Case ID: ohio-st_16/html/0485-01.html
Source: Caselaw Access Project
Author: {"author": "Scott, O. J.\n    ", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

James Durbin v. Buel G. Fisk.
    The maker of a promissory note executed a mortgage upon real estate to secure its payment. In puruance of an order made in a proceeding in equity thereafter instituted by creditors of the mortgagor for the purpose of marshaling liens, the mortgaged premises were sold; the purchaser was the holder of the note and mortgage, and the proceeds of sale were applied upon his claim. At the time of the sale, the purchaser had knowledge of a prior lien upon the premises, held by one who had not been made a party to the proceeding; but believed such prior lien would not affect his title. The prior lien-holder subsequently brought the premises again to a judicial sale for the satisfaction of his claim, and the holder of the note again became the purchaser, in order to protect his title and interest in the premises. In an action at law, subsequently brought upon the note by the holdei against the maker: Held—
    1. The defendant was entitled to be credited with the proceeds of the first sale, without any deduction therefrom on account of the loss which the plaintiff had sustained by reason of the prior incumbrance.
    
      2, A plaintiff can recover only on tire causes of action stated in Ms petition. It is not tke province of a reply to introduce new causes of action. TMs can be done only by amendment of the petition.
    Error to the court of common pleas of Henry county. Beserved in the district court.
    *Suit was brought by defendant in error, in the court below, against the plaintiff in error, as the maker of a promissory note, dated September 1,1855, calling for $2,500, payable to one Cassius M. Eisk, or bearer, twelve months after date, with interest at the rate of ten per cent, per annum. The plaintiff in that action, by his petition, alleged that the note was, some time in the year 1856, indorsed and delivered by the payee to S. A. Bacon and George "W. Eisk, who afterward indorsed and delivered the same to him, and that he is now the owner and holder thereof. He admits that Durbin paid on the note June 9,1856, the sum of $650, and that he was credited with the further sum of $200, April 1, 1860, also with the sum of $100, November 1, 1860, on account of the rents of certain real estate. He avers that no further payments have been made; that a balance remained due thereon at the time of bringing suit, amounting, with the interest thereon, to $1,788 ; that the note has been lost since it came into his possession and he believes it to be destroyed ; and he asks judgment for said balance with interest at the rate of ten per cent.
    The defendant below answered, setting up, in substance, among other things, that he was entitled to credits on the note for two payments, one of $800 and the other of $1,332. That one Dennis Perkins had previously instituted a suit against both the parties to to this suit, and other defendants ; and that in that suit, the debt evidenced by the note now in suit was found to be a lien, preferable to that of other creditors, upon two tracts of land which are particularly described, and that under an order of sale made in that case, one of these tracts was sold for the sum of $800, and that the proceeds were applied on tho plaintiff’s said debt at the May term, 1860, of the court. That, pursuant to the same order of sale, the other tract was subsequently sold for $1,332, and the proceeds similarly applied by the court at its October term, 1860.
    To this answer the plaintiff replied, not denying the facts stated in the answer, but alleging, in substance, as follows : That at the time of making the note in suit, the defendant, to secure its payment, had executed a mortgage covering both the tracts of land described in the answer; that the Belmont *County Branch
    of the State Bank of Ohio held a prior mortgage upon the last described tract, upon which, .at the suit of the bank, a decree of foreclosure and sale had been obtained in the court below, on the 17th of May, 1859. That the suit of Dennis Perkins was subsequently instituted for the purpose of marshaling the liens upon the property of the defendant Durbin; .that the bank was not a party thereto,, and that by the decree rendered therein, no provision was made for the payment of the debt due to the bank; that the court found and decreed plaintiff’s debt to be the first lien upon the premises, and that he accordingly received the proceeds of the sale of the first tract, amounting to $S00; that he also bought the second tract at the subsequent sale in July, I860, for the sum of $1,340, both sales having been made -under the -decree in the Perkins case; that at the time of the latter purchase he was aware of the lien of the bank, but did not know that a deeree of foreclosure had been rendered thereon, and was informed and believed that his purchase under the Perkins decree would give him a good title to the premises. That the branch bank, in November, 1860, took out execution under its prior decree, and brought the said second tract to sale, and that the plaintiff, to protect himself, his improvements, and interests, firand it necessary to become the purchaser, and did accordingly purchase the same for $1,335. That by means of the premises, he lost all benefit of his first purchase of the same tract under the decree in the Perkins case, which did not therefore operate as a real satisfaction of his debt, nor diminish, the amount due him from the defendant Durbin. He therefore asks that the amount due him may be ascertained without deduction on account of his purchase of said second tract, and for judgment accordingly.
    To this reply the defendant demurred generally, and the court overruled the demurrer, and the defendant excepted.
    The cause was thereupon submitted to the court, and a judgment was rendered in favor of the plaintiff for $2,056.73, with interest at the rate of ten per cent, per annum.
    The defendant seeks to reverse this judgment, on the ground that the court erred in overruling his demurrer to the plaintiff’s reply.
    
      * James Durbin, plaintiff in error.
    
      
      James Murray, for defendant in error:
    We are not advised of the grounds upon which this plaintiff claims to consider his indebtedness as paid, satisfied, discharged, or canceled ; nor can we conceive of any ground upon which it could be so regarded.
    The Yattier case is certainly not in point; and were it so, the decisions upon which it was based have been long since overruled by the court making them. Cummings’ Appeal, 23 Penn. St. 509; 14 Penn. St. 383.
    The i’ight of the defendant below to recover under such circumstances is directly denied in the late cases of Hollister v. Dillon, 4 Ohio St. 197; Davenport v. Sovil, 6 Ohio St. 459.
    That Fisk bid in this property at an amount sufficient, under the decree of the court, to pay Durbin’s indebtedness to him, is true; but the consideration for that bid has since entirely failed. He was a party to the case in which he made the bid, but the prior mortgagee and lien-holder was not a party thereto; nor was he a party to the foreclosure suit of that prior mortgagee. He had no notice of the pendency of its proceedings, and consequently could not be thereby bound. Durbin knew of both, was a party to both, and could have made all parties in interest parties to both, thus obtaining proper distribution of the proceeds. Ho failed to do so; obtained double credit—credit without payment or satisfaction.
    We ask that the judgment be affirmed.
   Scott, O. J.

The plaintiff in the court below sued as indorsee to recover from the maker a balance claimed to remain unpaid on a negotiable promissory note. This is an ordinary common-law cause of action. No circumstances were stated in the petition entitling the plaintiff to equitable relief, nor was any such relief asked.

The defendant answered, claiming the benefit of a payment which he alleged had been made upon the debt which the plaintiff was seeking to recover. This payment consisted of the proceeds of cer587] tain real estate sold by order of the court *in a judicial proceeding in equity, between the same parties, and purchased by the plaintiff, and which proceeds of sale had, by the order of said court, been applied in satisfaction, fully, or ±pro tanto, of plaintiff’s claim.

The plaintiff, by reply, shows that he purchased said premises at the judicial sale in ignorance of the legal effect of a prior incumbrance thereon, held by a stranger to the proceeding, though the existence of the prior lien was well known to him at the time of the sale; and that at a subsequent sale of said premises for the satisfaction of the prior lien, he found i,t necessary to repurchase the premises for his protection. Having, through a mistake of law, failed to derive from his first purchase the full benefit of a perfect title, he demands a judgment on the note as though the order of sale which he had procured, the confirmation of sale, and the order appropriating the proceeds, had never been made.

We can discover neither principle nor precedent which would authorize the court to ignore, or treat as a nullity in a collateral action at law, the prior orders and decrees of a court of equity, made in the exercise of full jurisdiction, in a controversy between, the same parties, and which are still unreversed and in full force.

We think the case of Tattier v. Lytle’s Executors, 6 Ohio, 478, is conclusive against the claim of the plaintiff below. That case was every way stronger for the plaintiff than the one before iis. In that case there was a total failure of title. The plaintiff took nothing by his purchase under his own execution. Whilst here the plaintiff below acquired by his first purchase at least the equity of redemption which his debtor held as against the liens under which the sale was made. Besides, in that case the plaintiff was seeking directly to vacate the levy, order of sale, and satisfaction which had been entered upon his judgment, by mistake, as he alleged. Here no such relief is asked for; but the plaintiff below, while seeking to retain the benefit of his decree and sale, in the Perkin’s case, seeks to be discharged from the effect of the consideration paid therefor. Tet, in the former case, the court, acting upon the maxim caveat emptor, refused the relief asked for. This maxim has always been regarded as applicable to ^purchasers at sheriff’s sales; but it would have to be entirely reversed if a creditor, purchasing his debtor’s land at a sale made under process issued at his own instance, can hold his debtor responsible for all prior liens upon his property, on the mere ground that the purchaser was mistaken as to the legal effect of those liens, or did not suppose that they would affect his title.

We are referred by counsel for defendant in error to the case of Hollister v. Dillon, 4 Ohio St. 197. But that was the case of a suit in equity upon a mortgage, after a judgment at law for the same debt had been satisfied by sale of the mortgaged premises upon execution; the mortgagor having sold and conveyed all his interest in the premises before judgment. The case is not analogous to the present one.

Whether the defendant in error can obtain equitable relief bysubrogation to the rights of the Belmont County Bank, whose claim he has paid, or in any other mode, we need not now inquire. For by his petition he asserts the mere legal rights of the holder of a promissory note. And if his replication could be regarded as seeking equitable relief under the facts there stated, it is a total departure from the petition. A plaintiff can recover only on the causes of action stated in his petition. It is not the province of a reply to introduce new causes of action. This can only be done by amendment of the petition.

The judgment of the court of common pleas will be reversed, the demurrer to the reply of the plaintiff below must be sustained, and the case remanded to the court of common pleas for further proceedings.

Day, White, Welch, and Brinkerhoee, JJ., concurred.