Pelton v. Farmin

Sec. 6 chap. 134, R. S., which declares that the sheriff’s deed “shall be effectual to pass the rights and interests of the parties in the property adjudged to be sold,” when applied to the deed executed upon a foreclosure sale,.must be understood as referring to such rights and interests as were or might properly have been litigated in the foreclosure action. The object of a foreclosure suit is to bar the mortgagor and those claiming subsequent to the mortgage, from redemption, and not to try titles alleged to be paramount to that of the mortgagor. If the party made defendant as claiming some interest subsequent to the mortgage, claims no such interest, he should disclaim, and the suit shouid be dismissed as to him. The settingup of a paramount title by such party is no answer to the allegations made against him; and if the plaintiff does not choose to litigate such alleged title in the foreclosure suit, he may properly raise the objection by demurrer. What would be the effect of a judgment involving a decision upon such alleged paramount title, set up by a defendant in foreclosure and litigated without objection, -is not here determined.

APPEAL from the Circuit Court for Winnebago County. Action to foreclose a mortgage of real estate, executed by Farmin, June 2d, 1852! The complaint alleges that the defendants Daniel B. Knapp, Andrew B. Knapp, Daniel W. Bradley and others, “have or claim to have some interest in said mortgaged premises, or in some part thereof, which interest or lien, if any, has accrued subsequent to the lien of said mortgage, and is subject thereto.” Said defendants Daniel B. and Andrew B. Knapp and Bradley answered, denying all the material allegations of the complaint. “Eor a further answer,” they then allege a paramount title to portions of said premises under tax deeds. The plaintiff demurred to that portion of the answer which set up such paramount title; one of the grounds of demurrer being, “that it did not constitute a defense to the action,” and another, “ that the issue tendered by said portion of the answer is not cognizable in this equitable actipn, but is purely of legal cognizance.” The demurrer was overruled, and the plaintiff appealed, contended, among oth-ei things, that sec. 6, ch. 134, E. S., can have no application to conveyances made in pursuance of a sale under a judgment of foreclosure, Secs. 5 and 6 of that chapter are the same as sec. 287 of the New York code, and were sec. 197 of the code of 1856. At the time of the enactment of the code of 1856, the provisions of see. 83, ch. 84, E. S. 1849, declaring the effect of deeds executed upon sales under a decree of foreclosure, were in force, and sec. 83 was not repealed by that code. It was recognized as in force by ch. 113, Laws of 1858 (E. S. 1858, p. 860) and remained in force until January 1, 1859, when the new revision took effect. It was re-enacted in substance by the legislature of 1859, as sec. 3, ch. 195, Laws of 1859, and is now in force. In Lewis v. Smith, 5 Seld., 502, it was held that, under the statute of New York, a plaintiff cannot make one a defendant in a foreclosure suit for the purpose of litigating adverse claims, and that such claims are not barred by a defendant suffering a default. It is not there held, however, that even under the New York statute, a defendant claiming a paramount interest may not set it up by answer, and be bound by a litigation of his claim in that suit. See opinion of Deeito, J., p. 516. The statute of that state declares that the deed executed by the master in chancery upon a foreclosure sale, “ shall vest in the purchaser the same estate that would have vested in the mortgagee if the equity of redemption had been foreclosed; and such deed shall be as valid as if the same were executed by the mortgagor and mortgagee, and shall be an entire bar against each of them, and against all parties to the suit in which such sale was made, and against their heirs respectively, and all claiming under such heirs” (2 R. S., N. Y., 192, sec. 158); and the court say : “ Taking all the expressions of this section together, it is obvious .that the ‘ entire bar' which is spoken of refers to rights and interests in the equity of redemption, and does not embrace interests which are paramount to the title of both mortgagor and mortgagee. Such interests would be other and greater than would have vested in the mortgagee if the equity of redemption had been foreclosed.” Again, the allegation of the bill in that case was, “ that the said Drusilla Lewis [and 'others] have or claim to have some interest in the aforesaid mortgaged premises as subsequent purchasers or incumbrancers, or otherwise.” That was precisely the form prescribed by the 132d rule in chancery, corresponding with rule 83 of our old rules in equity. And dhe court laid great stress upon the form of that allegation. Edwards, J., says: “The word otherwise, according to the rule of construction adopted in all analogous cases, means in some other Wee capacity, and does not embrace a claim like that set up in this case.” The result of such a construction of the allegation and of the statute was plain enough. The widow’s dower interest was a paramount interest. She also had other interests not paramount. She suffered a default in the foreclosure suit, and afterwards brought ejectment for her dower. The court held that she was not called upon by the allegations of the bill to make defense as to her dower interest, and that not having done so, such interest was not foreclosed. Before the revision of 1858, we had a statute similar in terms to that in New York, declaring the effect of a foreclosure in chancery and of the sheriff’s deed given upon the sale. R. S. 1849, chap. 84, sec. 88, as amended by Laws of 1852, ch. 893, sec. 2. But in the late revision that provision was not retained, and the only statute we now have which controls this case reads as follows : “ Real property adjudged to be sold must be sold in the county where the mortgaged premises or some part thereof are situated, by the sheriff of that county or by a referee appointed by the court for that purpose; and thereupon the sheriff or referee shall execute a conveyance to the purchaser, which conveyance shall be effectual to pass the rights and interests of the parties in the property adjudged to be sold.” R. S., ch. 134, sec. 6. This statute was enacted with no special reference to foreclosure suits, but is equally applicable to all other suits where any part of the relief consists in a decree for the sale of real property, and is the only statute we have upon the subject, except that of 1859, chap. 195, authorizing the redemption of lands sold under’ foreclosure of mortgages thereafter executed by j udgment or decree of court. See. 3 of this is a re-enactment of the old statute as to such mortgages, but of course has no application to this mortgage, nor to the deed which may be executed upon the sale in this suit. There can be but one construction given to our statute. There is nothing in the context to vary or control the plain meaning of the words “shall be effectual to pass the rights and interests of the parties in the property adjudged to be sold." All the rights and interests of all the parties to the suit, in the property adjudged to be sold, are conveyed by the deed to the purchaser. It becomes absolutely necessary, then, for parties defendant, having claims, to set them up and have them litigated, or pay the penalty of having such claims barred by the judgment and sale. Again, the allegation in the complaint as to the interest of the respondents, is not in conformity with rule 83, but is in such a form as to call upon the defendants to answer as 1fo any and all interests they may have in the property. It distinctly asserts that whatever interest the defendants have is subject to the lien of the plaintiff’s mortgage; and that is j ust the question we have attempted to litigate.