Opinion
March Term, 1858
E.W. Chester, for the appellant.
Charles H. Glover, for the respondent.
The appellant was clearly entitled, when he commenced the action, to a judgment for a specific performance of the contract with Draper. If a conveyance to him had been executed at that time, he would have acquired by it, as an incident, the equitable right to require the mortgagees in the two mortgages on those premises, with others, to seek satisfaction, upon a foreclosure, by a sale in the first instance of that portion of the mortgaged premises still owned by Draper, after the conveyance to the appellant. It is a familiar principle of equity that when mortgaged premises are sold, subsequent to the mortgage, to different purchasers in parcels, the parcels, on foreclosure, are to be sold in the inverse order of their alienation, according to the equities of the respective purchasers in regard to the payment of the mortgage. ( Stuyvesant v. Hall, 2 Barb. Ch. R., 151; Guion v. Knapp, 6 Paige, 35; Howard Ins. Co. v. Halsey, 4 Seld., 271.) When sufficient is realized by the sale of one or more parcels to pay the mortgage debt and costs, the remaining parcels are of course discharged of the lien.
It is supposed by the counsel for the appellant that it was necessary, in order to secure to the appellant this equitable right, to make the mortgagees parties defendants to the action. The argument is, that Draper might, before the appellant could compel the execution by him of a deed of the premises embraced in the contract, and put it on record, sell the residue of the mortgaged premises to a bona fide purchaser, who would have priority over him in respect to the order of sale of the premises on the foreclosure of the mortgages; that the filing of a notice of lis pendens, if the action was against Draper alone, would not be notice to subsequent purchasers of that part of the premises not embraced in the contract; and that to make it notice to them, the mortgagees must also be defendants. This argument is radically erroneous in the view taken by it of the operation of the notice of lis pendens, in case Draper was the sole defendant. The notice in that case would be notice to a purchaser, pendente lite, of any portion of the mortgaged premises, precisely as the record of a deed from Draper to the appellant of the parcel contracted to him would be notice of the conveyance. It would be as much the duty of the purchaser, in investigating the title of a parcel he was about to purchase, to look for a notice of lis pendens in a litigation involving another parcel covered by the mortgage, as to look for the record of a deed of the latter parcel. The action would involve the right of priority in the sale of the parcels on a foreclosure of the mortgages, as an incident to the conveyance, and thus the case would be within the established rule, that the filing of a notice of lis pendens is notice of the action, and of the rights of the plaintiff set forth therein, to all purchasers of any part of the subject of the litigation pending the action. ( Parks v. Jackson, 11 Wend., 442, and cases there cited; Stuyvesant v. Hall, 2 Barb. Ch. R., 160.) Uniting the mortgagees in the action with Draper as defendants, makes no difference in regard to the operation of the notice filed. They had not the legal title to the premises mortgaged, and could not convey them; and subsequent purchasers from Draper would not be bound to look for, or be chargeable with notices of lis pendens against the mortgagees. The filing of such notices against Draper only would be notice to such purchasers, whether the mortgagees were or were not joined with him in the action. The only notice required to secure to the appellant all his equitable rights would be that the appellant had made the contract with Draper and was entitled to a deed under it. It would not be necessary to give notice of any of the matters in the complaint in this action, not essential to the action as between the appellant and Draper. Notice of that matter would be notice of all the rights arising from it. It is obvious, therefore, that there was no necessity for the protection of the equitable right of the appellant to make, or any propriety in making, the mortgagees defendants.
It is further claimed by the appellant's counsel, in connection with the position above considered, that the rights of the mortgagees in regard to the order of sale of the different portions of the premises mortgaged rendered them necessary parties; and also that they had an interest in the application of the moneys to be paid by the appellant, in view of which they might properly be brought into court. Aside from the prayer of an injunction against a sale by the mortgagees of the portion of the premises embraced by the contract, unless the proceeds of sales of the rest of the mortgaged premises on foreclosure should be insufficient to satisfy the mortgages and costs, it is not easy to see what interest they have in the action or what answer they could make to the complaint. They have no interest in the question of the making of the contract, and the right of the appellant under it to a conveyance; they could allege nothing against a conveyance, because the duty might be imposed upon them of selling the mortgaged premises in parcels. If, when they come to foreclose their mortgages, it shall be of any moment to them whether the premises be sold in parcels or otherwise, then, and not until then, will be the proper time to raise the question as to the order of sale. Their mortgages, and that they are liens upon the whole premises, are admitted; there is not in the complaint any ground for controversy as to the amount due on the mortgages; and no relief is prayed, interfering in any manner with their interests, or any asked against them; nor is there any foundation laid for any judgment against them.
[The learned judge, after quoting the language of Lord COTTENHAM, in Tasker v. Small (3 Myl. Craig, 63), and citing Mole v. Smith ( Jacob, 490, 494); Wood v. White (4 Myl. Craig, 460); Robertson v. The Great Railway Company (10 Simons, 314); 1 Dan. Ch. Pr., 442, proceeded:]
There is no ground for the injunction asked against the mortgagees. The order of sale of premises owned by different persons in parcels is to be determined in reference to the equities when the sale is ordered. It cannot be determined before, as it cannot be known what equities may arise before the order for sale. Nor can the mortgagees properly be called into court to litigate a question which may arise, but has not actually arisen. In Pelham v. Gregory (1 Eden, 520), Lord NORTHINGTON said he "had no apprehension that any person could have a right to call another into the court to make him contest here by anticipation, a future legal right; and that he had as little conception that the court, when such a right was brought there, had any jurisdiction to take cognizance of it." There is no difference in principle, in this respect, between a legal and equitable right.
The point in this case is so well considered and so clearly settled in Tasker v. Small (3 Myl. Craig, 63) that it will be only necessary for me, in disposing of this case, to repeat a part of Lord COTTENHAM'S judgment: "Generally, to a bill for a specific performance of a contract of sale, the parties to the contract are the only proper parties; and when the ground of the jurisdiction of courts of equity in suits of that kind is considered, it could not properly be otherwise. The court assumes jurisdiction in such cases because a court of law, giving damages only for the non-performance of a contract, in many cases does not afford an adequate remedy; but in equity as well as in law, the contract constitutes the right and regulates the liabilities of the parties, and the object of both proceedings is to place the party complaining as nearly as possible in the same situation as the defendant had agreed that he should be placed in. It is obvious that persons, strangers to the contract, and therefore neither entitled to the rights nor subject to the liabilities which arise out of it, are as much strangers to a proceeding to enforce the execution of it as they are to a proceeding to recover damages for the breach of it." He then proceeds to consider whether a prior mortgagee stands in such a relation to the property that he can be made a party by the purchaser of the equity of redemption, and holds that until the purchase is actually completed the party to the agreement could not even maintain a bill to redeem the prior mortgage, which would be the extent of his right upon the completed execution of the contract by a conveyance of the equity of redemption. And he adds: "The prior mortgagee has no interest in the specific performance of the contract; he is no party to it, and the performance of it cannot affect his security or interfere with his remedies."
These principles and consequences are plain and familiar, and they are quite irreconcilable with the relief which the appellant seeks. The judgment should be affirmed.
All the judges concurring,
Judgment affirmed.