Brooks v. Kelly

1. Sale oe Land. In chancery. Confirmation. Acts in pais of stranger to title. One who has no title, legal or equitable, to a tract of land, cannot by acts in pais confirm the sale of any interest therein made under a decree in chancery; and even a purchaser of the equity of redemption thereof pending a suit by one claiming title through such sale is not affected by the acts in pais of such stranger to the title. 2. Same. BUI filed by purchaser before confirmation. Subsequent confirmation. Where a purchaser of land at a sale under a decree in chancery, before confirmation of the sale, institutes a suit based upon his title acquired through such purchase, he can obtain no relief predicated on such title, even though he should by a supplemental bill establish a confirmation by the court subsequent to the filing of his original bill. 3. Execution. Whether mortgagees interest salable thereunder. A mortgagee’s interest in the mortgaged property is not subject to sale under an execution at law against him. 4. Mortgage. Where title taken as security for purchase^noney paid. One who at the request of another pays the purchase-money of land and takes the title to himself as security for Ms money, agreeing to convey the title to such other person upon payment of the money thus advanced, is a mortgagee, or trustee of the legal title with a charge on the land. 5. Same. Sale of mortgaged property. Liquidation of debt. And where a part of such land is sold by the concurrent action of the mortgagee and the equitable owner, and the purchase-money thereof applied to the mortgage debt, such transaction is a liquidation of that debt to the extent of the money so realized and applied. 6. Same. Sale of mortgaged properly. Rights of junior mortgagee. But a junior mortgagee is not bound by such sale, if not assented to by him. 7. Same. Of equitable interest. Foreclosure-sale without confirmation. And the cestui que trust in a deed of trust executed by the one equitably entitled to receive title to tbe land embraced in sucb deed, upon payment of a sum of money due the bolder of tbe legal title, must be treated as a junior mortgagee, even after sale under tbe deed of trust and purchase by Mm, in a contest with tbe senior mortgagee or bolder of the legal title. 8. Same. Contest between junior and senior mortgagees. Rents of mortgaged property. A junior mortgagee, not being entitled to rents of the land mortgaged as against the mortgagor, cannot have such rents accruing while the land is in the possession of a senior mortgagee to whom the equity of redemption has been conveyed subsequently to tbe execution of tbe junior mortgage, applied to tbe debt due such senior mortgagee. 9. Chancery Practice. Oross-bill on prospective complaint improper. Relief on original bill. Although, in a suit involving tbe equities of tbe complainant and several defendants in a tract of land, it may be improper and unnecessary to permit one of the defendants to maintain a cross-bill upon a prospective ground of complaint against a co-defendant, still tbe court, in granting relief on the original bill, should keep in view and enforce, as far as possible, the equities of all the parties.

Appeal and Cross-appeals from the Chancery Court of Montgomery County. Hon. R. W. Williamson, Chancellor. J. D. Butler, having bought a tract of land which he was unable to pay for, procured Jackson Martin to pay the purchase-money thereof, fifteen hundred and thirty-four dollars and fifteen cents, and on the 18th of November, 1871, caused the legal title to the same to be conveyed to Martin by an absolute deed, in order to secure to Martin the repayment of the money thus advanced by him, with interest thereon at the rate of twelve per cent, per annum, it being verbally agreed between Martin and Butler that, upon such repayment, the former should convey the land to the latter. On the 12th of April, 1873, Butler caused another tract of land to be conveyed to Martin by a deed absolute in form, in consideration of one hundred dollars, advanced by the latter to the former to pay for this land, it being again agreed that, upon repayment of the one hundred dollars, with fifteen per cent, per annum interest thereon, the land should be conveyed by Martin to Butler. This last-mentioned tract of land Butler had verbally contracted for several months before the transaction with Martin in respect thereto. On the 14th of March, 1873, Butler, being in possession of both tracts of land, executed a deed of trust on the same and some other property, to secure the payment of eight hundred and fifty dollars then due by him to J. C. Kelly & Co. (a mercantile firm composed of J. C. Kelly and C. I). Kelly), and a further indebtedness which he expected to incur to them during that year. On the 4th of January, 1874, Butler negotiated a sale of one hundred and sixty acres of the land to J. F. Shirley for twelve hundred and fifty dollars. Of this' amount Shirley paid Martin six hundred dollars cash, and gave him his promissory note for six hundred and fifty dollars and interest, receiving from Martin a bond conditioned to make title upon payment of the notes. Martin gave Butler credit for twelve hundred and fifty dollars on account of this transaction with Shirley. Shirley went into possession of that part of the land bought by him, and Butler retained possession of the remainder. On the 9th of October, 1876, J. C. Kelly & Co. filed a bill to enforce their deed of trust, making Butler only a party defendant. On March 14, 1877, a decree was rendered in that case in favor of the complainants, under which, on May 7, 1877, three hundred and sixty-six acres of the land were sold, and were purchased by C. D. Kelly, one of the complainants, for the aggregate sum of fifty-four dollars. The commissioner of the court executed to Kelly a deed for the land bought by him, but the sale had not been confirmed when the bill in this case was filed. On January 19, 1877, Martin claimed that after deducting the credit for the Shirley land, Butler owed him one thousand eight hundred and ninety-two dollars and ninety cents; and Butler induced C. D. Brooks to pay this amount to Martin, who then, at Butler’s request, conveyed the land, except that part sold to Shirley, to Brooks, who was to hold the title as security for the repayment of the money advanced by him and paid to Martin. Butler, being in possession of the land conveyed to Brooks, received from him a bond for title, conditioned that the latter would make a conveyance to the former on the repayment of the one thousand eight hundred and ninety-two dollars and ninety cents, with interest. C. D. Kelly, claiming by his purchase at the sale under the decree of foreclosure in favor of J. C. Kelly & Co., filed the bill in this case on the 23d of June, 1877, against Butler, Martin, Shirley, and Brooks, alleging that- he was the legal and equitable owner of the land; that the conveyances to Martin were simply mortgages, the equities of redemption being in Butler : that the trust-deed to Kelly & Co. conveyed and bound Butler’s equitable title; that Shirley, and subsequently Martin, purchased with notice of the trust-deed and subject to the incumbrance thereby imposed ; and that Martin had been fully paid the debt for which the land was held by him. The prayer of the bill was that the complainant be permitted to redeem all the land embraced in the deed of trust to J. C. Kelly & Co. by payment of whatever sum of money, if any, might be found due to Brooks. A decree pro confesso was taken against Shirley, and all the other defendants answered. While this suit was pending in 1878, the contract of sale between Shirley and Martin was rescinded. The former gave up the land and surrendered his bond for title; the latter gave up his note of six hundred and fifty dollars, and paid Shirley, in addition, four hundred and one dollars and twenty-five cents for improvements he had made on the land. Thus Martin came into possession of one hundred and sixty acres of the land. Butler, being in possession of the other part of the land, Brooks, in order to acquire the same, paid him about five hundred dollars, and thereupon he transferred his possession to Brooks, surrendered his bond for title, and executed a quit-claim deed of his title to Brooks. On the 6th of August, 1881, the chancery court rendered a decree herein, from which Martin and Brooks appealed. This court remanded the case to the lower court. See 59 Miss. 652. After the case had been returned to the court below the complainant, on the 12th of October, 1882, filed a supplemental bill, stating that at the time of his purchase of the land under the ■decree of foreclosure, he was the sole owner of the deed of trust and the debt thereby secured upon which that decree was based; that the sale to him was confirmed by the acts of the parties in interest before the filing of complainant’s original bill, and was confirmed by the court after the filing thereof in March, 1881; and that Brooks had received, since his occupancy of the land obtained from Butler, rents sufficient to more than pay the debt for which he held the land. Martin and Brooks severally answered this supplemental bill, and the latter made his answer a cross-bill. The nature of Brooks’ cross-bill and the proceedings therein are sufficiently indicated in the opinion of the court. At the March term, 1885, of the chancery court D. L. Sweat-man presented a petition stating that on the 7th of June, 1880, he purchased, as the property of C. D. Kelly, certain of the lands involved in this suit at a sheriff’s sale under executions based upon judgments at law against C. D. Kelly and others, and received a deed to such lands from the sheriff, and that the supplemental bill of the complainant, C. D. Kelly, shows that he was the legal owner of the land at the time of the sale to the petitioner, and, therefore, the petitioner “ prays that he be made a party complainant in this suit as presented in said supplemental bill.” The petition was granted, and Sweatman accordingly became a party to the suit. In support of the allegation of the supplemental bill that the sale to Kelly was confirmed by the acts of the parties in interest, proof was adduced to show that Butler was present at the sale, and did not then make any objection to it, and has not since made any objection thereto. Upon final hearing of the case the Chancellor rendered a decree, the nature and effect of which are sufficiently stated in the opinion of the court. From this decree Brooks, Kelly, and Sweatman severally appealed. ~We can find nothing in the pleadings or in the proof to sustain the decree. Brooks, having been substituted by his purchase to the rights of Martin, had a lien or mortgage prior in date to the lien of C. D. Kelly, and the decree should have provided that Brooks’ claim on the land be paid first; the residue, if any, should then have been applied to the Kelly claim. Although the complainant ashed leave to redeem, and although the record and proof show clearly that Brooks’ lien on the land has priority over that of Kelly, yet .the learned Chancellor in the court below grants relief in a way entirely different from that prayed for by complainant, and in a manner not authorized by the pleadings in the cause. The allegata and probata must correspond. The complainant can have no relief except upon the case as made by the bill, and the defendant is not compelled to r meet a case made by the proof, but not stated in the bill. See George’s Digest and authorities there referred to on page 863, § 204. The proof to support the allegation as to confirmation by the parties in interest of the sale to Kelly, shows nothing but acquiescence on the part of Butler, and no act which would estop him to object to confirmation at the subsequent term of the court. It would be quite a departure from a long line of precedents in this court to hold that a sale by a commissioner has been confirmed by the acts of the parties simply because they acquiesced in or made no objection to the sale before the next succeeding term of the court. And we submit this further fact that no opportunity has been afforded to the parties in interest to object to the sale because no motion has been made to have the sale confirmed. The order confirming the sale at the former trial of the cause in the court below was a nullity because made without any notice to the parties and not at the term succeeding the sale. All the parties to the former suit, No. 190, mentioned in the pleadings in this cause are not before this court. A. B. Hubbard and one Thomas Henderson were parties to that suit, and are not before this court. If this court should determine that the proof is sufficient to sustain Kelly’s title to the land, then we submit the following reasons to show that the decree is erroneous and void, because if C. D. Kelly can maintain his suit at all under the pleadings in this cause his title was complete at the institution of this suit. Brown v. Bank of Mississippi, 2 Geo. 454. If C. H. Kelly’s title or equity was complete at the institution of this suit, then his entire right, title, and interest to all the lands at present involved in this suit were divested by the sale under execution to H. L. Sweatman. The court below ignored D. L. Sweatman’s claim to the land on the ground that Kelly’s interest in the land as beneficiary in a mortgage could not be divested by a sale under execution, but, as we have stated, if Kelly had any title that is maintainable in this suit, he acquired it by virtue of his purchase at the commissioners’ sale and that title could be divested by execution, hence the decree is void for want of jurisdiction, the complainant having no title at the date of the decree. It may be contended that Sweatman was a purchaser pendente lite; that he had aright to let the suit proceed in the name of the original party. This may be the rule with reference to private conveyances or assignments made pending a suit, but when the title passes by operation of law, the purchaser is a necessary party. Story’s Eq. PL 165, § 158 a. After Sweatman petitioned to be made a party and there was an order making him a party, Kelly had no further claim or interest, because they do not claim the land jointly. It is either Sweatman’s or Kelly’s, but cannot belong to both. The court below thought it would, be wrong under the circumstances in this case to require the defendant Brooks to account for the rents, and we think the court was correct in that view, for it would be very unjust and inequitable to charge Brooks with the rents unless he be first reimbursed the whole sum he had to pay out with interest in order to get the rents. Brooks paid Martin one thousand eight hundred and ninety dollars and paid Butler five hundred dollars, total, two thousand three hundred and ninety dollars, before he could get control of the rents and profits, and these sums should be refunded to Brooks with six per cent, interest if he should be required to account for the rents, and then the account should be stated according to the rule laid down in Staton v. Bryant, 55 Miss. 277, but we don’t think Brooks is chargeable with the rents at all under the peculiar circumstances of this case. Brooks is a bona fide purchaser for value, and is not chargeable with notice of Kelly’s deed of trust, although it was recorded. Harper v. Bibb & Hopkins, 5 Geo. 472, and Ghrijfin v. Baker, 50 Miss. 163. Finally, upon the merits of this whole cause, laying aside for the present all legal objections, we don’t think complainants are entitled to relief upon the principles of equity, for where equities are equal the court will not interfere. If this case is sustained Brooks will be damaged much worse than either of the complainants will be if it is dismissed. Kelly is insolvent and the proceeds of the suit will never benefit him; there is no earthly chance for Butler to be benefited in the result one way or the other. Sweatman cannot be injured by a dismissal of the cause, for he tells you in his deposition that all of Kelly’s indebtedness to him was secured by real estate and collateral notes, etc. "We claim that on the facts of this case Brooks is a mortgagee and that all his claim to the land-debt paid by him to Martin is repaid him with the interest thereon. The Chancellor took a different view and accepted Brooks’ statement of the matter, as shown in his answer and deposition, and regarded him as a purchaser from Martin and bound to pay Kelly the balance of the one thousand eight hundred and ninety-two dollars purchase-money, after first satisfying that part of the indebtedness held by Martin, which constitutes a prior lien on the land. And Brooks not having done this, Kelly had an interest in the land to that extent, and he decreed accordingly. The Chancellor thought the decree was the most equitable solution of this complicated suit. By it Brooks would get the advantages desired by him in the way of rents out of his trade for the land, and thus reimburse himself, as it were, for the excess over the land-debt proper paid to Martin. The court adopted the idea that the deed held by Martin was a mortgage, and that it was foreclosed by agreement between him and Butler by a sale of the land to Brooks, and thus Brooks, according to his statement, was a vendee of the land. Inasmuch as the court accepted Brooks’ own statement, to wit, that he was a purchaser of the land, in rendering the decree, he should not be heard to complain now in this court. But this is not true with Kelly. His theory that Brooks was merely a mortgagee was not accepted by the Chancellor. Kelly’s theory was not accepted although (as we. claim) the evidence shows that he (Brooks) was mortgagee, and it also shows that the mortgage-debt has been paid. It matters not that Kelly’s theory would entirely deprive Brooks of the land and give it to Kelly. All that Brooks ought to claim as against Kelly is the money on the land-debt. And this we will now proceed to show he has received. Brooks received as rents for the land of which he has had possession two thousand and forty-four dollars and sixty-four cents. Now, the' amount due on the land-debt and taxes at the date of the deed from Martin to Brooks, as shown by the commissioner’s report, was one thousand and eighty-one dollars and thirty-five cents. So we see at a glance that Brooks has been largely more than repaid the principal and interest of the land-debt. Hence we respectfully submit that the chancery court should have so decided, and have given the land to Kelly. We suppose the Chancellor thought that no proof was in the record to sustain the allegations of the petition by Sweatman, that he had not proven up his exhibits in either of his petitions, nor any of his allegations, and he therefore did not grant him any relief. If such were his conclusions, we think he was right, but for fear this court might take a different view we thought it best for him to join in the appeal of Kelly, and if Kelly was not entitled to the deeree of this court that he would be. In this connection we will volunteer this statement: That this claim of Kelly’s is a security for an indebtedness of Kelly to Sweatman, that their interests are not conflicting, and that they fully understand each other. Before concluding we will state that the proof shows that J. C. &, C. D. Kelly were the owners of the deed of trust against Butler at the time of filing the foreclosure bill (case No. 190), and that when the land was sold the claim, or deed of trust, was owned by G. D. Kelly alone. So C. D. Kelly was the sole owner of the claim or deed of trust and of the land so far as Butler and J. C. Kelly were concerned in the sale of the land; and hence, in truth, all the parties in interest in the case of J. C. & C. D. Kelly v. J. JD. Butler et al. are before the court in this suit, and this court can consider the sale as confirmed by the acts of the parties. In addition to this, the evidence shows that Butler was present when the land was sold and purchased by Kelly, and that he did not object then, and he has never objected since to this purchase by Kelly. We ask this court to reverse the decree of the Chancellor and grant us a decree declaring that the land indebtedness to Brooks has been paid and decreeing the land to Kelly.