Rogers v. Holyoke

[225] By the Oourt MoMillan, J. The answer of the defendant we think contains a substantial denial of all the allegations of fraud or bad faith on the part of the defendant Holyoke, contained in the complaint. The. defendant Holyoke having the second lien upon the premises by virtue of his mortgage, and not being a party to the foreclosure action commenced by Whitaker on his mortgage in the Hnited States Court, was wholly unaffected by the proceedings in that action, and as against Holyoke, the only right acquired by Gilman as purchaser at that sale, was the right to a prior lien upon the premises, to the extent of the money due and unpaid on the Whitaker mortgage, in the same manner as if Whitaker had assigned that mortgage to him, without foreclosure. Vanderkemp vs. Shelton, 11 Paige, N. Y., 28 ; Astor vs. Miller, 2 ib. 68 ; Bartlett vs. Gale, 4 ib. 507; Benedict vs. Gilman, ib. 61. The action by Gilman in the State court against Holyoke, and Napier & Brodie as junior incumbrancers, was, as to them, an action for foreclosure de novo. It was brought by Gilman for the express purpose of foreclosing the equity of redemption of Holyoke under his mortgage, and in the pleadings therein this mortgage is set up as an existing in-cumbrance, and subsequent lien. It appears by the recitals in the decree in that action, that the parties all being in Court, and represented by counsel, by consent and agreement of counsel for the respective parties, it was found that the allegations in the complaint were true, and the decree settles the amount due the plaintiff on the Whitaker mortgage, orders a sale of the premises, and payment from the proceeds thereof; 1st, the costs of the sale, and of the action ; 2d, the amount due the plaintiff; the balance, if any, to be brought into Court, to abide its further order. Bogers having purchased of Gilman during the pendency [226] of the action in the State court, as against Holyoke, can claim no greater rights than were possessed by Gilman, his grantor. Having by his own 'showing become a purchaser pendente lite, it became necessary for him, in order that the action might be continued, to apply for leave to become a party to this action, either by substitution, or by prosecuting it in the name of Gilman. Chisholm vs. Clitheral et al. 12 Minn., 375. The action having been prosecuted in the name of Gilman to a decree and sale, after the purchase by Rogers, the latter claiming as he does the benefit of the proceedings in the action in the State court, is bound by them, as much as if he had been formally substituted. Therefore, as Rogers relies upon the validity of the decree in the action of Gilman against Holyoke to sustain the sale, he cannot be permitted to deny the facts upon which the decree is based, among which are the validity of the defendant Holyoke’s mortgage as a subsequent lien on the premises, and his equity of redemption thereunder. As Holyoke had the second lien upon the premises by virtue of his mortgage, the surplus proceeds of the sale of the. premises after satisfying the Whitaker mortgage, and costs, constitute the primary fund applicable to the payment of his mortgage. . In the protection of this interest, he has a right to move the court upon cause shown to set aside the sale. Independent of the question of fraud in the mortgages from Robertson to Holyoke, and the sale under the decree in the Gilman suit, there are not allegations of new matter in this complaint sufficient to entitle the plaintiff to. a decree vesting the property in him. If the views we have expressed are correct, the plaintiff as the vendee of Gilman takes, as against Holyoke, as assignee of. the mortgage to Whitaker, not as a bona fide purchaser of the premises. Whatever may [227] be the law under other circumstances, in this case, the plaintiff’s claim being a prior lien, must first-be satisfied out of the mortgaged premises ; the mere fact, therefore, that other mortgages to a large amount were executed by Robertson to Holyoke, embracing other premises which are still held by the defendant Holyoke, would not be a sufficient ground to authorize a court of equity, at the instance of the plaintiff, to require Holyoke' to exhaust the other securities covered by his mortgages, before resorting to the property embraced in the mortgage involved in this action, for the claim of the plaintiff must be first satisfied, and subject to this claim of the plaintiff, the defendant has a right to have his mortgage satisfied out of the same premises. There are no averments in the complaint that the other property covered by the mortgage to Holyoke, is sufficient to pay the incumbrances; which, under any circumstances, we apprehend would be necessary to qualify the equity of the defendant in the premises. Hntil the confirmation of the sale, upon the coming in of the report of sale, the proceedings are not complete, and the sale may be set aside, for cause, by the court. Gen. Stat., Ch. 81, Tit. 2, § 29, p. 566. Certainly the rights of the plaintiff, as lessee of the premises, could not be affected by the sale to Gilman under the decree of the State court, until the confirmation of the sale, and under the purchase from Gilman, we have seen, the plaintiff acquired only the right of a prior incumbrancer as against the defendant Holyoke. The fact that no report of sale has been made by the sheriff, will not be sufficient ground for granting the temporary injunction, since if that is an objection to the.proceedings, it is one upon which the court below may be called upon to pass, and the presumption is, that it will-be prop [228] erly determined ; and besides, as it is not an objection which is addressed to the discretion of the court, but one which goes to the jurisdiction of the court, error, if committed, can be relieved against. Gen. Stat., Ch. 81, Tit. 2, § 29, ¶. 566. If the plaintiff is not a party to the action brought by Gilman against Iiolyoke, he certainly can become so, and in the absence of any cpestion which cannot be determined upon the motion to set aside the sale made in that action, we are unable to see why the court in which that matter is pending, being a court of equity, should be called upon by a new, and separate, action, to enjoin the proceeding. We think the application for the injunction was properly denied. The order denying the injunction is affirmed.