Case ID: wis_39/html/0296-01.html
Source: Caselaw Access Project
Author: {"author": "LyoN, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Baass vs. The Chicago & Northwestern Railway Company.
    Foreclosure oe Mortgage. Parties defendant. Right of mortgagor to have priority of his trust deed to a third person determined in the case.
    
    
      1. The defendant in a mortgage foreclosure, claiming that a trust deed of the premises executed to a third person is prior to the mortgage in suit, has a right to have that question determined in the action, and for that purpose to have the grantee in such deed made a defendant.
    2. There was no error, therefore, in refusing to vacate an order that such grantee be made a defendant, although plaintiff offered to stipulate “for the purposes of tins case,” that the lien of said deed was prior to that of his mortgage; such stipulation not being conclusive of the question as against other parties, nor, perhaps, as against the plaintiff him- self in any other action or proceeding.
    APPEAL from tbe Circuit Court for Dane County.
    This appeal is from an order refusing to vacate a previous order requiring tbat tbe Farmers- Loan & Trust Company be made a défendant in tbe action.
    Tbe record returned to tbis court does not include tbe pleadings; but it appears from tbe motion papers tbat tbe action is to foreclose a mortgage on certain lots in tbe city of Madison, given to secure tbe payment of $500 and interest;, tbat said mortgage purports to bave been executed in July, 1870, and recorded in September, 1874; tbat in April, 1871, tbe defendant executed a trust deed or mortgage upon a large .amount of real estate, including said lots, to tbe Farmers, loan & Trust Company, to secure its bonds for $3,900,000, which, instrument was duly recorded during the same month; and that the defendant has been in the constant posssession of said mortgaged premises ever since the spring of 1871. On motion of the defendant, the court made an order requiring that the said Trust Company be made a defendant in the action. The plaintiff moved the court to vacate such order, and at the same time tendered a stipulation as follows: “ Whereas it is claimed on the part oí the defendant that the Farmers’ loan & Trust Company, and the Union Trust Company, corporations of the state of New York, hold mortgages covering the mortgaged premises described in the complaint in this action, which mortgages were recorded in the office of the secretary of staté of Wisconsin prior to the time the plaintiff’s mortgage was recorded in the office of the register of deeds for Dane county, Wisconsin, and that in consequence thereof the said corporations are necessary parties to this action: Now, therefore, in order to avoid the necessity of making them parties, it is, for the purposes of this case, providing such oi’der be vacated, hereby stipulated that the plaintiff in this action waives all claim of priority over the said mortgages or deeds of trust given to the corporations aforesaid, and admits that the same are incumbrances on the premises described in said mortgage set out in the plaintiff’s complaint in this action, superior and paramount to said mortgage.”
    The motion was denied, and the plaintiff appealed. .
    
      B. J. Stevens, for appellant:
    In this country, where, on foreclosure of a mortgage, a sale of the mortgaged premises is decreed, the practice as to parties defendant is different from that in England, where payment is obtained by the mortgagee taking possession and reimbursing himself from the rents and profits. Here the general rule is, that the only proper parties to the foreclosure suit are the mortgagor and mortgagee and those who have acquired rights or interests under them subsequent to tbe mortgage. Eagle Fi/re Ins. Go. v. Lent, 6 Paige, 635; Western Ins. Co. v. Eagle Fwe Ins. Go., 1 id., 284; Holcomb v. Holcomb, 2 Barb. (S. 0.), 23; Lewis v. ¡Smith, 11 id., 158. Prior incumbrancers are not necessary parties. Farwell v. Mwr-■phy, 2 Wis., 533, 541; Strobe v. Downer, 13 id., 11; Walher v. Jarvis, 16 id., 28; Mims v. Mims, 1 Humph., 425; Bose v. Page, 2 Sim., 471. It has always been, so far as we know, the invariable practice in this state to foreclose and sell mortgaged premises subject to the rights of prior incumbrancers. The only possible object in making them parties would be to sell the premises free from all incumbrances, satisfying them from the proceeds of the sale in the order of their priority. This cannot be done where, as in this case, the prior mortgages are not due.
    
      Smith <& Lamb, for the. respondent,
    argued, among other things, that the proposed stipulation would be utterly immaterial unless the Trust Company were made a party to the suit, so that it and its assigns, as well as defendant, could have the benefit of the judgment stipulated for, as an estoj)pel against plaintiff and his representatives hereafter; that it is doubtful whether the judgment as to that point would be. conclusive even between the parties, very respectable authorities holding a judgment to be an estoppel only as to matters litigated by parties actually contesting the question before the court ( Wadham v. Gay (Ill. Sup. Ct.), 14 Am. Law Beg., 419, 427; Jenhins v. Robertson, L. R.,' 1 Scotch-App. Gas., 117); that if the Trust Company were .not made a defendant, the respondent might not be in a position to insist on all the rights of that company, even where the protection of those rights might be incidentally very advantageous to the respondent; that if, for example, the question whether respondent bought the land in good faith, without knowledge of plaintiff’s mortgage, should be adjudged adversely to it, the court might refuse to hear the respondent as to the rights of its subsequent grantee in trust; that it is tbe respondent’s absolute right under tbe statute (Tay. Stats., 1421, § 23) to bave all persons interested in tbe subject matter of tbe controversy brought in as parties;. and that such is also tbe general rule of equity (Armstrong v. Pratt, 2 "Wis., 299), and priority between mortgages is peculiarly a proper question to be litigated in a suit to foreclose one of them. Svrp’rs v. P. P. Co., 24 Wis., 122.
   LyoN, J.

Tbe record does not give the name of tbe mortgagor, or inform us of tbe title- claimed by tbe defendant; but we gather from tbe argument that tbe mortgagor conveyed tbe mortgaged premises to tbe defendant by a deed junior in execution, but senior in récord, to tbe mortgage in suit. On tbe record before us it is uncertain whether tbe trust deed is prior or subsequent in right to tbe mortgage. If prior in right, it seems to be conceded that tbe Trust Company is not a necessary or proper party to tbe action; but otherwise if tbe same is subsequent in right.

Were tbe stipulation conclusive on that question — did it render tbe trust deed prior in right to tbe mortgage in all proceedings, and in favor of or against all persons who bave now, or may hereafter bave, an interest in tbe mortgaged premises, — it would seem entirely unnecessary to mate the Trust Company a party to tbe action. But such is not tbe effect of tbe stipulation. It may be that tbe trust deed is subject to tbe mortgage; and if so, notwithstanding tbe stipulation, no good reason is perceived why any person interested, other than tbe plaintiff, may not be beard to assert tbe fact. Indeed, it is not certain that tbe plaintiff himself may not assert it in any other action or proceeding; for tbe stipulation is tendered-only “for tbe purposes of this case.”

It seems to us that the defendant has the right to have tbe question determined in this action, whether tbe trust deed or the mortgage in suit has priority; and because tbe offered stipulation does not determine that question, and because it cannot be conclusively determined without the presence of the Trust Company, we thinlc the circuit court properly refused to vacate the order making that company a party defendant in the action.

By the Court. — Order affirmed.