Court Opinion

ID: 7942322
Source: CourtListenerOpinion
Date Created: 2022-09-08 23:16:19.260488+00
Date Added: 2024-06-11T16:33:46.682294
License: Public Domain

ON MOTION FOR REHEARING.
Montgomery, J.
Petition for rehearing. Defendant Colby owns the equity of redemption in the property in controversy. When he acquired such ownership, there were five mortgages upon said property. The first mortgage was foreclosed, and the title purchased by the mortgagee. To these foreclosure proceedings the junior mortgagees were parties, but the defendant Colby was not. After the first mortgagee had acquired his title under said foreclosure sale, he conveyed the same to the holder of *23the second mortgage, who brought this suit against defendant Colby to foreclose both the first and second mortgages. It is the claim of the defendant Colby that, though he is not bound by the foreclosure proceedings, because not made a party, he has nevertheless a right,to insist that those proceedings did cut off the lien on his equity of all the mortgages except the first. We decided that this claim was not well founded, and, after careful re-examination of the case on this petition for a rehearing, we are satisfied with the correctness of that decision.
In deciding the case we indicated that, as against the owner of the equity of redemption, defendant Colby, there passed to the purchaser at the foreclosure sale the interests of all the lienholders subsequent to the first mortgage. It was unnecessary to make this statement, and subsequent examination has cast doubt upon its correctness. This question was discussed in Baker v. Pierson, 6 Mich. 522. In that case there were five mortgages on the land in question. The first mortgagee foreclosed, bringing in as defendants to the foreclosure proceedings the owner of the equity of redemption and the holders of all the mortgages except the fifth. The holder of the second mortgage purchased at the foreclosure sale, and then brought this suit against Pierson, the holder of the fifth mortgage, for the purpose of foreclosing the first and second mortgages. Defendent Pierson claimed the right to redeem by paying the amount paid at the foreclosure sale. The question, “Upon what terms can Pierson be allowed to redeem? What sums must he pay, and to whom ? ” was reserved for the opinion of this court. Chief Justice Martin, Justice Manning, and Justice Christiancv participated in that decision. Each wrote an opinion advancing radically different views. It was the opinion of Justice Manning that the purchaser at the foreclosure sale acquired the liens of the mortgagees defendants in the first suit; that he had a right to insist that defendant Pierson pay the aggregate amount of all the mortgages prior to his own; but that, as he only asked for the pay*24ment of the first and second mortgages, he was only-entitled to that relief. Chief Justice Martin, while agreeing with Justice Manning as to the terms upon which redemption should be had in that case, was of the opinion that the effect of the former foreclosure proceedings ended, even as to defendant Pierson, the liens of the third and fourth mortgages. In other words, Chief Justice Martin contended for the doctrine insisted upon by defendant Colby in this suit. Justice Christiancy did not agree with Justice Manning that the liens of the subsequent mortgages had passed to the purchaser. He says:
“Did the purchaser, by this sale, acquire the liens of the subsequent mortgages in the land ? I think not. A mortgage is but a security for a debt. Independent of the debt, the lien can have no existence in equity. The debt is the principal-, the lien the accessory, which can no more exist without the debt than the shadow without the substance. Nor can it be a subject of separate ownership by one, while the debt is owned by another, unless, perhaps, as a mere naked trust for the benefit of the holder of the debt. -
“ If the purchaser at the foreclosure sale became entitled to the debts secured by these subsequent mortgages, then he may have obtained the liens of these mortgages, which were collateral to the debts, and he would be entitled to an assignment of any notes or bonds secured by the mortgages, and to enforce them for his own benefit against the makers. But certainly no one will claim any such effect from the sale. All must admit that the sale left these debts in the hands of the subsequent mortgagees, with the same right to resort to the personal liability of the mortgagor as they had before. As between them and the purchaser, their debts have been separated from the liens; in other wordp, as against him, while that sale remains in force, they have lost their liens upon the land. But he has not acquired them. He has acquired nothing more by the purchase than if there had been no subsequent liens. Such, then, I think, was the effect of the decree and sale as between the purchaser and subsequent mortgagees who were parties to that suit.”
This reasoning is approved by Chief Justice Martin in the following language:
*25‘ ‘ He [the purchaser] does not acquire the liens of the incumbrancers who were parties, for he does not acquire their debts, and a lien separated from the debt is extinguished ; nor can he be regarded as holding their liens as a trustee, for that would render his purchase valueless, as the beneficiaries might compel him, if he were their trustee, to enforce such liens for their benefit.”
But Justice Christiancy did not agree with Chief Justice Martin that the foreclosure proceedings destroyed, as to defendant Pierson, the mortgage liens prior to his own, held by parties to that suit. He says:
‘ ‘ What was the effect, as between the purchaser and those parties on one side, and Pierson, the fifth mortgagee, who was not a party, on the other ? Precisely nothing. As he is not to be prejudiced by the decree or sale, and his right to redeem, and all his claim to relief by cross-bill, are, and must be, founded upon the invalidity of those proceedings as against him, it must be equally clear that he can claim no benefit from those proceedings. He cannot bind others by the proceedings in a suit by which he refuses to be bound. He cannot claim under and repudiate these proceedings at the same time. To claim an advantage from the sale is to ratify the sale. He cannot affirm it as to those incidents which might operate in his favor, and repudiate it as to those which operate to his prejudice. He must repudiate the whole, or affirm and submit to the whole. He cannot be permitted to reap any advantage from the effect of that suit upon the parties to it holding the subsequent mortgages without putting himself on equal terms with those parties, and consenting to be bound by the decree and sale. As to Pierson, the prior mortgage to Moore is still unforeclosed, and that mortgage, and all the junior mortgages prior to his own, remain precisely as if no foreclosure or sale had ever taken place.”
Nor do we think it can be said that the views of Justice Christiancy are not in harmony with the decision made in Baker v. Pierson. That decision compelled defendant Pierson to pay all that complainant asked. According to the views of Justice Christiancy, he was bound to pay more. We think, as stated by Justice Manning, it was *26“not for the court to say he shall pay more than Baker [complainant] asks.” If the court had adopted Justice Christiancy’s views, we think that case would have been disposed of precisely as it was. It will thus be seen that two of the justices who participated in Baker v. Pierson distinctly repudiated the view in our former opinion, and their argument against that view is.very forcible. We therefore avail ourselves of this opportunity to correct so much of said opinion as placed our decision upon the ground that the liens on the equity of redemption subsequent to the first mortgage passed to the purchaser at the foreclosure sale. It is sufficient to say that the owner of the equity of redemption, not being a party to the first foreclosure proceedings, was not bound thereby, and cannot claim that the liens of the mortgages were thereby extinguished. Whether those liens passed to the purchaser, or whether they are enforceable in the hands of the original mortgagees, it is unnecessary to determine in this case.
We do not deem it necessary to discuss the other contentions made in the petition for a rehearing. Except as herein stated, we are satisfied with the reasoning of our former opinion, and the petition will therefore be denied.
Moore, C. J., Carpenter and Hooker, JJ., concurred. Grant, J., did not sit.