Opinion
No. 36668.
February 23, 1948.
1. EQUITY.
Motion to strike answers on ground that they presented no defense sufficient in law admitted facts asserted in the answer.
2. JUDGMENT.
In action to enforce alleged judgement lien against land, answer alleging that debtor had conveyed the land to holder of senior mortgage under agreement that indebtedness would be credited with a specified amount which was far more than land at time of conveyance was worth stated a good defense.
3. MORTGAGE.
Duly recorded conveyance of mortgaged land to mortgagee for a consideration far in excess of the value of equity of redemption was equivalent of foreclosure good in equity and terminated interest of junior judgment lienholder in mortgaged land.
4. EQUITY.
Complainant in equity must not only show a right in himself which has been infringed, but also that his harm is not merely technical.
APPEAL from the Chancery Court of Jefferson Davis County.
R.H. J.H. Thompson, Fulton Thompson, and Robert H. Thompson, all of Jackson, for appellant.
Upon the Merchants Company accepting a conveyance of the lands in question from the mortgagor as full settlement of the indebtedness secured, it took title subject to the lien of appellant's enrolled judgment.
Howell v. Bush, 54 Miss. 437; Wilie v. Brooks, 45 Miss. 542; Errett v. Wheeler, 109 Minn. 157, 123 N.W. 414, 26 L.R.A. (N.S.) 816; Beacham v. Gurney, 91 Iowa 621, 60 N.W. 187; Woodside v. Lippold, 113 Ga. 877, 39 S.E. 400, 84 Am. St. Rep. 267; Bank of Commerce v. Elliott, 109 Wisc. 648, 84 N.W. 417, 6 A.B.R. 415; Lowry v. Morrison, 11 Paige 327; Evans v. Staalle, 88 Minn. 253, 92 N.W. 941, 11 A.B.R. 184; Slingerland v. Sherer, 46 Minn. 422, 49 N.W. 237; Paxton v. Scott, 66 Neb. 385, 92 N.W. 611, 10 A.B.R. 80; Philmon v. Marshall, 116 Ga. 811, 43 S.E. 48, 11 A.B.R. 180; 37 C.J. 339, Sec. 61; 5 Am. Eng. Ency. of Law 821; 15 Am. Eng. Ency. of Law 321, 325; Remington on Bankruptcy (5 Ed.), p. 692, Secs. 3437.50, 3443, 3449; Tiedeman on Real Property, Sec. 222; 1 Jones on Mortgages 870, Sec. 85; Perry on Trusts, Sec. 347; 2 Pomroy's Equity Jurisprudence 791.
The doctrines of laches and stale claims are not applicable.
Hill v. Nash, 73 Miss. 849, 19 So. 707; Cox v. American Freehold Land Mortgage Co., 88 Miss. 88, 40 So. 739; Houston v. National Mut. Building Loan Ass'n, 80 Miss. 31, 31 So. 540, 92 Am. St. Rep. 565; Helm v. Yerger, 61 Miss. 44; Westbrook v. Munger, 61 Miss. 329; 30 C.J.S. 557, Sec. 131.
The institution of this suit in equity is a part of and ancillary to the judgment, as a mode of enforcement, and keeps the judgment alive pending the entry of the decree in this suit so that the seven year period of limitations does not begin to run until final decree in this suit has been entered.
Work v. Harper, 31 Miss. 107, 66 Am. Dec. 549; Smith v. Everly, 4 How. (5 Miss.) 178; Lynn v. Gridley, Walk. (1 Miss.) 548, 12 Am. Dec. 591; Marshall v. Minter, 43 Miss. 666; Delta Pine Land Co. v. Adams, 93 Miss. 340, 48 So. 190; Locke v. Brady, 30 Miss. 21; Buckner v. Pipes, 56 Miss. 366; Stith v. Parham, 57 Miss. 289; Street v. Smith, 85 Miss. 359, 37 So. 837; Russ v. Stockstill, 155 Miss. 368, 124 So. 359; Grace v. Pierce, 127 Miss. 831, 90 So. 590; Kilpatrick v. Byrne, 25 Miss. 571; Beirne v. Mower, 13 Smedes M. (21 Miss.) 427; Rupert v. Dantzler, 12 Smedes M. (20 Miss.) 697; Sugg v. Thrasher, 30 Miss. 135; Board of Commissioners v. Hurley, 169 F. 92; In re DeLany, 124 F. 280; Carpenter Brothers v. O'Connor, 16 Ohio cc 526, 9 Ohio cd 201, 1 A.B.R. 381; Davidson v. Burke, 143 Ill. 139, 32 N.E. 514, 36 Am. St. Rep. 367; Miller v. Sherry, 2 Wall. 237; Lion v. Robbins, 46 Ill. 276; Edgell v. Haywood, 19 Am. Dec. 436; Tilford v. Burnham, 7 Dana 109; King v. Goodman, 130 Ill. 102, 17 Am. St. Rep. 277; Massey v. Gorton, 90 Am. Dec. 288; Conley v. Buck (Ga.), 28 S.E. 97; Wright v. Rhodes, 42 Tex. 523; Brown v. Harding, 171 N.C. 686, 89 S.E. 222; Osborne v. Lindstrom, 9 N.D. 1, 81 N.W. 72, 81 Am. St. Rep. 516, 46 L.R.A. 715; Dabney v. Shelton, 82 Va. 349, 4 S.E. 605; Rogers v. Kimsey, 101 N.C. 559, 8 S.E. 159; Code of 1942, Sec. 733; 34 C.J. 1088, Sec. 1535, note 9, Sec. 5136, note 11(b); 37 C.J. 333, Sec. 511, p. 338, Sec. 58, p. 339, Sec. 61; 7 Remington on Bankruptcy (5 Ed.), p. 730, Sec. 3472, p. 744, Sec. 3491.
Enrolled judgments in United States courts have the same standing as state court judgments.
Code of 1942, Secs. 1557, 1558.
In all cases of joint or joint and several indebtedness the creditor may settle or compromise with and release any one or more of such debtors; and the settlement or release shall not affect the right or remedy of the creditor against the other debtors for the amount remaining due and unpaid, and shall not operate to release any of the others of said debtors.
Enochs-Flowers v. Bank of Forest, 172 Miss. 36, 150 So. 711, 159 So. 407; Code of 1942, Secs. 334, 335.
W.U. Corley and Hugh M. McIntosh, both of Collins, and C.W. Sullivan, of Hattiesburg, for appellees.
The equity of redemption being worthless, no harm resulted to the junior lien holder.
Yates et al. v. Mead et al., 68 Miss. 787, 10 So. 75; Goosby v. Byrd, 194 Miss. 568, 13 So.2d 33; Cade v. Toler, 155 Miss. 606, 124 So. 793.
Where a person has an adequate legal remedy for the enforcement of a right and through his own negligence loses such remedy, he cannot have resort to equity to enforce such right.
Twin States Realty Co. v. Kilpatrick, 199 Miss. 545, 26 So.2d 356; Comans v. Tapley et al., 101 Miss. 203, 57 So. 567; Buckner v. Calcote, 28 Miss. 432, 596; Davis v. Hoopes, 33 Miss. 173; Sugg v. Thrasher, 30 Miss. 135; Goosby v. Byrd, supra; Vanlandingham v. Meridian Creek Drainage District, 191 Miss. 345, 2 So.2d 591; State v. Woodruff, 170 Miss. 744, 150 So. 760; Thornton v. City of Natchez, 129 F. 84; Neppach v. Jones, 23 Am. St. Rep. 145; Douglas v. Douglas, 72 Mich. 36; Montgomery v. Noyles, 73 Tex. 203; Brown v. Roberts, 75 Tex. 103; Frost v. Wolf, 19 Am. St. Rep. 761; Reynolds v. Sumner, 126 Ill. 58, 19 Am. St. Rep. 523; Hanner v. Mounten, 138 U.S. 495; Speidel v. Henricy, 120 U.S. 387; Holmberg et al. v. Armbrecht et al., 66 S.Ct. 582; 21 C.J. 47, Sec. 23; 34 C.J. 739, Sec. 1142; Griffith's Mississippi Chancery Practice, Secs. 32, 440; 19 Am. Jur., Equity, Secs. 498, 501, 505, 508, 513.
A judgment creditor, having released or by his conduct waived or lost his right to subject the land first liable to satisfy his judgment, is not entitled to subject the lands next liable for the whole amount of his judgment, but only for the balance after crediting thereon the value of the land first liable. Where the different parcels of land are sold simultaneously, they must contribute pro rata to the satisfaction of the judgment.
Agricultural Bank of Mississippi v. Pallen, 8 Smedes M. (16 Miss.) 357; 34 C.J. 618, Sec. 942.
The appellant's suit in the chancery court of Jefferson Davis County, Mississippi, was filed only a few days prior to the expiration of the judgment upon which it was based, and this suit did not operate to extend the statutory period of limitation. The judgment upon which the suit was based expired prior to the rendition of a decree by the lower court. This is true even though it may be contended that the seven year statute of limitation was extended for a period of two months and eight days, the period of time between the petition in bankruptcy by P.A. Dale and his final discharge. Therefore, the judgment sued upon had expired when the lower court rendered its decree, and an appeal will not lie.
Work v. Harper, 31 Miss. 107, 66 Am. Dec. 549; Smith v. Everly, 4 How. (5 Miss.) 178; Lynn v. Gridley, Walk. (1 Miss.) 548, 12 Am. Dec. 591; Marshall v. Minter, 43 Miss. 666; Grace v. Pierce and Scruggs v. Herman, 127 Miss. 831, 90 So. 590, 21 A.L.R. 1035; Moody Williams v. Dye, 125 Miss. 770, 88 So. 332; Buckley v. F.L. Riley Mercantile Co., 155 Miss. 150, 124 So. 267; Rupert v. Dantzler, 12 Smedes M. (20 Miss.) 697; Beirne v. Mower, 13 Smedes M. (21 Miss.) 427; McAfee v. Reynolds (Ind.), 18 L.R.A. 211; John G. Miller Co. v. Brurylmone (Okla.), 56 L.R.A. 620; Code of 1942, Secs. 733, 735; 21 A.L.R. 1049.
In the event this Court should render a judgment for the appellant and hold that the judgment sued upon has not expired, then it will be necessary to reduce the amount sued for by one-half on account of the release by the judgment creditor of one of the two judgment debtors.
Yazoo Delta Mortgage Co. v. Harlow et al., 150 Miss. 105, 116 So. 441; Code of 1942, Sec. 334.
Where a new lien is desired or sought, suit must be brought on the judgment to do so, within seven years.
Street v. Smith, 85 Miss. 359, 37 So. 837; Locke v. Brady, 30 Miss. 21; Buckner v. Pipes, 56 Miss. 366; Stith v. Parham, 57 Miss. 289; Pollard v. Eckford, 50 Miss. 631; Buckley v. Riley Mercantile Co., supra; Edwards v. McGee, 31 Miss. 143; Fox v. Wallace, 31 Miss. 660; Maynard v. Cocke (Miss.), 18 So. 374; Code of 1942, Secs. 733, 735.
Argued orally by J.H. Thompson, for appellant, and by Hugh McIntosh, for appellees.
Appellant filed a bill to subject the land described therein to the enforcement of an alleged judgment lien. The land is a tract of 120 acres. The chronology is briefly as follows:
1. On March 18, 1931, the land was owned by P.A. Dale.
2. On the date aforesaid P.A. Dale executed and delivered to S.S. Dale, Jr., a deed of trust on said land to secure an indebtedness of $3,275. This deed of trust was recorded on April 29, 1931.
3. On May 5, 1931, appellant recovered a judgment against P.A. Dale for $4,107.53 and the judgment was enrolled on May 28, 1931.
4. On November 22, 1932, S.S. Dale, Jr., assigned the deed of trust, and the note evidencing the secured debt, to the Merchants Company, a corporation, the assignment being entered upon the record on November 26, 1932.
5. On August 19, 1935, P.A. Dale conveyed the land to the Merchants Company by a warranty deed, duly recorded.
6. On November 7, 1935, by warranty deed duly recorded, the Merchants Company conveyed the land to B.D. Walker and D.L. Buckley, and they and their vendees are appellees herein.
7. On April 12, 1938, appellant recovered a judgment against P.A. Dale in renewal of the judgment previously mentioned, and the renewal judgment was enrolled on April 22, 1938.
8. On May 19, 1938, P.A. Dale was adjudged a bankrupt in the District Court of the United States, and on July 26, 1938 was discharged in bankruptcy.
9. On March 24, 1945, the present suit was filed by appellant.
The defendants fully answered the bill, setting up several defenses. Among the defenses they averred as follows: That when, on August 19, 1935, the mortgagor and the owner conveyed the land to the then holder of the mortgage and indebtedness aforementioned, that is to say, to the Merchants Company, it was upon the agreement that the note and indebtedness would be credited with the sum of $800 as the consideration for said conveyance; that he was in fact given such credit on the debt; that the land at the time of the conveyance was worth far less than the amount of the credit, and could not have brought as much on a formal foreclosure; that, as a matter of fact, the land at the time was unimproved, cut-over woodland, and was not worth exceeding $1 per acre.
Appellant, the complainant, moved to strike the answers, contending that they presented no defense sufficient in law. The effect of the motion was, of course, to admit the facts asserted in the answer. The motion to strike was overruled.
The casual reaction of the legal mind is that the only manner by which a junior lienholder may be put out of the way by a senior encumbrance is to formally foreclose by a public sale either by a trustee or by a commissioner, in which case the trustee's or the commissioner's deed will relate back to the date of the senior encumbrance, so far as junior encumbrancers are concerned.
In this jurisdiction, however, it has long been a common business custom to consummate a foreclosure by agreement between the mortgagor and the mortgagee accompanied by a conveyance by the mortgagor to the mortgagee of the mortgaged property when the property is actually and distinctly worth less than the debt. This works to the advantage of both the mortgagor and the mortgagee, because it saves the costs of a formal foreclosure, and is of no actual disadvantage to the junior encumbrancers because when the mortgaged property is worth distinctly less than the mortgage debt there is nothing left over to which the equity of redemption could attach as being of any value.
This custom and practice must have been in mind when, more than 50 years ago, this Court considered the case Yates v. Mead, 68 Miss. 787, 10 So. 75, 76. In that case, the mortgagee, Danner Company, had subsequently obtained a deed of conveyance from the mortgagor; and, as shown by the briefs, it was contended by appellants, the holders of a junior judgment lien, that "the only way for the mortgagee to procure an absolute title free from junior liens is to foreclose", while the appellees contended "that the mortgagee had the right to take the mortgaged estate, in good faith, in satisfaction of their preexisting debt secured by the mortgage."
Had the Court agreed with the position taken by appellants, the language of the Court now to be quoted would have been unnecessary and would not have been used; but the Court responded rather to the above stated contention by appellees and said: "Granting the correctness of the general proposition, it is true, nevertheless, that in the present litigation it was incumbent upon those asserting this right in Danner Co. to show that they so dealt with the mortgaged estate, in taking to themselves absolute title to the same as not to injure or destroy the rights of junior lienors. In other words, the burden was upon Danner Co., or, more properly speaking, upon those claiming under them, to show the amount due upon the mortgage debt at the time of the taking of an absolute conveyance to the property, to show the value of the property at the time; to show that the debt was equal in amount to the value of the mortgaged estate; that the equity of redemption was valueless, and hence that no harm came from such acquisition of absolute title to the junior judgment creditors. This burden the appellees have not successfully borne." The implication of this language is unavoidable that if the proof there outlined had been met by the mortgagee it would have foreclosed the junior lienholders. Indeed, it would be an apt application of the maxim that Equity regards substance rather than form.
In the present case the burden in every respect above mentioned has been met in their answer by the defendants, and, unless we are to withdraw what was said by the Court in Yates v. Mead, their answer must be held to be sufficient; and we cannot now withdraw the quoted language because it has become a rule of property as to thousands of similar transactions since that announcement was made years ago.
And we do not in this State stand alone in this matter. In Alabama, where conditions are similar to ours, their Supreme Court has said in Pruett v. First National Bank, 229 Ala. 441, 157 So. 846, 847, to quote: "It is further established that where the parties effectuate a foreclosure by agreement, consummated by a conveyance, in lieu of a sale under the power, the title so acquired relates back to the execution of the mortgage, and such a foreclosure has, and will be given, the effectiveness of a foreclosure in equity."
There having been, as the record now stands before us, that which was the equivalent of a foreclosure good in equity, all duly recorded and for a consideration far in excess of the value of the equity of redemption so that the junior lienholders were not thereby harmed, the interest of the junior lienholder, the appellant in this case, in the mortgaged land, was thereby terminated, and the court was correct in so holding. It is fundamental in our equity procedure that a complainant must not only show a right in himself which has been infringed, but also that he has been harmed thereby beyond that which is merely technical. Federal Land Bank of New Orleans v. Mississippi Power Light Co., 157 Miss. 737, 739, 128 So. 98.
It is not necessary to pursue the other features of the case.
Affirmed and remanded.