Case Name: William J. Bennett vs. The Calhoun Loan and Building Association, E. Welling, and E. DeTreville
Court: South Carolina Court of Appeals
Jurisdiction: South Carolina
Decision Date: 1857-01
Citations: 9 Rich. Eq. 163
Docket Number: 
Parties: William J. Bennett vs. The Calhoun Loan and Building Association, E. Welling, and E. DeTreville.
Judges: Johnston and Wardlaw, CC., concurred.
Reporter: South Carolina Equity Reports
Volume: 30
Pages: 163–183

Head Matter:
William J. Bennett vs. The Calhoun Loan and Building Association, E. Welling, and E. DeTreville.
Where mortgaged land is sold by the sheriff, undei;,jiim5?v6§fcn.tions, the purchaser takes subject to the lien of the mortgages!";,-,.
Where, pending a bill to foreclose a mortgage opland, th% land is stt by the sheriff under junior executions, the cqMpláiíjlúrjtAs nbfi^ouM to amend his bill so as to make th^ purchasei^at'gherift-g.^íde a paríy.^
If the purchaser wishes to be heard, he mayliksbems, bfin¿;'hi)iisel|lbe-fore the Court by supplemental bill, in the uafui’e,.ofli a cross1 bi'Ili5
The Acts of 1784,1789, and 1810, in relation to’Ithe'timáJ-Yit^tn which causes in equity should be decided, were intended foB'the pifies themselves. A third person cannot impeach a decree because of delay in obtaining it.
Where mortgaged land is sold by the sheriff, under executions junior to the mortgage, and the mortgagor afterwards takes the benefit of the Insolvent Debtor’s Acts, the mortgagee, by failing to prove his mortgage in the Law Court, as directed by the Insolvent Law, does not forfeit his lien upon the land as against the purchaser.
BEFORE DARGAN, OH., AT CHARLESTON, JUNE, 1856.
Daegan, Ch. Tbe Calhoun Loan and Building Association is a corporate body, and Edwin Welling, one of its members, on tbe 17tb day of April, A. D. 1853, executed to tbe said Association a bond, conditioned for tbe payment of five thousand dollars, in instalments, and to secure tbe payment thereof, executed a mortgage of a lot in tbe city of Charleston, at tbe corner of Beaufain and Butledge-streets. There was much said at tbe trial, and there is a good deal in tbe evidence, as to tbe manner in which tbe debt was created. But all that I regard as immaterial to tbe issues presented for adjudication in this case. Tbe mortgage was duly proved and recorded.
On tbe 13tb May, 1854, tbe Association filed a bill against Edwin Welling for a foreclosure of tbe mortgage. From tbe date of tbe filing to tbe lltb February, 1856, no proceeding was bad in the case, when an order pro confesso was taken against Welling. Tbe case was referred to tbe Master on tbe 19th February, 1856. On tbe 4th March, 1856, there was a report, and on tbe same day tbe report was confirmed, and there was a decree for the foreclosure of tbe mortgage, by which the premises were ordered to be sold, and the proceeds of tbe sale applied in satisfaction of the amount reported to be due, and tbe balance, if any, to be paid to the mortgagor, tbe said Edwin Welling.
After tbe filing of this bill, Edwin Welling was arrested on a capias, and having petitioned for the benefit of the Act passed for tbe relief of insolvent debtors, on tbe 8th October, 1855, be was regularly and duly discharged as an insolvent debtor. Tbe Association adopted no proceedings to prove their debt as a suing creditor, according to tbe directions of said Act. E. DeTreville, one of tbe defendants, was appointed tbe assignee:
Subsequent to the date of the mortgage, to wit, on 24th May, 1854, Edwin Welling executed and delivered to tbe plaintiff, William J. Bennett, a bond, bearing that date, in tbe penal sum of seven thousand dollars — conditioned to indemnify the said William J. Bennett for tbe liability be was then about to assume by the endorsement of Welling’s note for three thousand seven hundred dollars, to the Planters’ and Mechanics’ Bank. On tbe same day, Welling gave a confession of judgment for tbe penalty of tbe bond, and a writ of fieri facias was lodged with tbe sheriff to bind. The plaintiff alleges that he has been obliged to pay the note, besides, that he has made other pecuniary advances for said W elling, for all of which he has received no reimbursement, and that tbe said Welling is utterly insolvent. In the meantime tbe mort gaged premises have been sold, not under tbe decree for fore closure, but under sundry writs of fieri facias in tbe bands of tbe sheriff, against tbe said Edwin 'Welling. William J. Bennett (this plaintiff) became tbe purchaser, and tbe purchase money has been paid to tbe sheriff, and applied to tbe executions in bis bands, according to their legal priority.
Tbe plaintiff charges that tbe decree of foreclosure, in tbe case of tbe Calhoun Loan and Building Association vs. Edwin Welling, was, under tbe circumstances, a nullity, tod prays that it may be so declared by a decree of this Court. He charges that tbe lien of tbe mortgage was lost, and tbe mortgage itself forfeited, by tbe omission of tbe said Company to institute proceedings for tbe recovery of their debt in tbe Insolvent Court. He prays that tbe lot at tbe corner of Beau-fain and Butledge-street may be sold by a decree of this Court, and tbe proceeds applied to tbe payment of bis judgment, and for general relief.
Tbe three defendants have filed separate answers, in none of which are the facts above stated controverted or denied. And these are tbe facts on which tbe judgment of tbe Court will be formed.
One of tbe grounds, upon which tbe plaintiff claims to have tbe decree for foreclosure vacated, is, that tbe suit of tbe Calhoun Loan and Building-Association against Welling bad abated at tbe time tbe order pro confesso was taken. His proposition is, that tbe case was out of Court, and that there was, at that time, no suit pending in which any order or decree could be taken against tbe defendant. In this view of tbe case I entirely concur.
I have already stated, that, from tbe filing of tbe bill, on 13th May, 1854, nothing was done in tbe advancement of tbe cause until tbe 11th February, 1856, when tbe order pro con-fesso was taken. A period of nearly twenty months elapsed without tbe plaintiff’s moving.
There is both reason and necessity that there should be some limitation to tbe time, during which tbe plaintiff shall be permitted to keep bis case pending in Court, without advancing. If a year is not enough, how long a time should be allowed ?
The Act of Assembly of 1784, for establishing a Court of Chancery, affords a rule for this matter. The 6 Sec. 7 Stat. 209, is in these words: “ That no suit or petition in Chancery, in which a decree or dismission has not yet been obtained, shall be considered as dismissed or discontinued for any past delay of prosecution, but that all such suits and petitions shall be deemed to be pending in the Court hereby established, and to “be now in the same state in which they were when the last proceedings were had thereon; and that every such suit or petition shall be finally determined within one year from and after the passing of this Act; and every suit or petition which shall hereafter be presented or instituted in said Court, shall be finally decided within one year after the same shall have been preferred or commenced, unless upon application in full and open Court, in Term time, and for special reasons to be assigned on account of the absence of material witnesses, or of some of the parties, or any other equitable cause, the Court shall think proper to extend the time (not exceeding twelve months longer) for the determination of the suit.”
The language of the Act, that no suit in Chancery, then pending,11 shall be considered as dismissed or discontinued for any past delay of prosecution” clearly implies, that before that time, delay of prosecution did operate for the dismissal or discontinuance of causes. The Act then provides a rule for the future, and declares that all suits thereafter instituted shall be finally decided within one year from the time of their commencement, unless upon cause shown in open Court, in Term time, they shall be continued. When a case is marked “ continued” upon I;ke docket by the presiding Chancellor, I apprehend it is a sufficient compliance with this latter provision of the Act, in respect to the manner of continuing causes. The case of the Calhoun Loan and Building Association did not go upon tbe docket until February Term, 1856, wben the decree for foreclosure was obtained. My opinion is, that no case was then pending in which it was competent for the Court to give a decree.
I am also with the plaintiff on the other grounds upon which he predicates his prayer for relief. After the filing of the bill, and before the decree for foreclosure, to wit, on the 7th July, 1855, Welling filed in the Court of Common Pleas a petition for the benefit of the insolvent debtor’s Act. On the 20th October, 1855, he obtained his discharge, which was 'under the usual formalities, and in the usual form. This, it is contended, operated as an abatement to the suit of the Calhoun Loan and Building Association vs. Welling. There are authorities to that effect, though I am not prepared to go so far as to say that the suit abated. The bankruptcy of a plaintiff, or his discharge under the insolvent debtor’s law, would certainly operate as an abatement. For any voluntary act of a defendant to abate the suit, would be an anomaly in the rules of practice. He is, in general, not allowed to put an end to the suit by his own act. The discharge of an insolvent may, without violence to a due construction of the proceedings, be considered as compulsory. His arrest is not voluntary. And after that proceeding, he must remain incarcerated, unless he petitions for his discharge.
Upon the question, whether the discharge of an insolvent operates as an abatement of a suit pending against him, there is conflict in the authorities. The better opinion is, that where a defendant becomes a bankrupt after the commencement of the suit, the bankruptcy is no abatement, and the plaintiff may elect to dismiss his bill, and go in under the bankruptcy, or to. go on with the suit, making the assignees parties by supplemental bill. Monteith vs. Taylor, 9 Yes. 615; Sedgewich vs. Cleveland., 7 Paige, 290 ; Story’s Eq. PI. and Pr. 842. In 1 Daniel’s Chan. PI. and Pr. 280, the author, summing up, observes, “After what has been said, it is scarcely ■necessary to say, tbat where a party who is a defendant to a suit becomes a bankrupt, or takes advantage of tbe insolvent debtor’s Act, it will be necessary for tbe plaintiff, if be proceeds with bis suit, to bring tbe assignees before tbe Court by a supplemental bill.”
' In Randall vs. Munford, 18 Ves. 427, Lord Eldon uses this language: “ This Court, however, without saying whether a bankruptcy is or is not strictly an abatement, has said, tbat according to tbe course of tbe Court, tbe suit has become as defective as if it was abated.” If tbe suit does not abate, all tbe decisions agree in this, tbat tbe assignees must be made parties by supplemental bill. /
There is yet another ground on which tbe plaintiff is entitled to tbe relief which be seeks. When Edwin Welling petitioned for tbe benefit of tbe insolvent debtor’s Act, and when be obtained bis discharge, tbe Calhoun Loan and Building Association was a suing creditor of tbe petitioner, by bill in this Court to foreclose a mortgage.
By tbe provisions of the Act of 1759, 4 Stat. 86, all tbe creditors of an insolvent debtor petitioning for bis discharge (as well those suing, as those who are not) are required to prove and establish their demands before tbe Court in which such application is pending (i. e., tbe Court of Common Pleas). Such a proceeding, in tbat Court, operates ipso facto, as a discontinuance of any action, before any other Court, which a creditor of the insolvent petitioner is prosecuting against him. Tbe Court of Law, under this Act, has tbe power, and undertakes to administer tbe estate of tbe insolvent debtor through the medium of an assignee, and to distribute it among bis creditors, according to their respective rights and legal priorities. The proceeding of tbe creditors in tbe Insolvent’s Court is in tbe nature of an action against him. Tbe Court renders a judgment as to all the claims tbat are proved, according to tbe form prescribed. A distribution is made. All tbe suing creditors are bound to take their dividend. Tbe insolvent is discharged as to tbeir claims, and they must look to tbe bind. Tbe w<m-suing creditors may elect to take tbeir dividends, or not. In tbe latter case, not having a judgment, they may wait, and afterwards prosecute tbeir case against tbe insolvent, but neither they, nor subsequent creditors, can sue or implead tbe discharged insolvent within twelve months from tbe date of his discharge.
My object, in making these commentaries upon the Act of 1759, is to show that the Act was intended to establish a complete system of relief for insolvent debtors and their creditors, and that all parties were required to appear before the one jurisdiction invested with authority for that purpose. It is not reasonable, and it is made unlawful, for the creditors to drag an unfortunate debtor before more than one tribunal.
The Calhoun Loan and Building Association, at the time of the application of Edwin Welling to the Court of Common Pleas for his discharge as an insolvent debtor and at the time of his discharge, 8th October, 1855, was a suing creditor of the said Edwin Welling in the Court of Equity, in a bill to foreclose a mortgage. When the Court of Law entertained the petition, and advertised for the creditors of the petitioner to present and prove their demands before that Court, the suit in equity to foreclose was discontinued. As to the Court of Equity, it was coram non judice. After this, whatever right the mortgagee had, was to be enforced alone in the Court where the case of the insolvent petitioner was being tried. If he omits to present and prove his claim and mortgage, in the manner prescribed by the Act, he loses the benefit of the lien of his mortgage. Porteous vs. Sullivan, 1 McC. 897.
The 4th section of the Act provides, that mortgagees of the insolvent debtor, and persons to whom his estate has been assigned or conveyed in trust, for his benefit, shall, at the time and place appointed for the appearance of the creditors of the insolvent petitioner, appear, “ and deliver to the said Court a fair account or accounts, on o ith, of all monies that are really and bona fide due and owing to them,” &c., “ upon such mortgage, assignment or conveyance.” The Act then proceeds to declare, that the Court shall have power to order sale of such property, and apply the proceeds first to the satisfaction of the debt, for the payment of which the property has been mortgaged or assigned, and the residue, if any, is to be paid to the assignee of the insolvent debtor, for the benefit of his creditors generally, according to their respective rights.
The 7th section provides, that if the directions of the Act are not pursued, in relation to such mortgages and trusts, they are declared to be fraudulent, null and void, and the property so mortgaged, or conveyed in trust, shall be vested in the assignees of the insolvent debtor, “ in like manner and for the like purposes as all the other estate and effects of the said petitioner are hereby directed to be vested." 4 Stat. 251.
The Calhoun Loan and Building Association, disregarding the provisions of this Act, instituted, as therein required, no proceedings in the Court of Law to prove their debt and foreclose their mortgage; but prosecuted their suit in Equity to a decree. The mortgage thereby has become a nullity, and the legal estate in the mortgaged premises has vested in the assignee of the insolvent, E. DeTreville, who is a party in this cause, insisting upon his rights.
It is ordered and decreed, that the decree of foreclosure in the case of the Calhoun Loan and Building Association vs. Edwin Welling, rendered at February Term, 1856, be set aside and vacated. It is further ordered and decreed, that the lien Of the mortgage of Edwin Welling to the said Calhoun Loan and Building Association, of the lot at the corner of Beaufain and Rutledge streets, be set aside, and that the said mortgaged premises be sold by one of the Masters of this Court, at such time and on such terms as the said Master in his discretion may deem most conducive to the interest of the parties con-. cerned. It is further ordered and decreed, that the proceeds of said sale, after deducting the plaintiff’s costs in these pro ceedings and those of tbe defendants, Welling and Treville, be paid to tbe said E. DeTreville, tbe assignee of Edwin Welling, to be paid by bim to tbe creditors of tbe said Edwin Welling, according to tbeir respective rights.
Tbe defendants, tbe President and Directors of tbe Calhoun Loan and Building Association, appealed on tbe grounds :
1. That tbe 6th sect, of tbe A. A. of 1784, has never been followed in tbe practice of this Court, and has been virtually repealed by tbe subsequent Acts regulating tbe Court of Chancery.
2. That if tbe said Act is authority, its provisions were intended for tbe benefit of defendants; and it is in proof that Welling, in fact, waived any such benefit, bis conduct amounting to a consent to the decree, and it is not competent for any other than Welling to interpose such an objection as tbe complainant has made.
3. Tbe bill does not allege tbe want of necessary parties to tbe proceedings for foreclosure, neither Welling nor bis assignee having made any objections, except in tbeir answers, and tbe complainant’s position precludes him from making such an objection.
4. That tbe assignee of tbe insolvent debtor was not a necessary party to tbe original suit, as Bennett bad purchased all of Welling’s remaining interest in tbe mortgaged premises before Welling’s discharge, and there was nothing, therefore, to vest in bis assignee.
5. That tbe analogy between tbe relief of insolvent debtors by our laws, and bankruptcy in England, will not bold; tbe former being voluntary, tbe latter compulsory; and, under a contrary view, any defendant arrested under a capias would have it in bis power to abate a suit against bim in tbe Court of Chancery.
6. That even if tbe assignee should have been a party to tbe proceedings for foreclosure, it was bis duty to apply to be admitted, and be cannot be benefited by bis own neglect.
7. That the provisions of tbe Acts for tbe discharge of insolvent debtors from suing creditors, apply to suits in per-sonam, and have never been held to arrest proceedings for foreclosure of mortgage.
8. That at tbe time of Welling’s petition for relief under tbe Insolvent Debtor’s Act, and at tbe time of bis discharge, proceedings were pending in this Court, by tbe mortgagees, for tbe enforcement of their lien, and they are therefore entitled .to tbe protection of this Court.
9. That when tbe Insolvent Debtor’s Act was passed, and down to tbe year 1848, there was no law rendering tbe recording of 'mortgages necessary to tbe preservation of their lien. Tbe latter statute has, therefore, altered tbe whole policy of tbe law of mortgages, and is virtually a repeal of tbe 4th and 7th sections of tbe Act of 1759.
10. That tbe clauses of tbe Act of 1759, last referred to, are directed against secret trusts or liens, bolding that tbe mortgagees in tbe case provided for shall “ be deemed to have taken tbe mortgage from tbe petitioner upon a false or feigned trust, with tbe intention to defraud tbe creditors of tbe petitioner,” an inference clearly precluded, in this case, by compliance with tbe Act of 1848, and tbe institution of proceedings in Chancery for enforcing tbe lien of tbe mortgage.
11. Tbat tbe Act of 1843 declares tbe cases in wbicb mortgages are to be beld void. And it is submitted, tbat a duly recorded mortgage cannot be beld or deemed a secret trust, nor declared void, except for actual fraud.
12. Tbat Welling was discharged in tbe City Court, tbe jurisdiction of wbicb, as to parties and amounts, is limited, and tbe 4tb and 7tb sections of tbe Act of 1759 are not applicable to tbe City Court, if they are to tbe Court of Common Pleas.
13. Tbat, by tbe decree, tbe Calboun Loan and Building Association are beld both as suing and non-suing creditors, and are subjected to all tbe penalties wbicb attach to both.
14. Tbat tbe decree is, in other respects, contrary to law and equity.
Martin, for appellants.
Campbell, Richardson, for complainant.
B. J. Whaley, R, BeTreville, for assignee.
Buist, for Welling.

Opinion:
Tbe opinion of tbe Court was delivered by
DUNKIN', Ch.
Tbe Calboun Loan and Building Association is an incorporated institution, and Edwin Welling, one of tbe members of tbe Association, on 17th April, 1853, executed to the said Association a bond, in tbe penalty of ten thousand dollars, conditioned for • tbe payment of five thousand dollars, in monthly instalments of fifty dollars each, and, to secure tbe payment of tbe bond, executed a mortgage of a lot in tbe city of Charleston, at tbe corner of Beaufain and Butledge streets. Tbe mortgage was duly proved and recorded. Some of tbe instalments being in arrear and unpaid, tbe Association, on 13tb May, 1854, filed a bill against Edwin Welling for a foreclosure of tbe mortgage. Tbe defendant was, on tbe same day, served personally by tbe sheriff with a copy of tbe subpoena ad respondendum,. No further proceedings were bad until 11th February, 1856, when an order pro, confesso was taken, and tbe cause docketted.
Tbe case was referred to tbe Master, to ascertain tbe amount due on tbe defendant's bond. This order of reference was taken on 19th February, 1856, and on 4th March, 1856, tbe report of tbe Master was made and confirmed, and a decree of foreclosure entered, by which it was directed that tbe premises should be sold by tbe Master, and that tbe proceeds should be applied to tbe satisfaction of tbe amount reported to be due, and any surplus be paid to tbe defendant, tbe mortgagor.
During tbe interval between tbe filing of tbe bill by tbe Association, and the decree of foreclosure, to wit, on 24th May, 1854, Edwin Welling confessed a judgment to William J. Bennett, tbe plaintiff in this cause, to indemnify him against certain liabilities assumed in bis behalf. On this judgment a fieri facias bad been issued, and lodged to bind. But Welling becoming unable to meet bis various engagements, this property was levied upon under other executions, and was sold by tbe sheriff on 6th August, 1855. At this sale tbe plaintiff, William J. Bennett, became the purchaser, at tbe sum of three thousand five hundred dollars. Of this sum, two thousand five hundred dollars was applied to tbe discharge of executions older than that of tbe plaintiff, and tbe surplus towards payment of bis own execution, leaving a large balance due thereon. At tbe same time, tbe plaintiff took from tbe sheriff a conveyance of tbe premises. About two months after this transaction, to wit, on 8th October, 1855, Edwin Welling was admitted to tbe benefit of tbe Insolvent Debtor's Act, and E. DeTreville, Esq., was appointed assignee;
On lOtb April, 1856, tbis bill was preferred by tbe plaintiff against tbe Calboun Loan and Building Association, and Edwin Welling, and bis assignee, E. DeTreville. It is alleged, in substance, that before tbe plaintiff consented to assist Ed-, win Welling with bis name, be caused an inquiry to be instituted, through bis solicitor, relative to tbe incumbrances upon bis property; that be was apprised of tbe mortgage to tbe Calboun Association, bat " was given to understand that there " never was more than three thousand six hundred dollars " due thereon, and that tbis bad been reduced by payments "to about twenty-four hundred dollars." He avers that be' was not aware, nor does be believe bis solicitor was aware, When be took tbe judgment, that proceedings were then pending for tbe foreclosure of tbe mortgage to tbe Calboun Association ; " but that, soon*afterwards, his solicitor was informed "by Welling, that a bill bad been threatened or filed, but " that be bad stopped it by some adjustment or payment of " tbe debtand that be (tbe plaintiff) beard no more of it until 8th March, 1856, when be discovered that tbe decree of 4th March bad been entered. Tbe prayer of tbe bill is (among other things), that tbe decree of 4th March, 1856, may be declared to be irregular, and not binding upon tbe plaintiff as to tbe lot at tbe corner of Butledge and Beaufain streets, as tbe plaintiff was not a party thereto, and, at tbe time of tbe order pro cmfesso, there was no bill or suit pending, but tbe same was discontinued by force and operation of law, for want of prosecution; that tbe mortgage executed to tbe Calboun Loan and Building Association may be declared null and void, because, at tbe time when Welling was admitted to tbe benefit of tbe Insolvent Debtor's Act, to wit, 8th October, 1855, tbe Calboun Association did not render, on oath, an account of tbe amount due, and also make oath of tbe validity of their mortgage; and that, in any event, only so much may be allowed on said lien as is actually due after tbe payments bave been deducted.
Tbe Chancellor, at tbe bearing, ordered that tbe decree of foreclosure, in tbe case of tbe Oalboun Loan and Building Association against Edwin Welling, rendered February Sittings, 1856, should be set aside and vacated, on tbe ground that, "at tbe 'time tbe order pro confesso was taken, tbe case " was out of Court, and that there was, at that time, no suit " pending in which any order or decree could be taken against "tbe defendant, Edwin Welling." It was also declared, that as tbe Calhoun Association " bad instituted no proceedings "in tbe Court of Law to prove their debt and foreclose their "mortgage, but prosecuted their suit in equity to a decree, " tbe mortgage bad thereby become a nullity," according to tbe provisions of tbe Insolvent Debtor's Law.
Before discussing tbe doctrines announced in tbe decree, it may be well to consider tbe relative rights of tbe plaintiff and tbe Calhoun Loan and Building Association. On 24th May, 1854, tbe plaintiff undertook to assist tbe defendant, Edwin Welling, with a full knowledge of tbe existing mortgage to tbe Calhoun Loan and Building Association. He was given to understand, as be alleges, that, at tbe time, only about two thousand four hundred dollars were due on tbe mortgage. On 6th August, 1855, tbe plaintiff became tbe purchaser of tbe mortgaged premises, sold by tbe sheriff under executions against tbe mortgagor, Welling. What passed to tbe purchaser, at such sale, has been settled for tbe last thirty-six years by repeated adjudications. Tbe purchaser "takes " the land subject to tbe lien of tbe mortgage. He takes all "that tbe mortgagor possessed." Ux parte City Sheriff.,1 McO. 399. "Under tbe A. A., 1791, tbe right of tbe mort- " gagor is a legal one, may be levied on and sold, and tbe " purchaser takes tbe place of tbe mortgagor." State vs. Laval, 4 McC. 336. Tbe plaintiff paid tbe amount of bis bid, and took tbe sheriff's conveyance. He became, thereby and thenceforth, the proprietor of all the rights in the land of the defendant in the execution, or of his creditors, and subject only to the lien of the mortgage. If no judgment had at that time existed against the defendant, E. Welling, and he had conveyed the premises in fee to the plaintiff, for valuable consideration paid, the relative rights of the plaintiff, and of the Calhoun Association, would have been precisely as they now exist. From the moment of the sheriff's sale, the creditors of Welling ceased to have any interest in the premises. Their agent, the sheriff, had conveyed their interests to the purchaser, and his money had been applied to the satisfaction of their demands in the order prescribed by law.
Under these circumstances, and occupying this position, the. plaintiff has filed his bill to vacate the decree of foreclosure. It is not suggested that, as a bona fide purchaser from the mortgagor, pending a bill for foreclosure, the plaintiff in the bill was bound to make him a party defendant. The authorities cited in the argument (and none more strongly than Sedgvñch vs. Cleaveland, 7 Paige, 290, adduced by the plaintiff's solicitor) show the contrary. It was the voluntary act of the plaintiff to become the purchaser at sheriff's sale, as •much as if he had bought directly from the mortgagor, and in such case he cannot be permitted to defeat the complainant's rights or delay their proceedings by his purchase pen-dente lite. " He has no right to be heard," says the authority, " unless he brings himself before the Court by a supplemen- " tal bill, in the nature of a cross bill; which he .may do to " protect his rights."
He knew of the mortgage. He is presumed to have known of the pending litigation to enforce it. He occupies in no respect the condition of an involuntary trustee or assignee of a bankrupt, under the Insolvent Debtor's Law, and the- distinction is pointed out and recognized by the Chanceller, in Sedgwiclc vs. Cleaveland.
The plaintiff prevailed in his application to vacate the decree, in the case of the Association against Welling, on the ground that, at the time when the order pro confesso was taken, no suit was pending against the said defendant in that cause. So much of the Acts of 1784, 1789 and 1810, as relates to this subject, was manifestly intended, as is suggested in the principal Act, to dispatch business in the Court of Chancery, and to prevent unnecessary delay on the part of suitors. "With this view it is declared, in the Act of 1784, that every petition or suit " shall be finally decided within one year after " the same shall have been preferred or instituted," unless upon cause shown, and in the manner therein specified, the Court shall think proper to extend the time not exceeding .one year longer (or two years from the institution of the suit), for the determination of the suit. The Act of 1789 authorizes the extension of this period to three years; and, by the Act of 1810, the Court is "authorized to continue any cause, " depending in the said Court, for a longer period than three " years by consent of parties; and, without such consent, on "good and sufficient cause shown, in any case where any " decretal order shall have been pronounced, within the term " of three years from the time of filing the bill."
This Court is well satisfied with the observation of Chancellor Harper, in Jeannerett vs. Bedford, Rich. Eq. Cases, 469, that, according to the uniform practice of the Court, the cause is not regarded as ipso facto out of Court, although these directions may not have been strictly observed. It is not declared by the Act, that if the cause be not decided within that time it shall be ipso facto at an end and out of Court. The law of 1784 directs the cause to be "finally decided" within one year, unless for satisfactory cause shown. Under that Act, a party defendant might have had the bill dismissed for want of prosecution, unless for satisfactory cause shown to the contrary; or it would have been in the power of the Court, of its own motion, and after the cause was docketted, if the parties delayed their proceedings, to strike off the cause, or make suck order as -would be a final decision; or it might refuse to proceed further against the defendant, or might set aside a decree improvidently entered against him. But these directions of the Act should be, and have been, always construed to subserve the purposes of justice, and not to take advantage of inadvertence or misapprehension. As is remarked by Chancellor Harper, if such motion be not made by the party defendant, being in Court, this may be held evidence of consent on his part; and, it may be added, that if no order be entered by the Court, it may be inferred that the Court was satisfied that the delay was reasonable. In this case the bill was filed, and the defendant personally served with process on 13th May, 1854. He was then properly in Court. Negotiations took place between the parties, and some payments were made. In the meantime, no motion was submitted on behalf of the defendant. On the contrary, from the statement of the agent of the mortgagees, they were under the impression that he assented to the delay, and that every thing should stand against him as before. On 11th Eebruary, 1856, an order pro confesso was taken, and, after the usual intermediate orders of reference, &c., a decree pronounced on 4th March, 1856. If, on 10th April following (when this bill was filed), a motion had been submitted, on behalf of Welling himself.] to vacate the decree, not on the ground of surprise or other such cause, but under the provisions of the Act of 1784, his case would have been less strong than that of the petitioner in Jeannerett vs. Bedford, which was, we think, properly dismissed. But the Acts referred to were manifestly intended for the parties in the cause. This bill is preferred by one who was no party. It would be of dangerous consequence to permit a third person to inquire into such proceedings, and, because of a supposed unwarrantable lapse in a long litigation, to vacate a final judgment, in which no fraud is alleged, and which the parties themselves have not assailed for irregularity, or to which they may have consented. In a cause which, is reported (Smith vs. Sunt), a bill was filed in 1825, and a final decision not made until 1851. At one stage of the litigation, an order was made for the removal of the cause from Georgetown to Charleston. ' It lost its place on the Georgetown docket, and was not placed on the Charleston docket for two or three years. It was at length placed on the latter docket, and earnestly prosecuted, and not less earnestly defended, until the final decree. Would a creditor of the defendant, or a vendee of part of the property sold after the decree, be permitted to impeach the decree of 1851, because of an intermediate lapse or delay in the proceedings between the original parties, and have the judgment vacated because there was no cause in Court when the decree was made ? Such seems to be the case of the plaintiff, and the character of his application.
But it would avail the plaintiff very little, merely to set aside the decree of March, 1856. The mortgage of the Calhoun Association would still remain in full force, and it would only be necessary for the mortgagees to renew their proceedings for foreclosure. But the decree has further declared, that the mortgage has become a nullity under the provisions of the Insolvent Debtor's Act. It is impossible to examine these provisions of the law without perceiving that their purpose is to secure the estate of the insolvent debtor for the benefit of his creditors, or of those of them who may be entitled under the assignment, and whose debts are discharged by this act of the law. The severe penalties of the law (amounting to forfeiture) are levelled against secret incum-brances. If they were suffered to be effectual, it might not only deceive creditors inclined to accept the assignment, but would interfere with the successful discharge of the duty of the assignee in making sale of the estate of the insolvent debtor. A mortgagee is therefore required to present his claim, and make oath of the validity of the mortgage and of the amount due thereon. And the assignee is required to pay this amount, in the first place, from the sales of the premises. It is declared, that if the mortgagee shall not appear and make oath, as required, the mortgage shall he deemed fraudulent, &c. Under the provisions of this law, in the case of Porteous ys. Sullivan, 1 McO. 399, the Court held, that the mortgage of a slave, which slave was in the possession of the insolvent debtor, and included in his assignment, was void, because the mortgagee had not pursued the provisions of the Act. In the case now before the Court, the mortgagees, at the time when the insolvent debtor instituted his proceedings, had already filed their bill in this Court for foreclosure of their mortgage. According to the authorities cited in the decree, it would have been incumbent on them to have made the assignee a party defendant to their bill. The validity of the mortgage, as well as the amount due, were subjects already before the proper tribunal for adjudication. It may very well be doubted, whether the penalties of the law were applicable to a mortgage already sub judice, or whether it was intended to withdraw the inquiries in relation to the matter from the tribunal which had cognizance of it, and bind the •assignee by the ex ¡parte oath of the mortgagee; for no provision is made for any further inquiry by the Court adminis. tering the Insolvent Law. But it is unnecessary to solve or to consider this question. These provisions of the Insolvent Debtor's Law have no application whatever in the case submitted by the plaintiff. On 6th August, 1855 (more than two months before E. Welling was admitted to the benefit of the Insolvent Debtor's Act), all his right, title and interest in the premises were sold to the plaintiff; the premises were conveyed to him by the sheriff, and, according to the allegations of his bill, have been ever since in his possession. From the time of that sale, it is very clear that neither Welling nor his creditors had any interest in the premises. The value of his interest, whatever it was, was, on 6th August, 1855, paid by the plaintiff, and appropriated to the demands of the credi tors. On 8th. October, 1855, when "Welling took the benefit of tbe Act,-he had no more right to include in his assignment these premises, than to include in it his neighbor's lot at the other corner of the street. Whether the mortgage to the Calhoun Association was valid or invalid; whether anything, or nothing, or how much, was due on the mortgage, were inquiries which concerned only the Calhoun Association, who held the mortgage, and the plaintiff, who held the fee charged only with what might be due on that mortgage. The plaintiff has, therefore, very properly insisted that the defendant, the assignee of E. Welling under the Insolvent Debtor's Law, has no interest in the proceeds of the sales if the mortgage should be declared invalid, but that they belong exclusively to him under his purchase at the sheriff's sales, and he justly repels the pretensions of the assignee, or the creditors, to any participation in such proceeds. If, in May, 1854, E. Welling, for valuable consideration, had conveyed the premises in fee to the plaintiff, with notice of the incumbrance, and, in October, 1855, had been admitted to the benefit of the Act, it is difficult to conceive upon what principle he could include in his assignment the premises of which he had ceased to be the proprietor eighteen months before. This is substantially the relative situation of the parties. The plain intent of the Act is to declare void all secret liens upon the estate of the insolvent debtor, the legal title to which had passed to his assignee, for the benefit of his creditors. These premises constituted no part of the estate of the insolvent debtor, and the title never passed to the assignee. If the mortgage should be declared void, and the assignee attempted to pursue the directions of the Act, by making sale of the premises, he would be a mere trespasser. The Court is of opinion that the mortgage to the Calhoun Association was not invalidated in consequence of the circumstances stated in the decree.
Although the Court has come to the conclusion that the plaintiff is not entitled to relief upon any of the grounds stated, lie may, nevertheless, have claim to aid for other causes, if the allegations of his bill be sustained. He has charged misrepresentation on the part of the mortgagees as to the amount due to them, by which he was misled; and in respect to the defendant, Welling, or his assignee, he would be entitled to a modification of the, decretal order of March, 1856, so far as it directed any surplus to be paid to him.
It is ordered and decreed, that the decree of the Circuit Court be set aside, and that the cause be remanded for further hearing upon the matters involved in the pleadings, and not herein adjudicated.
Johnston and Wardlaw, CC., concurred.
DaRGAN, Ch., dissented.
Decree set aside, and cause remcvnded to Circuit Court,