Crystal River Lumber Co. v. Knight Turpentine Co.

• Decision Date: 04 March 1915
• Citation: 69 Fla. 288,67 So. 974
• Court: Florida Supreme Court
• Parties: CRYSTAL RIVER LUMBER CO. v. KNIGHT TURPENTINE CO. et al.

67 So. 974

69 Fla. 288

CRYSTAL RIVER LUMBER CO. v. KNIGHT TURPENTINE CO. et al.

Florida Supreme Court

March 4, 1915

On Rehearing, March 30, 1915.

Appeal from Circuit Court, Citrus County; W. S. Bullock, Judge.

Bill by the Knight Turpentine Company, a corporation, and another against the Crystal River Lumber Company, a corporation. From an order overruling a demurrer to the bill, and an order denying petition for rehearing on the demurrer, defendant appeals. Affirmed, and rehearing denied.

Cockrell J., dissenting.

Syllabus by the Court

SYLLABUS

When for any reason, foreclosure proceedings are imperfect irregular, or void, the purchaser at the sale becomes subrogated to all the rights of the mortgagee in and to the mortgage and the indebtedness that it secured, and becomes thereby virtually an equitable assignee of such mortgage and of the debt that it secured, with all the rights of the original mortgagee, and becomes entitled to an action de novo for the foreclosure of such mortgage against all parties holding junior incumbrances or the legal title, who had been omitted as parties to such original foreclosure proceedings under which he bought.

Though, in enforcing a mortgage lien upon lands, the existence of contract rights in the land acquired subsequent to the mortgage is known to the mortgagee, and such contract holders are not made parties to the foreclosure proceedings, a subsequent foreclosure of such contract rights may be had upon equitable principles.

COUNSEL Anderson & Anderson, of Ocala, for appellant.

H. M. Hampton and Hocker & Martin, all of Ocala, for appellees.

OPINION

WHITFIELD J.

This appeal is from an order overruling a demurrer to a bill of complaint, and from an order denying a petition for a rehearing upon the demurrer. The bill of complaint in effect alleges that R. J. Knight executed mortgages on certain lands to secure an indebtedness; that, subsequent to the execution of the mortgages, the mortgagor executed to the Crystal River Lumber Company a contract to convey the timber on the land, with the right to take the timber from the land during a long term of years; that the mortgage liens were held by the Consolidated Naval Stores Company and were enforced by foreclosure proceedings, in which a decree for $18,270.46 was rendered, but the Crystal River Lumber Company, who was the holder of the contract for the conveyance of the timber and incidental rights in the land, was not made a party to the foreclosure proceedings, for the reason that said Crystal River Lumber Company had 'ceased sawmill operations, and, having dismantled its mill and moved away,' 'it was the belief of all parties connected with the transaction that said company would not thereafter make any claim under said contract'; that the lands were bought at foreclosure sale for $15,000 by the mortgagee, who 'sold and conveyed all of the said property, and all of its rights under the said mortgage, * * * which it acquired by and through said sale' to the appellee Knight Turpentine Company; that the mortgagee purchaser at the sale 'has transferred, assigned, set over, and sold to * * * Knight Turpentine Company all of its rights therein, both under the said purchase at said master's sale and under the said mortgages'; that the Knight Turpentine Company sold and conveyed to the appellee the Pine Lumber Company the lands in controversy, reserving all the timber upon the lands; that a deficiency decree against Knight, the mortgagor, would be of no value, because said Knight was and is utterly insolvent; that the premises purchased at the foreclosure sale was not of the value bid therefor if the contract right of the defendant is valid; that the Crystal River Lumber Company is making some claim of title or right to the timber on the land, which asserted claim is inferior to complainants' rights acquired under the mortgage forclosure. The Knight Turpentine Company and the Pine Lumber Company brought this suit against the Crystal River Lumber Company to subject the contract held by the latter company for the conveyance of the timber rights and giving other incidental rights in the lands to the payment 'of the sums of money remaining due upon the mortgages.' A demurrer to the bill of complaint was overruled, and defendant appealed.

The rights of the appellant Crystal River Lumber Company in the lands were acquired subsequent to the mortgage liens; and, as the appellant was not a part to the proceedings to enforce the liens, its rights were not affected thereby. Such contract holder had a right to pay off the mortgage debts and redeem the land itself. See Dundee Naval Stores Co. v. McDowell, 65 Fla. 15, 61 So. 108; Burns v. Hiatt, 149 Cal. 617, 87 P. 196, 117 Am. St. Rep. 157.

The purchaser of property at a foreclosure sale for the full amount due on the decree of foreclosure, when, for any reason, the foreclosure proceedings are imperfect, irregular, or void, becomes subrogated to all the rights of the mortgagee in and to such mortgage and the indebtedness that it secured, and becomes thereby virtually an equitable assignee of such mortgage and of the debt that it secured, with all the rights of the original mortgagee, and becomes entitled to an action de novo for the foreclosure of such mortgage against all parties holding junior incumbrances or the legal title, who had been omitted as parties to such original foreclosure proceedings under which he bought. Key West Wharf & Coal Co. v. Porter, 63 Fla. 448, 58 So. 599, Ann. Cas. 1914A, 173; Jordan v. Sayre, 29 Fla. 100, 10 So. 823.

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