Court Opinion

ID: 7047765
Source: CourtListenerOpinion
Date Created: 2022-07-24 06:56:53.805627+00
Date Added: 2024-06-11T16:11:36.332640
License: Public Domain

On Petition fob a Rehearing.
Mitchell, C. J.
Since the principal opinion was filed, •and in support of the petition before us, learned counsel present an argument, in which great research and ability are manifest, and which is devoted to the discussion of questions neither argued nor, with but one exception, suggested before.
The questions presented, so as to fall within the rule requiring decision, were all considered and decided in the opinion filed. The ruling of the trial court in sustaining the demurrer to the second paragraph of the appellant’s cross-bill was merely suggested in the brief filed in the first instance. The ■court below followed the ruling in Catterlin v. Armstrong, 79 Ind. 514, 525, in which the learned commissioner who pronounced the judgment of the court had explicitly determined the question arising thereon, and as no suggestion of disapproval of that case was made in the brief, we were, as counsel seemed to be, content to. consider the point at rest.
It is now said that if the decision rendered in this case stands, it is impossible not to see that the appellant must suffer hardship and injustice, and we are pressed with an earnest and able argument to consider reasons adduced and authorities now cited for the first time to prevent the alleged injustice which it is claimed will result from the decision as it now stands.
The complaint in this case shows that a mortgage was executed by Blake to secure a debt owing to Kerr. This mort*264gage was dated September 23d, 1851. Blake also delivered an indemnity mortgage to Armstrong on the same and other lands on the 17th day of August, 1859. This mortgage, it is agreed, was duly recorded. A decree of foreclosure was rendered on the Kerr mortgage June 28th, 1860, and under this decree a sale was made to Catterlin August 11th, 1860. Armstrong was not made a party to the Kerr foreclosure. Catterlin received a sheriff's deed and went into possession at once, and made improvements.
It is now contended that a junior mortgagee, who has not been made a party to the proceeding, can not foreclose his mortgage against a purchaser in possession under a sale made in pursuance of a decree given on a senior mortgage, without first redeeming or offering to redeem from such sale, and it is insisted that because the bill asking a foreclosure in this, case does not allege a redemption or offer to redeem, it was in consequence insufficient on demurrer.
In this connection the cases of Cain v. Hanna, 63 Ind. 408, and Catterlin v. Armstrong, supra, so far as they announce a contrary rule, are subjected to animadversion as infringing well settled principles.
It is also contended that a purchaser in possession under a senior mortgage, who has made valuable improvements on the land, is, as against a junior mortgagee, whose mortgage was duly recorded, but of which such purchaser had no actual notice, entitled to be reimbursed for his improvements.
That the rights of a junior mortgagee, who was not made a party, are in no manner affected by the foreclosure of and sale on a senior mortgage, has been so often determined that this much may now be accepted as settled. As respects him there has been no foreclosure, and he stands in relation to that suit and the sale under it as though they had never occurred. The purchaser at such sale has accomplished nothing-more than to acquire and combine the rights and interests of the mortgagor and senior mortgagee. Thenceforth he stands to all intents and purposes in the shoes of both. He has ac*265quired and could acquire no right as against the junior encumbrancer which before was not possessed by those in whose place he stands. By his deed he acquired the legal title and right of redemption of the mortgagor. Superadded to these, equity maintains the senior mortgage on foot for his benefit. But neither the rights nor remedies of the junior mortgagee have been meanwhile affected or disturbed in the least degree. Whatever may have transpired to which he was not a party has deprived him of nothing, either in respect of right or remedy, which he possessed before. These conclusions are, we think, sound in principle and fully sustained by authority. Holmes v. Bybee, 34 Ind. 262; Murdock v. Ford, 17 Ind. 52; Hosford v. Johnson, 74 Ind. 479; McKernan v. Neff, 43 Ind. 503; Hasselman v. McKernan, 50 Ind. 441; Goodall v. Mopley, 45 Ind. 355; Gage v. Brewster, 31 N. Y. 218.
To ascertain what remedies a junior mortgagee may pursue after a foreclosure and sale on a senior mortgage to which he was not a party, it is only necessary to determine what he might have done before. That he might have maintained a suit to foreclose his mortgage, without first redeeming or offering to redeem from the senior mortgagee, can not be disputed. The most a senior mortgagee can do in such case, if he be made a party, is to exhibit his mortgage, either by answer or cross-bill, have it declared the prior lien and the sale decreed subject to it, or he may, in the same case, foreclose the right of both the mortgagor and junior mortgagee to redeem from him. If he can do more than this after a foreclosure of his mortgage and sale, then he has it in his power to deprive the junior encumbrancer of an important and valuable right without giving him a day in court. The right to foreclose his mortgage and expose the mortgaged estate to sale for the purpose of paying both mortgage debts, instead of redeeming from the first, is a valuable right and may be the only one which the junior encumbrancer is in position to avail himself of, and of this he can not be deprived during *266the lifetime of his mortgage except by the judgment or decree of a court duly given. Coleman v. Witherspoon, 76 Ind. 285; Moffitt v. Roche, 76 Ind. 75. That a second or subsequent mortgagee has the equitable right to redeem the mortgaged estate by paying the prior encumbrance at any time .after its maturity, can not affect his independent and concurrent right to foreclose and cut off the equity of redemption of all others who possess that right, and to sell the estate of the mortgagor or those standing in his place for the purpose of paying his debt, even though such sale may have to be made subject to the rights of prior mortgagees.
The precise question here involved was determined by Chancellor 'Walworth, in an elaborate opinion in the case of Vanderkemp v. Shelton, 11 Paige, 28. The learned chancellor there said: “ In England, the court does not decree a .sale of mortgaged premises, but merely allows the second encumbrancer to file a bill to redeem from the first encumbrance, .and that the junior encumbrancers may redeem both of the prior ones, or be foreclosed. And the complainant there is, in all cases, required to offer to redeem the first encumbrance. But here, where the puisne creditor has the right to a sale of the estate to satisfy his debt, after applying so much of the proceeds of the sale as may be necessary to pay the debt and costs of the prior encumbrancer, he is not required to offer to pay the first encumbrance.”
The right of the prior mortgagee, if made a party, is to set up his mortgage and have it adjudged the prior lien, and that it be first paid out of the proceeds of the sale, or if it is due he may by cross action have a decree of foreclosure against all concerned. What was said in Cain v. Hanna, supra, and Catterlin v. Armstrong, supra, concerning the right of a junior mortgagee to foreclose his mortgage after a foreclosure of and •sale on a senior mortgage to which he was not made a party, is approved.
A purchaser, who obtains title and goes into possession under .a sale made on a foreclosure of a senior mortgaore. is not en*267titled to be reimbursed for permanent improvements which he has made, by a junior mortgagee who was not made a party, ,and whose mortgage was duly recorded at the time of such foreclosure and sale. This was decided when this case was here before. That decision was cited and followed by Woods, J., in Taylor v. Morgan, 86 Ind. 295. The point involved was fully considered and determined in the case of Ritter v. Cost, 99 Ind. 80, which is in principle analogous. In Coleman v. Witherspoon, supra, substantially the same question is in judgment.
That a person in possession of real estate under color of title, and who, while so in possession, in good faith makes valuable improvements, will be allowed the benefit of such improvements upon failure of his title, is a salutary provision of the statute. This case, however, does not fall within its protection; no such claim is made. Nor is the contention of the appellant maintainable as a doctrine of equity. The consideration that he had no actual knowledge of the Armstrong mortgage is of no moment. It is admitted that it was of record, and he was, therefore, conclusively charged with notice of it, as also with the rights of the mortgagee under it. He will be presumed to have bid and made the purchase with reference to the junior mortgage, and with respect to the junior mortgagee he became to all intents the mortgagor and •equitable assignee of the senior mortgage. He had the clear right by a strict foreclosure to cut off any right of Armstrong under his mortgage, had he chosen to inform himself of the condition of the record. Instead of doing this he made improvements on the property, which under all the authorities became part of it.
It is not averred that he was misled into this by any misrepresentation, concealment or other misconduct of Armstrong. That Armstrong had knowledge of the fact that Catterlin. was making improvements on the lot, without more, did not constitute an estoppel against him. In legal contemplation, Catterlin had notice of his mortgage. The improve*268ments which he made are to be considered as if made by the mortgagor, whose shoes the appellant stands in with respect to the title. Wharton v. Moore, 84 N. C. 479 (37 Am. R. 627); Rice v. Dewey, 54 Barb. 455. Nor has he any greater-right to demand an accounting for taxes paid than the mortgagor himself would have had in case he had remained the-owner and in possession. The whole question is covered by the suggestion that as to Armstrong the foreclosure and sale on the Kerr mortgage left him with respect to his rights, remedies and obligations precisely as if it had not occurred.
Filed June 10, 1885.
Concerning the right of Catterlin to require the mortgaged premises to be sold in the inverse order of alienation, no-doubt can exist as to the rule, but the record presents no case for its application. The complaint for foreclosure does not disclose whether the other parcels of land embraced in Armstrong’s mortgage were sold by Blake or not, or whether they may not have been sold before the appellant’s rights attached; nor is anything made to appear showing their value. It was for the appellant to bring the facts upon the record by answer.
The petition for a rehearing is overruled.