Wakeman v. Hazleton.

He

THIS was an appeal from an order of the late vice chancellor of the seventh circuit, denying an application of the complainants for a resale of mortgaged premises, and for other relief. James Skinner, deceased, appointed the complainants his executors, and authorized them to sell his residuary estate and to divide the proceeds thereof among his legatees. They sold a farm in Seneca county, which belonged to their testator's estate, to the defendant E. Hazelton, and took back from him a bond and mortgage for a part of the purchase money. Hazleton afterwards became insolvent and conveyed the mortgaged premises to W. Clark, his father-in-law. The mortgage not being paid, the complainants employed M. S. Hunting, who was not authorized to practice in chancery, to foreclose the same. filed the bill in this cause, in the name of a solicitor residing in an adjoining county, to foreclose the mortgage. And, either through ignorance, or for some other cause which is not explained, he neglected to make Clark a party to the suit; although at the time of the filing of the bill, or within a few days there. after, he was informed that the mortgagor had conveyed all his interest in the premises about a year before, and that Clark was the sole owner of the equity of redemption at the time of the commencement of the foreclosure suit. Hazelton made no objection to the suit upon that ground, but suffered the bill to be taken as confessed; and the usual decree of foreclosure and sale was entered, in the same manner as if he was still the owner of the premises. At the time of the master's sale there was about $1800 due upon the bond and mortgage, and the mortgaged premises were worth considerably more than the amount of the debt and costs. Hazelton and Clark allowed the premises to be struck off to the husband of one of the legatees, for $600. Clark immediately afterwards insisted upon his right to redeem the premises, upon payment of the amount of the bid, on the ground that he had not been made a party to the suit; and he induced the purchaser to relinquish the purchase to him for that sum.

The complainants thereupon applied to the vice chancellor to set aside the sale, and for leave to amend their bill by making Clark, the owner of the equity of redemption, a party to

Wakeman v. Hazleton.

the suit; and for such other relief as might be proper under the circumstances of the case. The vice chancellor denied the motion with costs. He however directed Clark to pay to Ruth Smith, one of the legatees, who was an infant at the time of the master's sale, such a sum as would be equal to her share of the amount which was due upon the bond and mortgage. But he made no provision for the payment of what was due to the other legatees, out of the moneys secured by the bond and mortgage; or for indemnifying the complainants against their liability to those legatees for the loss which would be sustained by the negligence of such complainants as executors, in case the sale was permitted to stand.

A. Gibbs, for the appellants.

E. F. Smith, for the respondent.

THE CHANCellor. It is very evident in this case that if any thing is lost upon the bond and mortgage given to the executors, it will have been occasioned by their negligence in employing a man to foreclose the mortgage, in chancery, who was not authorized to practice, and who suffered the premises to be sold under a decree which was a mere nullity, so far as the rights of the owner of the equity of redemption were concerned. For under such a foreclosure there is no presumption that the mortgaged premises were sold for their value. Nor were the legatees who were adults bound to attend and bid upon the premises, upon a sale under such a decree, for the purpose of preventing a sacrifice of the property. There being no valid foreclosure, the legal effect of the proceeding is the same as if the executors had assigned this bond and mortgage to Clark for $600; when the mortgage was a valid lien upon premises which were worth the whole amount due, including the necessary costs of a proper foreclosure. I do not see any thing, therefore, to protect the executors from personal liability to the legatees in case this sale is permitted to stand. And as Hunting was not an officer of this court, authorized to foreclose the bond and mortgage here,

Wakeman v. Hazleton.

it is more than doubtful whether the complainants could recover against him for his gross neglect in failing to have the mortgage properly foreclosed. I think also, from the facts stated in the papers which were before the vice chancellor, that Hazelton, and Clark his father-in-law, must have been aware of the legal defects in the foreclosure of the mortgage; and that they intentionally suffered the premises to be struck off to Smith, for a small sum, for the purpose of obtaining the property without paying the amount justly due upon the bond and mortgage. The complainants, on the other hand, even if they were aware of the fact that Clark had not been made a party to the foreclosure suit, could not have understood the legal effect of the proceeding, or they would not have allowed the property to be sold under the decree for less than one third of the amount actually due. I think, therefore, that justice to all parties required that the vice chancellor should grant relief; where it could have been done without any injury whatever to Clark, the owner of the equity of redemption in the mortgaged premises. The sale, as well as the imperfect decree under which it was made, should have been set aside upon terms; unless Clark thought proper to pay the balance due upon the decree.

The order appealed from must therefore be reversed. And unless Clark thinks proper, within sixty days after the entry and service of the decretal order upon this appeal, to pay the complainants the balance due upon the decree, after deducting therefrom the amount which he has already paid to Ruth Smith for her share, with the interest thereon, the master's sale and the decree under which it was made, and all proceedings in the suit subsequent to the taking of the bill as confessed against the defendants, are to be set aside; upon the complainant's refunding to Clark the $600, and the amount paid to Ruth Smith, with interest on those two sums from the times they were paid. And the bill in that case must be amended by making the owner of the equity of redemption a party to the suit. If Clark does not pay the balance due upon the decree within the time above specified, the complainants are, within sixty days thereafter, to pay the amount of the bid at the master's

Parsons v. Mumford.

sale and the money paid to Ruth Smith under the vice chancellor's order. And if they neglect to pay or to tender it to Clark or to his solicitor, within the sixty days, their motion is to be denied with costs.

Neither party is to have costs as against the other upon this appeal.

PARSONS VS. MUMFORD and others.

M. being the owner of a farm, in January, 1838, mortgaged the same to R. to secure the payment of $6000 and interest. In June thereafter he again mortgaged it to P. the complainant, to secure the payment of $7000 and interest. In March, 1842, he gave to P. an absolute deed of the premises, and at the same time assigned to him his interest in two previous mortgages thereon; and took back from P. an instrument, not under seal, certifying that he had received such conveyance and assignment, and was to sell and dispose of the farm in such lots, tracts, or parcels, and for such price, and upon such terms, as he might deem expedient; and was to apply the proceeds of such sales, &c. to the payment of M.'s bond and mortgage to himself, and to the payment of the prior bond and mortgage to R.; and pay the surplus, if any, to M. And if it should be necessary or expedient, to foreclose either of the two last mentioned mortgages, to perfect the title to the premises, the costs of the foreclosure were to be paid, as part of the necessary expenses of the execution of the trust. Subsequently P. filed a bill to foreclose the mortgage given to him by M. and obtained the usual decree for foreclosure and sale, with a decree over against M. for the deficiency, if any. At the master's sale, the premises were bid in by P. for the sum of $200, subject to the prior mortgage to R.; leaving a deficiency, due upon the decree, of $9355,59; for which amount the decree was docketed against M. the mortgagor. P. went into possession of the premises and received the income thereof, kept down the interest upon the prior mortgage, and paid the taxes; but the income was insufficient for that purpose. On a bill filed by P., praying that the balance due to him upon his own bond and mortgage, and the interest which he had paid upon the prior bond and mortgage beyond the income of the premises might be ascertained; that the premises might be sold; that he might be permitted to bid at the sale, for the protection of his rights, &c.; and might be permitted to enforce his former decree for the deficiency; Held that this was a case in which the complainant was entitled to relief; and a demurrer to the bill was overruled.

Held also, that taking the whole transaction together-the conveyance from M. to P., and the written defeasance, and the subsequent purchasing in of the premises by

Parsons v. Mumford.

P., at the master's sale-it must be considered merely as a further security of the debt due to P., and that the interest of P. in the premises was in the nature of a mortgage merely.

Held further, that P.'s interest in the premises was subject to an equity of redemption in M., and was not strictly a trust which could enable P. to convey a good title to a purchaser who was acquainted with the facts of the case.

THIS was an appeal from a decree of the vice chancellor of the eighth circuit, allowing a demurrer of the defendant W. W. Mumford, and dismissing the complainant's bill as to him. W. W. Mumford, being the owner of a farm in the county of Monroe, mortgaged it to Robert Ray, in January, 1838, to secure the payment of $6000 and interest. And in June of the same year, he again mortgaged it to E. M. Parsons, the complainant, to secure the payment of $7000 and interest. On the 22d of March, 1842, Mumford gave to the complainant an absolute deed of the premises; and at the same time assigned to him his interest in two previous mortgages upon the premises, and took back from him an instrument, not under seal, certifying that he had received such conveyance and assignment from Mumford, to sell and dispose of the farm in such lots, tracts or parcels, and for such price, and upon such terms, as to payment, as Parsons might deem expedient; and to apply the proceeds of such sales, and the moneys to be received upon the assigned bonds and mortgages, to the payment of the bond and mortgage given by Mumford to him, upon the premises, and to the payment of the prior bond and mortgage to Robert Ray; and to pay the surplus, if any, to Mumford. The instrument given back to Mumford, by the complainant, also stated that if it should be necessary or expedient to foreclose either of the two last mentioned mortgages, to perfect the title to the premises, the costs of such foreclosure were to be paid, as part of the necessary expenses of the execution of the trust.

A few days after the receipt of this conveyance by Parsons, and the giving of such written instrument by him, he filed a bill to foreclose the mortgage given to him, upon the premises, by Mumford, in June, 1838, and making the mortgagor one of the defendants therein; in which foreclosure suit the usual decree VOL. III.

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