Opinion
No. 32211.
May 18, 1936.
1. APPEAL AND ERROR.
On interlocutory appeal after overruling of demurrer in suit to set aside sale of mortgaged property, contention that complainant could not maintain bill without tender of her proportion of mortgage indebtedness held not reviewable where such point had not been mentioned in any of grounds of demurrer.
2. MORTGAGES.
In suit to enjoin or set aside sale of mortgaged property, absence of sufficient tender in bill cannot be availed of by general demurrer, but such defense must be particularly pointed out by demurrer.
3. APPEAL AND ERROR.
Where defendants presented point on interlocutory appeal, after overruling of demurrer, which had not been before chancellor, before whom two of defendants had neither answered nor demurred, and pleadings disclosed questions not touched by demurrer, allowance of appeal held unauthorized, requiring dismissal.
APPEAL from chancery court of Sunflower county. HON. H.P. FARISH, Special Chancellor.
Everett, Forman Everett, of Indianola, and Maynard, FitzGerald Venable, of Clarksdale, for appellant.
It is the principle running through all the equity jurisprudence that where one seeks affirmative relief from a court of equity, that he must himself do equity with respect to the subject matter involved; that is, he must do or offer to do whatever is necessary to accord to defendant his just rights in the subject matter involved in litigation. This principle has been applied to innumerable situations.
Ala. Vermont Railroad v. Thomas, 86 Miss. 27; Foster v. Campbell, 145 Miss. 502; Strickland v. Webb, 152 Miss. 421; Alabama Code of 1907, sections 5443-5449; Kelly v. Cocke, 69 So. 576, 193 Ala. 271; Hammond v. Oakley, 154 So. 906, 228 Ala. 588; Johnson v. San Francisco Savings Union, 75 Cal. 134, 7 A.S.R. 129; 5 R.C.L., Cloud on Title, par. 36; Keller v. Souther, 26 N.D. 358, L.R.A. 1916B, 1218; Raggio v. Palintag, 155 Cal. 797, 103 P. 312; Sawyer v. Vermont Loan Tr. Co., 41 Wn. 524, 84 P. 8; Harsh v. Griffin, 72 Iowa, 608, 34 N.W. 441; Haggart v. Wilczinski, 143 Fed. 22, 74 C.C.A. 176; Gravelle v. Mortgage Co., 42 Wn. 457, 85 P. 36; Bryan v. Penny, 162 U.S. 419, 40 L.Ed. 1023; Bryan v. Brasius, 162 U.S. 415; Wright v. Harris, 221 Fed. 736, 40 L.Ed. 1022; Equitable Mrtge. Co. v. Gray, 68 Kan. 100, 74 P. 614; Stouffer v. Harlem, 68 Kan. 135, 104 A.S.R. 396; Rogers v. Benton, 39 Minn. 39, 12 A.S.R. 613; Robinson v. Ryan, 25 N.Y. 320; Brown v. Kales, 162 U.S. 411, 40 L.Ed. 1020; Bruschke v. Wright, 166 Ill. 183; 57 A.S.R. 125; Ann. Cas. 1917D, 578.
In the absence of the doing of equity by the payment of the debt secured by the mortgage, a suit for partition or an action to quiet title will not lie.
Stoffelo v. Nugent, 217 U.S. 499, 54 L.Ed. 856; 40 L.R.A. (N.S.) 845; 42 A.S.R. 68; 10 L.R.A. 296; Clark v. Wilson, 56 Miss. 753; Martin v. Kelly, 59 Miss. 652; Bonner v. Leslie, 61 Miss. 392.
There is no equity on the face of the bill because it appears from the will, made an exhibit thereto, that the executrix had full and unlimited power to agree to the sale of the property for the payment of the debts and that the complainant and her sister, minors, were not necessary parties to the foreclosure proceedings.
Our contention here is that the executrix, made a party to the bill of foreclosure as defendant, in effect agreed to the foreclosure as a method of paying and satisfying the indebtedness; that this was an exercise of her powers of disposition under the will, and there being such an exercise, the minors could not in any wise object though they were not made parties to the bill of foreclosure by proper process.
Valentine v. Wysor, 123 Ind. 47, 7 L.R.A. 788; Mutual Life Ins. Co. v. Woods, 121 N.Y. 302, 24 N.E. 602; Jones v. Lofton, 38 N.C. 136; Sydnor v. Palmer, 29 Wis. 226.
Our position is that as trustee she is their representative so that it was not necessary to make them parties to the proceeding in foreclosure, they being represented by her, and their interests being fully represented by her.
Kolb v. Bennett Loan Co., 74 Miss. 567; Clark v. Hornthal, 47 Miss. 434.
It seems to be the rule that in the case of a power coupled with an interest, or a power coupled with a trust, all that is required is a substantial compliance with the terms of the instrument creating the power.
Rowe v. Beckel, 30 Ind. 154, 95 A.D. 676; Taylor v. Benham, 5 How. (U.S.) 233, 12 L.Ed. 130; Crampton v. Rutledge, 163 Ala. 649, 136 Am. St. Rep. 94; Greenway v. White, 196 Ky. 745, 32 A.L.R. 1385; 21 C.J., sec. 292; Veterline v. Barnes, 124 U.S. 169, 31 L.Ed. 400; Wegman Piano Co. v. Irvin, 107 Ga. 65, 73 Am. St. Rep. 109; Winslow v. Minn., etc., R.R., 4 Minn. 313, 77 Am. Dec. 519; Smith v. Gaines, 39 N.J. Equity 545; Hancock v. Wooten, 107 N.E. 911, L.R.A. 466; Jackson v. Tallmedge, 158 N.E. 48, 246 N.Y. 133.
Under the terms of the deed of trust, the trustee is given the power to represent all bondholders and be the complainant in the foreclosure proceedings, and is also given the power to take in his own name a decree for deficiency. The mortgagors agreed to these stipulations and their heirs are bound by it, so complainant cannot complain of these features of the foreclosure proceedings, she being in privity with her ancestor, the mortgagor.
The trustee represents the beneficiaries in any judicial proceedings for the administration of the trusts.
Richter v. Jerome, 123 U.S. 233; Kerrison v. Stewart, 93 U.S. 155, 23 L.Ed. 843; Corcoran v. Chesapeake Ohio R.R., 94 U.S. 741, 24 L.Ed. 190; Shaw v. Little Rock Fort Smith R.R. Co., 100 U.S. 605, 25 L.Ed. 757; Jones on Mortgages, sec. 1383; Smith v. Bell, 217 Fed. 243; Seibert v. Minneapolis, etc., R.R. Co., 52 Minn. 148, 20 L.R.A. 535, 38 A.S.R. 530; Hackensack Water Co. v. DeKay, 36 N.J. Eq. 548; Alabama Vicksburg R.R. Co. v. Thomas, 86 Miss. 227; 41 C.J., sec. 1094.
Though a deed of trust contains provisions for foreclosure by exercise of power of sale, foreclosure by suit in equity is optional.
Smith v. Cleveland Steam Laundry, 131 Miss. 254; Cary v. Fulmer, 74 Miss. 729; Green v. Gaston, 56 Miss. 748; McDonald v. Vinson, 56 Miss. 497; McAllister v. Plant, 54 Miss. 106; Thompson v. Howze, 48 Miss. 444.
The rule that the trustee represents beneficiaries and can bring suits or take any action necessary to enforce a trust, is a rule of reason and common sense, due to the consideration that deeds of trust secure notes and bonds that come into the hands of innumerable people and frequently a mortgage or deed of trust secures notes or bonds represented by hundreds of different bonds in the hands of different holders, and the necessity of making all bondholders parties to the litigation in many instances would prove costly and oppressive. The purpose of appointing a trustee is to represent the interests of the parties.
That the trustee has the power to file a suit on behalf of the beneficiaries is because after condition is broken the legal title to the property is vested in the trustee. He, therefore, is a necessary party to any suit to foreclose a deed of trust.
Moyse v. Cohn, 76 Miss. 590; Harlow v. Mister, 64 Miss. 25.
The trustee has a legal title dedicated to the payment of the debts, and he is the proper person to call in the assistance of the court in carrying out his trust.
Even though the bondholders were made parties, appellee cannot complain.
Alabama Vicksburg R.R. Co. v. Thomas, 86 Miss. 227.
Only those persons can complain on appeal who are injured by error. Only those who are aggrieved by an action of court can complain or assign this as error.
Barrett v. Carter, 69 Miss. 593.
Moody Johnson, of Indianola, for appellee.
The other bond owners, secured by the deed of trust, were necessary and indispensable parties in a suit to foreclose the deed of trust.
42 C.J. 41, sec. 1553; Nashville Decatur R.R. Co. v. Orr, 21 L.Ed. 810; McPike v. Wells, 54 Miss. 136.
Necessary or indispensable parties are those without whom the court will not proceed even as to the parties before it. This class includes all persons who have an interest in the controversy of such a nature that a final decree cannot be made without either affecting their interests or leaving the controversy in such a condition that its final termination may be wholly inconsistent with equity and good conscience. Accordingly, persons whose interest will necessarily be affected by any decree that can be rendered are necessary and indispensable parties, and the court will not proceed to a decree without them.
21 C.J. 273, sec. 276; Mallow v. Hinds, 12 Wheat (U.S.), 193, 6 L.Ed. 599; McPike v. Wells, 54 Miss. 136; Griffith's Chancery Practice, page 117; 42 C.J., page 47, sec. 1563, page 53, sec. 1576; Byrne v. Taylor, 46 Miss. 95.
The complainants, in cause No. 5988, knew these two minors, as the children of E.H. Faison, were necessary and indispensable parties. Not only did the complainants know that but they were in fact made necessary parties as defendants.
The suit to foreclose, or to enforce the lien of the deed of trust, was not merely against Mrs. Faison, as executrix of the estate, but as well against Mrs. Faison, individually, and her two minor children, as joint owners of the land subject to the deed of trust. The trouble is, and this constitutes the fatal defect in the proceedings, that the cause was finally heard before the court obtained jurisdiction of the two minor defendants, joint owners with Mrs. Faison of the land. No process was served, or attempted to be served on these minor defendants. This was absolutely necessary before the court, in said cause, could acquire jurisdiction of them.
Griffith's Chancery Practice, page 117, page 273, sec. 276, and page 277, sec. 277; 42 C.J., page 47, sec. 1563, and page 53, sec. 1576; Byrne v. Taylor, 46 Miss. 95.
As we understand the law, a trustee, testamentary or otherwise, is the person who takes and holds the legal title to the trust property for the benefit of another.
39 Cyc. 19.
Neither an executrix nor an administrator has, as such, any inherent interest in, title to, or control over the realty of a decedent.
18 Cyc. 297.
It cannot be said, after a full and careful examination of the will, that the testator vested, or attempted to vest, the legal title to his real estate in the executrix.
18 Cyc. 299; 11 Enc. of Law (2 Ed.), 1035.
In the instant case the land was expressly devised to the heirs, and not to the executrix.
Cohea v. Jemison, 10 So. 46.
Inasmuch as the lands were specifically devised to the wife and children of the testator, the legal title as a consequence became vested in them, and they are all necessary and indispensable parties in any suit that may be filed to enforce the lien of a deed of trust thereon, executed by the testator. If it were otherwise they could be deprived of their title to the lands in a suit wherein they were not parties.
Even if the demurrer had assigned, as a ground thereof, the failure of the complainant to offer to do equity, yet the decree of the court overruling the demurrer would not, because of that, be reversed for the lower court, on remand, will protect the equities of the appellant.
Belt v. Adams, 86 So. 584; Belt v. Adams, 87 So. 666; Freeman v. Cunningham, 57 Miss. 67; Beckett v. Dean, 57 Miss. 232; 37 Cyc. 454.
As to the rights of a purchaser at an administrator's sale, which was not confirmed, see Pool v. Ellis, 1 So. 725.
What is true as to an administrator's sale is equally true as to the void trustee's sale. In such a case the purchaser, to the extent that the amount bid went in payment of the debt secured by the deed of trust, is a mortgagee in possession. But he is not a mortgagee in possession to the extent of the entire debt secured by the deed of trust. Surely it would be absurd to hold that such a purchaser, as a mortgagee in possession under an invalid sale, would be entitled to the rents up to the amount of the unpaid debt secured by the deed of trust, when he, by his bid, only paid a part thereof. No case that we have been able to find so holds.
Clark v. Wilson, 56 Miss. 753; Bonner v. Lessly, 61 Miss. 392.
Appellee is the daughter of Edmond H. Faison, deceased, who, during his lifetime, executed a bond mortgage or deed of trust upon all the lands involved in this suit. Faison died on November 11, 1926, leaving a will which was duly probated, under the terms of which appellee asserts that she was and is a devisee of a one-third interest in the said lands. On or about April 15, 1933, appellant Wirtz filed a bill to foreclose the bond mortgage or deed of trust aforementioned, averring therein that he was then the owner of a portion of the bonds secured by said mortgage or deed of trust, and he was joined in the bill, as complainant, by one Hachmeister, as successor trustee. Appellee, then a minor, was named as a party defendant to the bill of foreclosure, but was never served with summons. Instead thereof, the mother of appellee attempted to execute a waiver of process for appellee. The foreclosure suit proceeded to final decree, and, at the judicial sale ordered therein, the appellant Wirtz became the purchaser, received the commissioner's deed, and entered into possession of the land.
Thereafter, about June 3, 1935, and after appellee had attained the age of twenty-one years she filed her bill against Wirtz, and four others, seeking to set aside the said judicial sale and the commissioner's deed executed in pursuance thereof, and to vacate the entire foreclosure proceedings so far as appellee is concerned, because she was never served with summons, as required by law, and, therefore, was not in fact a party to the foreclosure suit. Wirtz and two other defendants answered appellee's bill and made their answer a cross-bill. And in their answer they incorporated a demurrer. There are four stated grounds of demurrer. The first ground is that the bill presents no cause of action; the second is that the bill fails to disclose that appellee was ever vested with any interest in the lands; the third is that the exhibits filed with the bill show that appellee had no cause of action; and the fourth ground is that Hachmeister, successor trustee, was not joined as a party defendant to appellee's bill. The demurrer was heard in advance, as is permitted by our procedure, and was overruled, but instead of proceeding to trial upon the full merits of the case, the court attempted to allow an interlocutory appeal "to settle all of the controlling principles involved in the case and to avoid expense and delay."
Upon turning to the brief of appellant, we find that the first point there entered upon, and which point embraces one-third of the pages of the argument, is that appellee cannot maintain her bill because she has not offered to do equity by tendering into court her proportion of the mortgage indebtedness — a point which was not mentioned in any of the grounds of demurrer, and which therefore was not before the trial court and is not before this court. It was settled in McDonald v. Kamper, 89 Miss. 221, 224, 42 So. 877, that the absence of a tender or of a sufficient tender in a bill cannot be availed of by a general demurrer, but that particular ground must be specially relied on by a demurrer which particularly points out this as a ground. This ruling is in accord with the principles of equity procedure upon the subject. See Griffith, Miss. Chan. Prac., pp. 295, 568.
Thus there is presented an attempted appeal to settle all the controlling principles of the case when the very first point argued and insisted upon was not presented to the trial court and is not pleaded in such manner that it may be considered here. And thus it is at once obvious that the appeal would not settle all the controlling principles of the case. In Moore v. White, 161 Miss. 390, 137 So. 99, we held that where an important point was attempted to be brought into the case on appeal which was not before the chancellor, no interlocutory appeal would lie.
What has been above said is enough to dispose of this supposed appeal, and leaving aside the fact that the demurrer is by three of the five defendants, the other two defendants not having answered or demurred, and no decree having been taken against them, Federal Land Bank v. Kimbriel (Miss.), 163 So. 501, but we must add that a careful examination of the bill, the answer, and the cross-bill discloses that there are important legal questions presented which are not touched by the demurrer in the answer or by the assigned grounds thereof, and which could not become the subjects of a demurrer under the state of the pleadings. The allowance of the interlocutory appeal was unauthorized and improvident, therefore, not only for the reasons stated, but for other reasons apparent upon the face of the pleadings and exhibits. It is apparent that the precise merits of this case cannot be fully understood and the correct legal principles safely applied until there has been a complete development of the case on all the facts. For fifty years, beginning with Ward v. Whitfield, 64 Miss. 754, 2 So. 493, and as particularly pointed out in Liberty Trust Co. v. Planters' Bank, 155 Miss. 721, 124 So. 341, and more recently in Stirling v. Whitney Nat. Bank, 170 Miss. 674, 150 So. 654, this court has admonished and protested against these interlocutory appeals, so often illegally allowed. And as to the alleged ground that such an appeal, as in this case, would avoid expense and delay, it is plain that the exact opposite has happened here and does happen, except in extremely rare cases.
Appeal dismissed.