Erving v. Phelps & Bigelow Windmill Co.

The opinion of the court was delivered by Allen, J.: The defendant H. F. Megenity executed two mortgages to George C. Strong, the first one for $500, and the second for $50. The first one was assigned to E. G. Robertson, and said assignment duly recorded. Robertson thereafter assigned it to W. A. Erving, the plaintiff in error, who did not record the assignment to him. The second mortgage was assigned to the Hartford Investment Company. On January 8, 1889, the Phelps & Bigelow "Windmill Company began this suit to foreclose a mechanic’s lien on the property covered by the mortgage, making service by publication on Robertson and the Hartford Investment Company. March 13, 1889, a judgment was rendered in favor of the windmill company, declaring its liens paramount to all others, and ordering the sale of the lands. Neither Erving nor the Hartford Investment Company had any notice of this suit until after the sheriff had advertised the lands for sale. On December 11, 1889, the Hartford Investment Company filed its answer and cross, petition, setting up three coupons which [789] were secured by tbe first mortgage, and also a motion for an order staying the sale. Thereupon bond was given, the sale stayed, and no further order has been issued. At the first term of the court thereafter, the Hartford Investment Company made application to open the judgment, and filed an amended answer and cross petition, setting up the second mortgage held by that company. On March 27, 1890, an order was made opening and setting aside the judgment against the investment company, and continuing the case to the next term. At the same time Erving, assignee of the first mortgage, appeared and filed answer and cross petition, setting up his first mortgage, and moved the court to set aside judgment against Robertson, his assignor, and to be let in to defend as his successor in interest. Another motion was filed on behalf of Ervmg for leave to file an interplea, and to be made a party in said action. The application of Erving to be substituted as a defendant for Robertson was refused, but the motion for leave to interplead was allowed. Immediately thereafter, on the same day, the court vacated the order, and also set aside the order letting the Hartford Investment Company in to defend. We are at a loss to understand why the court refused to open the judgment and give the plaintiff in error an opportunity to set up his rights. The only service in the case was by publication, notifying his assignor, Robertson, of the pend-ency of the action. Whether the plaintiff in error had a right to open the judgment under § 77 of the code, or brought himself strictly within the position contemplated by that section or not, it is hardly necessary to decide. It appears that the property which was the subject of controversy had not been sold; that Erving was the owner of the $500 mortgage, which it is conceded on all hands was a first lien on the premises. He had never had his day in court in fact. The judgment had been opened to let in the Hartford Investment Company. There is no reason apparent for depriving Erving of his just claim. To hold, under the circumstances of this case, that his failure to record the assignment from Robertson, and fore [790] closure under service by publication on Robertson, absolutely cut him off from all rights, where application is made to open the judgment before actual sale of the lands, and before any new rights have been founded on the judgment in the case, is to do a manifest and palpable injustice. We think the court erred in refusing to permit the plaintiff in error to answer and set up his rights. After the court had once permitted him to interplead, we fail to see how any change in the status of affairs between the Hartford Investment Company and the windmill company ought to or could affect Erving’s rights. It may be that an application for leave to file an-interplea was not technically correct in form, but the substance of the leave desired was that the plaintiff in error might set up his interest in the property. When the court had once granted permission to do so, under the circumstances in this case, it was manifest error to revoke the order and deprive Erving of all his rights in the matter. Robertson had no longer any right to the mortgage. Erving was the real party in interest. The mere fact that he had failed to record his assignment should not operate to deprive him of his rights, where no one else has been injured in any manner by such failure. The judgment of the court below will be reversed, with direction to permit the plaintiff in error to answer in the case. All the Justices concurring.