Forrer v. Kloke , 10 Neb. 373 ( 1880 )

Cobb, J.

In their foreclosure suit Nye, Colson & Co. make the defendant John Bloke, as well as the Schonlaus, defendants; but their only allegation to charge him contained in their petition is as follows:

“7. The défendant John Bloke claim's to have some lien or estate in said premises, but the plaintiffs are ignorant of the extent thereof, nor do they know whether said defendant has at this time a subsisting lien upon said premises, and they demand proof of the same.”

Thus it will be seen they presented, no issue to Kloke, nor assailed either the validity, priority, or amount of his lien in any degree. lie was therefore not called upon to defend anything, and no finding or judgment upon the pleadings thus presented would bar him of the right to foreclose a prior mortgage on the same premises.

But in pursuing his own remedy he should have made the holders of the mortgage subsequent to his own parties to his action, and had the mortgagors, the Schonlaus, made the proper motion for that purpose he would have been compelled to bring in all subsequent incumbrancers and lien holders hy proper amendments of his petition and alias summons; or had the holders of the subsequent mortgage seen proper to apply to the court for that purpose, they would have been let in to answer and defend.

But the weight of authority is largely against the position taken by appellee, to-wit: that the defendant Kloke having been made a party to the foreclosure suit of Nye, Colson & Co., although their petition tendered no issue to him contesting the validity, priority, or amount of his lien, is bound by the decree in that case settling the priorities of liens, etc.

In- the opinion of this court in Buel v. Farwell, 8 Neb., 235, there is an expression which is erroneous, except when read by the lights, furnished by the facts in that case. The opinion contains this clause: “Itis apparent, therefore, that- it was the land and not merely the equity of redemption that was sold, and all of the interest, right, title, and lien of each of the parties to the action, who was legally served or who appeared in the case, passed to the purchaser by the sheriff’s deed.” But preceding this and on the opposite page of the opinion the court say : ■

“ The question here presented is whether the money bid upon and paid for the property, on which Earwell, as treasurer of the Sullivan Savings Institution, held the first and superior lien, belonged to him or to the plaintiff whose lien was second and inferior. And behind that is the question, what was sold by the sheriff and what title passed by the sheriff’s deed ? ' The plaintiff could have foreclosed his mortgage without noticing the prior mortgage of the Sullivan Savings Institution, in which case all rights under the latter named mortgage would have been undisturbed by the proceeding, and the purchaser at the sheriff’s sale would only have taken the equity of redemption as to the same. But by making the first and prior mortgagee a party to the suit the plaintiff procured a decree and sale under which, as to both mortgages and all other lien holders legally in court, the land itself was sold — not only the equity of redemption as to both mortgages, but all the title which the mortgagors had, and the inchoate title of the other lien holders. Otherwise, why were they made parties, to the suit, and the priorities of their several liens adjudicated upon by the court and settled in the decree ? ”

The case of Miller v. Finn, 1 Neb., 288, is cited by appellee. I have read that able opinion with great care, but fail to find anything in it tending to shake the conclusion to which I have arrived in this case; and as that was an action brought by a purchaser at sheriff’s sale, to have declared fraudulent and void as to creditors a prior mortgage on the same premises, and the proceedings of foreclosure and sale thereunder, or to redeem the said mortgage if upon the hearing it should appear to have been made bona fide, and as the court allowed, the plaintiff to redeem on the ground that he was the owner of certain judgments against the original mortgagor, the then holders of which had not been made, parties to the foreclosure suit, I do not see how any of the reasoning of that case can help that of the appellee here.

Also Shellenbarger v. Biser, 5 Neb., 195. In that case one of the defendants answered setting up a prior mortgage on the premises, and also a paramount title thereto by deed from an independent source. At the., hearing the district court found: “ That the defendant, Eorrest K. Biser, sets up and claims legal title to the premises in controversy by adverse and paramount title to the title of Julia Biser, who executed the mortgages to plaintiff and defendant Wheeler, and that said Eorrest K. Biser’s title, so set up and claimed, cannot be litigated or affected in this' action. It is therefore adjudged and considered that this cause and action be and the same hereby is dismissed as to the defendant Eorrest K. Biser, and that said Forrest K. Biser go hence without day,” etc.

The opinion of this court by the present chief justice, after quoting the above finding and judgment in the district court which was appealed from, continues: “ The general rule in equity is, that all persons materially interested in the mortgaged premises should be made parties to the suit. This includes all incumbrancers (prior and subsequent) existing at the time of filing the petition, in order that the purchaser may take a perfect title by a sale under the decree, as he takes only the title of the parties to the suit; and also prevent a multiplicity of suits, and in order that the proceeds of the mortgaged premises may be distributed among the lien holders according to the priority of liens. Many of the cases hold that a prior incumbrancer is not a necessary party to the suit, as the purchaser takes the estate subject to the paramount lien; yet he is a proper party in order to obtain an adjudication as to the validity and amount of the lien.” As the defendant Forrest K. Biser had answered, in that case the court was not called upon to consider, nor did it consider, what would have been the effect of an adjudication or finding of the district court upon his rights had he refused or failed to answer.

Having reached the conclusion which I have above indicated it will be unnecessary to notice any of the exceptions to the introduction of testimony and other minor points raised in the case.

The decree of the district court is reversed, and the cause remanded for further proceedings, with leave to the plaintiff to turn his case into a bill to redeem should he so elect.

Judgment accordingly.