage to Cole, Dawes & Foss, in writing, guarantied the payment of said principal note and the coupons. It appears also that. Steward paid, or promised to pay, Dawes & Foss a certain compensation for procuring this loan for him, and to secure the compensation promised Steward gave Dawes & Foss a second mortgage upon the same real estate which he had pledged to Cole. It appears that trouble arose between James W. Dawes and Fayette I. Foss, the individuals composing the copartnership of Dawes & Foss, that litigation ensued, and that the court in which such litigation was instituted appointed one Charles C. White receiver of the effects of said copartnership of Dawes & Foss. Default hav [643] ing been made in the payment of the mortgage debt,. William S. Flentham, Cole’s assignee, brought suit in the district court of Hitchcock county to foreclose the mortgage. Daniel O. Steward and his wife, James W. Dawesr Fayette I. Foss, and Charles C. White as receiver of the copartnership effects of Dawes & Foss, were made parties defendant to the action. The connection of Steward and wife with the case need not be noticed. Dawes & Foss and White, the receiver, entered their voluntary appearance to the suit of Flentham. In due time a decree was rendered finding the amount due Flentham on his mortgage debt and giving him a . first lien upon the mortgaged premises to secure its payment. The court also found the amount due Dawes & Foss and the receiver on the second mortgage given to them by Steward, and that Dawes & Foss and the receiver had a second lien upon the mortgaged premises to secure the amount found due them. The real estate was then sold by the sheriff at public auction and purchased by Flentham. After applying the amount bid at the sale towards the payment of FJentham’s decree and the costs of the foreclosure proceedings there still remained a balance due on his decree. Flentham moved the court for a personal judgment against Dawes & Foss and the receiver for the balance remaining unpaid on the decree. The district court denied this motion, and from this order Flentham has appealed. In the petition filed by Flentham for the foreclosure of his mortgage he averred that Dawes & Foss had guarantied in writing the payment of the mortgage debt, setting out a copy of the guaranty, and that White had been appointed receiver of the effects of thecopartnership of Dawes & Foss; and prayed in the petition for a personal judgment against Dawes & Foss and White, as receiver, for any deficiency that might be due him, after applying the proceeds of the sale of the mortgaged property towards the liquidation of the mortgage debt. To sustain this decree counsel for the appellees contend : [644] 1. That as the copartnership effects of Dawes & Foss were in the hands of a receiver the latter could not be sued without leave of the court which appointed him, and as such leave was not obtained, the district-court of Hitchcock county had no jurisdiction over the copartnership of Dawes & Foss, nor over the person of the receiver. The general rule undoubtedly is that a receiver may not be sued without leave of the court which appointed him; but if this rule is applicable to such a case as the one at bar it would seem that the fact that the receiver had been sued without leave of the court appointing him was a matter of defense for the receiver, and that the suing him without permission of the court which appointed him would not of itself render invalid the process of the court served on him, nor prevent the jurisdiction of the court in which he was sued from attaching to his person; and that a judgment pronounced against such receiver would not be absolutely void for want of the court’s jurisdiction over him, because the record did not disclose that the party bringing the suit had first obtained leave of the court who appointed the receiver to sue him. The receiver having voluntarily < ntered his appearance in this action, and not having objected to the jurisdiction of the court over him in any manner, and having asked the court for and obtained affirmative relief in the action by taking a decree On the mortgage of Dawes & Foss, the question of the jurisdiction of the district court over the receiver comes too late, and he must be deemed to have submitted himself to the jurisdiction of the court and to have waived the defense of being sued therein without leave of the court which appointed him. (In re Young, 7 Fed. Rep., 855; Naumburg v. Hyatt, 24 Fed. Rep., 898; Hubbell v. Dana, 9 How. Pr. [N. Y.], 424; Jay’s Case, 6 Abb. Pr. [N.Y.], 293.) 2. A second argument insisted on to sustain the correctness of the decree is that the record does not show that [645] Foss, of the firm of Dawes & Foss, ever guarantied the payment of the mortgage debt. This contention is wholly without merit. The guaranty made by Dawes & Foss of the payment of this mortgage debt was in writing and became and was a joint and several obligation of the members composing this copartnership. 3. A third contention is that the decree was correct because Dawes & Foss and the receiver had no notice of Flentham’s application for a deficiency judgment. The recital in the record is as follows: “ Now on this the 2d day of June, 1892, * * * this cause coming on for confirmation, * * * the defendants are allowed by the court until June 3, 10 o’clock A. M., to show cause why said sale should not be confirmed and deficiency judgment rendered against James W. Dawes and Fayette I. Foss, etc. * * * And now on this 3d day of June, 1892, the defendants having failed to show cause why said sale should not be confirmed, * * * it is ordered that said proceedings be and they are hereby approved, ratified, and confirmed. * * * And thereafter the same day the cause came further on for hearing on motion of plaintiff for deficiency judgment against the defendants James W» Dawes and Fayette I. Foss, in consideration whereof the court overruled said motion,” etc. Here then is a recital in the record that Dawes & Foss had actual notice of the application by Flentham for a deficiency judgment; that they applied for and were given time in which to resist said application. 4. Another contention in support of the decree is that the rendering of a deficiency judgment in a mortgage foreclosure case is the exercise by the court of its legal functions j and that a court of equity has no jurisdiction to render such judgment. Section 847 of the Code of Civil Procedure expressly authorizes the district courts of this state, in a suit for the foreclosure of a real estate mortgage, on the coming in of the report of sale of the mortgaged premises, [646] to decree a judgment and award execution for any deficiency remaining unpaid on the decree after the sale of the mortgaged property. The familiar principle is that when a court of equity acquires jurisdiction over a cause for any purpose, it may retain the cause for all purposes, and proceed to a final determination of all the matters at issue in the case. (Morrissey v. Broomal, 37 Neb., 766; Buchanan v. Griggs, 20 Neb., 165.) 5. The final contention in support of the decree is that the record does not show that Eleutham had exercised due diligence to collect the mortgage debt; and that therefore the guarantors of the debt had been released from their obligation. No such defense was interposed by Dawes & Foss or their receiver in the court below; nor is there in the record any evidence on the subject whatever. Nor do we think that any laches or want of diligence on the part of Flentham in his efforts to collect this mortgage debt would afford any defense to Dawes & Foss. In Huff v. Slife, 25 Neb., 448, this court held that one who before maturity unconditionally guaranties the payment of a promissory note becomes absolutely liable upon the default of the maker; and that the mere neglect of the holder of a note to sue the maker does not discharge the guarantor although the maker becomes insolvent. The decree appealed from is reversed, and the cause remanded to the district court with instructions to render a personal judgment against James W. Dawes and Fayette I. Foss, and Charles C. White as receiver, for the amount remaining unsatisfied on the decree in favor of Flentham. Reversed and remanded.