Court Opinion

ID: 6546647
Source: CourtListenerOpinion
Date Created: 2022-07-19 22:20:05.854525+00
Date Added: 2024-06-11T15:55:59.145727
License: Public Domain

McCulloch, J., (after stating the facts.) At the time-of the commencement of the foreclosure suit by appellant, the suit instituted by appellee, as a judgment creditor of A. J. Dennis, to set aside the convej'ance to J. M. Dennis, appellant’s mortgagor, was spending. Appellee, by the commencement of his suit to set aside the conveyance, acquired an inchoate lien on the' property, which was perfected on the rendition of the decree in his favor setting aside the fraudulent conveyance and ordering the property sold for the satisfaction of his debt. Jones v. Ark. Mech. & Alg’l Co., 38 Ark. 17; Stiv v. Chaytor, 55 Ark. 117; Doster v. Manistee Nat. Bank, 67 Ark. 325; Wallace v. Treakle, 27 Grat. 487; Freeman on Judgments, § 350. Appellee was therefore a necessary party to the foreclosure suit; and, not being a party thereto, it was not bound .by the decree, and its right to redeem from the mortgage was not barred. 9 Enc. PI. & Pr. p. 324; Dickinson v. Duckworth, 74 Ark. 138; Turman v. Bell, 54 Ark. 273; Memphis & L. R. Rd. Co. v. State, 37 Ark. 632. Its right was confined, however, strictly to that of redeeming from the mortgage. It could not demand another foreclosure and resale of the mortgaged premises. Dickinson v. Duckworth, supra. In sustaining appellee’s right to redeem from the mortgage, the chancellor was clearly correct, but the next question which arises is, whether or not appellant is chargeable with rents and profits of the property collected by him after his purchase at the foreclosure sale and -before redemption by appellee. It is well settled that a purchaser at a mortgage foreclosure sale which is defective, and therefore does not divest the title of the mortgagor, is in effect a mortgagee in possession, and is accountable as such for rents and profits of the mortgaged premises. “He is treated,” reason some of the authorities, “as a bailiff of the mortgagor, and necessarily sustains the same relation to one who holds an interest in the equity by a title derived from the mortgagor.” Clark v. Paquette, 67 Vt. 681. But, if the foreclosure is valid as against the mortgagor, and the purchaser at the sale takes possession of the premises, he is not deemed to be in possession under the mortgage, and can not be held accountable for rents and profits before an offer to redeem is made by a junior incumbrancer, who was not a party to the foreclosure proceeding. Adler-Goldman Commission Co. v. Herren, 65 Ark. 229; 2 Jones on Mort. § 1118a; Rogers v. Herron, 92 Ill. 583; Daniel v. Coker, 70 Ala. 260; Van Duyne v. Shann, 41 N. J. Eq. 312; Gaskell v. Viquesney, 122 Ind. 244; Gaidt v. Equitable Trust Co., 100 Ky. 578. The possession of the purchaser, under those circumstances, is that of a purchaser, and not as mortgagee. The sole right, as we have, already shown, of the subsequent purchaser qr junior lienor, who has been omitted from- the foreclosure proceeding, is, not to have the foreclosure sale set aside, but is to have an opportunity to redeem from the mortgage. Dickinson v. Duckwirth, supra; Allen v. Swoope, 64 Ark. 576. It is conceded by counsel for appellee that this would be true if appellee was only a junior lienor, and had not acquired the mortgagor’s equity of redemption by purchase of the property at the sale ordered by the chancery court to satisfy its judgment against A. J. Dennis. They contend that appellee’s purchase of the mortgagor’s equity of redemption before the foreclosure sale under appellant’s mortgage substituted it in the place of the mortgagor, and that the foreclosure without making appellee a party to the proceeding was no foreclosure at all. We think the case of Adler-Goldman Commission Co. v. Herren, supra, is decisive against that contention. At the time of the commencement of appellant’s foreclosure suit appellee was only a lienor, though it became, before the foreclosure sale was made, the absolute owner of the equity of' redemption. Appellant nevertheless purchased the title of his mortgagor, and entered into possession as purchaser, and not as mortgagee. Appellee had the right to redeem at any time from, the mortgage, because it had, as lienor, been omitted from the foreclosure proceeding, but until it offered to redeem it had no right to disturb appellant’s possession or call him to account for the rents and profits while in possession under his purchase. In Adler-Goldman Commission Co. v. Herren, supra, the junior mortgagors foreclosed their mortgage before the attempt to redeem from the prior lien of Herren, yet the court denied their right to require the latter to account for rents. This is not an attempt, within the statutory period of redemption, to redeem from the foreclosure sale. The statute giving the right of redemption from mortgage foreclosure sales under decrees of court (act May 8, 1899), having been passed subsequent to the execution of appellant’s mortgage, is by its express terms excluded from operation as to mortgages executed prior thereto. If that statute was applicable to the mortgage in question, appellee could, within the prescribed period of redemption, have tendered the amount required to redeem, and then appellant would have been chargeable with rents and profits received while in possession. Danenhauer v. Dawson, 65 Ark. 129. The only question remaining for our consideration is ■ regarding the contention of appellant that a suit to redeem can not be instituted until after a tender of the amount due. This is true, but the tender can be made at any time, and the time of making the tender would only affect the question of cost of suit. Of course, until there has been an offer to redeem by paying the amount due, the suit can not be successfully maintained; but a court of equity should not dismiss a suit on account of the failure to make a tender, so as to require the institution of a new suit, when the plaintiff is willing and makes an offer during the pendency of the suit to pay the amount necessary to redeem. That is one of the distinctions between the right of redemption from a mortgage and the statutory right of redemption from a foreclosure sale. Wood v. Holland, 57 Ark. 198. Appellee is not entitled to recover any cost of suit incurred prior to an offer to pay the amount of the mortgage debt and interest. The decree is reversed with directions to enter a decree establishing appellee’s right to redeem from appellant’s mortgage, but only on the terms indicated in this opinion. .