Court Opinion

ID: 3252114
Source: CourtListenerOpinion
Date Created: 2016-07-05 16:22:40.607044+00
Date Added: 2024-06-11T12:53:11.019408
License: Public Domain

The rule which we quoted from Winston v. Browning, supra, to exist in Alabama, was in accordance with the well-settled practice in equity then in existence. The only procedure to secure a personal judgment for the deficiency after foreclosure was a suit at law. 1 Wiltse on Mortgage Foreclosures, §§ 411, 412; 42 C. J. 58. The statute gave a new right. Teal v. Lewis,85 Ala. 218, 4 So. 695; Presley v. McLean, 80 Ala. 309. We quote as follows from the latter:
"The effect and operation of the statute are, to confer on the Chancery Courts new and additional power and jurisdiction in the rendition of decrees in the specified classes of suits — decrees having the force and effect or judgments — and to authorize a mode of proceeding for their enforcement not originally and formerly pursued. The rendition of such decrees, and the subsequent proceedings thereon, being of statutory origin, must be in substantial conformity with the statutory provisions and regulations. * * *
"The statute contemplates and provides for a second decree, the rendition of which is dependent on a sale of the property, and its confirmation. The second decree is founded on the first, as a judicial ascertainment of the entire amount of indebtedness, and the sale and its confirmation ascertain the amount of credit, where a decree is rendered, finding the balance due, for which execution must issue. Until a sale is made and confirmed, a decree for money, or a decree awarding execution is premature and invalid. Winston v. Browning, supra; Hughes v. Hatchett, 55 Ala. 539; Sayre v. Elyton Land Co.,73 Ala. 85."
This principle, enforced without a statute, was observed in an early case in New York by Chancellor Kent. Dunkley v. Van Buren, 3 Johns. Ch. (N.Y.) 330. In that case he follows the chancery procedure in England, and concludes: "It is sufficient to observe, that the present suit is the ordinary bill to foreclose, and was not intended to supply, at once, the place of a suit at law upon the bond, and a suit in equity upon the mortgage."
That suit brought about the first innovation made upon the common-law principle by the adoption of a statute in New York, the first state acting on the subject. That statute provided that any person liable to plaintiff for the payment of the debt may be made defendant, and a personal judgment rendered against him for the residue. Other states, such as Wisconsin, Nebraska, North Carolina, South Carolina, Florida, and others, have adopted similar statutes. 1 Wiltse on Mortgage Foreclosures, § 412, p. 562.
Under such statutes all persons who guaranteed the payment or collection of the debt, though by separate instrument, may be made parties to mortgage foreclosures, for the purpose of rendering a deficiency decree against *Page 285 
them. 1 Wiltse on Mortgage Foreclosures, § 414.
An examination of the cases holding that such a guarantor may be made a party shows that the right is by virtue of a statute. The rule is generally enforced, when no statute intervenes, that a third person who is liable for the payment of the mortgage debt as a guarantor or indorser cannot be joined as a defendant, in order to be subject to a personal judgment, unless he is otherwise a proper party. 42 C. J. 58.
It is said in one of our cases that: "In a bill to foreclose a mortgage the only proper parties are the mortgagor and the mortgagee, and those who have acquired any interest from them subsequent to the mortgage." Hambrick v. Russell, 86 Ala. 199,202, 5 So. 298, 299. When the mortgagee had assigned the note and mortgage so as to pass the legal title to the property and the right to collect the debt, he is not a necessary party to a foreclosure proceeding. Rountree v. Satterfield, 211 Ala. 464,100 So. 751; Langley v. Andrews, 132 Ala. 147, 31 So. 469; Crawford v. Chattanooga Sav. Bank, 201 Ala. 282, 78 So. 58; Prout v. Hoge, 57 Ala. 28.
The question in those cases arose upon a contention that the foreclosure proceeding could not be prosecuted without the mortgagee. They simply held that it could be done upon an allegation that he had parted with all his interest, legal or equitable.
In none of those cases did the question arise as to whether he was a proper party, though it was alleged that he had parted with all interest. Unless he is a party, his rights are not affected. If he did not sell and assign the mortgage and debt, the purchaser at the foreclosure sale would take subject to his rights. Such mortgagee may deny the assignment or set up fraud, want of consideration, or other defense to it. But, whether so or not, to quiet the title and assure the purchaser against any such claim, and being directly connected as a party to the transaction, and the conduit of it to the complainant, surely it would not be contended that he was an improper party, though no effort be made to secure a personal judgment against him. All persons who may be properly made parties to the foreclosure as respects the equitable relief, which by common practice equity possesses, may under the statute, such as ours, be subjected to execution if liable for the debt. 1 Wiltse on Mortgage Foreclosures, § 413; Flagg v. Florence D. Co., ante, p. 153, 153 So. 177.
It was held in our case of Saia v. Kronenberg, 223 Ala. 19,134 So. 634, that in such a suit, though a regular indorser is not a necessary party to a foreclosure suit, he is necessary, of course, to be subject to a deficiency decree. That holding is entirely consistent with the theory that a deficiency decree may be rendered against any one who is liable for the debt, and is a proper party to the suit, when he is made a party.
But we have shown that our statute does not, as does that of New York and other states, authorize one liable for the debt to be made a party, when not otherwise a proper party, for the purpose of being subject to a deficiency decree. Section 6652, Code.
So that our question goes back to the inquiry which we discussed in the former opinion, of whether an irregular indorser, who became such after delivery of the note and mortgage, and at the time of its assignment, and was not necessary to pass the title, and who had no interest in the transaction except to guarantee payment of the debt, was a proper party to the foreclosure suit, and subject to a joint deficiency decree along with the mortgagor and mortgagee as the regular indorser. We must consider in this connection that the equitable right of foreclosure is not to collect the debt but "to extinguish the equity of redemption." That involves the presence in court of the title to the property, as to which collateral guarantors have no interest to be protected. Their only interest is to see that the property sells for its full value, and, since the sale is public, that right exists though not a party to the suit. Whatever may be his claims in respect to his collateral indorsement, they would not affect the foreclosure. The suit should not be incumbered by such incidental issues not germane to the equity of the bill. He may claim fraud, want of consideration, or that he did not indorse. Such claim would not affect the suit in any respect, nor the rights of the purchaser at the sale. It does not seem logical to hold that such indorser may be made a party to determine his personal liability when he is in no other way a proper party, and when his rights only refer to a status existing after the court has completed its task of extinguishing the equity of redemption.
We think that an irregular indorser of that sort is not a proper party to a foreclosure suit, nor therefore to a deficiency decree in one.
We see no inconsistency in this holding with our case of Saia v. Kronenberg, supra, but it *Page 286 
follows from a proper construction of section 6652, Code.
Application for rehearing is overruled.
ANDERSON, C. J., and GARDNER and BOULDIN, JJ., concur.