Murdock v. Ford

Davison, J. The appellant, who was the plaintiff; brought an action against the appellees, alleging, in his complaint, these facts: Elieazer Ford, on October 9, 1855, executed to [53] one John Murdoch five, several, promissory notes, each for the payment of $1,077; the first payable on or before March 1, 1857; the second by March 1, 1858; the third on March 1, 1859; the fourth by March 1, 1860, and the fifth on or before March 1, 1861. To secure the payment of these notes, Fiieaser Ford, and Margaret Ford, his wife,, executed to John Murdoch a mortgage on certain land in Benton county. After this, John Murdoch assigned the first and second notes, those maturing in March, 1857, and March, 1858, to one Caldwell, who assigned them to David U. Denny; At the March term, 1858, Denny, having instituted suit on the mortgage, recovered a judgment in the Benton Circuit Court against Ford and wife, on said two notes, and also a decree of foreclosure against them, in the usual form, foreclosing all equity of redemption that they, or either of them, had in the premises. John Murdoch, though he was still the holder of the last three notes, was not made a party to the suit in which the decree was rendered, or, in any way, notified of its pendency. In September, 1858, the sheriff, by virtue of an order of sale issued on said decree, sold the mortgaged premises to Edward C. Sumner, for $1,850, and, pursuant to the sale, made him a sherifPs deed. On June 13, 1859, John Murdoch assigned the last three notes to William T. Murdoch, the plaintiff, who, before he commenced this suit, applied to Sumner to redeem the land described in the mortgage, and tendered him the full amount of the principal and interest of the decree, which had been assigned to him, and under which he had purchased; but he refused to accept the amount tendered, or to admit any right or claim of the plaintiff in the premises. It is averred that Sumner, upon receipt of the sheriff’s deed, took possession under his purchase, and has ever since enjoyed the rents and profits of the land, which are alleged to be worth $1,000, and has removed rails, and committed waste, to the amount of $800. The relief prayed is, that an account be taken of what is due Sumner, if any thing, on account of said judgment and decree; that he be adjudged liable for rents and profits, and waste, and that the plaintiff be^ allowed to redeem; and, further, that said land, when so redeemed, [54] be decreed liable to be sold for the payment of said notes and mortgage, &c. Defendant’s answer relies, for defense, upon the decree, order of sale, and sheriff’s sale to Sumner, To which the plaintiff replied, reiterating, substantially, the facts stated in his complaint. Demurrer to the reply sustained, and final judgment given for the defendants. Has the plaintiff a right to redeem ? This is the controlling inquiry in the case. The appellant argues that John Murdoch, the holder of the last three notes, stood in the relation of a junior mortgagee of the land; that he ought to have been, but was not, made a party to the suit for foreclosure; and therefore his rights could not be affected by the decree. To a suit to foreclose, a junior mortgagee is certainly a proper, if not a necessary, party; because, “where a prior mortgagee, at the time of filing his bill, has either actual or constructive notice of a junior mortgage, or other subsequent incumbrance, he is bound to make the holder thereof a party to the action, or the proceedings therein will not affect him.” Haines v. Beech, 3 Johns. Ch. 454; Shaw v. Hoadley, 8 Blackf. 165; Branch Bank, &c. v. Taylor, 10 Ala. 70; Swift v. Edson, 5 Conn. 531; Cooper v. Martin, 1 Dana, 23; 2 Hilliard on Mort. 131; Story Eq. Pl., § 192, and notes. Indeed, the general rule in equity is, that all persons materially interested, whether legally or beneficially, in the subject matter of the suit, are to be made parties to it, as plaintiffs or defendants, so that there may be a complete decree, that shall bind them all. Story’s Eq. Pl., § 72. See, also, 2 R. S., §§ 17, 18, pp. 30, 31. Thus, it is evident, that the rights of John Murdoch, whatever they may be, in the mortgaged premises, could not be affected by the decree of foreclosure, for the obvious reason that he was no party to the suit in which it was rendered. What, then, are his rights? If, as contended, he stood in the relation of a junior mortgagee of the land, he had an undoubted right to redeem, as against Sumner, because, as the sheriff’s vendee, he acquired title only against the parties to the suit, which can not be set up against the subsisting equity of those who were not parties. Haines v. Beech, supra; Kimmell v. Willard, 1 Doug. (Mich. Rep.) 217; 1 Hilliard on Mort. 300, et seq; Branch Bank, &c. v. Taylor, supra; [55] 2 Story’s Eq. Jur., § 1023. And it must be conceded, that if as a junior mortgagee, John Murdoch had aright to redeem, Ms assignment of the last three notes and mortgage to the plaintiff, conferred on him the same right. But it remains to be inquired, whether John Murdoch really did occupy the relation of a junior mortgagee? We have decided that notes secured by mortgage, and due at different times, are like so many successive mortgages; the one first due has priority and the others come in, in the order in which they mature Hough v. Osborne, 7 Ind. 140; Harris v. Harlan, 14 Ind 439; Bank v. Tweedy, 8 Blackf. 447; Stanley v. Beatty, 4 Ind. 134. It is, however, insisted that the mortgage, in thii instance, created but one lien, one defeasance, and one equitj of redemption, which tvere extinguished by the decree anc sale to Sumner. We are not, in view of the facts stated inclined to adopt that construction. True, the general rule of law is, that a foreclosure and sale of the mortgaged premises invests the purchaser with the fee simple, and the mort gage becomes extinct; but there are cases, and we thinl? bilis is one of them, in which a court of equity will consider an incumbrance alive, in order that the purposes of justice maybe subserved. Howe v. Woodruff, 12 Ind. 214, and cases there cited. And, moreover, John Murdoch, the holder of the junior incumbrance, in this case, was not a party to the suit which resulted in the decree, and, in consequence, the result of that suit can not be allowed to impair, in any degree, Ms rights under the mortgage. And his assignee, the plaintiff, has, it seems to us, adopted the proper remedy. Having tendered the full amount of the judgment and interest, he has the right to redeem. And having that right, it seems to follow, that Sumner, being in possession of the mortgaged premises, in virtue of a sheriff’s sale under the prior mortgage, is liable for rents and profits, and, also, for waste. The principle is, “ that the party in possession is entitled, only, to what is equitably due, after deducting whát has come to his hands from the estate,” and, also, what has been lost to the estate by his commission of waste. 1 Hilliard on Mort. 417, 433; Latimer v. Moore, 4 McLean, 110; Moore v. Degraw, 1 Halst. Cha. 346; Givens [56] v. McCalmont, 4 Watts, 460. The demurrer to the reply was not, in our opinion, well taken, and the judgment must, therefore, be reversed. II. W. Chase and J. A. Wilsiach, for the appellant. Per Curiam. — The judgment is reversed, with costs. Cause remanded, &c.