Case Name: HARDIN, Appellant, v. GRAHAM et al., Respondents
Court: South Dakota Supreme Court
Jurisdiction: South Dakota
Decision Date: 1916-11-13
Citations: 38 S.D. 57
Docket Number: File No. 3932
Parties: HARDIN, Appellant, v. GRAHAM et al., Respondents.
Judges: POLLEY, P. J., not sitting.
Reporter: South Dakota Reports
Volume: 38
Pages: 57–64

Head Matter:
HARDIN, Appellant, v. GRAHAM et al., Respondents.
(159 N. W. 895.)
(File No. 3932.
Opinion filed November 13, 1916.
Rehearing denied January 6, 1917.)
1. Appeals — Review—Unsettled Record, Scope oí Review Under.
Where trial court declined to find that the record had actually heen settled at the time of motion for hew trial, the only portions of the record that the Supreme Court can consider on appeal are such as could he considered on -apipeal taken solely from the judgment, and not from denial of new trial.
2. Real Property — Property Under Foreclosure — Mining Appurtenances — Statute.
Under Civ. Code, .Sec. 189, providing that sluice boxes, flumes, hose, pipes, railway tracks and certain milling appurtenances and other machinery and -tools used in working and developing a mine, are to be deemed affixed to the mine, 'held, that such appurtenances are real property. So held, where such property is the subject of foreclosure, and the court had ordered receivers to sell the mining appurtenances without the same being subject to redemption.
3. Courts — Federal Circuit Court — Decree of Foreclosure Sale Without Redemption — Jurisdiction.
A federal circuit court, in a suit to foreclose a mortgage on a mining property and appurtenances, is without power, as against one claiming as owner, whose right of redemption accrued before foreclosure was begun, to decree a sale of such property, being realty, without right of redemption.
4. Mortgages — Foreclosure Sale — Redemption, Persons Entitled— Redeeming' to Protect. Mortgage Lien, Whether — -Periods of Title.
Plaintiff, wih® purchased mining apparatus, which, under Civ. Code, Sec. 18 9, is realty, and took a receiver’s deed therefor, in proceedings in a state court to enforce superior miners’ liens, thereby became owner of the mining company’s equity, and as such owner was entitled to redeem from an existing mortgage, notwithstanding the mortgagees redeemed from the receiver’s sale, receiving a redemptioner’s deed, and then transferred the property to defendant, who also became purchaser at a receiver’s sale under a decree of federal court in process of foreclosure of the mortgage; such 'foreclosure toeing void because made without right of redemption; it appearing that the money advanced to redeem from tlhie sale under the federal receivership was merely advanced for the purpose of protecting the mortgage lien, which action was inconsistent with an assertion of title; and such title as was thereby obtained was merely incidental to the mortgage; and under such redemption defendant is estopped from -asserting title under the sheriff’s deed issued upon the receiver’s sale in the state court. Held, further, that plaintiff had the right to redeem from the federal receiver’s sale without paying or tendering the amount due under -the foreclosure decree.
5. Judgments — Conclusiveness—Collateral Attack, Through State Court, Upon Invalid Federal Court -Foreclosure Decree.
Where a Federal Court had jurisdiction to authorize a foreclosure sale subject to'redemption, but was without power to authorize a sale without redemption, a subsequent action in a state court to redeem was not a collateral attack upon such decree.
Appeal from' Circuit 'Court, Lawrence Count}''. Hon. Jamrs McNrnny, Judge.
Action by James D. Hardin, against Walter E. Graham and others, for a decree adjudging' plaintiffs’ right to- redeem from a receivers’ sale. Rrom a judgment for -defendants, and from an order díenying a new trial, plaintiff appeals.
Reversed1 with directions.
D. M. Vinsonhaler, B. C. Strode ,Jolm H. Rogers, and Hoimrd G. Puller, for Appellant.
Ogden & Ogden, for Respondents.
(i) To point one of the opinion, Appellant cited1: Code Civ. Brae., Sec. 463.
Respondents 'cited: Brown v. Brown, 12 S. D. 382; Gade v. 'Coffins', 8 S. D. 322.
(3) To -point three of the opinion, Appellant cited: Code Civ. Proc., Sets. 373-379; Vo!. 17, (2d Ed1.) Ain. & Eng. Enicy. of Laiw, page 1034; Lacy Coal Mines v. Chicago 'Coal Company, 131 Ill. 9, 22 N. E. 503, 8 L. R. A. 598; Bruehke et al. v.-Wright et a!., 46 N. E. (Ill.) 813-819; Smith v>. Carnahan, 83 Neb. 667-674; Big-low v. Forrest, 91 Wall. (U. S.) 339; Brine v. Hartford Fire Ins. Co., 96 U. S. 627, 24 L. Ed'. 856; Fitch v. Wetherbee, no Ill. 475, 492.
(4) To point four of the opinion, Appellant cited: Code Civ. Pnot., Secs. 646, 376.
Respondents cited': 34 Cyc. 333'; Watkins v. Minnesota Thresher -Co., 42 N. W. 892; Mercantile Realit}*- Co. v. Stetson, 94 N. W. 859; Cressler v. Tri-State L. & T. Co., 107 N. E. 68; Juckett v. Fiargo Mere. Go., 19 S. D. 150; J-oy v. Midland State! Bank, 26 S. D-. 244;- Blaire v. Ill. Steel- Co., 42 N. E. 895.
(5) To -point five of the -opinion, Respondents -cited: Jucket-t v. Fargo Merc. Co., 19 S-. D. 244; B-ryn-j-ol-fson v. Ohstus, (N. D-.) 96 N. W. 261; TihreadgiU v. Col-cord, 96 Pac. 803; 34 Cyc. 32-7.

Opinion:
'GATES, J.
This cause was before this court upon preliminary motions anld am opinion was -nen-dered, whi-ch i-s referred to for further particulars, viz., 36 S. D. 525, 155 N. W. 782. Upon the transmission of the record to- the trial court that court declined to- find that the record1 had actually been settled at the time of the hearing -o-f the motion for a new trial. We are therefore of the opinion, that the only portions of the record that are before us and) -that we can 'consider .are such, as- would' be before us, artd -such- as we co-ul'd consider, bald the appeal been taken so'lel}' from, the judgment. We are therefore limited- to- -a consideration /of whether the judgment is warranted -by the pleadings and the findings of fact.
The matter in dispute relates to the -ownership and- right of possession o-f the mining properties- of the- Branch Mint Mining & Milling -Company. Reference is matte to Phillips v. Branch Mint Mining & Milling Co., 27 S. D. 350, 131 N. W. 308; Hardin v. Union Trust Co., 191 Fed. 152, 111 C. C. A. 632; Hardin v. Union Trust Co., 226 U. S. 606, 33 Supt. Ct. 111, 57 L. ed. 379, for a more 'comipiete understanding of the case. The decision in the Phillips case -resulted in the establishment of the miners' liens as first liens upon the property.
On September 4, 1909, Hardin became the o-wner of the equity of the mining company in the property by virtue of a re'ceiver'-s -deed issued1 unider receivership proceedings in -the state court in the Phillips case.
Hong prior to the lien claim's anidi -the claim of Hardin-, the mining company had mortgaged the property to- the Union Trust Company as trustee for the purchasers of -a bond issue. In February, 1910, the trustee 'began1 'foreclosure suit in- the then United States 'Circuit Court for the -district of South Dakota, to which Hardin 'was a party. On Ju-ly 27, 1910, judgment was entered -decreeing foreclosure of the -mortgage, which judgment w!as affirmed in the- United States Circuit .Court of Appeals decision above referred1 to, -and! a writ of 'certiorari w.as denied in the United States Supreme 'Court decision above referred to. From a sale under foreclosure of the miners' liens in the Phillips case, the Union Trust Company became a .rede-mptioner and -obtained redemptiolner's -deed on January 8, 1912. It thereafter deeded) the property to John Stokes Ad'ams, who in turn deeded it to- Graham on March 24, 1913. The -money for such redemption was advanced- to the Trust Company -by Graham, one of the bondholders. It is -conceded' by the parties' that the certificate of sale under the miners' lien foreclosure was the paramount lien on the property.
During the pendency of -the forcl'osure suit ini the federal court two receivers were appointed by -that -court to take charge of the property, and) an order for the sale of the property was made to satisfy certain receivers'" 'certificate® issued 'during the pendency of said suit. (The receivers hereinafter referred to1 -in this opinion are these receivers and not 'the receivers • in the state -court hitíberfo referred to.) Graham obtained a receivers' -certificate for the money advanced by himi to the trust company to effect the .redemption1 from the Phillips lien sale. At the receivers' sale held ion February 5, 1913, Graham became the purchaser, and in satisfaction of hisi bid of $20,552.64 turned over receivers' certificates (including die above-mentioned1 certificate), aggregating' $20,472.92, anid paid the remainder of his bid in cash. Such salle was. by the order of the federal court made without the right of redemption. It was oomfirmed and! a receivers' deed was issued to Graham, which was filed for record in March, 1913. On June 12, 1913, Hardin tendered1 Graham the sum of $21,-844.20, add served upon him a notice of redemption from said •receivers' sale, which tender was refused. Thereupon Hardin brought tills action, the purpose- of which was in general to have the court adjudge that he had effected a redemption from the sale made by the receivers on February 5, 1913. The trial court concluded that such receivers' .sale and deed were valid, and that Hardin's tender wias ineffective because he had no right to redeem, -and judgment was entered declaring Graham to be the owner olf the property. From the judgment and an 'order denying a new trial Hardin lias appealed, but, as we have 'hitherto shown, we must disregard the appeal from the order denying a new trial.
By section 189, G. C., it is provided:
"Sluice boxes-, flumes, hose, pipes,' railway tracks, cars, blacksmith shops, mills, arid all other 'machinery or tools used in working or developing a mine, are to be deemed affixed1 to the mine."
These things are considered to he real property. The important question in this case is, therefore, whether the federal court had authority -to authorize ¡the receivers to- sell real property without the right of redemption.
Many decisions so hold where the property .consists 'both of real -and1 personal property, -and it is not feasible to sell the different kinds of property separately, or where the purpose of the s-u-it is the 'winding -up of the affairs of an insolvent corporation. Hammock v. Farmers' Loan & Tr. Co., 105 U. S. 77, 26 R. ed. 1111; Nat. Foundry & Pipe Works v. Oconto Water Co. (C. C.) 52 Fed. 43; Oconto Water Co. v. Nat. Foundry & Pipe Works, 59 Fed. 20, 7 C. C. A. 603; McKenzie v. Bismarck Water Co., 6 N. D. 361, 71 N. W. 608; Farmers' L. & Tr. Co. v. Ottumwa Nat. Bk. (C. C.) 78 Fed. 881: Pacific N. W. Packing Co. v. Allen, 116 Fed. 312, 54 C. C. A. 648; Merc. Realty Co. v. Stetson, 120 Iowa, 324, 94 N. W. 859; Blair v. Illinois Steel Co., 159 Ill. 350, 42 N. E. 895, 31 L. R. A. 269. Ooncedin'g ¡that in certain cases a ¡court of equity has power to direct the sale of the equity of a corporation in its property without the right of redemption, it is entirely clear that at ifae time of the receivers' sale •the mining company bad' no equit}'- in this property. Ever since September 4, 1909, Hardin has been the ¡owner of that equity, unless he -was ¡deprived thereof by the sheriffs ¡deed to Graham issued under foreclosure ¡of the miners' liens in the Phillips case. Ever since September, 1909, ¡the mining company has had¡ no equity in the property. If said sheriff's deed to¡ Graham deprived Hardin of such equity in the property, then by suoh deed Graham succeeded1 to ¡such equity. So that in either event the mining- company he-lid noi equity in the property at the ¡time of the sale by the federal 'court receivers. By the laws of South Dakota such a .sale as was attempted to> be made by the receivers could not deprive Hard-in (if he w-as the owner) or Graham ('if he was the owner) of the- right of redemption. C. C. P. § 373, 375, 376, 646; Locey Coal Mines v. Chicago, W. & V. Co., 131 Ill. 9, 22 N. E. 503, 8 L. R. A. 598. It will be observed that Hardin's title tol the mining property became vested long prior to- the beginning of ¡the foreclosure suit in the federal court, and therefore long ¡prior to the 'talcing of possession of the property by (he receivers. Watkins v. Minn. Thresh. Mfg. Co., 41 Minn. 150, 42 N. W. 862.
The jurisdiction' of ¡the federal court was invoked for the purpose of foreclosing the mortgage. When that court appointed receivers -in the foreclosure suit such powers as the court could confer on the receivers were piolwersi under -and by virtue of the mortgage. ¡Under the mortgage itself no s'ale could be made .which would! -cut off the right of redemption. Subject to the light of redemption, the court had • power to order a sale of -the -property, to .pay the mortgage debt or any claim incidental to- the. mortgage debt. Although an unusual practice, we do not question the powers of the federal court to order a separate sale of the mortgaged property to raise the amount of the advancements that were made to' preserve the property .-and for the expense of the receivership!; but inasmuch as those -advancements were merely incidental to the foreclosure of the mortgage, a sale thereunder coiu'lid give no greater rights than those secured .'by the mortgage, at least as against Hardin if lie wtas then the owner of the property. It is clear therefore that 1» sale could >be made either under foreclosure or on account of matters incidental thereto which would cut off the right of redemption iof one whose rights 'became vested prior to the receivership.
Noiw was Hardin, deprived of his equity in the property •by the sheriff's deed1 to Graham under the Phillips sale? Upon the face of 'the deed he was. Upon consideration of the acts of the parties he was: met. By applying to and receiving from the receivers a receivers' certificate for the amount which he advanced to the Union Trust Company to redeem from the Phillips sale, Graham said in effect that he w-as merely advancing the money for the purpose of protecting the lien of the mortgage. Such action on his part was utterly' inconsistent with an assertion of title. His action declared, louder than word's, that such title as he got was merely incidental to the mortgage and for its protection. He should therefore be estopped from' asserting title-under the sheriff's deed issued upon the Phillips sale.
We must therefore 'hold' 'that Handlin was entitled to redeem from -the receivers' sale at the time he made his tender. Inasmuch as the mortgage still stands unforeolosed and rests upon the unexecuted decree of foreclosure, Hardin had the right to redeem from' the receivers' sale without paying or tendering the amount 'due under such decree, which decree will; after redemption is made by him, still stand as an incumbrance upon the property.
But it is urged that this action constitutes a collateral attack upon the orders of the federal court authorizing and confirming the receivers' sale. If Hardin had waited until after the period1 of redemption had expired!, or if the court had authority to order the sale without the right of redemption, there would be much force in respondent's argument. But during the period of redemption to which he was entitled, Hardin tendered the amount necessary to redeem, and1 this action was brought to. enforce that right which was denied to him. The power to authorize a sale by the receivers, was- within the jurisdiction of the federal court. The power to authorize this particular sale without the right of redemption was not within the jurisdiction of the federal court. Hence this 'action dbes not constitute a collateral attack upon the ard'ers and' judgments of that count.
The judgment appealed1 from 'is reversed, and the trial count is directed to enter judgment allowing Hardin within a reasonable time to pay into court the amount requisite to redeem from (die sale made by the federal court receivers, and that upon such payment title to1 the 'premises be decreed1 to- be in him subject to the unexecuted decree of foreclosure hereinbefore referred to. If Hardin shall fail to malee such redemption within such reasonable time as the Court may direct, then the judgment appealed from may be re-entered.
POLLEY, P. J., not sitting.