Elkins National Bank v. Reger , 70 W. Va. 113 ( 1911 )

POEEENBARGER, JUDGE:

Having become possessed, in the manner hereinafter stated, of a promissory note for the sum of $1,310.00, executed by Mrs. Ella D. B. Reger and secured upon her property by a vendor’s lien, the Elkins Rational Bank brought this suit to enforce the lien. The note was for part of the purchase money of the property proceeded against and made payable to the vendor, Mrs. Elizabeth B. Tibbetts. The deed for the property was acknowledged August 31, 1904. On the same day Mrs. Tibbetts assigned the note to Shelton L. Reger, the husband of Mrs. Reger. About the same time, the husband and wife made and delivered their ¡oromissory note to the Elkins Rational Bank for $1,200.00, and the former assigned, to said bank, as collateral security for said $1,200.00 note, the note executed by his wife to Mrs. Tibbetts and by her assigned to him. The proceeds of this note were placed to his credit and he checked out the monejr, but to whom and for what purpose it does not very clearly appear. The $1,200.-00 note reads in part "I promise to pay,” but is signed by both parties. At the time of the assignment of the $1,310.00 note as collateral, Mrs. Reger assigned to the bank, as further security, three promissory notes of $300.00 each, executed to her by Dora Watson and Creede Watson, and secured by a vendor’s lien on property other than that involved here. The $1,200.00' note was renewed once or twice and, default having been made in the pajmient of the last renewal note, the bank sold the collateral notes at public auction and bought them in through its attorney at the price of $1,590.00. It then brought this suit .to enforce the lien of the $1,310.00 note on the property of Mrs. Reger. There was a prior vendor’s lien on it in favor of Mrs. Grace Davis Lee for purchase money due her from Mrs. Tibbetts, payment of which Mrs. Reger had assumed. At the time of the purchase by Mrs. Reger, this lien amounted to $2,500.00, evidenced by three promissory notes, one for $834.00, and two- for $833.00 each. Sometime after the purchase by Mrs. Reger, her husband went to the Elkins Rational Bank, where these- last mentioned notes were held for collection, and paid off the first one -calling for $834.00. Claiming an assignment of that note, by reason of his having paid it or taken it up with money claimed to have been his own, he assigned it to J. W. Knopsnyder, as collateral security for a $500.00 loan made by said Knopsnyder to Mrs. Reger, and further secured by a deed of trust upon 'the property here proceeded against in which E: D. Talbott was made trustee. Mrs. Grace Davis Lee, holding her two vendor’s lien notes, Ella D. B. Reger, Shelton L. Reger, E. D. Talbott, trustee, and Elizabeth B. Tibbetts, payee in the $1,310'.00 note and promissor in the $834.00 note and the two $833.00 notes, were made parties defendant. Knopsnyder is shown by .the answers filed, but not by the bill, to have been dead at the time of the institution of this suit, and his executor, the Dam Trust Company, was not made a party. Without referring the cause to a commissioner, the court decreed the debt .of Mrs. Lee, then amounting to $2,030.00, to be the first lien upon the property, that of the bank, amounting to $1,641.43, the second, and that of Knopsnyder the third lien, and ordered the property sold to satisfy these liens in default of payment, by Mrs. Tibbetts of the debt due Mrs. Lee, and, by Mrs. Reger, of the debt, due the bank, and appointed a commissioner for the purpose of executing the decree. A sale was made to K. I. Hall for the sum of $4,900.00, which was paid in cash, and then Shelton L. Reger and others put in an upset bid of $5,200.00. This bid was accompanied by a petition of Mrs. Reger praying the court to set aside the sale and re-sell the property. Erom this decree, the Regers have appealed.

Of the many assignments of error, the most important one is founded upon the failure to make Knopsnyder’s executor a partj'-,' after discovery of its possession of the $834 note and the manner- and purpose of its acquisition. As the bill did not disclose these facts, the demurrer was no doubt properly overruled, but, if the executor was a necessary party, the disclosure of its interest at any stage of the proceeding, no matter in what way, made it necessary for the plaintiff to amend by making the executor a party. As the bill accords to Mrs. Lee the first lien on'the property and claims the place of second lienor for the bank, one of its jmrposes was, after the disclosure of the alleged assignment of the $834.00' note to Knopsnyder through S. L. Reger, to assert priority of the bank’s lien over Knopsnyder’s right, if any, as holder of that note, and such was the effect of the decree. Indeed, the decree allowed nothing to anybody on account of the $834.00 note. It treated that note as having been paid, although it was shown to be in the hands of the executor of Ivnopsnyder. But for this claim of priority, Ivnopsnyders executor might have been omitted, under the authority of Turk v. Skiles, 38 W. Va. 404, and Arnold v. Coburn, 32 W. Va. 272, holding it unnecessary, in a suit of this character, to make a lienor under a deed of trust, subsequent to the vendor’s lien, a party, and sufficient to make the trustee a party so as to bring the legal title before the court. Turk v. Skiles, however, says 'it is necessary to make the cestui qua trust a party if there is a controversy as to priority between the vendor’s lien and the trust lien, on the theory of a waivor or estoppel on the part of the holder of the former in favor of the holder of the latter. Here the question of priority stands upon a ground higher than that of waiver or estoppel. Mrs. Lee admittedly had the first lien for the $834.00 note. If she assigned it to Reger and Reger to Knop-snyder, it is clearly entitled to preference over the lien asserted by the bank. There may not be much merit in this claim of assignment, but -it is a claim and an adjudication against it in the absence of Knopsnyder’s executor cannot bind it. Hence, the failure to make it a party was an obvious error which will reverse the decree, unless it can be excused upon some- ground.

The presence of the trustee in the deed of trust as a party is relied upon as a sufficient excuse, on the theory of his representation of the Knopsnyder debt, secured by the deed of trust, as well as by the $834.00' note. The deed of trust was such in form and effect as is ordinarily taken to secure a debt and conferred no authority upon the trustee to collect, wherefore he did not represent it. Bryan v. McCann, 55 W. Va. 372; George Trustee, v. Zinn, 57 W. Va. 615. Hence the trust debt was not represented, nor was the holder of the $834.00 note before the court. Though Talbott seems to have filed it with a deposition he had no title to it, nor right to collect it otherwise than as attorney or agent. Nor did S. L. Eeger represent it, although he claimed an equitable right respecting it. For the purposes of adjudication, it was not before the court at all.

■ Nor do we think Mrs. Eeger released or waived the error by asking the court to set aside the sale and re-sell the property. In every substantial view this act was one in resistance of the sale and not an acceptance of the benefit of the decree complained of.

Though the Knopsnyder estate may not be interested in some of the controversies raised by the assignments of error, it is difficult to say how far that interest extends, and, as the decree must be reversed for lack of a necessary party, we refrain from further consideration of the assignments, in conformity with the general rule. - '

For the error aforesaid, the decree complained of will' be reversed and the cause remanded, with leave to the plaintiff to make Ivnopsnyder’s executor a party and amend its bill.

Reversed and Remanded.