Opinion
03-19-1890
SMITH v. DAVIS et al.
De Witt & Provost and A. Q. Keasbey, for complainant. Cortlandt Parker, for defendant Davis.
On bill to redeem from a prior mortgage.
De Witt & Provost and A. Q. Keasbey, for complainant. Cortlandt Parker, for defendant Davis.
BIRD, V. C. This bill is filed by a mortgagee, and in it he asks to redeem the property described from a prior mortgage. He asks that an account be taken of the amount due upon the prior mortgage, and offers to pay such amount. The mortgage referred to had been foreclosed before the complainant's mortgage was given; and a decree was taken upon such prior mortgage January 9, 1883, while the complainant's mortgage was not executed until November 16, 1885. By his bill, he admits the existence of this decree, but claims that there should be large deductions made therefrom because of the possession of the mortgagee of the mortgaged premises. Although by his bill he admits that an inquiry has been had as to the liability to account for such possession, yet he insists that that account was not taken against the true or real owner of the mortgage. He claimsthat, while the proceedings to foreclose under which such decree was obtained were in the name of Davis, the real owner of the mortgage was one Baldwin, and insists that that fact alone raises a sufficient equity to justify the court in so far opening the decree as to take another account of the rents and profits, if it should be ascertained that Baldwin was in possession of the premises under the mortgage upon which the decree was obtained. He seems to think that because he was not a party to those proceedings, and has not been heard, although he did not become interested in the premises until more than two years after the decree was obtained, now, being a party interested in the premises, he has a right, at this late day, to be heard as to the correctness of that decree, notwithstanding, under the act, he might have made application, and been admitted as a party, and been heard as to the extent of his rights, at any time after he took his mortgage, since, at the time of the taking of his mortgage, the said decree had been already so far opened as to allow the defendant Flagg to show that Baldwin was the real owner of the mortgage in that cause on which the decree had been obtained, and had been in possession of the premises as mortgagee, and was really chargeable as such mortgagee in possession. See Revision, p. 110, §§ 41, 42, which secures to every person acquiring an interest in mortgaged premises pending the suit to foreclose the right to come in, and to be made a party, and to be heard.
Section 41 provides: "Where, after the filing of the bill, any person shall acquire such an interest in the subject-matter of the suit as would have made him a proper or necessary party, if such interest had been possessed by him at the time of the commencement of the suit, it shall not be necessary to file a supplemental bill to make such person a party, but the same may be done by petition filed in the cause."
An outline of the whole case, as shown by the bill of complaint in this cause, will enable us to judge with some certainty as to the merits of the complainant's claim. Mr. Smith, the complainant, filed his bill December 26, 1889. This was more than four years after he had taken his mortgage, and some time after the appeal which had been taken from the decree of the court of chancery, above referred to, had been dismissed. The bill then shows that on May 21, 1877, the mortgage upon which the said decree was obtained was given to the insurance company, and by it assigned to McCoon, March 23, 1881. McCoon assigned to Davis June 29, 1881, and Davis filed his bill to foreclose such mortgage July 13, 1881. While proceedings were pending in such foreclosure suit, and on the 31st day of May, 1882, Davis assigned said mortgage to said Baldwin; but such assignment was not recorded until August 1, 1884. On July 22, 1884, Baldwin assigned said mortgage to one Perkins; and that assignment was recorded August 1, 1884. From this it appears that the assignment by Davis to Baldwin, and by Baldwin to Perkins, were both recorded more than a year before Smith took his mortgage, and that he is chargeable with full knowledge of the situation at the time he took his lien. The complainant admits that the said decree is a prior lien, but claims large deductions should be made by reason of circumstances set forth in his bill. One of the principal circumstances is that that suit was carried on in the name of Davis, while in reality he was only the owner of the mortgage for a little more than a year after the suit was instituted, when it was in reality assigned to Baldwin. It is said that this misled the defendant Flagg; for, had she known that Baldwin was the real owner, she could have made a more successful defense, by charging Baldwin with liability as mortgagee in possession. He says, also, that, had she known this fact, she would have been enabled to show that, if he was not in possession under one mortgage,—that is, a mortgage for $11,000 which the court declared to be void,—she would have been enabled to show that he was actually in possession under the mortgage under which the decree was obtained.
So far as any other circumstances detailed can have any influence upon the case, I think they utterly fail in sustaining the complainant, Smith, in his claim to an equitable right to review the question concerning Baldwin's liability, as the case now stands. That question was presented, discussed by counsel, and considered by the court, in the case of Davis v. Flagg, 35 N. J. Eq. 491. Mrs. Flagg was bound by that decree, except as to her right to an appeal. It was admitted on the discussion that she appealed, and that the appeal was dismissed without resistance on her part. The present complainant, Smith, accepted his mortgage on the premises involved in that controversy. He certainly could have no superior rights to Mrs. Flagg, his mortgagor. Without reference to the laches of Smith, he cannot attack this decree, and reopen the controversy from which such decree emanated, by filing an original bill for the purpose of redeeming the premises from such decree; one of the main purposes being, as appears upon the face of the bill, to question the correctness of that decree in respect to the amount which it adjudged due to the complainant named in that decree. Under the rules and practice of the court, he has not put himself in a proper position to raise such a question. This, I think, will appear in the further consideration of the case.
Smith, in the endeavor to establish his right or claim, lays great stress upon the fact that Davis, the complainant in the suit in which said decree was entered, assigned and transferred all his interest therein to Baldwin, and that Baldwin afterwards assigned and transferred all his interest to Perkins. By such assignment, it is claimed that Davis ceased to have any interest whatsoever in the subject-matter of the controversy, and that no proceeding whatever could be carriedon in his name. In support of this, the case of Fulton v. Greacen, 36 N. J. Eq. 216, and cases therein cited, are referred to, and relied upon. I apprehend there is no question as to the law. As intimated, I cannot perceive how Smith can take advantage of the present condition of affairs by his bill, so as to inquire respecting the correctness of the decree in favor of Davis. In other words, if the suit has abated by virtue of the assignment of Davis, and the assignee of Davis has failed to revive and continue the suit according to the practice of the court, Smith has not taken the proper course to deal with such omission.
It also seems to me that Smith should not be permitted to attack this decree, and have all proceedings in the cause in which it was rendered declared a nullity subsequent to the assignment of Davis, because of his own laches in coming to the court for aid. The assignments having been recorded long before he took his mortgage, he is chargeable with notice thereof. It would be very unjust to allow him to stand by while the litigation was going on concerning the property in which he was thus interested, and not charge him with some responsibility. He had no right to allow the litigation to continue for two years before the decree of which he now complains without asserting his interest, making known his rights, and showing the irregularity, or absolute nullity, of the proceedings. It was his duty, as it is one of the highest duties of the court, not to encourage litigation. Having thus stood by, I think he is not at present in a position to question the validity or regularity of the said decree, especially since the merits of the controversy, so far as Baldwin was concerned, were fully inquired into, after that decree was opened, at the instance of Mrs. Flagg. The insistment then was that Baldwin was the real complainant, and that he should be charged as a mortgagee in possession, and the decree was opened so far as to enable Mrs. Flagg to show that fact, if she could. A great deal of testimony was taken with the view of showing that Baldwin was in possession. And now Smith, without presenting any new matter, or without showing any mistake, except that he shows that there was an actual assignment to Baldwin, comes in, and asks that the decree may again be opened, and he be permitted to charge Baldwin by showing that he was the real complainant, and was in possession as mortgagee, as intimated. I can see no just grounds for advising such a course. I think the motion should be dismissed, with costs.