Court Opinion

ID: 9320403
Source: CourtListenerOpinion
Date Created: 2022-12-02 17:51:22.194222+00
Date Added: 2024-06-11T17:14:34.556216
License: Public Domain

The Chancellor :
On May 25,1871, tbe defendant W. E. Cornelius conveyed to tbe defendant Hiram Yaugbn, in mortgage or trust to secure rent-notes falling due quarterly, foran annual rent of $600 for ten successive years, tbe steam-boiler, machinery, and other apparatus of a flouring-mill. Tbe complainant, C. M. Hays, became subsequently a jsartner of Cornelius in tbe property thus encumbered, and in tbe mill business carried on with it, and afterwards sold his interest to Cornelius. Tbe consideration of this sale was tbe sum of $6,000, for which Cornelius executed to complainant bis three notes, dated September 28, 1871, at one, two, and three months, for $2,000 each, and secured their payment by a second mortgage on the property previously conveyed to Yaughn. The first of these notes has been paid, the third assigned to Yaughn, and the other has been retained by the ■complainant. This bill is filed against the mortgageor, prior mortgagee, and the holder of the third note secured by the •second mortgage, and asks a foreclosure, by sale, of both mortgages. The defendant says that the rent-notes, secured by the first mortgage, have been paid up to the 1st of January of the present year, leaving only three of the quarterly notes given for the rent of this year past due and unpaid, and they object to a foreclosure of that mortgage.
On a bill by a second mortgagee, nothing more than the equity of redemption or the mortgageor’s interest which passed to him can be decreed to be sold, unless the first mortgagee is in a condition to foreclose, and consents to a sale of the entire property. Cloud v. Hamilton, 3 Yerg. 81; Gihon v. Belleville Co., 3 Halst. Ch. 536; Roll v. Smalley, 4 Halst. Ch. 464; Hudnit v. Nash, 1 C. E. Green, 560 ; Potts v. New Jersey Arms Co., 2 C. E. Green, 518. The second mortgagee cannot interfere with the contract of the prior mortgagee; nor, consequeñtly, can he sell the interest of that.mortgagee, against his wishes. Bigelow *463v. Cassedy, 11 C. E. Green, 562; Stark v. Cheatham, 2 Tenn. Ch. 303. He has a right to redeem the prior mortgage if the debt be past due, or to the extent of the debt past due. Western Ins. Co. v. Eagle Fire Ins. Co., 1 Paige, 284; Edmiston v. Lyde, 1 Paige, 641. In a proper ease, he is entitled to a decree declaring his right to redeem, and to sell in order to repay the redemption-money, as well as >to satisfy his own debt. Fell v. Brown, 2 Bro. C. C. 278 ; Cholmley v. Oxford, 2 Atk. 267; Edmiston v. Lyde, 1 Paige, 641. Where the object of the second mortgagee is simply the foreclosure of his mortgage, a prior mortgagee is not a necessary party. Mims v. Mims, 1 Humph. 425. He is a proper party, even in such case, where there is substantial doubt as to the amount of the prior mortgage-debt. Jerome v. McCarter, 94 U. S. 736. If the prior mortgagee has been in possession, he is also entitled to make him a party, and to have an account of rents and profits, in which the latter will be charged with the full value of the premises. Trulock v. Robey, 15 Sim. 265; Trimbleston v. Hamill, 1 Ball &. B. 385; Gordon v. Lewis, 2 Sumn. 143. Or, if the property be personal, with the hires and profits thereof. Overton v. Bigelow, 10 Yerg. 48. The mortgagee who goes into possession, and thereby prevents other creditors having subsequent liens from entering, will be charged with all the profits he might have received, although he permit the mortgageor to take them. Copping v. Cooke, 1 Vern. 270; Bentham v. Haincourt, Pr. Ch. 30. The rents and profits collected by a receiver pending litigation will' go, it may be added, to the party at whose instance the receiver was appointed. Sanders v. Lord Lisle, I. R. 4 Eq. 43 ; Howell v. Ripley, 10 Paige, 43.
■ Where a debt secured by mortgage is payable by instal-ments, a failure to pay any one instalment as it matures is, ordinarily, such a breach as warrants proceedings to foreclose. Hunt v. Harding, 11 Ind. 245 ; Estabrook v. Moulton, 9 Mass. 258. So, of a failure to pay interest-coupons, *464if the mortgage authorize a sale in that contingency. Howell v. Western R. Co., 94 U. S. 466. And, it seems,, there can be only one foreclosure of a mortgage, and1 the sale must be, in such cases, of the entire property, provision being made for subsequently maturing instal-ments as they fall due, and the proceeds being applied to' the debts secured, in the order of their priority, or equally,, if there be no preference. Codwise v. Taylor, 4 Sneed, 346; Howell v. Western R. Co., 94 U. S. 466; Ewing v. Arthur, 1 Humph. 537.
In this case, the complainant is entitled to have the status' of the debt secured by the first mortgage ascertained; and, if any part of it is past due and unpaid, to a decree authorizing him to redeem by paying the same, and declaring his right, in that event, to sell to repay the redemption-money, as well as his own lien debt, which sale will be of the whole property, a sufficiency of the fund being retained to meet the subsequent rent-notes as they mature. If no' part of the debt secured by the first mortgage, and past due,, is unpaid, the complainant can only sell subject to the first, mortgage; and this he may do in any event, if he prefer not. to redeem. The mortgageor must be allowed a reasonable-time in which to pay the complainant’s demand, in order to prevent a sale. Lewis v. Baker, 1 Head, 388.