Opinion
No. 55/41.
02-06-1924
BUCHANON & SMOCK LUMBER CO. v. BROWER et al.
Patterson, Rhome & Morgan, of Asbury Park, for complainant. J. Everett Newman, of Asbury Park, for defendants.
Bill to foreclose mortgage by the Buchanon & Smock Lumber Company against Mary A. Brower and others. Bill dismissed.
Patterson, Rhome & Morgan, of Asbury Park, for complainant.
J. Everett Newman, of Asbury Park, for defendants.
FOSTER, V. C. Complainant's bill is filed to foreclose a mortgage given by one William D. Bryant and covering property in Monmouth county owned by the defendant Mary A. Brower. Mrs. Brower purchased the property from one Lillian Sachs on November 19, 1923. On July 30, 1923, Lillian Sachs bought the property at a sheriff's sale, in a foreclosure proceeding, wherein she,Lillian Sachs, was complainant and William D. Bryant was defendant. The bill in this suit of Sachs against Bryant was filed on February 3, 1923; on February 13th, ten days later, the complainant herein recorded the mortgage now in suit, which bears date October, 1922, but was not executed nor acknowledged until February 9, 1923. On February 16th, the subpoenas in the suit of Sachs against Bryant were issued.
Sachs had no actual knowledge, at the time the bill was filed and the subpoenas is sued, of complainant's mortgage, and consequently did not make complainant a party to that suit, and complainant had no knowledge of the Sachs' foreclosure proceedings until the deed from the sheriff to Sachs was recorded, and therefore did not apply to intervene in the Sachs suit.
Counsel for defendant Brower contends that, notwithstanding this situation, complainant's mortgage now in suit, so far as Mrs. Brower's property is concerned, was barred by the Sachs foreclosure as effectively as if complainant had been made a party thereto, and in support of this contention, and of his motion to dismiss complainant's bill so far as it relates to Mrs. Brower's property, he relies upon section 58 of the Chancery Act (C. S. vol. 1, p. 432), which provides that:
"In any suit for the foreclosure of a mortgage * * * all persons claiming * * * a lien upon such property, by * * * any * * * mortgage, * * * which, by any provision of law, could be recorded * * * and which shall not be so recorded, * * * at the time of the filing of the bill in such suit, shall be bound by the proceedings in such suit, * * * in the same manner as if he had been made a party."
Complainant in answer claims that an action in chancery is commenced with the issuing of process or subpoena and not when the bill is filed, and the cases of Haughwout and Pomeroy v. Murphy, 22 N. J. Eq. 531; Hermann v. Mexican Petroleum Corp., 85 N. J. Eq. 367, 96 Atl. 492; Haupt v. Board of Education, 87 N. J. Eq. 362, 100 Atl. 337. and Delaware River Quarry Co. v. Freeholders, 88 N. J. Eq. 507, 103 Atl. 18, are cited to support this contention; and based on these authorities complainant's argument is that as its mortgage was recorded three days before the subpoena was issued in the Sachs suit, although ten (Jays after the bill therein was filed, it was incumbent on Sachs to make complainant as the holder of a lien of record at and before the commencement of the action—i. e., the issuing of subpoenas—a party defendant in order to bind complainant, or to bar, or foreclose, its mortgage lien.
Section 58 of the Chancery Act has been considered in several cases in this court and in the Court of Errors and Appeals, and it has uniformly been held as stated by the Court of Errors and Appeals in Sibell v. Weeks, 66 N. J. Eq. 714, 55 Atl. 244, that under this statute the owner of a mortgage not recorded when a bill is filed to foreclose another mortgage upon the mortgaged premises is barred by the decree in such foreclosure as effectively as if he had been made a party and had appeared. In Dinsmore v. Wescott, 25 N. J. Eq. 302, and in Leonard v. New York Bay Co., 28 N. J. Eq. 192, it was held that, under this statute, if the unrecorded title had come to the knowledge of complainant during the pendency of his suit, no duty would thereby have been cast upon him to have the owner made a party. And in McCrea v. Newman, 46 N. J. Eq. 473, 19 Atl. 198, it was held that this section of the act affords the complainant in a foreclosure proceeding and a purchaser under him complete protection from an incumbrance unrecorded when the bill was filed. See, also, Raymond v. Post, 25 N. J. Eq. 447; Cannon v. Wright, 49 N. J. Eq. 17, 23 Atl. 285; and Stiles v. Galbreath, 69 N. J. Eq. 222, 60 Atl. 224.
This section of the act does not, as counsel for the parties claim, change the rule of the cases that an action in chancery is begun when process issues, nor does it, as claimed, fix a different time, or make any distinction as to the time, when a foreclosure action is begun. What the statute does is to fix a definite time in foreclosure cases, viz. at the time of filing the bill, when unrecorded liens of the classes expressly specified in the act are bound and barred by the proceedings in such cases, in the same manner as if the holder of any such lien had been made a party to the suit. That is the exact situation here, for the mortgage of complainant was not recorded at the time of the filing of the bill in the Sachs foreclosure, and it was therefore under the statute barred by the proceedings in that action. I will advise that the bill be dismissed as to the defendant Mrs. Brower and also as to the property purchased by her from Sachs under the latter's foreclosure proceedings.