Ellis v. Southwell

Walker, J. It is urged, that the cross-bill filed by Weinhagen and Hornbostle, was not taken as confessed, and that it was irrregular to decree them relief, unless it was proved or confessed. It is a sufficient answer to say, that complainants recognize their mortgage in the bill, the mortgagor admits its validity by the default on the original bill, and no reason is perceived, why there should be a cross-bill filed, when all of the facts in the case stand confessed by all the parties to the record. The defendants to the original bill admit, that complainant has the mortgage described in the bill, that it was a prior lien on the premises, and as no fact in the case was controverted, it would be an useless act to try facts not disputed. All that was necessary, was for the court to ascertain the amount due on the several mortgages, and order their payment out of the proceeds of the sale of the premises, in the order in which the liens attached. It seems to be the practice, on a bill to foreclose, to make all incumbrancers parties. And upon passing a decree of foreclosure, to ascertain and settle the rights of all parties, decree the payment of the mortgaged debt, and on default a sale of the premises, and the application of the proceeds in satisfaction of each incumbrance, according to priority, and a payment of any surplus to the mortgagor. This too whether junior mortgagees shall or shall not file cross-bills. The sale is as effectual, if made under the foreclosure of the first mortgage, to cut off all subsequent mortgages, as if upon a foreclosure of all the incumbrances. Where the sale is made under the foreclosure of one of several mortgages, the only question is as to the equitable distribution of the proceeds. And the surplus might be disposed of on application, to an incumbrancer not made a party to the suit, if it appeared that, in equity, he was entitled to receive the fund. If the defendants fail to file a cross-bill, they should establish their claims on the trial, or before the master on a reference. 2 Barb. Ch. Pr. 181; Beekman v. Gibbs, 8 Paige, 511. In this case, all the parties were before the court, and the decree was regular and fully authorized, on the bill and answers, without regard to the cross-bill. Had the mortgagor paid complainant’s debt before/ale, there would not have been any regular decree, for a sale, for the satisfaction of the junior mortgage. To obtain relief against the mortgagor by a foreclosure on their mortgage, they should have had a trial or default on their cross-bill. But in this case the sale was made under the foreclosure of complainant’s mortgage, which appears to have been regular, and the only question was as to the application of the proceeds of the sale, and no error is perceived in applying any surplus to the payment of Weinhagen and Hornbostle. The record fails to show, that Ellis ever established his claim, or that it was ascertained by the court. It was error to have decreed its payment until its validity and amount were ascertained. If a surplus had remained after paying the prior mortgages, and it had been asked of the court, a reference to the master might have been had, to ascertain whether he was entitled to participate in that fund. But we see from the record, that the sale did not yield a sufficient sum to pay the first and second mortgages, and consequently Ellis has no right to participate in the fund. No injury can result from the decree, and we therefore deem it unnecessary to reverse it, but shall so modify it, as only to decree the payment of complainant’s, and Weinhagen and Hornbostle’s mortgages. Decree modified.