Opinion
No. 35580.
March 27, 1944. Suggestion of Error Overruled April 24, 1944.
1. MORTGAGES.
Landowner executing trust deed to secure note had right to convey land to grantee and deed vested the grantee with title to land, subject to lien of the trust deed.
2. MORTGAGES.
The holder of trust deed had right to foreclose trust deed in a way that would vest purchaser at sale of land under foreclosure with title to land free from claim of purchaser who had acquired title from debtor after execution of the trust deed.
3. MORTGAGES.
Where purchaser who had acquired title to land encumbered by trust deed was not made party defendant in suit to foreclose trust deed, the purchaser's title to land remained unaffected by the foreclosure decree and he held the land subject to the lien, if any, of the trust deed.
4. MORTGAGES.
Where purchaser, who had acquired title to land encumbered by trust deed, was not made party defendant to suit to foreclose trust deed, bill of holder of trust deed to cancel the purchaser's deed and for compensation for purchaser's use of land on theory that purchaser's deed was executed pursuant to scheme between purchaser and trust deed grantors to defraud holder of trust deed was demurrable.
APPEAL from the chancery court of Jones county, HON. D.M. ANDERSON, Chancellor.
Jeff Collins, of Laurel, for appellants.
It is the contention of the appellant, Early B. Seale, that the suit, originally brought against Jim Thomas and Neily Thomas, and the decree thereon was void, because, at that time, Early B. Seale held the record title and was in possession of the premises and had been before the filing of the suit and since the execution to him of the warranty deed by Jim Thomas and Neily Thomas, and was therefore a necessary party to the suit to reform and foreclose the deed of trust; and not being made a party to said suit, the proceedings therein were absolutely void, and gave Easterling no right to claim title to said lands under the procedure.
Osborne v. Crump, 57 Miss. 622; Rowe v. Beers, 59 Miss. 371; Champlin v. McLeod, 53 Miss. 484; Cannon v. Barry, 59 Miss. 289; Ross-Meehan Brake Shoe Foundry Co. v. Pascagoula Ice Co., 72 Miss. 608, 18 So. 364; Phipps v. Tarpley, 24 Miss. 597; Wofford v. Board of Police of Holmes County, 44 Miss. 579; Code of 1930, Secs. 921, 2110, 2128; Griffith's Mississippi Chancery Practice, Secs. 117, 122.
See also Lemmon v. Dunn, 61 Miss. 210; McPike v. Wells, 54 Miss. 136; Bibb v. Wilson, 31 Miss. 624; Gates v. Union Naval Stores Co., 92 Miss. 227, 45 So. 979; Carman v. Watson, 1 How. (2 Miss.) 333; Burroughs v. Jones, 78 Miss. 235, 28 So. 944; Terry v. Unknown Heirs of Gibson, 108 Miss. 749, 67 So. 209; Clayton v. Merrett, 52 Miss. 353; Smith v. Denny Co., 90 Miss. 434, 43 So. 479; Griffith's Mississippi Chancery Practice, Secs. 109, 110.
The allegation of alleged fraud does not set up any fraud, but sets up a perfectly bona fide transaction. The allegation of fraud is only the conclusion of the pleader. What does the bill allege as to fraud? It alleges that the appellant, Early B. Seale, bought a piece of land, upon which appellee had a mortgage, and that Early B. Seale knew that appellee had a mortgage on the land, and so did the mortgagor. Now that is absolutely all there is to it. The mortgagor certainly had the equity of redemption. That is admitted. He certainly had a right to give a warranty deed to it to Early B. Seale. He did not have to get the permission of the mortgagee to do it. From the allegations of the bill, the mortgagor told the vendee that Easterling had the deed of trust. So where is the fraud? What was done, as alleged in this bill, is being done under the law every day. It is legal. It is not fraudulent. It does not take one right against or away from the mortgagee. He can still foreclose his deed of trust, when he gets ready, so long as it is not barred by the statute of limitations. He can reform it, if he has, or had, any right of reform. There is absolutely no fraud in the transaction. But when he goes to foreclose or reform in chancery he must bring in the vendee, Early B. Seale.
But, you say, the complainant has brought all parties into court in this suit, including Early B. Seale. Why can you say that he may not reform the deed of trust, foreclose his mortgage, and set aside your deed in this suit? Here is the answer: Because the statute of limitations has run against his note and deed of trust, before he filed this suit. This is shown by the record. In other words, I stand or fall upon the record. Hence, I ask the court for a careful consideration of the case, even if it is upon a decree overruling a demurrer to the bill of complaint.
A.S. Scott, of Laurel, for appellee.
Before a sale under a mortgage or deed of trust, the mortgagor or grantor shall be deemed the owner of the legal title of the property conveyed in such mortgage or deed of trust, except as against the mortgagee and his assigns, or the trustee after breach of the condition of such mortgage or deed of trust. But where the debt has been assigned, upon default, title to mortgaged property vests in assignee with right to seize and sell conferred by mortgagee.
Elder v. Jones, 106 Miss. 489, 64 So. 212; Code of 1930, Sec. 2128.
Appellants say before the deed of trust can be foreclosed that the defendant, Early B. Seale, must be made a party. But we say that appellee positively had the right to file suit against the Thomases and stop the running of the statute of limitation. The court decreed that the Thomases owed appellee the money and declared a lien on the land and appointed a commissioner to sell the land and we say this stopped the running of the six year prescription. Of course it did not affect Seale's rights until he has had his day in court. That is what we are trying to give him in the case at bar. Appellants' brief goes off on the false premise that the appellants should win this law suit because the appellee is barred by the statute of limitations. Yet no authority is cited to sustain this assertion. When appellee filed suit against the mortgagors and asked judgment against the Thomases and the court so decreed then the statute of limitation stopped running. And in the case at bar where the bill of complaint alleged that the Thomases and Seale did not have their transaction of conveyance until long after the deed of trust in question was in default, with their full knowledge thereof, then Section 2128, Code of 1930, steps in and aids the chancellor in his decision to overrule the demurrer filed in the case at bar. In the first suit a judgment or decree was asked and obtained against the mortgagors, the Thomases; a personal decree against said defendants so that if the land did not bring enough to pay the debt other property belonging to the Thomases could be levied upon. This fact shows that the Thomases were essential parties, and we never have denied that Seale was certainly a necessary party-defendant. All that we have contended for is that appellants are wrong in their contention that the first suit against the Thomases, even if Seale was omitted as a defendant, did not stop the running of the statute of limitation. The judgment against the Thomases clearly stopped the running of the statute. There certainly is a valid decree as against the Thomases, and when we bring Early B. Seale into court charging that he was a fraudulent purchaser, well knowing that the deed of trust was long since in default at the time the Thomases' deed was made to him, then we have made out a case which he will have to answer. If appellee had not recovered a personal decree against the Thomases on the promissory note and the foreclosure proceedings not been within six years of January 1, 1937, then appellants' contention might hold water. Not otherwise. The first suit was good as against everyone, except Seale. And we say that at anytime appellee found out that the Thomases and Seale entered into the fraudulent transaction, when all three knew the deed of trust to appellee was in long default, that appellee rightly can bring Seale into a court of equity under Section 2128, Code of 1930. What if Seale, instead of demurring to the bill of complaint, had tendered or offered to pay the mortgaged debt? Under our allegation in the bill, would a court of equity consider he had acquired any title in the face of Section 2128, Code of 1930? Certainly, no legal title passed to Seale. If Seale bought a right of redemption he has not offered to redeem anything. After the breach of condition, a mortgagor nor his sub-vendee, even under an irregular or voidable, or void, foreclosure, after breach of the condition of the mortgage, has the right to question the possession of mortgagee without first paying the debt.
Helm v. Yerger, 61 Miss. 44, 51; Bryan v. Brasins, 162 U.S. 415, 16 S.Ct. 803, 40 L.Ed. 1022.
In the case at bar, if Seale had been the complainant a court of equity would decline to entertain his bill for relief against an invalid foreclosure sale without a tender or offer to pay the mortgage debt.
American Freehold Land Mortgage Co. v. Jefferson, 69 Miss. 770, 12 So. 464, 469.
As was said in Wirtz v. Gordon, 187 Miss. 866, 184 So. 798: "As against the mortgagors and the devisees under the will of E.H. Faison, deceased, the legal title of the land, together with the right of possession, passed to the trustee by operation of Section 2128 of the Code of 1930 at the time of default long prior to the foreclosure suit." Citing Buck v. Payne, 52 Miss. 271, and Elder v. Jones, supra. Neither can the trustee after condition broken be divested of the legal title and right of possession.
American Freehold Land Mortgage Co. v. Jefferson, supra.
We most respectfully submit that the chancellor did not err in overruling appellants' demurrer and that this cause should be affirmed.
Wood v. Peerey, 179 Miss. 727, 176 So. 721; Thomason v. Neeley, 50 Miss. 310; Shaw v. Millsaps, 50 Miss. 380; Pulliam v. Taylor, 50 Miss. 551; Code of 1942, Sec. 265.
This is an appeal from a decree overruling a demurrer to a bill of complaint. It appears in substance from the bill of complaint and the exhibits thereto that in February, 1936, Nelia Rayford Thomas, the then owner of the N.W. 1/4 of the S.W. 1/4, Section 2, Township 9, Range 14, and her husband, Jim Thomas, executed and delivered to the appellee a deed of trust thereon to secure the payment of a promissory note from them to the appellee, due on January 1, 1937. On February 16, 1940, while this promissory note remained due and unpaid, the Thomases executed and delivered to the appellant a warranty deed to the land, the consideration therefor being "One Hundred and No/100 Dollars, cash and the assumption of certain indebtedness due the Federal Land Bank of New Orleans, Louisiana." On the day of its execution, this deed was filed with the chancery clerk and duly recorded in the record of deeds. In April, 1940, the appellee exhibited an original bill of complaint against the two Thomases only, praying for a foreclosure of the deed of trust executed by them to him. On August 6, 1940, a decree was rendered in accordance with the prayer of the bill under which the land was sold by a commissioner appointed for that purpose and purchased by the appellee; the commissioner's deed to the appellee thereto being confirmed by the chancellor on the 14th of June, 1941. In August, 1943, the appellee's bill of complaint now under consideration was filed against the appellant setting up the foregoing facts and charging that the appellant's deed to this land was executed pursuant to a scheme entered into by him with the Thomases "to injure and defraud complainant" when all of them well knew that the Thomases had executed and delivered to the appellee a deed of trust on the land to secure the payment of a debt which then remained unpaid. The prayer of the bill is for the cancellation of the appellant's deed to the land and for the awarding to the appellee compensation from the appellant for the use by him of the land.
The Thomases had the right to convey this land to the appellant, and the deed thereto vested the appellant with the title to the land, subject to the lien of the appellee's deed of trust. The appellee had the right to foreclose this deed of trust in a way that would vest the purchaser at the sale of the land under the foreclosure with title to the property freed from the appellant's claim thereto. This, however, the appellee did not do. In order for the appellant to be in any way affected by the foreclosure of the deed of trust in the suit in equity instituted by the appellee therefor, the appellant should have been made a party defendant thereto. Not having been made such a party, his title to the land remains unaffected by the decree there rendered. In other words, he holds the land subject to the lien, if any, of the appellee's deed of trust, the existence vel non of such a lien not being now before us. Griffith's Chancery Practice, sec. 117; 42 C.J. 49; 3 Jones on Mortgages, sec. 1793; Rowe v. Beers, 59 Miss. 371. The demurrer to the bill of complaint should have been sustained.
Reversed and remanded.