Gerken v. Davidson Grocery Co.

• Decision Date: 05 February 1931
• Docket Number: 5569
• Citation: 296 P. 192,50 Idaho 315
• Parties: MABLE R. GERKEN, Wife of GLEN GERKEN, Respondent, v. DAVIDSON GROCERY COMPANY, a Corporation, and FRED H. TURNER, Sheriff of Jerome County, Idaho, Defendants, Appellants, W. A. HEISS, H. W. CLOUCHEK and HENRY W. CLOUCHEK, Executor of the Estate of AUGUSTA CLOUCHEK, Deceased, Defendants, Respondents
• Court: Idaho Supreme Court

296 P. 192

50 Idaho 315

MABLE R. GERKEN, Wife of GLEN GERKEN, Respondent, v. DAVIDSON GROCERY COMPANY, a Corporation, and FRED H. TURNER, Sheriff of Jerome County, Idaho, Defendants, Appellants, W. A. HEISS, H. W. CLOUCHEK and HENRY W. CLOUCHEK, Executor of the Estate of AUGUSTA CLOUCHEK, Deceased, Defendants, Respondents

No. 5569

Supreme Court of Idaho

February 5, 1931

MORTGAGES-FORECLOSURE-COMMUNITY PROPERTY-PARTIES-LIABILITIES INCURRED BY PURCHASE-JUDGMENTS-COLLATERAL ATTACK-QUIETING TITLE-RIGHT OF ACTION-CONDITIONS PRECEDENT.

1. Wife was not bound by decree foreclosing mortgage on community property, where she was not made party to foreclosure action.

2. Foreclosure judgment, unappealed from, cannot be attacked collaterally, unless void on its face, except for fraud.

3. Where husband has been made party defendant to foreclosure judgment, wife will not be permitted to recover land without paying debt, notwithstanding she was omitted in the action.

4. Liability to pay mortgage debt rests upon mortgaged land as well as mortgagor.

5. Mortgagor, or his grantee, taking land burdened with lien cannot, without paying debt, quiet title as against mortgagee.

6. After foreclosure sale, subsequent equities are binding on purchaser and equities were placed there by himself.

7. Mortgagor's grantee, with constructive notice of third mortgage when he took quitclaim deed, and not contesting foreclosure of third mortgage, to which proceeding he was party, took land subject to third mortgage.

APPEAL from the District Court of the Eleventh Judicial District for Jerome County. Hon. H. A. Baker, Judge.

Action by Mable R. Gerken against Davidson Grocery Company et al. to vacate a judgment of foreclosure and to quiet title to real property. Judgment for plaintiff. Reversed.

Judgment reversed, costs to appellants. Petition for rehearing denied.

Fisher & Coffin, for Appellants.

There is a rule in equity to the effect that where the mortgagor's grantee has paid off a senior mortgage in ignorance of the existence of the junior mortgage, he may have the senior lien revived and be subrogated to the rights of the former holder thereof as against the intervening junior lien. (Capitol Nat. Bank v. Holmes, 43 Colo 154, 127 Am. St. 108, 95 P. 314, 16 L. R. A., N. S., 470.)

It is generally held, however, that where the junior lien was duly recorded, or where the difficulties of the mortgagor's grantee arise from his own negligence, the foregoing rule in equity will not be invoked, and he will be held to have released the property from the lien of the senior incumbrance. (Stastny v. Pease, 124 Iowa 587, 100 N.W. 482; Conner v. Welch, 51 Wis. 431, 8 N.W. 260; Haydon v. Huff, 60 Neb. 625, 83 N.W. 920; Garwood v. Eldridge's Admrs. & Heirs, 2 N.J. Eq. 145, 34 Am. Dec. 195; Hargis v. Robinson, 63 Kan. 686, 66 P. 988.)

There is some authority to the effect that where foreclosure proceedings are commenced against community property which, before suit brought, has been transferred by the mortgagor, both the husband and wife being owners of the community legal title, must be made defendants and that if either is omitted, the decree is void as to both. (Dane v. Daniel, 28 Wash. 155, 68 P. 446; Sloane v. Lucas, 37 Wash. 348, 79 P. 949.)

In Idaho it has been held, however, that if the husband be made a party defendant, although the wife is omitted, she will not be permitted to recover the land without payment of the debt. (Fales v. Weeter Lbr. Co., 26 Idaho 367, 143 P. 526.)

Since an action to quiet title is an action in equity wherein the maxim applies, that he who seeks equity must do equity, a mortgagor, or his successor in interest cannot quiet his title against the mortgagee without paying, or offering to pay, the mortgage debt, payment whereof may be required by the court as a condition precedent to the granting of such relief. This rule applies whether the party seeking to quiet his title be personally liable for payment of the mortgage debt (5 R. C. L. 664, sec. 36; Brandt v. Thompson, 91 Cal. 458, 27 P. 763; Booth v. Hoskins, 75 Cal. 271, 17 P. 225; Ephraim v. Nevada & California Land & Livestock Co., 282 F. 610; Mack v. Hill, 28 Mont. 99, 72 P. 307; Machold v. Farnan, 20 Idaho 80, 117 P. 408), or is merely the owner of the legal title, but not personally liable for payment of the mortgage debt. (Chapman v. Hicks, 41 Cal.App. 158, 182 P. 336; Johnston v. San Francisco Sav. Union, 75 Cal. 134, 7 Am. St. 129, 16 P. 753; McMillan v. Davenport, 44 Mont. 23, Ann. Cas. 1912D, 984, 118 P. 756.)

James R. Bothwell and W. Orr Chapman, for Respondent Gerken.

The fact that the purchaser at a foreclosure sale under a first mortgage has previously bought the equity subject to a second mortgage, which he did not expressly stipulate to pay, does not prevent his acquiring a perfect title against that mortgage by the purchase. The mortgagor is estopped from denying the title he has set forth in his mortgage, and all parties to the foreclosure suit are estopped from disputing the title acquired by the purchaser under the sale, and such purchase will not be treated as a redemption. (3 Jones on Mortgages, 8th ed., p. 626, sec. 2122; Brown v. Winter & Sherry, 14 Cal. 31; Zuege v. Nebraska Mortgage Co., 92 Kan. 272, Ann. Cas. 1916B, 865, 140 P. 855, 52 L. R. A., N. S., 877; Security Mortgage Co. v. Herron, 174 Ark. 698, 296 S.W. 363; Security Mortgage Co. v. Harrison, 176 Ark. 423, 3 S.W.2d 59.)

The rule that a mortgagee in possession is entitled to retain possession until the debt has been paid is solely one of equity, and to justify its application the circumstances must be such as to make it inequitable to eject him before payment. The rule is not extended to or applied against the claims of one neither legally nor morally bound to pay the debt or against one who holds a title superior to the lien of the mortgage. (Faxon v. All Persons, 166 Cal. 707, 137 P. 919, L. R. A. 1916B, 1209; 3 Pomeroy's Equity Jurisprudence, 4th ed., sec. 1189, p. 2817; Fontana Land Co. v. Laughlin, 199 Cal. 625, 48 A. L. R. 1308, 250 P. 669.)

LEE, C. J. Givens, Varian and McNaughton, JJ., and Koelsch, D. J., concur.

OPINION

LEE, C. J.

This is a suit to quiet title to certain real property. The original owners, Eugene G. Gauss and Lydia M. Gauss, husband and wife, incumbered the property by the execution of three mortgages, respectively, to Equitable Savings & Loan Association on August 25, 1919, W. A. Heiss, October 1, 1919, Davidson Grocery Company, June 24, 1923. On February 25, 1925, the mortgagors conveyed the property by quitclaim deed to Glen Gerken, husband then and at all times since of Mable R. Gerken, plaintiff, and respondent herein: deed was recorded March 2, 1925.

Neither Gerken nor his wife ever assumed the mortgages or undertook their satisfaction. On August 19, 1925, Heiss, the second mortgagee whose mortgage had been recorded October 7, 1919 instituted foreclosure proceedings against the original mortgagors, Davidson Grocery Company, the third mortgagee aforesaid and appellant here, and Augusta Clouchek, a judgment creditor. In that action, neither Gerken nor his wife were made parties nor did either ever appear therein. Appellant, Davidson Grocery Company, having been served with summons, defaulted. Decree of foreclosure was entered; and on January 23, 1926, the property was sold by the sheriff at public auction to Glen Gerken for the cash sum of $ 798.29, the whole amount due upon the judgment, including interest and costs. There was no redemption; and subsequently the sheriff issued Gerken a deed to the premises, which deed was recorded February 24, 1927. On February 26th following, appellant, Davidson Grocery Company, commenced an action to foreclose its mortgage. The defendants joined were the Gausses, W. A. Heiss, Glen Gerken and H. W. Clouchek, executor of the estate of Augusta Clouchek, deceased: Glen Gerken's wife, respondent, Mable Gerken, was not joined as a party or served with summons, nor did she appear personally or by attorney: Gerken defaulted and did not contest the Davidson Grocery Company's mortgage. Decree was entered, the premises bid in by appellant, Davidson Grocery Company, to whom later...