Whitney v. Higgins

10 Cal. 547

• Court: California Supreme Court
• Decided: July 1, 1858
• Status: Published

Opinion

Field, J., delivered the opinion of the Court

Terry, C. J., and Baldwin, J., concurring.

The plaintiff purchased the premises at a sale upon a decree rendered in a suit to foreclose a mortgage executed on the 21st of February, 1856. The defendant claims under a purchase at a sale made upon a decree rendered in a suit to enforce a mechanic’s lien which attached on the 18th of January, 1856. The property was not redeemed from either sale, and the sheriff executed a deed to the plaintiff June 27th, 1857, and to the defendant on the 30th of Lecember following. The plaintiff was one of the mortgagees, and neither he nor his co-mortgagee was made a party to-the suit to enforce the mechanic’s lien; and the present bill is filed to redeem the premises from the sale under the decree rendered in that suit. The defendant demurred to the bill, the demurrer was sustained, and from the judgment rendered thereon, the plaintiff appeals.

The conveyance to the plaintiff took effect, by relation, at the date of the mortgage, the 21st of February, 1856. By it the plaintiff acquired all the estate which the mortgagor possessed in the property on that day. He, therefore, stands in precisely the same position as though he bad purchased the property of the mortgagor at that time; and the question is thus presented—and it is the only question in the case—whether a subsequent purchaser possesses, after the expiration of the six months allowed by statute, a right to redeem property sold to enforce a mechanic’s lien, upon a decree rendered in a suit to which he was not made a party.

The suit tp enforce the mechanic’s lien was instituted, and the decree rendered therein, before the execution of the deed to the plaintiff, though not until after the sale to him, and the defendant contends that the lien of the mortgage was waived by a failure of the mortgagees to present it in that suit. To this it may be answered : first, that the lions which must be presented under the seventh section of the Mechanics’ Lien Law of 1856, are those arising under that act; and, second, if this were otherwise, that the act was passed on the 19th of April, 1856, and its provisions do not apply to or affect any previously acquired liens. (Laws of 1856, chap. 134, §§ 7, 11.)

The plaintiff’s claim to the relief he seeks rests upon the general principle that the rights of a person can not be affected by a suit to which he is a stranger. By the judgment in a suit, parties and privies are alone bound. The estate of Stephens had passed from him by the proceedings under the foreclosure, and as, had it continued, his rights could not have been cut off without his day in Court, so neither can the rights of the plaintiff, his successor, be thus defeated.

Though the lien of mechanics is purely the creature of the statute, a decree for the sale of the premises in its enforcement has the same and no greater effect upon the rights of purchasers and incumbrancers, prioi to the commencement of suit, than a similar decree would have .upon the foreclosure of a mortgage. If such purchasers or incumbrancers are not made parties, they are, in no respect, bound by the decree or proceedings thereunder. A mortgage, in this State, is only a lien or incumbrance ; the estate in the land remains in the mortgagor, and all persons interested in the estate at the time the suit is instituted to enforce the mortgage, whether purchasers, heirs, devisees, remainder-men, reversioners, or incumbrancers, should be made parties, or their rights will not be affected. The same is true as to suits to enforce a mechanic’s lien. “ The mortgagee,” says Kent, “must make all incumbrancers, prior and junior, existing at the filing of the bill, parties; ” and the reason he assigns for the rule is, “to give security and stability to the purchaser’s title, for he takes a title only as against the parties to the suit; and it can not and ought not to be set up against the existing equity of those incumbrancers who are not parties.” (4 Kent, 185.) In Haines v. Beach, (3 Johns. Ch., 459,) a prior mortgagee had foreclosed his mortgage without making a subsequent mortgagee and subsequent judgment-creditors, parties; and, upon a bill filed by the executors and heir of the deceased junior mortgagee, the plaintiffs were held entitled to redeem. “It was the duty of Gardner, (the first mortgagee,)” says Kent, “to have made the younger mortgagee a party to his bill; and all incumbrancers existing at the commencement of the suit, are entitled to be parties, for they have an interest to be affected, and ought to have an opportunity of paying- off the prior incumbrances. The injustice that would be produced if they wore to lose their rights, because they are not made parties, is very apparent. The rule, therefore, has been well settled and uniformly supported, that the subsequent incumbrancers must be parties, and if omitted, the decree will not bind their rights.” And again: “ The necessity of making the subsequent incumbrancers parties, or holding their rights unimpaired, appears to be much stronger, and indispensable to justice, in cases of decrees for sales, according to our practice; for otherwise the mortgagor would take the surplus-money, or the cash value of the equity of redemption, and defeat entirely the lien of the subsequent creditor. But their rights can not be destroyed in this way, and the purchaser will take only a title as against the parties to the suit, and he can not set it up against the subsisting equity of those incumbrancers who are not parties.” (Godfrey v. Chadwell, 2 Vernon, 601; Bishop of Winchester v. Beavor, 3 Vesey, 314; Hobart v. Abbot, 2 P. Wms., 643; Watson v. Spence, 20 Wend., 260; Lyon v. Sandford, 5 Conn., 554; Cooper v. Martin, 1 Dana, 25; Rogers v. Jones, 1 McCord, 221; Story’s Equity, § 1023; Williamson v. Field’s Executors and Devisees, 2 Sand. Ch., 533.)

But as to persons who acquire interests by conveyance or incumbrance after suit brought, it is not necessary to make them parties. They are bound by the decree. The rule is thus stated in Story’s Equity Pleadings (§ 194,) : “Bub incumbrancers, who become such pendente lite, are not deemed necessary parties, although they are bound by the decree; for they can claim nothing except what belonged to the person under whom they -assert title, since they purchase with constructive notice; and there would be no end to suits, if a mortgagor might, by new incumbrances, created pendente lite, require all such incumbrancers to be made parties.” In Bishop of Winchester v. Beavor, (3 Vesey, 314,) the Master of the Rolls observed- that a judgment confessed after a bill filed, would not do. And in Cook v. Mancius, (5 Johns. Ch., 94,) Kent held that a person becoming an incumbrancer pendente lite, was not entitled to redeem unless under special circumstances. “If the plaintiff,” observes the Chancellor, “had been a judgment-creditor at the commencement of the suit to foreclose the mortgage, the mortgagee would have been bound to have made him a party, or else the decree and sale would not have taken away his right to redeem, even as against Mancius, the purchaser. This principle was discussed, and sufficiently explained, in the case of Haines v. Beach, (3 Johns. Ch., 459,) and in the authorities there referred to. But the present plaintiff became an incumbrancer pendente lite, and, therefore, according to the doctrine in the case of The Bishop of Winchester v. Paine, (11 Vesey, 194,) it was not necessary that he should have been made a party, and he has no right to redeem.”

This consideration of the proper parties to a suit of foreclosure, and the effect of the decree upon the rights of persons interested in the mortgaged estate, clearly establishes the title of the plaintiff to redeem. The principles which govern as to parties in those suits, apply equally to suits for the enforcement of a mechanic’s lien. The mortgage under which the plaintiff claims was placed upon the premises before suit was brought; the mortgagees, as subsequent incumbrancers, were necessary parties to the suit; not being made such parties, they were not bound by the decree or sale under it; the plaintiff, by his purchase, took the title as it existed in the mortgagor, at the date of the mortgage; his position in Court, therefore, is that of the owner of the legal title, subject to the mechanic’s lien. The defendant, as assignee of the purchaser under the decree upon that lien, is substituted to the rights of its original holder, and is entitled to the amount due upon that lien to the extent of the money paid upon the purchase.

The case of Lyon v. Sanford (5 Conn., 544) is in point, and is in fact much stronger than the case at bar. In that case, the equity of redemption had been attached by a creditor of the mortgagor, and it was held that a decree of foreclosure on a bill brought subsequent to the service of the attachment, did not affect the rights of the attaching-creditor, he. not having been made a party to the suit, and that having afterwards recovered judgment and levied his execution upon the premises, he was entitled to redeem on paying the prior incumbrances, notwithstanding the decree of foreclosure against the mortgagor. “ It is objected,” says the Court, “that if creditors attaching the interest of the mortgagor before the commencement of the process for foreclosure, are necessary parties, creditors who attach after-wards must also be made parties; and that a mortgagee would never be able to make all persons parties who might, between the filing of the bill and the final decree, acquire a lien upon the premises. But such conclusion will not follow from the principle which is adopted by this decision.”

“ It is a general rule, applicable to chancery proceedings, that all persons interested in the subject-matter of the suit at the time of bringing the bill, shall be made parties in the cause; and should the death of any defendant happen during the pendency of a suit, whereby the interest of such defendant devolves upon others no* already parties, such persons must also be made parties. But when a defendant to a bill in chancery, after the commencement of a suit, attempts to alienate or convey the subject-matter of such suit by voluntary contract, the purchaser, it is believed, need not be made a party to the bill; but his interest, acquired pendente lite, will be bound by the event of the suit, which was properly commenced. And so, in respect to creditors who attach property mortgaged, during the pendency of a petition to foreclose ; the lien which they acquire is by their own voluntary act subsequent to the commencement of the suit, and they will be bound by the decree, though not parties. They must necessarily abide by the fate of the mortgagor, whose estate they have attempted to acquire.”

If an incumbrancer, prior to suit brought, not being made a party, is entitled to redeem, a fortiori is a purchaser of the entire estate subsequent to the lien, and before, suit, entitled to make a redemption.

The counsel of the respondent appears to have confounded the equity of redemption with the right to redeem from a sale on execution under the statute. The statutory right, in some instances, exists where there is no equity, and in other instances, in connection with the equitable right. Parties -to the suit in which the judgment is rendered, under which the sale is made, are restricted to the six months given by statute, for they have had their day in Court, and their rights after .decree depend entirely upon the statute. Parties acquiring' interests, pending suits to enforce previously existing liens, taking their interests in subordination to any decree which may be rendered, have no equity and are confined to the rights given by the statute, and so, as a consequence, are those whose interests are acquired after judgment docketed or sale made; but parties obtaining interests subsequent to the plaintiff, and before suit brought, who are not made parties to such suit, possess both the equitable and the statutory right. They may redeem, under the statute, or they may file their bill in equity.

The plaintiff is within this last class. He occupies, as we have already observed, by his purchase, the same position as the mortgagor, and possesses the legal title, subject, only, to the previous incumbrance of the mechanic’s lien. As the mortgagees were not made parties to the suit to enforce that lien, he is entitled, like them, to come into a Court of Equity to redeem the premises.

It follows, that the Court below erred in sustaining the demurrer, and the judgment rendered for the defendant thereon must he reversed, and the cause remanded for further proceedings.

Ordered accordingly.