Hart v. Haydon

• Decision Date: 29 March 1881
• Citation: 79 Ky. 346,2 Ky.L.Rptr. 359
• Parties: Hart, & c., v. Hayden, & c.
• Court: Kentucky Court of Appeals

79 Ky. 346

2 Ky.L.Rptr. 359

Hart, & c., v. Hayden, & c.

Court of Appeals of Kentucky.

March 29, 1881

1. A party who holds a mortgage upon property that is insufficient to satisfy all the liens upon it is entitled to contest the existence of mortgage liens asserted by others, although his debt may not be due, and although his mortgage may not have been executed until after the other mortgagees had instituted suit to enforce their liens.

2. When a mortgagee has sued to foreclose his mortgage, and made another mortgagee a defendant, the action of the latter is not a lis pendens until he has filed his cross-petition and had process issued.

3. If the fact that a claim is tainted with usury is disclosed by the record, the chancellor will purge the claim, although the debtor may refuse to make such a defense.

APPEAL FROM LINCOLN CIRCUIT COURT.

PORTER & WALLACE FOR APPELLANTS.

1. Appellant was not, as to appellee Hayden, a pendente lite purchaser, as Hayden had not filed his cross-petition at the time her mortgage was executed. (Secs 96 and 97, Civil Code.)

2. A junior mortgagee, although his debt may not be due, has such an interest as to entitle him to contest the claim of a senior mortgagee, as by showing that it has been in part paid or is tainted with usury, although his mortgage may not have been executed until after the senior mortgagee instituted suit to foreclose his mortgage. (1 Dana, 25; 5 B. M., 274; 10 B. M., 118.)

T. P HILL AND M. C. SAUFLEY FOR APPELLEES.

1. Appellant's debt having not yet matured, she is not entitled to contest the validity of appellee's claim.

2. Appellant was a pendente lite purchaser, although appellee had not filed his cross-petition when her mortgage was executed, as the lis pendens was complete upon the filing of the original petition setting up appellee's lien. (Story's Eq., sec. 406.)

3. A pendente lite purchaser is not entitled to be made a party to the pending litigation to subject the property purchased to the payment of debts. (Childs v. Burton, 6 Bush, 619; 1 Bush, 427; Ibid, 230; 10 Bush, 437; Chancery Digest, 152; 1 Dana, 578; 1 Daniels' Chancery Practice, star page 328.)

4. Usury is a personal privilege, and can be pleaded only by the debtor. (2 Parsons on Contracts, part 2, page 399.)

OPINION

PRYOR JUDGE:

This case has been heretofore decided, but on a petition for a rehearing, we have deemed it proper to discuss more fully the questions raised, although satisfied that the doctrine announced is neither so novel or uncertain as to require an elaborate argument in support of it.

On the 23d of December, 1875, Grigsby and wife borrowed of Ballou $6,000, and executed to him a mortgage on a certain tract of land to secure its payment. Ballou, on the 19th of September 1878, filed his action in equity in the Lincoln circuit court, asking a sale of the land to satisfy the mortgage debt. Prior to the execution of this mortgage, Grigsby and wife (the wife then trading as a feme sole, and empowered to act as such) had executed a mortgage to the appellee Hayden on this land, to secure him in the payment of $5,324. This mortgage was dated on the 26th of April, 1869 and the note payable in three years from that date. This land belonged to the wife (Mrs. Grigsby). Ballou made Hayden a defendant to his action, alleging the existence of his lien, and on the 30th of September, 1879, Hayden filed his answer and cross-petition against Mrs. Grigsby (the husband being dead), asking an enforcement of his lien, and also a judgment in personam. On the 30th of October, 1879, the appellant, Mrs. Hart, filed a petition to be made a party to the action of Ballou, making it a cross-petition against the mortgagor, Mrs. Grigsby, in which she alleges that the latter, on the 21st day of March, 1879, executed to her (Mrs. Hart) a mortgage on the same land to secure the payment of $20,000, evidenced by certain notes, and due five years from that date. She alleges the insolvency of the obligor, the insufficiency of the land to satisfy all the mortgage debts. and asked to be allowed to contest the validity of the mortgage claim set up by Hayden, on the ground that payments had been made for which no credit had been given, and that the claim, or a greater part of it, was usurious. On motion of Hayden the answer and cross-petition was stricken from the files, or a demurrer sustained, and her petition dismissed. This ruling of the court below, as indicated by counsel for the appellee, was made for the reason that the appellant, Mrs. Hart, was a lis pendens purchaser, and because her several debts were not due. The mortgage to Mrs. Hart was executed after the institution of the action by Ballou, but before the answer and cross-petition of Hayden, the appellee, was filed, and this court held in the original opinion, that so far as Hayden was concerned, the appellant could not be regarded as a lis pendens purchaser, although Hayden had been made a defendant to Ballou's petition. That to constitute Mrs. Hart such a purchaser on the complaint of Hayden alone, his cross-action should have been filed and process issued. Ballou is not appealing, and if he was, the doctrine applicable to a pendente lite purchaser cannot control the decision of the question presented in this case.

While the appellant is not in a condition to coerce payment of her debt, there is no reason why the estate given or pledged to secure its payment should not be preserved as against those who have no claims, or are asserting liabilities that ought not to be enforced by the chancellor.

The probability that the debtor may, when the debt of the appellant matures, be in a condition to pay it, furnishes no ground for refusing the relief asked, when it is manifest, if her petition is denied, her security is not only likely to be diminished, but her entire debt lost. This is upon the assumption that the statements of the petition are true, and when considered on demurrer, must be so regarded. The action of Hayden was not a lis pendens when the mortgage of the appellant was executed; but whether so or not, we deem it unnecessary to determine. We have no reason, on the hearing of this case, on the question of law raised by the demurrer to doubt the validity of the transaction between Mrs. Hart and Mrs. Grigsby. The former held notes on the latter, and for the purpose of securing them, obtained the mortgage on this land. There is no rule of law or equity that would prevent the appellant from...