Walker v. Warner

53 N.E. 594, 179 Ill. 16

• Court: Illinois Supreme Court
• Decided: April 17, 1899
• Status: Published

Opinions

Mr. Justice Magruder

delivered the opinion of the court:

The origdnal petition in this case alleges, that appellant is the owner in fee simple of the premises claimed by him, and asks that his title as snch owner be established and confirmed. The amended petition is so framed, as to be a bill to redeem from the foreclosure sale. The prayer of the amended petition is that if the purchaser at the foreclosure sale, or his assigns, have any lien or charge upon said premises, the amount thereof may be ascertained, and appellant may be permitted to pay the same.

Samuel J. Walker was the mortgagor, who executed the Stewart mortgage. On August 27, 1873, he sold and conveyed a part of the premises subject to that mortgage to George J. Sherman. When the Stewart mortgage was foreclosed, Samuel J. Walker, the mortgagor, was made a party defendant, but his grantee, Sherman, was not made a party defendant. Sherman acquired his interest by deed from Walker more than five years before the foreclosure proceeding was begun, the foreclosure bill having been filed on January 6, 1879.

It is contended by the appellant that, as Sherman was not made a party to the foreclosure proceeding, the sale thereunder was utterly void as to him, and as to appellant, his grantee. Appellant does not allege in his petition, that either Samuel J. Walker, or Sherman, or he himself, paid the Stewart mortgage or any part thereof, or that he or Sherman has offered to redeem from the sale under the Stewart mortgage, but insists that the purchaser at the foreclosure sale acquired only a right of subrogation, which right has been barred by the Statute of Limitations; and that, by reason of such bar and also by reason of the alleged satisfaction of the Stewart mortgage by the foreclosure sale, appellant’s title has ripened into an absolute fee simple title. Undoubtedly, Sherman, as the grantee of the equity of redemption, should have been made a party to the foreclosure suit. His rights could not be cut off by that proceeding, unless he was made a party thereto. But the decree of foreclosure was not, for that reason, a void decree. Sherman was still the owner of the equity of redemption. As the court obtained no jurisdiction over him in the foreclosure suit, his rights remained unaffected by it. The right, however, which thus remained unaffected, was simply a right to redeem. (Cutter v. Jones, 52 Ill. 84; 2 Jones on Mortgages,—5th ed.—sec. 1048).

Samuel J. Walker could invest his grantee, Sherman, with no greater title than he himself possessed. The purchaser of the mortgaged premises from the mortgagor stands in the shoes of the mortgagor, and is charged with notice of the mortgage and its legal effect. He merely succeeds to the rights of the mortgagor. The failure to make him a party to the proceeding to foreclose the mortgage does not affect the validity of the decree, but simply leaves his right of redemption unimpaired. The original mortgagor, Samuel J. Walker, was a party to the foreclosure decree, and, as there is no claim that the sale was not fair and regular, the purchaser at the sale and his grantees should be protected. The purchaser at the sale under the decree of foreclosure takes the interests of the defendants, and also of the mortgagee, divested of any equity of redemption on the part of all persons who are parties. Although the grantee of the mortgagor, who is not a party, is not affected, yet his interest, which remains the same, is only a right to redeem. By the foreclosure and sale and the master’s deed thereunder, the legal, title becomes vested in the grantee in such deed, and leaves nothing in the mortgagor, or his grantees, who are not parties to the proceeding, except the right to redeem in equity. Inasmuch as the interest of the grantee of the mortgagor, who is not made a party to the foreclosure, is merely a right of redemption, the right which he has is an equitable one, and must be asserted in a court of equity. The views thus expressed are sustained by the following authorities: Carroll v. Ballance, 26 Ill. 9; Oldham v. Pfieger, 84 id. 102; Taylor v. Adams, 115 id. 570; Rose v. Walk, 149 id. 60; Cutter v. Jones, supra; Kelgour v. Wood, 64 id. 345; Kenyon v. Shreck, 52 id. 382; West v. Reed, 55 id. 242; Seaman v. Bisbee, 163 id. 91; Barrett v. Hinckley, 124 id. 32; Mulvey v. Gibbons, 87 id. 367; Bryan v. Kales, 162 U. S. 411; Bryan v. Brazius, id. 415.

By the foreclosure sale to McCoy, and the execution of the master’s deed to Steele, who obtained the certificate of sale from McCoy by assignment, the legal title passed to Steele, subject only to a right of redemption in Sherman, who was not made a party to the foreclosure proceeding.

Inasmuch as the only right, which Sherman had after the foreclosure sale was a right of redemption, the question arises whether or not that right was barred or lost when the amended and engrossed petition was filed in this case on May 8, 1897. It is a difficult question to determine, and is left in much uncertainty by the authorities, as to when an equitable right of redemption is barred, especially where the redemption is to be made from a mortgage, or a sale under the foreclosure thereof, where the claimant of the right of redemption has not been made a party to the proceeding. In determining whether, in this case, the right has been barred, the time of filing the amended petition, to-wit, May 8, 1897, and not the time of filing the original petition, to-wit, May 21, 1896, is to be taken into consideration. The original petition was not a bill to redeem, but a bill to establish title. There was no prayer asking for the exercise of the right of redemption, until the filing of the amended petition. The appellant abandoned the case made by his original bill or petition, and made a new and different case by way of amendment, thus making use of the privilege of amending, in order to make an entirely new bill. (Shields v. Barnum, 17 How. 130). As, therefore, the amendment to the original petition transformed it into a bill to redeem, we must regard the date of the filing of the amended petition, as the date when the prayer for the exercise of the right of redemption was first made. Whatever may be the period of time, within "which the appellant ought to have exercised his right of redemption, that period must be calculated with reference to the date of filing the amended petition.-

The right of redemption being a purely equitable estate, a court of chancery will not protect and enforce it unless equitable considerations require it to do so. As the right is the creation of a court of chancery, it can only be asserted in such court when its assertion is plainly equitable. (West v. Reed, supra; Kenyon v. Shreck, supra). It may, therefore, be lost, unless it is asserted with'in a reasonable time, and before the situation of the parties has changed, and the rights of others have intervened, or improvements have been made. In other words, the right may be lost by laches. In the recent case of McDearmon v. Burnham, 158 Ill. 55, we said (p. 62): “When a court of equity is asked to lend its aid in the enforcement of a demand that has become stale, there must be some cogent and weighty reasons, presented why it has been permitted to become so. Good faith, conscience and reasonable diligence of the party seeking its relief are the elements that call a court of equity into activity. In the absence of these elements the court remains passive, and declines to extend its relief or aid.”

In determining whether there has been laches in the matter of exercising a right of redemption, a court of equity is not necessarily controlled by the period of limitation, as fixed in actions at law. A delay for a much less period than that prescribed by the Statute of Limitations will, according to the circumstances of the case, be held to be laches and a bar to the right of redemption. (Williams v. Rhodes, 81 Ill. 571). Where there has been a defective foreclosure, the equity of redemption will not be permitted to be asserted against a superior equity, or an equity still stronger. (Mulvey v. Gibbons, supra).

In the present case, the debt secured by the mortgage to Stewart was due on December 1,1866. When the present bill to redeem was filed on May 8, 1897, more than thirty years had elapsed since the maturity of the debt, secured by the Stewart mortgage. More than twenty-three years had elapsed since the last partial payment on September 30, 1873, had been made upon that mortgage. More than eighteen years had elapsed since the proceeding to foreclose the mortgage was instituted, to-wit, January 6,1879; nearly sixteen years had elapsed since the decree of foreclosure was entered on December 12, 1881. Sherman obtained his deed from Samuel J. Walker on August 27, 1873. He held the title for twenty years until August 18, 1893, when he made a deed to the present appellant. Sherman was affected with notice of the existence of the mortgage when he obtained his deed from Walker. For a period of twenty years he held the title without making any payment whatever upon the mortgage debt. The appellant waited nearly four years after obtaining his deed from Sherman, before he filed this petition or bill to redeem. When the bill was filed, more than fifteen years had elapsed since the property was sold under the foreclosure decree by the master in chancery on January 28, 1882. The master’s deed to Steele was executed on April 9, 1887, and more than ten years had elapsed after that date before the filing of the bill to redeem. Neither Sherman, nor the appellant, paid any taxes upon the land after January 6, 1879, when the bill to foreclose was filed, nor, so far as appears, did Sherman pay any taxes prior to the filing of the bill to foreclose. In the meantime, Nelson A. Steele, who obtained the master’s deed, had parted with his interest to the appellees herein. The appellees, who are railroad companies, had acquired a right of way through the property in question, and laid down their tracks about six years before the present bill was filed. The failure of the appellant and his grantor, Sherman, to pay taxes or make any payments upon the mortgage would indicate an abandonment of the property on their part. Under these circumstances it would be inequitable to allow a redemption. The equity of redemption cannot be enforced where there has been an attempted foreclosure, and all parties have supposed that the foreclosure was good, and the holder of the equity of redemption has abandoned the premises and all claim to them, never paying any taxes or offering to redeem until after a series of years, when the property has passed through, many hands for full value, and has become valuable. (Mulvey v. Gibbons, supra).

In some cases, it is said that the right to redeem and the right to foreclose are mutual and reciprocal, and that when the one is barred the other is barred. This proposition rightly understood only means that, if the instrument be a mortgage with one party, it must be a mortgage with both, that it cannot be a mortgage on one side only, but must be a mortgage with both parties. (Bradley v. Norris, 63 Minn. 156; Locke v. Caldwell, 91 Ill. 417; Jackson v. Lynch, 129 id. 72; Green v. Capps, 142 id. 286). So long as the relation of mortgagee and mortgagor exists, the right of redemption exists. It seems to be assumed by counsel for appellant, that, as the appellees succeeded to the rights of the mortgagees by reason of holding under the purchaser at the foreclosure sale, the relation of the appellees, as such mortgagees, to the appellant, as mortgagor, or as holding under the mortgagor, continued to exist by reason of the fact that appellees took possession of the property in 1891, a little more than five years before the filing of the amended petition. It is true that, after condition broken, the mortgagee has two methods of enforcing the security for the debt; one of these methods is by bill in equity for the sale of the mortgaged property; the other is by entry and possession of the property by the mortgagee and the application by him of the rents and profits to the payment of the debt and interest. When the mortgagee enters and takes possession after condition broken, and before the debt is paid, for the purpose of enforcing his security, the relation of mortgagee and mortgagor continues to exist, and the mortgagee occupies a position of trust with reference to the mortgagor. But, in the present case, possession was not taken by the purchaser at the foreclosure sale, or any of his grantees, until the proceeding by foreclosure had been completed, and a sale had been made and a master’s deed had been executed. The initiation of the foreclosure proceeding's may have operated to acknowledge the outstanding right of redemption at that time, but the culmination of the proceedings and the deed of the master must be recognized as evidence of the assertion, on the part of the mortgagee or the purchasers at the sale, of an extinguishment of the equity of redemption. (Harter v. Twohig, 158 U. S. 448). The possession taken in 1891 was not under the mortgage, but was adverse to the rights of the mortgagor and his grantees. Such possession was taken in assertion of the rights of the purchaser and his grantees, as acquired by virtue of the mortgage sale and the master’s deed. Even if the limitation upon the right to redeem be regarded by analogy as the same as the statutory limitation on foreclosure by suit, here the master’s deed, executed on'April 9, 1887, to Steele was so executed more than ten years before the present bill to redeem was filed. Under the Limitation law suits to foreclose mortgages are barred within ten years after the right of action, or the right to make sale, accrues. The amended petition may be fairly construed to allege that a payment was made upon the Steele mortgage as late as September 30,1873. This payment was made after the Limitation law of 1872 went into force. Hence, the payment of September 30, 1873, relied upon as constituting a new promise and as reviving the debt, revived the debt for a period only of ten years from that date. (Drury v. Henderson, 143 Ill. 315). Although this mortgage was executed when the Statute of Limitations of 1849, barring the debt in sixteen years, was in force, yet, inasmuch as a payment was made after the act of 1872 went into force, that act governed as to the time of the extension created by the payment. It follows that, even if Sherman or the appellant was entitled to redeem from the mortgage sale for ten years after the execution of the master’s deed, ten years had expired before the amended bill or petition in this case was filed.

One of the counsel has suggested another view of the matter, and that is, that under section 15 of the Limitation law of 1872, “all civil actions not otherwise provided for shall be commenced within five years next after the cause of action accrued.” It is urged, that a proceeding to enforce the right of redemption is a civil action, and should, therefore, be commenced within five years after the right to redeem has accrued. If this view be adopted, the five years had elapsed after the taking out of the master’s deed on April 9, 1887, before May 8, 1897, the time of the filing of the present bill or petition.

It is apparent, therefore, that, whether we apply to the facts of this case the doctrine of laches as enforced in equity—which does not fix any particular period for the termination of the right of redemption, but leaves it to depend upon the equitable circumstances developed in each case-—or the doctrine that the limitation of the right to redeem in equity must be governed, by analogy, by the Statute of Limitations, as enforced in actions at law, or as applied to the right of foreclosure, in either view, the appellant’s right of redemption was gone when the amended bill or petition was filed.

We are, therefore, of the opinion that the court below committed no error in sustaining the demurrer to the petition filed by the appellant. Accordingly the decree of the circuit court, dismissing the petition, is affirmed.

Decree affirmed.