Doty v. Enterprise Timber Co.

Stevens, J., delivered the opinion of the court. Appellant, L. H. Doty, recovered a judgment against T. H. Thompson and the Kosciusko Industrial College in the sum of ninety-nine dollars and eighty-two cents and had the judgment duly enrolled in Attala county. The judgment debtors owned certain land in said county, upon which they had given to the C. C. Kelly Banking Company a deed of trust securing a certain indebtedness advanced by said Banking Company to the Kosciusko Industrial College. There were standing trees upon the lands covered by the deed of trust, and ninety-six of these trees the judgment debtors severed from the soil [879] and conveyed to the appellee, Enterprise Timber Company. From the agreed statement of facts it appears that the timber was sold at private sale and at the instance of the C. C. Kelly Banking Company. The consideration for the sale, four-hundred- and fifty dollars, was paid by appellee direct to the C. C. Kelly Banking Company, to be credited upon, and the sum was credited upon, the debt due said Banking Company, secured by said deed of trust. At the time this private sale was consummated, the judgment of appellant was of record and unpaid. Appellant then had an execution issued and levied upon the timber, and appellee filed its claimant’s affidavit, claiming title derived through the priváte sale aforesaid. The issue was tried in the justice court, and on appeal to the circuit court a jury was waived, and the •claimant’s issue submitted to a special judge upon the pleadings and an agreed statement of facts. The trial court found in favor of the claimant, and from the judgment so entered appellant prosecutes this appeal. The judgment has, among other things, the following recital: “It appearing from the agreed statement of facts that the plaintiff in execution has failed to show that the logs levied on by the sheriff were subject to said execution, but that C. C. Kelly Banking Company held a prior lien thereon by virtue of a deed of trust executed by defendants, and that the proceeds of said logs were applied to the debt secured by the said deed of trust, and that plaintiff in execution failed to show that said logs brought an inadequate price.” Section 819, Code of 1906, clearly provides that an enrolled judgment becomes a lien upon and binds ,all the property of the defendant within the county where the judgment is so enrolled, and that this lien avails in favor of the judgment creditor “against a judgment debtor and all persons claiming the property under him.” In construing a similar provision of the Code of 1857, our [880] court, in Mitchell v. Wood, 47 Miss. 231, long ago observed : ‘ ‘ It never could have been in the contemplation of the legislature to enable the judgment debtor to defeat the claim of his judgment creditor by alienation of his property after judgment. Such a .construction as would produce such results ought not to be favored by the courts, unless the language of the law, according to well-settled principles of construction, requires it.” But no one in this case challenges thé validity of appellant’s judgment lien.. The battle ground of this case is upon the alleged right of the senior lienholder, the C. C. Kelly Banking Company, to negotiate for and in the interest of the judgment debtor a private sale of the mortgaged property and thereby enable the purchaser to take the property freed of the junior lien. At the time appellee purchased the timber there were two liens upon the property, the senior lien evidenced by a deed of trust, and the junior lien evidenced by the enrolled judgment. The case is not one where the holder of the senior lien purchases the property. If such were the case, the main inquiry would then be whether there was a merger of the two estates — the lien and the equity of redemption. In the case before us the purchaser is a stranger, having no prior lien or claim upon the property of any kind. It is true that it purchased at the instance of the beneficiary in the deed of trust, but in purchasing it acted upon its own account, and its sole purpose evidently was to acquire the legal title. There is no stipulation that appellee is an innocent purchaser, and such a stipulation would be impossible,^in view of our registry laws. Appellee is in the attitude simply of buying the property, upon which there is an outstanding judgment lien, and there is no law that we know of which denied to Mr. Doty his right to an execution and levy upon the property so transferred. Appellant has pursued his legal remedy, and appellee, the claimant, to prevail, must show that the [881] property was not subject to the execution. It is admitted that the judgment is valid, is unpaid, and is duly enrolled, and that execution was properly levied. Appellant, then, should have recovered as against the c] aim-ant, and the judgment entered by the trial court cannot in this proceeding he upheld. If the appellee has any rights, they are equitable in their nature, and the forum for its remedy is a court of equity. We-are not here called upon to define the rights of appellee, or to determine exactly what its rights and remedies might be. We discuss the question more for the purpose of disposing of appellee’s equitable claims presented in this action. It would appear that the only right which appellee has would be the equitable right of having the C. C. Kelly Banking Company transfer to it the prior lien evidenced by the deed of trust, and to be subrogated to the lien thereof in preference to the junior lien of the judgment creditor. We are not to he understood as holding that this can be done. But this certainly is the utmost right appellee would have, and the enforcement of such right could only be had in a court of equity, where all the necessary parties are before the court and the proper issues presented. Our court, in the case of Broohs v. Kelly, 63 Miss. 616, expressly held that, where a part of land subject to a senior and junior mortgage was sold by the concurrent action of the senior mortgagee and owner and the purchase money applied to the mortgage debt, the transaction was a liquidation of the debt to the extent of the money so realized and applied, but that a junior mortgagee was not bound by such sale, if he did not assent to it. So in this ease the judgment creditor, owner of the junior lien, is not bound by the private sale made at the instance of the senior lienholder. The owner of the deed of trust had its remedy for the foreclosure thereof, and it would be dangerous to the interests of the junior lienholder to- say that the owner of the senior lien and the owner of the property could in [882] any case by private agreements dispose of the property without giving the junior creditor his day in court.' The junior creditor in .proper cases would have the right to attack the validity of the senior lien, the extent of the indebtedness, the method of foreclosure, and at any sale under the first lien to boost the price at which the property must be sold. In this case the C. C. Kelly Banking Company, holder of the senior lien, is not even a party to this litigation. “The right of subrogation, being equitable in its nature, cannot be enforced in proceedings to which those whose equities are affected are not parties. Creditors to whose rights a party seeks to be subrogated are necessary parties to an action to obtain such subrogation.” 37 Cyc. 388. The judgment of the learned circuit court will be reversed, and the cause .remanded for further proceedings in accordance with this opinion. Reversed and remanded.